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June 2016 EEnergy Informer

19

In this issue

How Long Would It Take To Wean Off Fossil Fuels? ...................................................................................................... 1

Kicking Fossil Fuel Habit Easier Than Previously Thought ............................................................................................. 6

China: Energy Transition Already Underway ................................................................................................................. 7

Climate Change: What Are We Waiting For? ................................................................................................................. 9

Look Ma: Virtually All New Capacity Is Renewable ........................................................................................................ 11

Global Solar To Grow 21% In 2016 ................................................................................................................................ 12

Solar Impulse Continues Epic Journey ........................................................................................................................... 15

Coal: Under Siege .......................................................................................................................................................... 16

Global Wind To Approach 800 GW By 2020 .................................................................................................................. 19

Connected Homes Do More Than Reduce Bills ............................................................................................................. 21

What Happened To Falling Demand In Australia? ......................................................................................................... 22

Decentralized Energy: From Niche To Mass Market ..................................................................................................... 23

Germany Manages Big Savings In Renewable Generation ............................................................................................ 24

Future of Utilities: Utilities of the Future ....................................................................................................................... 27

How Long Would It Take To Wean Off Fossil Fuels? Apparently, and surprisingly, faster than previously thought possible

n 1973 scientists discovered that the continued use of ozone depleting gases such as CFCs were a

major environmental threat to Earth’s protective shield against ultra-violet light. An international

treaty, the Montreal Protocols, was passed in 1987 phasing out the harmful chemicals. At the time, a

senior chemist at DuPont, among the major manufacturers of CFCs, warned that there was no

practical substitute for CFCs and predicted that the phase out would be virtually impossible and/or

enormously expensive. It was neither.

As it turns out, DuPont and others quickly found substitutes – perhaps not as potent or cheap as CFCs –

but affordable and practical enough. A major climatic disaster was averted within an amazing short span

of time.

CFCs, used in refrigeration, of

course, are no match for carbon in

fossil fuels. But the experience of

phasing them out entirely and quickly

from the global supply chain in

record time is often mentioned as an

example of how global cooperation

can avert climate catastrophes.

Since every country on Earth signed

the Paris Agreement in Dec 2015

and 175 countries reaffirmed their

intention to abide by their voluntary

pledges to reduce greenhouse gas

emissions at the United Nations in

I

What happens now that we have an agreement to reduce carbon?

Source: UN

EEnergy Informer The International Energy Newsletter

June 2016

EEnergy Informer June 2016 Vol. 26, No. 6

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2 June 2016 EEnergy Informer

New York City on 22 April 2016 (photo), can carbon emissions be next? And more important, how long

would it take? How much would it cost?

The costs, of course, are not trivial as further described in article on page 9. But that misses the point. The

important question is not how much it costs to reduce carbon emissions before it is too late, but rather,

what would be the cost if humanity does not act in time to avert climate change? How much would be the

cost of inaction? Most experts who have looked into the matter are convinced that the cost of delay or

inaction could far exceed the cost of action, as painful as it may be.

For those among this newsletter’s readers who may think that this – namely a gradual transition away

from carbon-heavy fuels followed by other strategies to arrive at a steady-state where anthropogenic

carbon emissions are absorbed by Earth’s natural carbon capture and storage mechanisms – is a ridiculous

and/or impractical question to entertain, there are hopeful signs that such a transition is in fact already

underway in a few places, and increasingly considered elsewhere.

The most stunning sign of change was

announced in late April 2016 when

Bloomberg and other news media reported

that Saudi Arabia, the world’s biggest oil

exporter, is creating a $2 trillion sovereign

wealth fund – the biggest in the world – to

wean Saudi’s economy away from over-

reliance on oil by 2030.

While it is premature to make any

predictions on how successful the Saudi

venture may turn out to be and how fast, the

sheer fact that Saudis are even thinking – let

alone publicly talking – about such a

transition speaks volumes.

Saudi Arabia transitioning away from oil? It

is the equivalent of Kodak announcing – 3

decades ago and at the peak of its success

selling photographic film – that it would

phase out of the business. Of course, many

say that is exactly what Kodak should have

done while it still could, instead of opting

for a slow but irreversible death.

Saudis, of course, are not the only ones

thinking beyond oil. Also in April 2016, the

French oil major Total said that it wants to

be among top 3 global solar companies in

20 years. In making the announcement, the

company’s CEO Patrick Pouyanné said

Total would create a new business division

to focus on gas, renewable energy and

power stating that the move will “strengthen

its position as a global energy leader.”

And shortly thereafter, Total bought Saft Goupe SA, a French energy storage company for €950 million

($1.1 billion). Total appears to be thinking beyond oil, remember BP’s cute slogan?

Source: ERM analysis of data from UNFCCC INDC Portal and other sources; Market Intelligence on Climate Change, Climate Change Business Journal, Volume IX, No. 1-3, Q1, 2016, edited by Jim Hight


At first glance, what Total is

trying to do may sound like a

great idea. But not everyone

agrees that big oil and gas

companies will necessarily

make great renewable

companies even if they try.

As described in the May

2016 issue of this newsletter,

there are two schools of

thought on what major oil

and gas companies can or

should do over the long term.

The first is to

gradually move

away from over-

reliance on fossil

fuels by getting

into new and

more sustainable

forms of energy – presumably renewables as Total is attempting to do; or

To gradually cut back on oil and gas exploration, transportation, refining and marketing as

alternatives for fossil fuels emerge and reduce their market share over time.

As explained by Jeroen van der Veer, ex-CEO of Shell in the May 2016 issue,

“The second school (of thought) says the mission of oil and gas companies is to produce oil and

gas, and if this mission ends, then the companies end too. Then you pay out the dividend to the

shareholders and stop.”

Jeroen van der Veer belongs to the first. He said,

“The energy transition presents great opportunities for oil and gas companies to develop new

forms of energy and gradually move away from fossil fuels.”

Opinions, of course, vary on merits of big oil getting into renewables. At least one industry insider this

editor contacted, who requested anonymity, is not convinced. He said,

“My personal opinion is that oil companies destroy value when they get into businesses they do

not know. There are plenty of companies chasing renewable opportunities and the capital

markets are happy to send capital their way. If the oil companies do not have opportunities in

their (own) businesses, they should return the capital to the shareholders.”

Perhaps he knows better. Several prior attempts by oil companies to get into renewable business did not

turn out to be great success stories. Perhaps oil companies should stick to their knitting, and when that

business dries up, it is time to turn off the lights. On the other hand, if demand for their main products,

namely oil and gas, are not going to grow as they did historically, what else can they do to remain viable

and profitable over time. That must be on the minds of many within the industry who see renewables, and

especially energy storage, as an opportunity for growth.

