Electricity Storage

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Electricity Storage

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    The Growth of Wind and Solar PV Energies Means a Growing Need for Compensating Capacity

    The need for compensating capacity will rise in lockstep with the growth in demand for fluctuating renewables. And the demand for that power, gauged by the growth of installed capacity, stands to rise strongly in several global regions through 2025, reflecting governments’ intensifying efforts to move away from fossil-based fuels. (See Exhibit 1.)

    exhibit

    On balance, the greater the share of fluctuating renewables in a given energy-generation region, the greater the fluctuations produced. Hence, the greater the need for compensating capacity. (To learn more, click "The Transition to Greater Penetration of Fluctuating Renewables—and the Near-Term Impact on Energy Generation.") But the degree of fluctuation will also be influenced by the mix of wind and solar PV energies within a particular system: fluctuations in one source can be partially offset by fluctuations in the other.

    In Exhibit 2, we show demand projections for compensation capacity resulting from rising penetration of fluctuating renewables in Germany, Spain, and the United Kingdom for four reference years. As noted, Europe will be the first region to experience problems related to fluctuating renewables, so we have focused on Europe for quantification of the challenge. In principle, however, our findings will hold true for other regions as well.

    exhibit

    Our estimates are based on what we consider realistic assumptions regarding compensation demands imposed by both predictable (that is, day-night and seasonal) and unpredictable (that is, driven by medium-term weather conditions and forecast errors) variability in fluctuating renewables. In 2025, as much as 28 gigawatts of compensating capacity will be required in Germany to provide up to 40 terawatt-hours of compensation energy. Spain and the United Kingdom will have similar requirements. By contrast, current storage capacities stand at about 7 gigawatts in Germany and 5 and 4 gigawatts in Spain and the United Kingdom, respectively. Almost all of this existing storage is in the form of pumped hydroelectric storage facilities.

    Collectively, European countries will need about 100 gigawatts of compensating capacity. This corresponds to a total installed generation capacity in 2025 of approximately 1,000 gigawatts, roughly 350 gigawatts of which will come from renewable sources.  The facilities will need to be capable of providing roughly 150 terawatt-hours or more of compensation energy, corresponding to more than 5 percent of the annual demand for electricity.

    The United States, which has lower penetration of fluctuating renewables but a larger installed capacity in absolute terms, will need up to 170 gigawatts of compensating capacity by 2025, considerably more than the roughly 25 gigawatts it has today. This corresponds to a forecast generation capacity of about 1,100 gigawatts in 2025, with renewable sources accounting for roughly 250 gigawatts.  Given the current difficulty the United States has maintaining grid stability, the timely availability of adequate compensating capacity will be critical for a successful buildup of fluctuating renewables’ capacity there.

    Insufficient ability to compensate for fluctuations is not a far-into-the-future scenario. Already today, there are periods in which feed-in from renewables is higher than off-peak electricity demand in some regions, especially in countries where renewables represent a high share of overall generation capacity—for example, Denmark and Germany. In such periods, there is very high volatility in electricity prices. Furthermore, wholesale prices frequently turn negative, as happened several times in Germany in 2009, with record negative prices as low as –€500 per megawatt-hour despite a powerful grid infrastructure capable of shifting large amounts of energy across Europe. And this is only the beginning of the impact of increasing fluctuations from renewables on the power grid.

    The upshot of the above: strongly rising demand for fluctuating renewables will necessitate a significant ramping-up of compensating capacity in the years ahead. Next, we explore the four broad approaches to providing that capacity.  

    Eurostat.
    U.S. Energy Information Administration.