CLEAN ENERGY IN EUROPE: TOO MUCH OF A GOOD THING?

With the rapid spread of solar power, Spanish energy is now increasingly cheap. In the midday hours, energy prices often ‘loiter near zero on wholesale markets’, and in Germany wholesale prices were negative in 301 of the 8760 tradeable hours last year due to plenty of wind production.

As such farms literally ‘take over Europe’, politicians must address the pressing issue of what to do with all the power they produce. ‘Ultra-low– and indeed negative– prices suggest that it is not being put to good use at present, reflecting failures in both infrastructure and regulation’, reports the Economist.

To improve efficiency, a slew of options are available- transferring energy to areas without a surplus, shifting demand to times when energy is readily available, and energy storage via electricity, fuel and heat. The European renewables boom exceeds anywhere else in the rich world- last year the continent installed ‘roughly twice as much’ fresh capacity as the US, consisting of 56 gigawatts of new solar power and 17 gigawatts of new wind power, likely to be exceeded this year. By 2030. 43% of the EU’s total energy consumption wlll be green, up from just 23% in 2022. 

As for the first option, an estimate by ENTSO-E, a group of European grid operators, suggests improved international links would ensure a staggering 42 terawatt-hours of year of ‘otherwise wasted’ electricity would be used in 2040, over Denmark’s current annual consumption. This grid, think-tank Bruegel states, would need 20-30% less capacity for energy backup and storage.  

However, such extensions face issues in that they are time-consuming and meet local opposition, and as such energy firms are putting them underground, which, too, raises costs. Even the implementation of an extension raises arguments. Undeniably the market with lower electricity prices will export power to that with higher prices. While both sides may benefit,  the electricity producers on one side and the consumers on the other benefit, while the other group inevitably oses out in both places.

Another option that policymakers could implement may be demand shifting. The plan is to move flexible sources of demand, like EV charging and district-heating buffers, into the hours of the day where energy is plentiful. 

However, it too sees obstacles such as the need to use smart meters measuring the quantity and time of energy consumption, allowing prices to vary accordingly. And the pace of progress is mixed at best; most are making slow progress implementing the technology. 

Pricing also proves to be another issue. For example, a giant kettle in Hamburg named Karoline ‘stands ready’ to convert surplus electricity into heat for as many as 20,000 households. Even if employed merely briefly, it has to pay full monthly network charges, so often ‘sits idle’ while local wind turbines are ‘turned off to prevent the grid from overloading’. Consumers, too see similar issues, tending to pay network charges at fixed rates, regardless of when energy is taken from the grid. While the EU is ‘pushing’ systems in a ‘more flexible direction’, this too takes time.

Finally, the last solution that might be of help would be that of better storage. An energy firm in Vantaa, Finland, plans to dig a hole the size of a whopping ‘440 Olympic swimming pools’ beneath the town’, storing water heated to 140˚C, storing 90 gigawatt-hours of heat, able to keep the town snug and warm for an entire year. 

Other firms are also ramping up battery usage for short-term storage, but again face issues such as existing energy-market structures, built around expectations of backup capacity from conventional fossil fuel plants with regards to frequency control and congestion management. Experts lament that ‘the efficient use of surplus electricity is not considered and not encouraged in Europe’. 

Better incentives would enable policymakers to more effectively use household batteries. A German home with batteries could receive €650 a year if able to store energy for the grid. EVs, too, could be used, as ‘in essence’ they act as a car and a battery in one. British energy provider Octopus recently launched a tariff providing free charging if the firm can decide when the car charges and sometimes transfer energy from its battery into the grid. These tariffs would both help ‘soak up surplus energy’ and make EVs a more attractive purchase. 

Without such actions, it is clear Europe will face the daunting issue of using the growing amounts of surplus energy, reducing profits for investors in renewable energy, reducing incentive in their usage. Such ultra-cheap power, while ‘something to be celebrated’, ‘can be tough to exploit’. 

Author: Kendrick Low