Oil prices depressed in 2015, global renewable investments set new record Global renewable investment set new $286 billion record in 2015, annual in $ billion

Source: Global trends in renewable energy investment 2016, UNEP Bloomberg New Energy Finance,


Drive-in theatres, for

example, were a rage in

suburban America in the 50s

and 60s. Few survive. Air

conditioned multiplexes have

replaced traditional movie

theatres with changing habits

– and technology offers

viewers the option to

download and watch what

they wish on mobile devices

on demand.

In this context, the global

coal mining industry, plagued

by a persistent supply glut

and plunging prices, is also

thinking about its future, or if

it in fact has one, as further

described in article on page

16. They are not, so far as this

editor is aware, diversifying into renewables – and will probably not be good at it even if they tried.

The reality is that after 175 countries signed the agreement at the United Nations in New York City on

Earth Day – 22 April 2016 (photo on front page) – carbon has officially turned into a serious liability.

No one knows how much of a liability it is or may turn out to be – since there is no agreed price on it yet

– but it is a liability nevertheless. The more of a company’s assets or investments that are tied to carbon-

heavy fossil fuels, the more the liability and the risk exposure. And like money in the bank accumulating

interest, the exposure to carbon liability will gradually get worse. It is not going away.

Which explains why

academics and scholars are

beginning to address the time

it may take for the transition

away from fossil fuels –

serious. And the answers some

of these scholars suggest are

simply hard to believe.

As explained in the following

article, Professor Benjamin

Sovacool of University of

Sussex in Brighton, UK, for

example, believes that

humanity can kick the fossil

fuel habit much faster than

others think may be possible,

or desirable. One need not

agree with such predictions,

yet there is no denying that the question is now being seriously asked, and in respectable circles.

Developing economies soon to surpass developing ones Renewable investments in $ billion

Source: Global trends in renewable energy investment 2016, UNEP Bloomberg New Energy

Future different than the past With falling prices, solar panels are increasingly cost-competitive on global scale

© Earth Policy Institute/Bloomberg Reproduced from Giles Parkinson’s Renew Economy, 7 Feb 2016


That is not all. A growing number of countries are now looking into scenarios where fossil fuel use will

be restricted or virtually banned over time. As was reported in May 2016 issue of this newsletter,

Denmark has been discussing plans to move its entire economy away from fossil fuels by 2050 –

although successive governments have expressed different levels of affinity to such a mandate or date.

Likewise, Norway is pushing its transport sector toward electricity. In April 2016, Austria said it was

considering a ban on new petrol cars by end of decade – that would be an important milestone if it in fact

materializes.

Sign of the times: Energy jobs shifting away from coal and oil to renewables Depressed oil prices have been hard on the oil sector, with an estimated loss of some 300,000 well-paying jobs. Once prices rebound, if they do, many laid off workers will return to the rigs, as they have always done in prior cycles of boom and bust – that is the conventional wisdom. But will they? Many laid off workers have already found jobs elsewhere, and some of these workers may not return to the oil sector even after it rebounds from the current slump. According to data by Indeed, a job posting website, oil job searches are down 32% suggesting that fewer job seekers are looking for or are expecting to find them in the oil business. By contrast, job searches for solar, nuclear and wind are up by 51, 17 and 15%, respectively, since 2014. While oil-related jobs account for half of all energy-related work globally, solar’s share has risen to 39%. Moreover, unless there is an unexpected shift, the long-term trends favor renewables. Indeed reports that over the past 2 years, oil postings have dropped by an average of 12.6% per quarter. According to Tara Sinclair, chief economist at Indeed, "The decline in oil prices has not just rocked that industry, but jobs linked to both fossil fuels and renewable energy," adding "Whether or not solar overtakes oil … energy workers would do well to position themselves for work in renewable fields such as solar, wind, and hydroelectricity." What can be said about the future energy job prospects? Sinclair thinks, “… the rebalance of work is important for the future of the climate, and, in terms of total job numbers … “ You can read what you want from these numbers and whether they are temporary, i.e., solely driven by the current oil price slump or permanent. Over time more workers will move away from shrinking coal and oil sector to renewables where the growth prospects appear brighter and more sustainable.

Fossil fuels and carbon that is emitted when they are combusted, of course, are pervasive in everything

humans do, every day. It is hard to imagine a day when they will be used sparingly. Professor Sovacool’s

suggestion that they may be phased out rather quickly challenges the conventional wisdom.

Yet carbon is now officially a liability, it poses a risk – and as time goes on, both will grow. And

alternatives, renewables plus far more judicious use of energy to minimize its carbon impacts, are moving

mainstream. There is no escaping these facts even if there is disagreement on the speed of the transition.


Kicking Fossil Fuel Habit Easier Than Previously Thought Following Paris agreement attention is focused on how and how long

xamining prior energy transitions throughout history, one is led to the conclusion that a long time

span is required. Moving from wood to coal in Europe, for example, took between 96 and 160

years; electricity took 47 to 69 years to enter into mainstream use. Energy infrastructure has a

long life, lot is invested in existing systems, habits change slowly, governments and businesses

are reluctant to switch. You have, no doubt, heard the arguments before.

Professor Benjamin

Sovacool, Director of

the Sussex Energy

Group at the

University of

Sussex, however,

believes that the next

great energy

transition – that is

away from fossil

fuels – could take

place in a fraction of

the time of major

changes in the past.

Sovacool says

moving away from

fossil fuels could be

different – “the

scarcity of resources,

the threat of climate

change and vastly

improved

technological

learning and innovation could greatly accelerate a global shift to a cleaner energy future.”

Many would disagree, starting by asking, ‘what scarcity?’ The world seems to have too much oil, coal

and gas – which explains the current depressed prices.

Sovacool, however, points to examples of speedier transitions, usually driven by a policy-driven or

political decision. For example, Ontario completed a shift away from coal between 2003 and 2014 and

France’s decision to go nuclear saw atom’s share of electricity generation rise from 4% in 1970 to 40%

by 1982 and around 75% shortly after.

Not mentioned by Sovacool, of course, are two even more extreme cases driven by a natural disaster and

political fiat. By 2022 Germany will phase out its nuclear fleet following a decision after Fukushima

accident in 2011. Even more dramatic was Japan losing and subsequently shutting down all of its 56

nuclear reactors virtually within a week – not a voluntary transition, one might add.

“Moving to a new, cleaner energy system would require significant shifts in technology, political

regulations, tariffs and pricing regimes, and the behavior of users and adopters.”

