World Energy Perspectives 2016 - Renewables Integration
World Energy Council’s report on World Energy Perspectives 2016 focuses the growing importance of renewables and especially Variable Renewable Energy Sources (VRES) all over the world. Policymakers and the industry need to address emerging issues to ensure continued growth of variable renewables and their successful integration in electricity systems. Based on case studies from 32 countries across five continents, the report highlights lessons learnt, identifies critical success factors and extracts practical solutions for success.
The report highlights seven key findings:
- Renewables, including hydropower, now account for about 30 % of the total global installed power generating capacity and 23% of total global electricity production. In the last 10 years, wind and solar PV have witnessed an explosive average annual growth in installed capacity of 23% and 51% respectively, although their combined contribution to the global electricity production is around 4 %.
- Renewables have become big business. In 2015 a record USD286 billion was invested in 154 GW of renewables capacity (76% in wind and PV), by far overtaking the investment in conventional generation to which 97 GW were added. There was a general market shift from developed countries to emerging economies. China alone accounted for 36% of global RES investments.
- The combination of improving technologies and cost reductions is driving down capital expenditure and operational and maintenance costs of variable renewables, solar PV in particular. The most recent data available suggests the lowest auction value for wind is a tariff of USD28/MWh in Marocco and USD30/MWh for a 800 MW solar PV plant in Dubai. These exceptionally low values cannot generally be projected to other countries with different wind and sun load factors (in continental Europe, for example, they are up to 50% lower) and high local costs.
- By 2015, 164 countries around the world had renewable energy support policies in place; 95 of them were developing countries, compared with 15 in 2005.
- The example of the EU highlights the consequences of reductions in subsidies and other support schemes for investment in renewables: as subsidies decreased, the EU’s share of global solar PV installed capacity dropped over the past four years from 75% to 41%, the share of wind from 41% to 33%.
- A right location with high wind or solar load factors and low grid connection costs is the key to success for new, large variable renewables projects.
- A real challenge for variable renewables integration is to rapidly manage the implications of variable nature of wind and sun.
The report presents solutions for the main challenges, which can be divided into two complementary categories:
1. Policies and Market Design
- A holistic and long-term approach to system design is key when planning variable renewables integration. Each country’s power system is unique depending on its primary energy sources, location and size of power plants, transmission and distribution (T&D) systems, financial conditions, costs and consumer behavior.
- Policymakers must design market rules to ensure a more sustainable energy system in line with the objective of the Trilemma, including clearly defined CO2 emissions regulations.
- Introduction of capacity markets can help ensure security of supply, as energy-only based markets are often insufficient to guarantee supply in systems with a large share of variable renewables.
- Adjustments to existing market design can be efficient, for example:
- Larger balancing areas.
- Aggregating the bids of different plants in the market can facilitate a reduction in the overall variability of electricity supply and thus reduce the forecast errors and system balancing needs.
- Ancillary services can be provided by variable renewables, even in the absence of sun and wind, with help of new inverter technologies.
- Hourly and sub-hourly scheduling.
- Nodal pricing demonstrates the benefits of an appropriate selection of location for renewables power plant and as a result, a smoother integration of intermittent renewable generation technologies.
- Policymakers and the industry are encouraged to conduct thorough technical and economic analyses with comprehensive assessment which, in addition to VRES CAPEX and O&M, include the associated costs for the complete power system.
- Weather forecasting methodologies need further development to achieve better accuracy.
- Advanced operating procedures to optimize reserve capacity and flexibility of conventional generation should be introduced to manage intermittency and variability.
- Demand response, i.e. the short-term adjustment of demand to address temporary shortage or excess power from variable renewables, must be developed further.
- Energy storage technologies can be a game-changer and contribute to addressing the intermittency challenge.
- An expansion of the transmission and distribution grids, including cross-border interconnections, may be necessary together with an optimum operational cooperation between TSO’s and DSO’s.
Full report: WORLD ENERGY PERSPECTIVES 2016