September 15, 2011 - From the August, September, 2011 issue

California Learning from Other Regions on How to Incentivize Reductions in Green House Gasses.

The following excerpts are from a presentation during the Integrating variable resources: reliability, storage and other responses panel at the Governor’s Conference on Local Renewable Energy Resources. The presentation by Dr. Malcolm Jacques, the executive director of Wasabi Energy, summarized the existing and relevant international experience in developing distributed energy resources—experience and information that will be helpful as California works to achieve the goals set by Gov. Brown to add 20,000 megawatts of renewable energy to the state’s energy grid by 2020.

"...Sufficient economic incentive must exist for investment in new, dispatchable power plants and other flexible assets."

There are a total of 119 countries that have set renewable energy targets as of 2010. Ninety-eight have set targets for renewables to provide between ten and 30 percent of their power needs. 

You’ve heard a lot about the EU, and you’ve heard a lot about Germany. In the EU, they are changing some of their regulations to introduce energy efficiency as another major driver for achieving greenhouse gas targets. We should never lose sight that that’s what we’re doing here: We’re trying to reduce greenhouse gas emissions, not necessarily sell PV systems. 

In the EU—and the figures I have might be old—Portugal leads the list of renewables, with 41 percent of their annual electricity supply coming from renewables. Denmark came in with 34 percent, Spain with 29 percent, and Germany with 17 percent in 2010. Those are annual figures, and they are pretty impressive. We’ve looked behind those figures, and there are times within those systems, and certainly within Germany, when 40 percent of the entire power consumption is being met by renewables. There are regions within Germany that are meeting their power requirements with 100 percent renewables, or close to it. The question of can we get to 33 percent is a moot. You can get to 33 percent, and you can get to far more. 

The question I’m addressing is: can we can learn from other countries. There are a lot of other countries out there, and there are a lot of work and studies being done. I’ve selected three fairly definitive studies, and I will give you the conclusions and how it all relates to the situation here. 

The first study I’ve chosen is the Deutsche Energie-Agentur (DENA) grid study in Germany. The study takes the perspective of the German power utilities, but nevertheless, it’s a fairly definitive study, published late last year. The DENA grid study shows that distributed resources are essential in the plan for a 39 percent renewable future in Germany. The reason those resources are essential is to provide system flexibility. Keep things flexible. Have as many resources on the grid as you possibly can. Don’t be too restricted. Future-proof the system. There are going to be new technologies. There are going to be new communications systems that are going to be able to do many things that we can’t do today. 

To get increasing flexibility, the DENA guys came up with three options. They are not mutually exclusive. One was market-driven use of storage facilities and demand-side management. That’s going to be important. Second, they looked for improved wind forecasting. That’s already happening in California. Third was something I heard earlier today—providing balancing energy from wind and/or  biomass plants. Those are the three options that they gave. The take-home message that I want you to take from the DENA grid study is system flexibility and the important role that distributed resources must play in maintaining system flexibility.

The second study of note came from the IEA this year. They put out a book, which you can buy for €100, or €80 if you want the downloaded version. The book is titled Harnessing Variable Renewables: A Guide to the Balancing Challenge. The book addressed the critical question of how to balance power systems featuring large shares of variable renewable energy. They focused on renewable, and we are talking distributed. The book provides a detailed description of all of the main elements of the balancing challenge that someone like the CalISO faces every day. The conclusion that they came to after a very detailed study was that system flexibility is needed. They pointed out that variability is not a new phenomenon to power systems. Power system operators respond to variability every day usually from the demand side, but they are ramping up flexible resources every minute and every hour of the day. That’s what they do for a living. That’s how we keep our system stable. The balancing capability of most existing power systems, which they studied, has proven to be adequate in handling any renewable energy system that’s been put on it today. We are not starting from zero in managing variability, with renewables we are simply moving more variable resources onto the supply-side. Germany is a great example of this. 

The main conclusions that came out of the IEA study were that the balancing challenges are far from insurmountable. System flexibility is essential, and operation of dispatchable plants must remain economical or their contribution to the flexible resources may be lost. A similar conclusion came from the DENA study. 