E

Sovacool says transition away from fossil fuels may be much faster than historical ones Global energy supply by fuel source as a% of total, 1830–2010 Coal surpassed the 25% mark in 1871, 500 years after the first commercial coal mines in England. Crude oil surpassed the 25% threshold in 1953, nearly a century after Edwin Drake drilled the first commercial well in Titusville, Pennsylvania in 1859. Hydroelectricity, natural gas, nuclear power and renewables have yet to surpass the 25% threshold.

Source: http://www.sciencedirect.com/science/article/pii/S2214629615300827

http://www.sciencedirect.com/science/article/pii/S2214629615300827


“Left to evolve by itself – as it has largely been in the past – this can indeed take many decades.

A lot of stars have to align all at once.

“But we have learnt a sufficient amount from previous transitions that I believe future

transformations can happen much more rapidly.”

A case in point, he says, is the rapid deployment of nuclear power in France,

“The French transition to nuclear power was also swift. Following the oil crisis in 1974, Prime

Minister Pierre Messmer announced a large nuclear power program intended to generate all of

France’s electricity from

nuclear reactors to displace

the Republic’s heavy

dependence on imported oil.

As the maxim went at the

time, “No coal, no oil, no

gas, no choice!”

There is no denying that when there

is a will, there usually is a way. Yet

all the examples are countries or

provinces making choices generally

with broad political and public

support. International treaties are

more difficult to reach and more

difficult to implement.

In case of carbon released by

combustion of fossil fuels, it will

probably not be easy or swift – nor is

everyone yet convinced that it is

necessary. As the following article

explains, there are signs that a

gradual transition may already be underway. Furthermore, some experts are asking what are we waiting

for as described on page 9.

Full article and press release at: http://www.sciencedirect.com/science/article/pii/S2214629615300827 http://www.sussex.ac.uk/broadcast/read/35187

China: Energy Transition Already Underway If China can reduce its fossil fuel dependence, anyone can

hile smallish countries like Denmark, Norway and Austria, already clean and exceedingly

green, make headlines by moving away from fossil fuels and towards a more sustainable

energy future, on a global scale, they won’t make much of a dent in global emissions even if

they succeed. Energy and carbon’s future will be decided in large and growing economies of

China, India, Indonesia, Pakistan, Nigeria and to a lesser extent the US, Russia, Germany, Japan,

UK and so on. These countries account for the lion’s share of global emissions and what they do or don’t

will determine the outcome of the agreement recently signed at the UN in April 2016.

W

France: World’s second biggest nuclear generator after USA

http://www.sciencedirect.com/science/article/pii/S2214629615300827

http://www.sussex.ac.uk/broadcast/read/35187


The conventional wisdom, as Professor Sovacool observes in the preceding article, is that change in the

energy sector takes place at glacial speed, hence don’t hold your breath for any dramatic developments

any time soon. And that is what the incumbents in coal, oil, gas and auto industry want to hear, namely

the status quo will prevail once delegates leave the signing ceremonies and the photo ops with the press.

Sporadic evidence, however, supports those who say things

could in fact change rather fast this time around once the

mindset is changed – and they point to the Paris accord as

the turning point.

The evidence emerging from China, while piecemeal, is

encouraging. It shows that change is already underway and

at a remarkable pace.

To start with, China’s economy is no longer growing at

double digits. Moreover, as its economy shifts from an

export-focused heavy manufacturing to serving the growing

domestic market and towards services, its demand for

electricity is expected to drop. It is projected to grow

roughly 3% in 2016, a remarkable decline compared to

historical double-digit growth rates of the past.

Even more amazing is that China’s central planners have

been shifting the electricity generation mix towards cleaner

and less polluting resources focusing on renewables and nuclear rather than coal.

China achieved not one but two global renewable records in 2015 — installing 32.5 GW of wind and 18

GW of solar in a single year, dwarfing US, Germany and other front runners (graph on page 9). It is an

understatement to say that China is reshaping the global energy economy and leading the transition to

lower carbon future.

The data coming from the China’s National Bureau of Statistics, not always the most transparent or up-

to-date, nevertheless convey the rapid transition of China away from coal and towards lower carbon

resources exemplified by a stunning 74% increase in grid-connected solar-generation capacity in 2015.

Additionally, China installed 15 GW of hydroelectricity and 6 GW of nuclear capacity last year, both

zero-emission resources.

Declining consumption and the transition towards renewables has resulted in another environmental

bonus: Declining coal consumption and imports – historically speaking. China’s coal imports dropping

30% last year, adding to the woes of Australian, Indonesian, South African, Colombian and American

coal exporters, all of whom are competing in a saturated market with declining growth prospects.

While India is behind China in its transformation, under Prime Minister Modi, it is also making efforts

to invest in renewables on a massive scale. Together, Chindia’s moves will account for over half of global

emissions, and both are transforming global energy market faster than anyone could have imagined only a

few years ago.

With the slowing demand growth and the flood of new renewables and nuclear, China’s thermal

generation declined 2.7% in 2015 – a trend that is expected to gradually reduce the share of thermal

generation in the electricity mix from 73% in 2015 to 63% projected by 2020. That is rapid

transformation for a massive economy, and a growing and developing one at that. It is truly amazing.

Will that be good enough, soon enough? Global energy-related CO₂ emissions by region

Source: The Outlook for Energy: A View to 2040, ExxonMobil, 2016


Moreover, the statistics indicates that thermal

plant utilization rates are beginning to decline –

a common phenomenon across Europe and the

US – as the percentage of renewables rises.

The culmination of these developments show up

in China’s coal consumption – roughly half of

global consumption of coal – which declined

4% in 2015.

Tim Buckley of the Institute for Energy

Economics and Financial Analysis (IEEFA),

which studies China’s energy transition away

from fossil fuels points out that China is planning to install an additional 22 GW of wind, 18 GW of solar,

16 GW of hydro, 6 GW of nuclear in 2016. Little by little, it adds up.

Declining demand growth plus 62 GW of zero carbon capacity should meet China’s electricity needs.

Coal consumption and imports are projected to continue their gradual decline as will thermal plants’

utilization rates.

For the skeptics who say the energy transition will take decades if not more, China provides a counter

example. And if China can succeed in adjusting its energy mix in record time, anyone can.

IEEFA.ORG

Climate Change: What Are We Waiting For? Reducing carbon emissions is simple until you try

conomists hardly agree on anything, but when it comes to what is the best way to reduce carbon

emissions, most favor a broad carbon tax that – simply stated – applies to emissions from all

sources and all fuels and which gradually rises over time until the required level of reduction has

been achieved.

Much has been written on the subject of what

can and should be done with climate change

including a recent book by Nicholas Stern

titled: Why are we waiting? The logic,

urgency and promise of tackling climate

change.

