Renewables – Power to the People

Dr. Rudolf Rechsteiner former MP (1995-2010)Switzerland

Contents

• Why renewables?• Forecasts for oil and gas – can we

trust them?• What needs to be done?• Profound changes of the power

system and infrastructure

An IEA View on energy (2003)William Ramsay, deputy director IEA

Presentation in the Swiss Parliament Energy Commitee

Tenfold growth over 10 years

Wind power exceeds all forecasts

Meilensteine exponentiellen

Wachstums (2n) erreicht Ende

Anzahl Jahre bis zur nächsten

Verdoppelung

kumulierter Bestand Ende

Jahr1000 MW 1985 6 1020 MW2000 MW 1991 6 2170 MW4000 MW 1995 4 4778 MW8000 MW 1998 3 10153 MW

16000 MW 2000 2 17706 MW32000 MW 2003 3 39434 MW64000 MW 2006 3 74328 MW

128000 MW 2009 3 157'900 MW264000 MW 2012(p) 3(p) 265’000 MW

Neu-Installationen von Kraftwerken in Europa: 71% der Leistung = erneuerbare Energie (2011)

Weltmarkt Solarzellenproduktion 2000-11(Jäger-Waldau: PV Status Report 2012)

Solar Power: costs reduced – better productivity each year

Gestehungskosten seit 1976 (BNEF) Solarzellen- Wirkungsgrade (NREL)

Endkundenpreis Dachanlagen BRD 2006-11 (BSW)

http://upload.w

ikimedia.org/w

ikipedia/comm

ons/c/c9/PVeff(rev100414).png

What are the good News?

• Solar is profitable in the retail market of many European countries.

• Wind power has made a huge step forward:– General reduction of costs– Technical progress for low wind sites, – Means we have a huge increase in profitable resource

• High petrol prices and scarce government money subsidies for fossil fuels reduced somewhat

The Implications of cheaper prices for wind and solar

• Lower barriers in economic terms• Faster growth possible, if market frame is there• It is comparatively less interesting to go to Africa for solar– Grids are not there– Grids are more costly than the additional power produced by

siting in the South• regional approaches are more appropriate in terms of

production, trade and storage• But: it makes a lot of sense to connect different weather

zones!

Waht needs to be done?

Windzonen und WindressourcenEuropa: Potentiale 20mal grösser als VerbrauchOffshore-Nutzungszonen (weiss)

Auslastung der Anlagen (load Factor) Ausgeprägte Winterspitze

Quelle: Forwind / EWEA 2011

Contents

• Why renewables?• Forecasts for oil and gas – can we

trust them?• What needs to be done?

The IEA forecasts for oil prices worked well in the 1990es

IEA World Energy Outlook 2000

IEA Oil Price Forecast methodin 2002

"Crude oil prices are assumed to remain flat until 2010 at around $21 per barrel (in year 2000 dollars) – their average level for the past 15 years. They will then rise steadily to $29 in 2030. ”

International Energy Agency: World Energy Outlook 2002, p. 37

The IEA method of supply prediction: predict demand!

„The oil supply projections of this Outlook are derived from aggregated projections of oil demand…. Opec conventional oil production is assumed to fill the gap.“

World Energy Outlook 2002 p. 95

IEA Forecasts never hit reality

Source: LBST – Werner Zittel

Post-peak oil fields show a decline rate of 5,5% per year (Höök, 2009)

IEA 2008 global production forecast

IEA 2008 oil fields inproduction decline rate forecast

Source: Höök, M. et al: Giant oil field decline rates and their influence on world oil production .Energy Policy (2009),

Decline rates of oil fields 4.9-9.7 percent per year

World Oil Price (real) and spare capacity (IMF 2012)

The Future of Oil:Geology versus TechnologyJaromir Benes, Marcelle Chauvet,Ondra Kamenik, Michael Kumhof,Douglas Laxton, Susanna Mursulaand Jack Selody

Negative learning curve of nuclear power

Cost over time of French and US new nuclear reactors

Source Grubler, Energy Policy, Sept 2010

Natural gas price will rise due to

Asien

Europa

USA

Decline rates of shale gas Haynesville shale gas wells

Source: J. David Hughes: Drill, baby Drill, Postcarbon Institute 2013

Contents

• Why renewables?• Forecasts for oil and gas – can we

trust them?• What needs to be done?

Golden End of renewable power plants reduces overal cost for society

Kraftwerk Rheinfelden 1898-2011 (gebaut 1894-1898)

Germany 1990-2012: from 3% to 25% clean power (50% bis 2020?)

19901992

19941996

19982000

20022004

20062008

20100

10000

20000

30000

40000

Windenergie

Start 1991

1990 3%

2020: 39-47% oder mehr (Schätzung)

2012/7 25%

Hydro power

Merit-Order-Impactrenewable power pushes market price to zero

Production and consumption over timeon household level – low cincidence! (~20%)

Grafik: Markus Hlusiak, Ann-Katrin Gerlach, Christian Breyer: Übergang zu einer regionalen Elektrizitätsversorgung aus 100 % Erneuerbarer Energie am Beispiel des Allgäus, Das Solarzeitalter 3/2012

Low self consumption in one-family houses

Better coincidence in large appartment houses.

