Fossil fuel electricity generation as ‘back-up’ for renewables?

In another success story from OECD renewable energy leader Germany, the country’s two largest electricity utilities have stated that they will not need to build any new fossil fuel power plants even in spite of the government’s decision to substantially reduce the amount of nuclear power in its generation portfolio. The nuclear industry vocally opposed the scaling back of the country’s nuclear power assets, claiming that the move would result a regression to more fossil fuel-fired power production. RenewEconomy offers perspective on the situation.

The two utilities–E.ON and RWE–say that rapid growth of renewable energy sources, particularly the country’s fleet of rooftop solar photovoltaic (PV) systems and wind power, will mean that the country will not suffer from a dearth of power as nuclear plants are decommissioned over the next decade. “We won’t be building any more gas and coal power generation plants in western Europe, because the market does not need them,” said a spokesperson for E.ON. RWE is also embracing the changing dynamics of the electricity generation market, with CEO Peter Terium referring to the transition to renewables as ‘exciting but turbulent’, and acknowledging that, thanks to the prevalence of distributed generation systems such as rooftop solar PV, ‘Today’s customer is tomorrow’s electricity producer’.

Thus far the transition has been relatively well-orchestrated and smooth considering its scale. However, the changes to Germany’s electricity generation infrastructure that are currently underway are massive–as are the challenges. However, as RenewEconomy’s Giles Parkinson points out, fossil fuel generation is expected to , and its future role will be very different to its current one.

The only fossil fuel plants that are being built are those committed to, or commenced, before the nuclear phase out was announced. And not only do Germany’s two biggest utilities dismiss the need for additional coal or gas capacity, they say that the current fossil fuel generation will ultimately be relegated to a role of back-up generation for renewables, rather than being called upon to supply “baseload” power. In some cases it is already happening. Indeed, a 2,200MW lignite-fuelled power station opened by RWE this month is designed to act as a sort of peaking plant, with the ability to ramp up (and down) 500MW of capacity within 15 to 30 minutes.

This is a fundamental transformation of the energy industry. In effect, RWE and E.ON are suggesting that the traditional model of electricity generation – that of baseload and peaking capacity – will be replaced by a new concept of flexible and inflexible power sources. The inflexible sources are those such as wind and solar, which produce when the wind blows or the sun shines; the flexible generation is that which can either be stored, or switched on when required, to fill in the gaps.

The same concepts carry over to the clean energy debate here in Australia. It is often pointed out that Australia’s move to a clean energy economy is not being held up by any technological barriers, but instead by political will, and by resistance from some of the most powerful players in the electricity generation industry. The statements above show that German electrical utilities are now coming to terms with the changing reality and embracing opportunities within it. In the meantime, Germany has become a country that prides itself on its well-executed incorporation of renewable energy into existing network infrastructure–having done what was widely derided as impossible and unnecessary.

The topic of electricity industry market reform has finally come to the forefront of the clean energy debate here in Australia, with Prime Minister Julia Gillard calling for change and pointing out that the Carbon Tax and subsidisation for renewable energy sources play only a small role in recent and future electricity price rises.

© 2012 Solar Choice Pty Ltd

James Martin II


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