Stern, of course, authored the seminal Stern

Review in 2007 for UK Treasury on economics

of climate change. His sequel makes many of the

same arguments, while asking why not much has

happened in nearly a decade since his first book,

as the book’s title implies.

So what can be said about the economics of climate change now that governments around the world have

unanimously agreed that (a) we have a problem and (b) we need to do something about it?

E Need more renewables in a hurry New global wind capacity installed, 2005-15, in GW

Source: Global Wind Energy Council

Source: Institute for Energy Economics and Financial Analysis (IEEFA)

http://ieefa.org/tongue-river-arch-coal-northern-plains-resource-council/


In case of the US, the Obama administration has pledged to cut US greenhouse-gas emissions between

26 to 28% by 2025 and 80% by 2050 from 2005 levels. Much of this rests on Environmental

Protections Agency’s proposed Clean Power Plan, which is currently in limbo pending a decision by

the Supreme Court, most likely delayed until a new president is in office next January.

In an article in the Wall Street Journal (25

April 2016), Amy Harder and Greg Ip report

that a $45-per-ton carbon tax rising 2% per

annum above inflation would achieve the US

target while having an almost unnoticeable

impact on household income. Electricity price

may rise 15% and gasoline 8%.

According to research by Resources for the

Future and Stanford University a $45

carbon tax on electricity sector alone could

achieve 75 to 83% of the US pledge to reduce

overall emissions 26 to 28% by 2025.

That, of course, is the easy part. Delivering

the 80% reduction by 2050 is much harder.

Moreover, as reported in the WSJ article,

many economists are not even sure if it is

meaningful to extend such studies to 2030 or

beyond since so many assumptions about

future costs and technologies become sheer

speculation.

Speculative or not, Professor William

Nordhaus of Yale University notes that

“policy makers need a guide to what to do

today to achieve reductions a century from now because that’s when the worst consequences of climate

change show up.”

The same WSJ article reports that based on the results of 6 different models, a global carbon tax starting

at $60 per ton and rising to $425 in today’s dollars by 2050 would be needed to meet the targets. Such a

tax would reduce economic output somewhere between 5 to10%, not something politicians like to talk

about.

Which provides an answer to Nicholas Stern’s question, why are we waiting, in his book’s title. We are

waiting for a new generation of politicians who are willing to propose a carbon tax that is high enough to

produce results but not too high to result in economic recession or public revolt.

Wall Street Journal article

Look Ma: Virtually All New Capacity Is Renewable The new normal in electricity sector is decidedly renewable

hile few other than Professor Benjamin Sovacool and his cohorts (article on page 6) expect

fossil fuels to disappear any time soon, a consensus is emerging that renewables are rapidly

catching up with fossil fuels both in cost and performance. Add a reasonable penalty for W

Source: Long-Term Costs of Cutting Emissions Grow Hazy by Amy Harder and Greg Ip, 24 Apr 2016, The Wall Street Journal

http://www.wsj.com/articles/long-term-costs-of-cutting-emissions-grow-hazy-1461515943


emitting carbon and some renewables will compete with some fossil fuels, say coal, in certain places,

say, electricity generation in sunny and/or windy regions.

This is already a reality in the electricity sector in the US, where coal has virtually disappeared as a

viable option in future generation mix. Include mandatory targets such as renewable portfolio standards

(RPS) and production tax credits (PTC) for wind or investment tax credit (ITC) for solar, and voila!

In the first quarter of 2016, renewables outpaced

natural gas 70 to 1 in new capacity additions in the

US, according to the latest data from the Federal

Energy Regulatory Commission (FERC). There

were no new capacity additions from coal or nuclear

power (table on right). What makes the latest data

even more amazing is that renewables are outpacing

gas-fired generation even when natural gas prices are

at historical lows in the US.

For the month of March 2016, solar and wind were

the only sources of new capacity, same as in January

2016. If such trends continue, the share of fossil fuels in the US generation mix will gradually shrink over

time just as the share of coal has already started to drop.

Renewable energy sources now exceed 18% of total installed generating capacity in the US, up from

roughly 14% in 2010. At 9.5%, the share of non-hydro renewables not only exceeds that of hydropower

at 8.6% but also exceeds nuclear power, which is around 9%. Nuclear plants, of course, generate power at

a much higher capacity factor, generally above 90%, accounting for roughly 20% of US power generation

– a feat they have managed to maintain for years despite a gradual fall in the number of operating

reactors.

Commenting on FERC’s latest data,

Ken Bossong, Executive Director of

the SUN DAY Campaign said,

"While often touted as being a

'bridge fuel,' natural gas is

increasingly becoming an

unnecessary bridge to nowhere,"

adding, "As renewables continue to

rapidly expand their share of the

nation's electrical generation, it's

becoming clear that natural gas will

eventually join coal, oil, and nuclear

power as fuels of the past."

Bossong has a point. If the aim is to cut down on carbon emissions, switching from coal to gas is helpful

but only goes so far. It is as if a heavy smoker decided to smoke only 1 pack of cigarettes rather than 2 per

day. It is a step in the right direction, but not good enough is the aim is to quit smoking.

But moving beyond the recent FERC numbers, renewables appear to be gaining ground and on an

accelerating speed globally.

Speaking at a recent event on future of energy organized by Bloomberg New Energy Finance in New

York, Jon Moore of BNEF said he envisions that more than two-thirds of all new global

generation capacity over the next 25 years will come from renewables, notwithstanding the huge growth

in energy demand from emerging economies (visual next page).

Renewables beat gas 70 to 1 New US capacity addition in 1st QTR 2016, in MW

Source: Energy Infrastructure Update, Federal Energy Regulatory Commission, Office of Energy Projects, April 2016


According to Moore,

solar will account for

one-third of all new

capacity – 3.43

terrawatts – a ten-

fold increase on

today’s capacity,

more or less equally

spread between

utility scale and

distributed.

If these numbers are

to be believed, the

solar capacity will

match the combined new capacity of coal, gas and nuclear with wind, hydro and other renewables make

up the remainder.

Speaking at the same event Michael Liebreich, the former BNEF chief, illustrated how respectable

organizations such as the International Energy Agency (IEA) keep under-estimating the growth of

renewables in successive annual predictions they make. The graphs above illustrate this point for wind

(left) and solar (right) in IEA’s flagship World Energy Outlook since 2002.

Over the past 15 years, the IEA has increased its solar forecasts 14-fold, but is still short of the BNEF

target by a factor of more than three.

