Fossil Power Generation –
Partner – Collaborator or Victim of the
Energy Turn-around
Dr. Jens Reich, Udo Sommer
STEAG Energy Services GmbH
Germany
Introduction
The electricity market in Germany is determined by the energy turn-around
(“Energiewende”), which was initiated by the first renewable energy law (EEG) in 1991.
After the revision of the EEG law in 2014 the development of renewable power generation
will continue. Even more important, in certain regions of Germany the cost of electricity for
customers for electricity from renewables is lower than for electricity from the grid. But the
actual situation is not only driven by the EEG. The German decision to stop nuclear power
generation together with low CO2 prices and the different development of fuel prices has an
influence as well.
Actual and future situation
In 2014 renewable energies had a share of more than 27,2% in the electricity production in
Germany. The residual power is mostly generated by conventional power plants fired by
lignite, hard coal and natural gas with a share of around 60% in 2014 (see Figure 1). Even if
you follow the expansion path of renewable to 2050 according to the target of German federal
government, conventional power generation will have a share of 50% on average during the
next 35 years. Just related to facts and figures both, renewable and conventional power
generation, are essential to supply Germany with power.
Figure 1:
Development and Outlook of Renewable and Conventional Power Generation in
Germany (Ref.: AGB-Stat, AGEB)
But where do the problems for power plants come from? In Figure 2 a plot of power demand
and generation is shown for a characteristic week in 2013, which gives the basis for a lot of
explanations:
Figure 2:
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Renewables and Conventional Power Plants feeding into the German Grid (Ref.:
Transmission network operators, EEX, DWD, BDEW (own calculations)
The power demand of the German grid varies from 45 – 70 GW depending on the time
of the day and the day in the week.
The power generation from photovoltaics (PV) and wind is fluctuating: wind in
occurrence and height and PV only in height (the daytime is highly predictable).
The residual load accordingly fluctuates from 14 to 65 GW respectively as share from
31% to 98%.
Furthermore the maximum hub is –43 / +48 GW and the maximum hourly gradient is
-9 / +12 GW/h. Projections until 2023 shows increased dynamics, i.e. capacity must be
provided in shorter time and with a higher amount (see Table 1).
If the focus is shifted from electricity to cogeneration of heat and power, the situation
is even worse. The requirement to supply heat to industry, households and
communities force operators of CHP plant to sell electricity at prices below generation
costs, which brings large utilities as well as municipalities in financial troubles (see
Sunday 24-03-13 in Figure 2).
The results are extremes of the electricity price from 109 €/MWh to -50 €/MWh. The
negative price was superimposed by the cold ambient temperature, which brought a lot
of CHP plants on the grid in order to heat households and communities.
Table 1:
Maximum gradients and hubs of wind and PV power generation and the residual
load
Before drawing conclusions from this picture let us take a look on the fictive situation in 2030
after going the prescriptive path (see Figure 3). On the one hand wind and PV will produce
more than power than needed. On the other hand there are times, where the residual load is
more than 95% of the demand, i.e. the situation of today will become much more
dramatically. What are the conclusions?
Figure 3:
Renewables and Conventional Power Plants feeding into the German Grid in 2030
(Ref.: Transmission network operators, EEX, DWD, BDEW (own calculations)
1. Conventional power plant:
In the last two years the base and peak load prices at the EEX have been decreasing over the
last years and are on a very low level (see Figures 4 and 5). If you look on the Clean Dark and
Clean Spark Spreads, the bad economics of even gas fired power is shown with negative
spreads. Please take also into account that the figure is for high efficiency power plant with
45% (coal) and 59% (natural gas).
Figure 4:
Figure 5:
EEX Base and Peak Future 2007 – 2014
Clean Dark / Spark Spreads in Germany 2013 – 2014
How many conventional power plants will survive the years of diseconomy? Who will
provide the residual load with characteristics described above, if not conventional power
plants?
What we need is the flexible, conventional power plant in operation and as back-up.
Conventional power plants are not rigid today, they are most flexible. As an example the
achievements in the reduction of the minimum load by various measures are illustrated in
figure 6.
Target
In the past
Figure 6:
Reduction of minimum load (Examples of coal fired power plants; )
Figure 7:
Redispach Measures in Germany in 2014 (Ref.: www.netztransparenz.de)
If you also take the burden by redispatch measures (see Figure 7) into account, the
conventional power plants have been and will be taken its role in the power supply of
Germany. Redispatch is a directive from the grid operator to increase or decrease the power
plant load against the economic operation regime in order to stabilize the grid after
unpredictable events and situations. In 2014 the number of redispatch measure was 3436,
which is an increase of 27% compared to 2013.
