Europe’s power traders have a colorful name for the way the rise of solar power is distorting the electricity industry: devil horns. That’s the shape formed by intraday power prices that increasingly having to adapt to greater flows from solar farms in the middle of the day. As photovoltaics feed more supplies to the grid, power prices crash and then rise as the sun sets, leaving a distinctive formation in charts like the one below.
More than an amusing oddity, the dramatic swings indicate the scale of the challenge grid managers are facing in smoothing out supplies from plants that only generate when the sun shines or the wind blows. The pattern is becoming increasingly familiar across Europe, especially in Germany, where it translates as “Doppel Knick.”
As solar capacity has surged more than ten-fold in the past decade in Germany, it’s leaving utility executives wondering if they should switch off coal and natural gas plants for a few hours when the photovoltaic facilities deliver their peak yield.
The impact on the grid from renewables is now so great that supply at times exceeds demand and pushes power prices below zero. The trend has also undercut the economics of replacing some of the oldest traditional plants, with some forms of renewables mature enough to compete in the market without subsidy.
In the past year alone, solar developers in Spain and offshore wind farms in Germany and the Netherlands won tenders for plants without guarantees for higher-than-market power prices. Even the U.K., with its rainy image, is expanding solar and the technology can now meet as much as 39 percent of peak summer demand.
That’s so much that National Grid Plc is preparing measures to avoid overloading of the network. The grid manager may need to curtail renewable energy production and also ask coal, gas and nuclear plants to rein in output during certain hours.
“People talk about winter and blackouts but there is more risk of system stress and blackouts in summer now,” said Andy Koss, chief executive officer of Drax Power Ltd., which operates a coal and biomass plant in northern England. “It’s a much less stable system than it used to be.”
He’s predicting that coal, a mainstay in power production for generations, won’t run at all during the next few summers and that gas and biomass will instead take on that flexible backup role. The fuel will still be needed come winter though.
Aurora’s Koenig suggested that batteries charging up during the day and discharge during evening hours, could help boost stability.
“If you add extra renewables you’re going to have problems unless you manage to expand the grid more or find smart ways to build out the existing grid, for instance by adding batteries,” he said.
Sources and photo-credits: Bloomberg