Session III: RES – Breaking the Inertia
The Session was introduced by a video speech given by Janez Potočnik, the European Commissioner for Environment who described the need to “green” the EU’s economy, as part of the EU’s 2020 objectives. Mr Potočnik set out his plan to introduce a Roadmap to a Resource-efficient economy during 2011.
He referred to some of the key questions to be answered in this paper – such as which resources do we need to be most efficient with and how to change the market to incentivise resource use. Mr Potočnik concluded by saying that a resource efficient Europe was “not only worth it, but essential”.
Opening the session, Ian Cronshaw, Head of Energy Diversification at the IEA began his presentation by stating that the current global energy pathway is not sustainable “ecologically, for affordability, or for security”. In order to reduce the global concentration of carbon dioxide to 450ppm – and therefore limit climate change to a manageable level - Mr Cronshaw highlighted energy efficiency as the key enabler, stating that “we must get energy efficiency to work everywhere”. Next in priority was Renewables, for which careful design of promotional policy is needed – key aspects being the need to remove non-economic barriers, ensure transparency and predictability, and decrease support over time. Referring to the challenge of managing intermittent Renewables generation, Mr Cronshaw pointed out that there is a need “to use the whole toolkit to manage flexibility”. In this field, the IEA is actively developing a “Flexibility Assessment Tool” abbreviated FAST. In Europe, Mr Cronshaw regarded transmission infrastructure as a priority for both Renewables and Market Integration. Concluding, Mr Cronshaw reflected on the IEA experience of the oil and gas sectors - that governments “must work with markets, and with industry”, and he stated, on Renewables, he was “keen to work with everyone in this room”.
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Stephen Woodhouse – Director of Pöyry Energy Consulting in the UK presented the key challenges to managing the electricity system in view of the growing levels of Renewables to reach the EU’s 2020 target. Drawing conclusions from a study on intermittency for the UK and Ireland, Mr Woodhouse began by considering the need for flexible back-up capacity. With declining load factors – under which some plant may operate less than 1000 hours per year, Mr Woodhouse argued the need for capacity markets – stating that “energy only markets simply don’t pay enough for peaking plants”. Referring to the need for greater interconnection, Mr Woodhouse saw a challenging funding situation as the “country paying for the grids may not get the benefits”. On the third key element of integration – Smart Grids - Mr Woodhouse referred to the very significant potential for demand response. Concurring with Mr Cronshaw, Mr Woodhouse agreed that all forms of flexibility were needed, and that the necessary market incentives need to be put in place. Mr Woodhouse called for greater customer engagement in managing electricity, saying that “Electricity has become almost invisible to the consumer – cheap and reliable….it must stop being an invisible product, and we must engage with the public”.
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Jerry O’Sullivan, Executive Director for Networks at ESB in Ireland concluded the speakers for the session, looking at ESB’s strategy for RES development and grid integration. Referring to the major ambitions for Renewables in Ireland – with 6.6GW of wind already approved, Mr O’Sullivan stated that for ESB “Renewables on its own is not the whole game”, and that it was part of a wider push for Smart Grids. ESB is already piloting Smart Grid systems, with a major study underway to assess what level of demand response is possible, with results foreseen by the end of the year. On electric vehicles (EV)– which have “real potential to flatten the load curve”, ESB is working on the roll out of charging points across the whole of Ireland by the end of 2011. Ireland has set an ambitious target to reach 10% electric vehicles by 2020. Ireland had also established a well co-ordinated structure for energy research that would help it to develop and deliver the necessary Smart Grid technologies. With wind development well underway, and a relatively isolated system, Mr O’Sullivan stated that Ireland will “see the challenges of Renewables earlier than countries” – but progress on integration was already well underway - with Smarts Grids and EVs already coming to Ireland. “I call that breaking inertia”, concluded Mr O’Sullivan.
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Panel Debate
In the following panel debate the speakers were joined by Hildegard Műller, Chair of the Executive Board at BDEW, Ian Marchant, CEO at Scottish and Southern Energy, Gian-Maria Ferrero, Vice President at SunPower and Stephan Ritter, General Manager Renewable Energy at GE Europe.
Commenting on the renewable targets set by the European Union in 2009 Hildegard Műller pointed out that the RES target for Germany “is absolutely realistic”. She added that markets integration will indeed bring benefits to the whole electricity system and that the next challenge lies with the development of adequate transmission capacity and how to incentivise conventional generation needed for back-up purposes.
Ian Marchant argued that the UK target for 30% of electricity from Renewables in 2020 can be achieved considering the massive investments that the industry has undertaken in the last years. However, “grid planning is lagging a bit behind the generation investment” and should be sped up in order to accommodate the massive amount of renewable electricity coming online. Mr Marchant argued that the need for Smart Meters is key to enable demand response stating that “until you can monitor and price what’s going on, what can you do?” As regards the need to balance the intermittency of some renewable sources, particularly wind power, he said that “gas-fired generation is the best complement to wind production, better than electricity storage”. Stephen Woodhouse agreed, arguing that the role of natural gas storage needs to be further evaluated in order to better understand how it can keep up with flexibility needs.
Gian-Maria Ferrero said that the solar power has experienced “a tremendous growth in the last years” and that technical hurdles do not represent a barrier to the further development of the sector anymore; he also added that the next step will be to drive solar costs down “allowing it to attain grid parity very soon”. As regards customers’ behavior, he concluded that a major raising-awareness campaign will be needed if people are to understand how their actions influence the whole electricity system.
Stephan Ritter touched upon the need for plant manufactures to step up the efficiency of generation equipment, including renewable, with the aim of achieving fewer losses in the generation business through innovation and continued research and development. He also stressed that financing is currently representing a barrier against the development of projects across Europe, as the current economic crunch makes fund-raising much more difficult for companies.