Global Solar To Grow 21% In 2016 Solar’s prospects continue to rise

ith so much of the current global energy infrastructure reliant on fossil fuels, especially in the

transportation sector, which is virtually totally dependent on liquid petroleum products, the

supremacy of oil, natural gas and coal will be hard to challenge for a while. Yet as the

preceding 3 articles describe, the

tremendous growth of

renewables is beginning to be

felt in the electric power sector.

And in time, it may challenge

the supremacy of oil even in the

transportation sector (following

article on Solar Impulse).

While hydro has historically

been the biggest renewable

resource – and in all likelihood

remain supreme on a global

level for some time – wind and

solar, and to a lesser extent,

biomass and geothermal are

gaining ground.

W

Source: IEA, BNEF

Future is solar Annual global PV additions, in GW

Source: Global Solar Demand Monitor: Q2 2016, GTM Research, May 2016

http://reneweconomy.com.au/wp-content/uploads/2016/04/bnef-solar-wind-growth.jpg

http://reneweconomy.com.au/wp-content/uploads/2016/04/bnef-solar-wind-growth.jpg

http://reneweconomy.com.au/wp-content/uploads/2016/04/bnef-solar-2040.jpg




Looking at the future prospects of renewables, solar’s growth trajectory is already challenging wind, and

by some estimates will be the source of much of humanity’s energy needs in the future once it is properly

complemented with other forms of generation, more flexible demand and more affordable forms of

storage.

Following a stellar 2015, the global solar PV market is projected to grow 21%, adding 66 GW of capacity

by the end of the 2016 (graph on page 12). That would be equivalent to building 66 nuclear reactors each

with 1,000 MW of capacity in a single year.

As the price of solar panels continues to fall feed-in-tariffs (FiTs) are being replaced by competitive

auctions as the most popular scheme to drive solar investments, according to GTM Research's latest

report, the Global Solar Demand Monitor: Q2 2016. GTM says the number of countries relying on

competitive auctions has increased from 14 in 2014 to 16 today, while the prevalence of FiTs has dropped

14% during the same period.

While utility-scale solar is expected to account for 61% of all PV installed in 2016, GTM notes a gradual

shift to distributed solar as the costs of panels continues to fall and with the advent of solar leasing in a

number of key markets.

"The gap between utility-scale solar and distributed generation (DG) has shrunk in the past 2

years as residential growth in the US, Germany, the UK, and Japan has picked up."

"DG growth will continue to be driven by greater end-customer familiarity with solar, higher cost

competitiveness, and country-tailored business models that build on leasing's success in the US

but are adapted to the specific needs of emerging markets."

The signs of solar’s growing dominance are hard to miss. In case of California, for example, energy from

grid-connected, utility-scale solar plants surpassed wind generation for the first time in 2015, according to

California Independent System Operator (CAISO).

CAISO reports that over the

past 5 years, utility-scale

solar generation in

California increased 15-fold,

from around 1,000 GWh in

2011 to 15,592 GWh in

2015. It accounted for 6.7%

of the system total vs. 5.3%

for wind.

Solar had another symbolic

victory in April 2016 when

San Francisco became

California’s first major city

to mandate solar installations

on new buildings. The move,

which takes effect in January

2017, follows similar

mandates passed by much

smaller municipalities of

Lancaster in Southern

California and Sebastopol in

Go solar

The Spectrum Solar Project in Las Vegas was developed by SunEdison Inc. PHOTO: STEVE PROEHLCORBIS Source: Source: Liz Hoffman, Clean-energy darling falls back to earth, The Wall Street Journal, 15 April 2016 from Steve Proehlcorbis photo


Northern California – both of which passed mandatory solar ordinances in 2013.

In case of San Francisco, new commercial and residential buildings up to 10 stories will have to install

rooftop solar PVs, solar water heating or a combination of the two under legislation unanimously

approved by the city’s Board of Supervisors.

Supervisor Scott Wiener, who introduced the city-wide ordinance, said, “In an era when we are reminded

daily of our rapidly changing climate, it is so important that we continue our strong push to alternative,

non-fossil fuel energies.”

San Francisco had previously

set a goal to use 100%

renewable energy by 2025 in

addition to other ambitious

environmental targets.

California state law already

requires most new buildings to

have 15% of the rooftop to be

solar ready to facilitate the

installation of PV systems.

Measures such as San

Francisco’s mandate are likely

to proliferate since many new

buildings already come with

solar panels and/or solar

heating systems – the marginal

costs are minimal and

dropping. Barely a week after

San Francisco’s new mandate

was announced, city of Santa

Monica in Southern California

passed a similar ordinance. It

won’t be the last.

The same can be said about RPS mandates: they don’t cost an arm and a leg, as many had predicted.

Meeting a 50% RPS in New York, for example, is estimated to add $1 per month to typical utility bills,

far less than a frothy latte at the corner coffee shop.

Rooftop solar continues to attract increasing interest as its costs keep on falling. According to John

Farrell at the Institute for Local Self-Reliance (ILSR) the estimates for rooftop potential are sharply

higher in 2016, based on more accurate roof surveys and cost data. Farrell claims that nearly two-thirds of

states could tap rooftop solar for one-third of their electricity as shown on map on above.

Using the latest data from the National Renewable Energy Laboratory (NREL) Farrell says that 35

states have sufficient on-shore wind power resources to meet 100% of their electricity consumption on an

annual basis.

People like Farrell are convinced that the age of fossil fuels can be brought to a close rather quickly and

painlessly if we only put our minds to it.

Lot more energy on the rooftops

Source: John Farrell, Institute for Local Self-Reliance


Solar Impulse Continues Epic Journey Pilotless next generation solar powered planes can remain aloft indefinitely

ars, trains and bikes are increasingly running on electricity, increasingly generated from

renewable resources. But planes? No way. That, in fact, is among the aims of Solar Impulse, a

plane powered entirely by solar energy collected on panels mounted on its expansive wing and

tail. The plane can fly around the clock by charging excess generation in batteries on board.

Theoretically, it can fly

continuously without ever

having to refuel – provided

its pilot can survive the

cramped cockpit.

The same can be said about

zero net energy homes

with adequate storage

systems. By storing the

excess generation during

sunny periods, they can

operate more or less

independent of the grid for

extended periods.

The plane, which was

grounded for a while in

Hawaii, landed in San Francisco, on its way to the East Coast. It will continue its journey back to where it

started as shown in map below. A feat hardly imaginable only a decade ago.

If all goes according to plan, the next generation of such planes can remain aloft at high altitude for days,

weeks or months controlled remotely from the ground. Flying without fuel forever, more or less, may be a

reality before we know it.

