Germany Notes - Part 2

A snapshot of the 40 MW solar park near Fürstenwalde, Germany

Today will be a shorter post as I spent most of my time organizing my meeting notes.

I will begin with the topic that became one of my main focuses in Germany - methods of dealing with renewable energy's intermittency.

There are a handful of solutions I researched to deal with the intermittency of solar and wind. They include energy storage, demand-side management, spacial variability in solar and wind systems, transmission lines, and flexible conventional generation. At a later date, I will delve into each individually, but today will only be introduction.

In addition to technology, intermittency must also be addressed in the electricity market. Most electricity markets I encountered are primarily energy markets. What I mean is that electricity suppliers are compensated primarily through the energy they sell and not based on their backup capacity.

Due to the feed-in tariff (FIT) in Germany, the large quantity of renewable energy like solar and wind installed in the country has decreased the wholesale price of electricity sizably. This is due to a combination of at least two factors. The first is that under the FIT, owners of wind and solar systems are payed a fixed price (in €/kWh) for all electricity exported to the grid regardless of the wholesale price of electricity. The second factor is the legal priority renewable energy is given on the electricity market over fossil-fuel, nuclear, and hydro generation. This means that the transmission operators are required to use any available renewable electricity first over all other forms of generation.

These two factors result in renewable energy being dumped on the electricity market at a price near zero since renewable energy generators have priority and are already being paid by the government through the FIT.

At a later date, I will talk in more detail about the merit order of the electricity market, but for now I will just say that lower wholesale prices of electricity makes fossil-fuel power plants less profitable to run. This has lead to many natural gas and (perhaps) some coal plants to be shut down in the Germany. In the long-term, this may cause a problem for the stability of the grid because there may not be enough backup conventional generation to compensate for the times when solar and wind are not generating electricity.

To quickly conclude, the stability of the grid depends just as much on the backup capacity as well as the electricity generated. Since generators are primarily compensated based on electricity and not capacity, when large proportions of renewable are connected to the grid they will decrease the price of electricity causing conventional plants to be shutdown, even if the plant's backup capacity is an asset to the system.

Some may argue that you don't need backup conventional capacity, but I don't really want to argue with or against that now. Remember these are only notes!

Bales north of Berlin.