Wednesday, September 18, 2013

The Economic and Political Consequences of the Last 10 Years of Renewable Energy Development (Geeky)

A bit of a departure from the usual fare at the Solar Gardens Blog, wind developer Jerome a Paris writes in The Oil Drum about some of the macro-effects of high renewable penetration as observed in Europe.  While this post is long and a bit technical, I find it worth the read to ponder what sort of incentives might support continued solar growth as prices reach parity and the grid struggles to keep up.  Even more disruption will occur when the energy market turns upside down, and power prices during the day become lower than those at night.

This new grid will need strong incentives for storage, demand response, and reserve capacity by the megawatt rather than the megawatt-hour.  

- Joy


I'll focus on Germany, where the transformation has been most advanced (and even has brought a new word to us: the Energiewende), and where the consequences of high renewable penetration are most visible.

A lot of rather unusual things have been happening in the Germany power sector lately, from negative prices, to utilities closing down brand new power plants and, naturally, a ferocious debate as to whether to cut support for renewable energy (as has already been done in Spain).

I've long described renewable energy producers as a price takers (i.e., they don't influence market prices in the short term and have to "take" market prices as set by other factors, unless shielded by specific regulatory regimes), but we are getting to the point, in a number of places, and in Germany in particular, where the penetration of renewable energy is such that it has a real macroeconomic impact on the prices of electricity, both at the wholesale and the retail levels, and thus on the way power markets run, and on the politics surrounding them. There's the additional factor that apparent spending on renewables is targeted by governments at a time of austerity in Europe, egged on by hardly disinterested utilities.

Read lots more:

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