C Flight without fuel

Source: Solar Impulse

Solar Impulse flight route: Around the globe with no fuel

Source: Solar Impulse


Coal: Under Siege Hard to imagine but Coal’s dismal prospects continue to get worse

he coal lobby, like the cigarette or carbonated-sweetened beverage lobby, is in denial. The reality

is not looking good, so they stick to historical growth scenarios that no longer match what is

happening in the real world. The official line is that thermal coal still has a rosy future in power

generation since millions of people with little or no access to electricity are more concerned about

getting the juice than the environmental side effects of coal mining, transport and combustion. And they

say metallurgic coal, used in steelmaking, will always be needed – look at all the skyscrapers going up in

mega cities of the world.

The reality is that while

cheap, coal is not as cheap

as it used to be – especially

now that carbon is

officially a liability and a

risk. Banks are increasingly

reluctant to finance, utilities

increasingly weary of

investing billions in assets

and infrastructure that may

become stranded, and

investor are having second

thoughts about the long-

term viability of coal.

Add the continuously

falling price of renewables and even lower cost of energy efficiency options and/or distributed self-

generation, and coal’s problems become evident.

Take the case of Great Britain, historically dependent on coal for a significant share of its generation.

According to Edmund Reid of Lazarus Partnership, on Saturday 14 May 2016, GB’s coal generation

capacity produced 1 GWh of power or 0.2% of output. A year earlier, on 14 May 2015, coal generated

202 GWh of power, 27.7% of output. While this may be an anomaly, the speed of coal’s decline has

caught many by surprise. Reid speculates that solar PV output could exceed coal generation in June or

July, possibly even in May. He estimates that solar PV has produced 642 GWh by mid-May, compared to

410 GWh from coal (graph on page 18). That is simply stunning and does not bode well for coal.

On top of these woes, are increased restrictions or moratoriums on future use of coal as others follow

California, where use of coal has been banned for quite some time, or has already been phased out as in

Ontario, or will be phased out or restricted as in the UK, Oregon, Alberta and possibly even Germany.

In the US, the Environmental Protection Agency (EPA) has introduced further restrictions that

essentially make new coal plants a non-starter despite the current regulatory uncertainties.

The reality is beginning to sink in. In April 2016, executives from BHP Billiton publicly confessed that if

the world followed through on its pledge to limit global warming to a 2°C temperature increase, thermal

coal miners could be in big trouble. The analysts, who are good at reading between the lines quickly

figured out what the executives were actually saying without saying it: Expect a massive drop in demand

and earnings for thermal coal.

April 2016 also witnessed Peabody Coal, among the oldest and biggest coal mining companies, file for

bankruptcy protection. There have been 50 such bankruptcies since 2012 – and it won’t be the last. To

T

Coal’s shrinking US market share

Source: U.S. Energy Information Administration, Monthly Energy Review, and Short-Term Energy Outlook (March 2016)

http://www.eia.gov/totalenergy/data/monthly/

http://www.eia.gov/forecasts/steo/

http://www.eia.gov/forecasts/steo/


those who favor a transition away from carbon-heavy fossil fuels, Peabody’s demise may be interpreted

as a harbinger of the end of coal. It will take a while, but few would disagree that coal’s fortunes are not

looking bright.

In its regulatory filings to the Securities and Exchange Commission (SEC) in 2014, Peabody had to

admit that the fossil fuel divestment movement “could significantly affect demand for our products or

our securities.” It is one more issue to worry about.

During the Paris

climate talks in

December 2015,

investment activists

announced that more

than 500 institutions

representing over $3.4

trillion of assets had

committed to some

level of fossil fuel

divestment – a murky

concept as previously

described in April

issue of this

newsletter.

The recent news coming out of China that net coal imports declined 30% in 2015 and may accelerate in

the future (article on page 7) are not good if you are in coal mining business.

What is striking coal executives and lobbyists is the speed at which countries like the US and China are

moving away from coal while investing in clean energy.

US solar installations, currently more than a million solar, have grown 17-fold since 2008, from 1,200

MW to an estimated 27,000 MW today, according to the Energy Information Administration (EIA). In

the meantime, US wind energy capacity has increased nearly 16-fold between 2000 and 2010 while wind

generation is expected to double in the next 5 years, powering 100 million homes by 2050.

Not only are coal executives surprised but so are the environmentalists who have been trying to eradicate

the use of coal in power generation for decades. Sierra Club's Beyond Coal Campaign, for example,

has been trying to phase out coal and natural gas use in the electric sector over the next 15 years.

Their efforts seem to be working with astonishing speed. The Sierra Club estimates that the coal phase

out is taking place at an average rate of one coal plant shutting down every 10 days since 2010; the

retirement of 101,673 MW of coal capacity – 232 plants and 662 coal units in the US.

Coal miners, of course, are not pleased but for every job disappearing more new ones are being created in

other, better paying sectors of the economy. In Illinois, a coal mining state, for example, an estimated

113,000 are employed in clean energy industry, according to Sierra Club.

In an open letter in late April 2016, Sierra Club warned coal industry executives and analysts to revise

their future forecasts downward dismissing claims by industry leaders that coal was poised for a rebound

after Peabody Energy's bankruptcy. “No matter where you live, everyone has a right to breathe clean air,”

it said, adding that even while the Supreme Court has put a temporary hold on EPA’s Clean Power

Plan, the coal industry will continue to decline – and not just in the US.


Consumption of

thermal coal used

for electricity

generation in the US

electric power

sector fell 29% from

its peak of 1,045

million short tons

(MMst) in 2007 to

an estimated 739

MMst in 2015,

according to EIA

(visual on right).

Consumption fell in

nearly every state,

with the largest

declines in the

Midwest and Southeast (page 17).

Previously the coal lobby was saying not to worry, the drop in US or European consumption will be

picked up by growth in China and other places where concerns about climate change and pollution take

the back seat to economic growth for the sake of growth. That logic also appears to be breaking down as

described in article on China on page 7.

China’s National

Development and Reform

Commission and National

Energy Administration in

April 2016 suspended or

slowed plans for more than

100 GW of coal-fired capacity

across the country in a bid to

rein in overcapacity in the

generation sector and improve

air quality. The order affects

around 200 plants currently in

development but not yet under

construction.

The country is the world’s

largest emitter of carbon

dioxide and has pledged to

peak its emissions by 2030.

All indications suggest this

will occur much earlier.

Still, Chinese coal demand is expected to continue climbing, if not at the breakneck pace seen during the

2000s. The China National Coal Association expects demand to grow about 2% annually through 2020,

far less than the average 9% growth between 2000 and 2010.