Im grossen Mehrfamilienhaus ist der zeitgleiche Eigenverbrauch viel grösser.*

Das Arealprinzip bei der Kostenverrechnung kann die Rendite einer Anlage entscheidend verbessern.*grösserer und zeitlich stärker gestreuter Verbrauch, weniger Dachfläche pro Einwohner

Solar roof power cheaper than residential power tariffs

German Power Spotmarket16 Juli 2011

Source: EEX/Photon

Power prices on record low (Strompreis Futures CAL 13)

ELIX 8.3.20133,7 €-Cent/kWhBaseload 2013

European power market: Lower power prices due to wind and solar

EEX electricity spot market 7. März 2012:Spot price at day cheaper than at night

Why has peak load power become so cheap? – the German example

PV Power covers the demand at day – no peak power stations needed with sunny days

Market Clearing Price GermanySunday August 8, 2012

Wind and solar reduce market

prices due to zero marginal cost

Solarstrom füllt das Netz - Bandenergie wird wertlos

Compensation rules for power are key for investment certainty

• We need fair compensation for decentrally produced power – Self consumption starts to be interesting, but it is not sufficient– Storage makes no sense as long as you can sell it with less cost to

local demand• Market prices at marginal cost is not a fair solution

– Every time the sun shines, the price is going to zero– But the cost is not zero– Overall cost is less than for fossil fuels

• Fair rules could be– A Feed-in tariff for avoided costs (what would power cost if

produced elsewhere with fossil fuel– Net metering: let the power meter turn back

Countries without feed in tariffsnet metering as a solution(=let the power meter turn back)

Situation today Net metering

Solar power is peak power. It is always welcome with market penetration below 20-30%. It covers the demand during high load periods.

With market penetration beyond 30% you need storage facilities and a smater grid.

You pay 20-25 Cents/kWh

You get 0-7 cents Cents/kWh

Contents

• Why renewables?• Forecasts for oil and gas – can we

trust them?• What needs to be done?• Profound changes of the power

system and infrastructure

Case study Switzerland:

Integration von Wind- und Sonnenstrom ist ohne Mehrkosten möglich• dank bestehenden grossen

Leistungsreserven in der Schweiz und in Europa (CH 12 GW, Europa 96GW Wasserspeicher)

• Dank Ausbau der Netze• Dank Ausbau der

Pumpspeicher (Spanien, Schweiz, Deutschland, Norwegen usw.)

• Dank neuen Speichern (E-Gas) und fossilem Backup (Erdgas)

Zu jeder Tages- und Jahreszeit • schont Wind- und Solarstrom die Entnahme von Reserven aus den Speicherseen (hellblau)• verbessert die Versorgungssicherheit • ersetzt Kohle-, Gas- oder Atomstrom

Speicherentnahmen

Grafik: CH Elektrizitätsstatistik

Leistungsprofil im Sommer, mit 18 TWh Solarstrom jährlich

Umkehrung der Speicherzyklen!Speicherkraftwerke produzieren am Abend und in der NachtPumpspeicher pumpen am Tag (Sommerzyklus, PV-Maximum)

Swiss power Generation in 2030

Vernetzung mit Gleichstromleitungen: grössere Reichweite, kleinere Verluste

The benefits of grids:• Balancing power over

several markets• Access to new resources• Access to existing storages

(e.g. pump storage)• Access to excess power in

other areas

Unterwasserkabel: Stand de Technik

Gleichstromleitungen Nord-Süd im Bundesnetzplan 2012

Challenges ahead for renewables• A fair price for non-polluting power

– Coverage of investment costs and risks over a facility’s life time – Integration of sites with high, medium and lower productivity, avoiding windfall profits– Long term stability of regulatory frameworks for cost reduction

• Access to the grids in a non-discriminating manner– Preferential access to grids for renewables– Interconnection of different weather zones and technologies– Transparent grid codes

• Security of supply and backup management – Forecasting of demand and supply– combining storages such as biomass, hydro, batteries in a low cost way– Creation of intra-day and intra-hour markets for power exchange– Fair compensation of idle backup capacities– storing fossil fuels as “lenders of last resort”

• Environmental care– minimizing environmental impacts while mobilizing natural resources by incentives and regional

planning obligations– Fair and sensitive planning of renewable energies and grids with a 100% approach in mind– Protection for rare species, natural rivers, exceptional landscapes

Why renewables should succeed:the benefits

• Reliable, inexhaustible and virtually free (but weather dependent) primary energy (wind, solar, hydro, geothermal)

• Resilient due to decentralized, interconnected generation

• Affordable power, on the way to become a least cost-solution, chance for a Golden End

• needing a favorable market structure – balancing high up-front cost with later benefits– Diversity of sources and interconnection