In addition calls for new power plants with higher efficiency and less CO2 emissions have
arisen. But looking on figure 8 shows the economic analysis of different conventional power
plants compared to the prices at the EEX. Currently the development of new, more efficient
power plant capacity is not economical because of the lack of incentives.
Figure 8:
Clean Dark / Spark Spreads in Germany 2013 – 2014
Conventional power plants have to serve the system by providing the residual load for the
next decades, because other technologies will not be available in the necessary amount to
stabilize the system. But the operation of a lot of existing power plants is currently not
economical. Due to age and diseconomy the considerations of power plant shut-down have
already started. The flat-line of the German power plant fleet is known, but not the exact time
and number of power plants. The important question is, will sufficient power plants survive to
provide the necessary residual load?
2. Market integration of and system services by renewables
As mentioned before the conventional and renewable power plants / units will have an equal
share on the total power generation. But this also means equal rights and duties. As an
example the costs for the EEG were estimated with ca. 21.1 Bn Euro for 2015. The total costs
for system services in the grid were ca. 1.1 Bn Euro in 2013. (5% of EEG cost). Power plant
operators are fighting for an adequate reimbursement of system services like redispatch.
Looking on the relation of total costs, which we do not want to doubt, the discussion with the
regulator could be more relaxed and open for compromise. It is time to integrate renewables
with all consequence and to treat both suppliers equal.
3. Energy Storage
The surplus power generation in the future by renewables or the balancing of peak time make
energy storage most attractive. But if you look on the potential by electric cars, pump storage
and hydrogen electrolysis, their utilization to store 10% of wind power generation in 2030
seems to be unrealistic due to the tremendous number of necessary units (please refer to table
2). Nevertheless the development of storage technologies makes sense to relieve the system
on all voltage levels, to provide system services and to integrate the transport sector.
Table 2:
Energy Storage: Vision and Reality (Ref.: Klocke, Gelsenwassser 2011)
4. Back-up by UTCE
Germany is already a net exporter of power in Europe. If the contradictive process will be
considered, i.e. shut-down of modern conventional power plants in Germany and supply by
the neighboring countries, a back-up capacity of 7 GW would be need in 2017 according to
the German regulator, respectively 65 GW substituting the entire residual load. Currently the
total coupling capacity is around 16 GW for imports (see. Figure 9). Should an industrial
country like Germany rely on a substantial amount of power imports? Despite the European
idea the German neighbors have to face their own challenges rather than to support the
German energy turnaround.
Figure 9:
Back-up by UTCE (Ref.: ENTSO-E (2011), AG Energiebilanzen)
5. Demand Site Management & 6. Smart Grids
Demand site management and smart grids were the white hope for load shifting and reduction
as well as flexibilisation. But during initialing these ideas the potential become more realistic:
costs, schedule and involvement and acceptance of consumers have to be reconsidered.
Nevertheless these issues need to be followed further and contribute to the energy turnaround.
Conclusion
There is no actual doubt about the energy turn-around and 80% target for renewables in 2050,
especially due to the depletion of and the independency on resources. But some challenges
have arisen on the horizon, e.g. who will provide the residual load in the future and which
power plants will survive the years of diseconomy. As an industrial country Germany
essentially depends on energy security and supply. It a high value for global competitiveness.
The average outage time of 16 min per year is still one of the lowest in Europe and the
economic damage by one hour of outage of the grid amounts between 250 to 600 Mn Euro
(see Figure 10), which gives also a good relation for the reimbursement of system services.
Figure 10: Economic Losses in Germany due to Black-outs (Ref.: HWWI, 2013)
Despite the predictability of renewable power generation conventional power plant are
necessary to stabilize the grids and to supply power, e.g. at weak windy and cloudy days. It is
the capability to provide capacity also on short-term notice using the chemical stored energy
in fossil fuels. This capability is related to several GW, rather than to MW and was improved
above the design criteria from several years ago. Furthermore it is highly economic to keep
existing power plants on the grid by adequate reimbursement, rather than to shut them down
and invest in a couple of years in new capacity.
Fossils and renewables are back-to-back partners in the system at least for the next 35 years.
Both partners shall have rights and duties without any ideological constraints. Flexible,
conventional power plants are necessary in operation and as back-up and shall be adequately
reimbursed. The renewables shall be integrated into the market and participate in system
services as well. Equal partners need to have their rights and duties as described.
Are conventional power plant just dinosaurs and therefore victim of the energy turnaround?
No, conventional power plant are collaborators or better partner of the renewables. They both
are sitting in one and must pull in one direction to reach the ambitious targets of the energy
turnaround. Concluding there is no doubt that on a long-term perspective a power generation
mostly on the basis of renewable is highly feasible.