Source: U.S. Energy Information Administration, Power Plant Operations Report Form EIA-923

Daily output of coal and solar PV in Great Britain, in GWh

Source: Bloomberg, Lazarus


Global Wind Capacity To Approach 800 GW By 2020 Wind has grown into a major industry

lobal Wind Energy Council’s (GWEC) 2015 report is worth a read in a number of respects,

not the least the continued growth of global wind and prospects for further expansion. It says

that if current trends continue cumulative installed wind capacity could grow from 433 GW at

the end of 2015 to 792 GW by 2020 – just shy of 800 GW mark.

China, having invested heavily in wind in the last few years now has a commanding lead over its rivals as

shown in graph on page 20.

Wind has grown into a major industry, employing large numbers of people with high paying jobs.

The American Wind Energy Association (AWEA), for example, says wind power employs a record

88,000 jobs at the start of 2016 – a 20% increase in a year – and exceeding the number of coal miners,

which have been in steady decline for some time. The US wind workforce can grow to 380,000 well-

paying jobs by 2030, according to AWEA if current support levels continue.

G Steady growth in wind, annual installations (top), cumulative (bottom), 2000-15, in MW

Source: Global Wind Report 2015, Global Wind Energy Council, April 2016


Wind’s

prospects have

been cyclic in

the US with the

expiration and

extension of

production tax

credits (PTC)

and other

incentives as

shown in graph

below right.

US wind

generation grew

by 5.1% in

2015, the

smallest annual

increase since at least 1999, partly blamed on lower wind speeds in parts of the country. Its share of total

generation has grown over time, now approaching 5%.

Proponents of wind say

that with steady support

schemes, wind’s

potential can be greatly

enhanced. Using data

from the National

Renewable Energy

Laboratory (NREL),

John Farrell at the

Institute for Local

Self-Reliance says that

35 states have sufficient

on-shore wind power

resources to meet 100%

of their electricity

consumption on an

annual basis.

GWEC

Connected Homes Do More Than Reduce Bills Time starved consumers will buy anything that offers convenience

verything, it seems, is getting connected to everything else. The latest is connected homes,

according to a survey by Nest, the wireless smart thermostat company acquired by Google a few

years ago for $2.8 billion. According to the survey, consumer awareness of the connected home is

growing quickly. When asked to name a connected product, 26% mentioned Nest thermostat in

2016, up from 6% in 2013.

E

Source: Source: U.S. Energy Information Administration, Electric Power Monthly

China on top, 2015 installations (left), cumulative (right)

Source: Global Wind Report 2015, Global Wind Energy Council, April 2016

http://www.gwec.net/wp-content/uploads/vip/GWEC-Global-Wind-2015-Report_April-2016_22_04.pdf

http://www.eia.gov/electricity/monthly/


Nest survey found that 81% of Americans either own or are interested in purchasing a connected home

product in the next year. Among the reasons

were the following:

Increased convenience (54%);

Increased security (44%);

Lower energy bill (38%); and

Increased home value (21%).

"Once viewed as luxury items, connected home

products are now reaching mainstream

consumers across all ages and incomes,"

according to Tom Bernthal, CEO, Kelton

Global, who conducted the survey for Nest.

Connected homes appear to be family-centric

households. Nearly 90% of consumers

surveyed said spending time with family is

their first priority. Yet over half confessed that

they rarely have enough time in a typical day to

do all that needs to be done. Sounds familiar?

Not surprisingly 63% wish that their home could just take care of itself. Wouldn’t that be nice.

Increased safety and security were mentioned by 44% among the reasons to integrate connected home

technology; 54% value the convenience including the ability to monitor and control their home from

anywhere; 38% said reducing home energy bills was important. Given that few customers understand

their bills (box below), they nevertheless want to reduce it.

When It Comes To Bills, Most Consumers Simply Don’t Get It Ask a typical customer about their monthly or quarterly electric bill. Most only have a vague recollection of how much they pay on average – if that. And it may not be very accurate. Few can remember the unit cost of electricity in cents/kWh, or the number of kWhs consumed. A recent survey of customers in the UK by uSwitch concluded what many already know, that electricity bills are too complicated and/or uninteresting for the average consumer to fathom. In fact, 6 out of 10 customers do not understand their energy bills. The same survey reported that 27% of customers – nearly a third – said they did not bother to check any details on their bill beyond the amount owed. Commenting on the findings, Ann Robinson, Director of Consumer Policy at uSwitch said, “The confusion around bills is a problem that must be tackled if consumers are to get in control of their energy use and spend. If they can’t make sense of their bill, customers could be missing out on better deals or risk bill shock by accumulating significant debt.” Making matters worse, growing numbers of customers pay their bills through automatic debit from the bank, which means that many don’t even bother to note the amount owed – so long as it is within a tolerable range. Findings such as these pose a challenge for proposals to move towards more sophisticated metering and billing schemes. If customers don’t get their existing simple bills, how likely are they to figure out more complicated ones and respond to price signals? http://www.uswitch.com/media-centre/2016/04/6-in-10-consumers-still-dont-understand-energy-bills-despite-rules-to-make-them-clearer/

Source: JLM Energy


According to Amanda Parrilli, director of Connected Home with Home Depot, "Connected home products

like the Nest thermostat are among one of the fastest growing categories in the retail environment."

What Happened To Falling Demand In Australia? It seems to be rising again

or a while, it seemed that electricity demand had peaked in Australia. According to Hugh Saddler,

a principal consultant at Pitt & Sherry, analysis of recent data from Australia’s National

Electricity Market (NEM), which covers the 5 populous eastern states and accounts for nearly

90% of the country’s total electricity consumption suggests that demand is the rise again.

As illustrated in the accompanying

graph, consumption has been rising

for nearly two years. Rooftop solar is

now contributing about 2.5% of total

electricity consumption in the NEM

and other distributed generation a

further 2.0%.

Solar, of course, has a more

pronounced impact on annual peak

demand than on total consumption.

On the peak summer day just ended in

Southern hemisphere, distributed

solar reduced peak demand by 2.2%

in NSW, 3.1% in Victoria, 3.8% in

Queensland and 5.4% in SA.

Why the rise of demand? Saddler

offers a few reasons:

First is probably the fact that the price shocks of last decade that lasted through 2013 have

now mostly been replaced with flat or even declining tariffs. Consequently, consumers are

probably not conserving as much as they did.

Second, there appears to be a slow-down in the growth of savings from energy efficiency

programs. Perhaps some of the low hanging fruit has already been picked.

Third, as appliances become more efficient, further tightening of performance standards

delivers diminishing returns in absolute terms.

Finally, regulators and policy makers no longer appear keen to further push for electricity

saving schemes. There may be other explanations.