The other conclusion was that sufficient economic incentive must exist for investment in new, dispatchable power plants and other flexible assets. Here, again, we are talking about storage, combined heat and power (CHP), fuel cells, waste-to-heat power (WH2P), demand-side management, and biomass—the whole range. There is a place for every one of them, and we should keep the definition of distributed resources as wide as possible. They also came up with some cost estimates and said that at 20 percent of electricity demand, wind energy balancing costs are going to range somewhere between $1 and $7 per megawatt hour. 


The UK Energy Research Council did the final study I looked at, titled “The Costs and Impacts of Intermittency” from 2006. The objective was to answer the question: What is the evidence on the costs and impacts of intermittent generation on the UK electricity network and how are these costs assigned? With typical British thoroughness, the UK Energy Research Council looked at over 200 papers and studies on this very subject. 

Their main conclusion was that intermittent generation need not compromise electricity system reliability at any level of penetration foreseeable in Britain over the next 20 years, although it may increase costs. In the longer term, growth above the 20 percent penetration of renewables may also be feasible, but this may require changes in the way that the electricity system is monitored and controlled. The UK study actually came up with the cost impacts of up to 20 percent renewable penetration in the UK. The balancing costs, which are the costs required to compensate for rapid short-term adjustments over a time period of minutes to hours, were estimated at £2 to £3 per megawatt hour. The second was the reliability cost, which is the cost of providing sufficient generation and reserve capacity to meet the peak demand. That may be required for several hours at a time. These costs are estimated to be a little higher at between £3 and £5 per megawatt hours. All of those studies found no major roadblocks to 20 percent or more renewable variable resources on the grid. They did signal an increase in balancing and capacity costs and changes in system controls and how we do things. 

To summarize: the three points I wanted to get across: the first and most important conclusion that the majority of these studies come to is that you must maintain system flexibility. Keep as many things as possible in your distributed generation portfolio. Don’t restrict it to rooftop PV. That’s dangerous. Keep the definition of distributed resources as broad as possible. Include other resources, like fuel cells, combined heat and power (CHP), waste-heat-to-power (WH2P) etc. One of the important things in the DENA study that I didn’t mention was that if you look at their assumptions, to get to 39 percent renewables was built on a base of 25 percent CHP in the system and no nuclear. You need some steady resources that you can predict and know reasonably well. I’ve been driving up and down the highway, and I go past a big refinery every day. It would be very instructive  to find out how much waste heat these guys generate and how much combined heat and power you could actually get out of what’s coming out of those stacks. It may seem strange, but refineries and other large energy users can contribute to meeting the 33% RPS. You can capture that waste heat and convert it into steady power or even store it. The waste heat coming off many industrial processes can contribute to the target of increased renewables. Marrying the two together is something we shouldn’t automatically assume is impossible just because we’re dealing with big oil companies. 

The import thing with system flexibility is to future-proof whatever you put together. Whatever regulations you put in place, future-proof it. Make it as wide as possible. Because there are some bright kids at places like MIT and Caltech, and I guarantee you, they are working on something that will be in the system in five years’ time that we don’t know about now. 

The second conclusion was that there are costs associated with this. Those costs do need to be defined and assigned. Finally, if you look at where all of the successful integrations of renewables into the grid have come from, you find that stable regulations and targeted incentives have played a big role. You’ve got a stable environment. In Germany, they’ve had the feed-in tariffs there for over ten years. You don’t want to be changing up and down like your guys in Washington do with tax credits, with policies coming in and out every time the administration changes. 

My question was, “Can we learn from the experience of other countries?” Well, of course we can. That’s what education is about. The signs are good. I read in  the PUC’s quarterly status report on the RPS from March this year that one of their next steps will be to work with the Energy Commission staff to better understand the similarities and differences between interconnection processes in the distribution system infrastructure in California compared to Germany and Spain. 

If there is one thing that I’d like to see come out of this working panel, it is a focus on some real studies that bring the right people together. We all talk about the German experience and the European experience. Get them together. 


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