The Future of Wind

16 July 2009

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A ground-breaking study by leading global energy analysts Pöyry Energy Consulting has revealed for the first time how the electricity markets will be profoundly affected by the growth of wind energy.

The report called, Impact of Intermittency, provides a unique insight into how the electricity sector in the UK and Republic of Ireland could look by 2030.

Both countries have set ambitious targets to reduce their carbon dioxide emissions by 2020 and wind energy is expected to be the greatest contributor. But the impact of the dramatic amounts of wind generation capacity needed to meet the challenge has largely remained uncertain.

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This new study highlights the potential hurdles and opportunities facing operators and investors in the energy sector.

Encompassing more than 20,000 hours of work and a budget of almost £1million, the year-long project used an unprecedented quantity of data. Hourly statistics for each of the years from 2000 to 2007 were taken from observations in 36 locations, totalling more than 2.5 million pieces of data.

Pöyry’s findings have now been presented to relevant government organisations including the Department of Environment and Climate Change (DECC) as well as a number of high profile energy companies.

James Cox, Principal Consultant at Pöyry Energy Consulting said: “At the outset we believed that it was vital to inform the debate about the importance of wind in decarbonising the electricity supply, by informed, quantitative analysis. “This has proved to be a major challenge but the richness of the information has surprised even the project team. And, while the answers we now have are often complex, we believe that any debate on the role of wind can now be properly informed.”

Estimates of the amount of wind needed to meet the carbon reduction targets range from 6-8GW for the Irish electricity market and 35-45GW for the British electricity market by 2030. The electricity generated in 2030 will be a lot different to now, and will have large challenges for the providers.

The study looks at:

  • the likely scale of future wind power and the impact on thermal plant
  • the reserve needed on the system to maintain current reliability standards
  • how market prices will be affected and whether too much wind could collapse prices to zero.
  • whether interconnection between the two markets can provide the golden bullet
  • how the each country’s market arrangements will cope
  • whether power station investment is an attractive proposition

 

Stephen Balint, Strategy Director at RES, said: "The results from this study represent a step forward in increasing understanding about what a high renewables world may look like.  The highly complex analysis undertaken by Pöyry has given a real insight as to how the electricity markets - and how prices - may change in the future"

Researchers examined the extremes of low and high wind, over 2000-2007, and found that even at an annual level wind generation output varied by almost 25% in the Irish market and 13% in the British market.

Using data from January 2000 to model a repeat of conditions in 2030, a classic dilemma was illustrated – electricity demand rocketed on frosty nights when there was virtually no wind and low output but, when the temperature rose in strong south–westerlies and there was less need for electricity, there was almost full wind generation output.

Although it has previously been suggested that this intermittent output could be mitigated by greater interconnection between the two markets, Pöyry believes its finding have underlined the critical importance of the Irish market having interconnection to the British market, although the opposite is not true.

However, stronger interconnection would also make British market price spikes become a feature of the Irish market. And the study suggests that interconnectors cannot be the golden bullet to solve the intermittency challenge, although they are extremely important.

As far as investment is concerned, the financial incentives for new coal or gas plant are not encouraging. According to Pöyry, such plants will have to operate at low and highly uncertain loads and, under current market arrangements, the likely returns do not appear good.

The report says: “If significant wind energy is achieved, along the lines required by the 2020 renewable targets, we predict power stations which are built now will face much more uncertain revenues in the future. For example, any generation built before 2016 to cover closure, under emission regulations, of existing coal-fired power stations, would face a volatile future, uncertain to the point that plant may only operate for a few hours one year and then hundreds of hours the next year.”

James Cox added: “Although additional detailed work needs to be carried out to properly model the behaviour of the grid systems in both countries, our worry at the outset of the study that the very dynamics of variable wind output would challenge the system operators, has moved to concern that the economic environment for thermal plant will be highly challenging.”

A summary of the Impact of Intermittency report is at www.ilexenergy.com

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