What Could We Do With So Much Free Electricity?:

LAGOS (Capital Markets in Africa) – Curtailment of renewables, disconnecting wind and solar when there’s too much electricity entering the grid, will be a common feature of Europe’s power system as more intermittent generation is added. That much is clear. Yet this excess electricity is probably going to create new opportunities rather than simply go to waste. Some new openings are already familiar – such as battery storage or demand response – and newer activities such as thermal storage or data processing may pick up more of the slack. Ultimately, all this wasted power may even unlock economic activity yet to be imagined.

Europe may have 978 gigawatts of solar PV capacity and 536 gigawatts of onshore and offshore wind capacity by 2040, according to Bloomberg NEF’s New Energy Outlook 2018. Generation from renewables is set to jump more than fourfold to 2,489 terawatt-hours in 2040 from 578 terawatt-hours today. At present, wind and solar output tends to be at or below hourly demand levels for much of Europe – but by 2040, this will no longer always be the case. A flood of cheap renewables, clustered around sunny and/or windy hours, could mean renewables generation far exceeds demand during certain hours of the day.

Curtailment kicks in when production of cheap renewable electricity surges. This is when the grid – or market signals – instruct renewable generators, which have very low marginal costs, to turn down or even halt generation. Curtailment, typically caused by low demand or grid bottlenecks, means this “free” electricity then goes unused.

By 2040, curtailment could peak at 7.3 terawatt-hours during the weeks with the most renewables generation. Some weeks could see almost none, as shown in the graphs above. So, what use could be made of this power? Storage is one clear opportunity. Small- and utility-scale batteries shift electricity from times of high generation to times of high demand, yet it would take an immense number of installations to make use of all curtailed power. Even 190 gigawatts of battery storage in 2040 would not be enough to absorb large volumes of curtailment, according to BNEF’s NEO report.

Technologies that can hold power for weeks or months rather than hours could provide a solution. Such technology could store energy from weeks with high renewables generation and unload it during weeks that would otherwise be more dependent on electricity generated by conventional power stations. (See Beyond the Tipping Point: Flexibility Needs in Europe.)

Alternatively, curtailed electricity might be better held through thermal storage. For instance, air-conditioning demand can be supplemented with the use of ice to cool buildings, resulting in a reduction in electricity consumption by the rest of the air conditioning system. Using curtailed electricity, this ice formation can be done at a different hour – such as when a surplus of renewable generation is available.

Energy storage isn’t the only option. Applications where energy is intermittently used may also prove lucrative, such as data processing for Bitcoin mining or cloud computing. Such processes are energy-intensive but can still tolerate a variable power supply, ramping up operation when there’s a supply of electricity that would otherwise be curtailed. These energy-intensive activities would also benefit economically from much cheaper, if not free, electricity.

Bitcoin miners are already moving to countries where there is cheap excess electricity, as in the Nordics and Canada. One example is HIVE Blockchain Technologies, which is making a move into Sweden. More widespread curtailment would give them more options.

Industrial sites that process items in bulk and rely on an aggregation of small margins to make their returns could also benefit from using curtailed power. Smelting and other material-refining processes are often touted as sources of such industrial flexibility. Insulation systems like those made by New Zealand-based Energia Potior can permit smelters to use extra electricity for brief periods of time. If some advance warning could be given for longer periods of curtailment, refiners and smelters could plan to ramp up production to match those hours. Since electricity costs make up about a third of the cost of aluminium – cheaper electricity would significantly impact producer margins. New energy-intensive industries, like cryogenics, could benefit in the same way.

Source: Bloomberg Business News