After rising significantly for a number of years, residential and commercial tariffs in NSW, Victoria and

Tasmania fell 5 to 9% during the 2014-15 period. Saddler says,

“Overall, the combination of lower prices and the absence of strong political leadership may have

led to an overall loss of focus on energy efficiency.”

What does he see for the future? “A confusing picture.”

http://www.pittsh.com.au/latest-news/cedex/

F Falling demand down under is rising again

Note: Excludes state of Victoria Source: Australian Energy Market Operator data, accessed through NEM-Review


Decentralized Energy: From Niche To Mass Market

New business models are likely to evolve

efugees are on their way to Europe, escaping civil war and suppression. The European Union not

only is trying to resettle but helps to establish refugee camps in transit countries such as Turkey

where there is no infrastructure. Organizations that provide disaster relief understandably have

other priorities than providing energy.

But as reported by Christoph Burger and Jens Wienmann of ESMT Berlin, some entrepreneurs see

refugee camps in the middle of nowhere as a market opportunity for testing new business models for

delivering decentralized energy where no alternatives exist.

Lars Krückeberg the co-founder of Solarkiosk, a Berlin-based startup, offers stand-alone energy

systems that can provide basic service in remote areas with no grid connection. Solarkiosk provides solar-

generated power from self-contained systems to off-grid communities – and not just in refugee camps.

Refugees, like the rest of us, have mobile phones that need to be-recharged, and need power for

refrigeration, lighting and essential services. The company’s revenues, which come from sale of Fast

Moving Consumer Goods (FMCGs) and solar power are shared with kiosk operators.

So far, the company has set up 110 Solarkiosks in 10 Sub-Saharan countries offering essential products

and service that appeal to rural communities. Multinational corporations including Coca Cola are

collaborating with Solarkiosk to provide safe water and Internet access. The company’s next step will be

to set up kiosks to power schools and health clinics in refugee camps.

Can a similar business model be viable for industrialized countries? Germany, for example, has one of the

most reliable electricity systems in the world, with the System Average Interruption Duration Index

(SAIDI) typically hovering around 2 minutes per year and 100% electrification rate.

Yet being energy independent appeals to some consumers, don’t ask why or how much it is worth. Timo

Leukefeld, professor at the Technical University of Freiberg, for example, promotes an energy-

autonomous house that produces its own heat and power – including the electricity for an electric car.

Leukefeld is offering a 1,700 square feet house with a solar thermal collector (500 sq. ft.), a PV collector

(620 sq. ft.), a 9,300-liter water storage tank and an electric battery (52 kWh) to achieve 70% thermal and

100% electric energy autonomy. The tenant is charged between €1-1.5 per square foot per month,

including the leasing contract for the electric vehicle.

R

Power to the people where none exists

Source: Solarkiosk website

Business Hub & Water Purification

Market Place Health Center

Refugee Camp Movie Theatre & Assembly Hall

Communication Hub


Before you dismiss the idea consider the fact that the local utility has agreed to collaborate by offering a

10-year flat rate for all energy services, which allows them to use the stationary battery for balancing

services, to feed excess heat into a district heating system, and to use excess solar power to store energy

in the water tank.

Local banks seem to like the idea

too by providing financing to

build single-family homes or

blocks of apartments with a

shared battery and water tank.

The energy independent homes

will have a connection to the

grid but will most likely operate

on a grid-assisted mode for the

most part.

Professor Burger says

decentralized business models

such as Solarkiosk and

Leukefeld’s are commercially

viable in both off-grid or on-grid

settings. He suspects that it will

not take much longer before they

migrate from niche to mass

market.

Germany Manages Big Swings In Renewable Generation Nobody said it was going to be easy, but thus far it seems doable

y end of 2015, Germany had nearly 100 GW of renewable capacity, consisting of roughly 45 GW

of wind, 40 GW of solar PVs, 9 GW of biomass and 5.6 GW of hydro. As illustrated below,

renewables now represent 50% of the total installed capacity and account for nearly 30% of

generation – both records for a major industrial economy the size of Germany.

German demand

rarely exceeds 80

GW, which means

that installed solar

and wind capacity

alone already

exceeds peak

demand. And given

the known

variability of

renewables, how

does Germany

manage to keep the

lights on and the

grid reliable?

B German energy mix: Increasingly renewable 2015 German installed capacity (left) and generation (right), in %

Source: BMWi

Energy independence in Freiberg

Source: Timo Leukefeld


First, the German grid is strong. Outages are measured in rare minutes per year, not in hours as in parts of

the US. This is due to interconnections with neighboring countries, which facilitates export of excess

energy – or to import it – as the case may be.

A second and rather unexpected reason is the flexible operation of coal and nuclear power plants.

Remaining nuclear power plants are able to reduce output by up to 20% for several hours, if renewable

generation is high. For example, on 8 May 2016, nuclear was able to reduce output by 1 GW. Flexibility

of coal was even higher at 6 GW, roughly 10% of peak demand that day. Hydro and Gas power plants

also contribute, but to a lesser extent. In addition, the ancillary power market in Germany operates faster

and with more players. Moreover, investments in system control software and weather forecasting tools

help ride out the variations in renewable generation.

According to Hans

Bludszuweit, a researcher at

CIRCE Foundation, in

Zaragoza, Spain, wind

generation is highest during the

winter months while solar

generation peaks in summer.

On many days when demand is

high relative to renewable

generation, the network can

balance things. Take 30 March

2015, a Monday where

renewable generation was

around 47 GW with 82 GW of

demand peaking around 2 pm. A day prior, on Sunday, peak demand was merely 61 GW.

The question is, how does Germany deal with excess generation from solar and wind especially when

demand is low, which happens more frequently as the renewable proportion continues to rise?

The main answer is the flexibility of

bulk generation together with

Germany’s strong interconnections with

its neighbors, which allows the excess

generation to be exported. However, as

the proportion of renewables continues

to grow, it is obvious that more storage

capacity will be needed.

As illustrated in graph above, wholesale

spot prices went negative for 8 hours

necessitating the export of all nuclear

and part of coal generation on 8 May 2016. At noon, renewable share was 89%.

Although network stability is an important issue, there is an increasing concern how to avoid curtailment

of renewable generation, as illustrated in graph above. The simple answer is to sell the energy to someone

else. But if neighbors also produce excess power, grid congestion is difficult to avoid. This leads to the

idea of a European Super-grid, more storage and more flexible demand.

The question is not if better interconnections, more storage or transmission is needed, but how much of each.

Excess renewable generation = negative wholesale prices German generation mix on 08 May 2016

Source: Agora Energiewende

German renewable curtailment low but rising Curtailment in Germany in GWh and percentage of total renewable generation

Source: German Network Agency


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