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“The Unbearable Lightness of Wind” (EU update)

By Ross McCracken -- May 21, 2009

[Editor note: Ross McCracken is editor of Platts Energy Economist]

Where support mechanisms are sufficiently generous, wind power is racing ahead. In the European Union, where supported by feed-in tariffs in countries like Germany and Spain, wind power targets are very likely to be met, if not exceeded. Last year, more wind capacity was installed in the EU than any other energy source, for the first time outstripping even natural gas.

Wind has become the “market choice” because the technology is mature, bank lending is assured where prices are guaranteed, and the supply-side has been steadily ramping up production capacity. And wind is the only viable renewable that can deliver large amounts of installed capacity in the short term.

But just because you can doesn’t mean you should. As wind penetration increases, the pricing effects become more extreme, impacting the profitability of existing baseload and peaking power plant, albeit in different ways. Surges in wind power create ‘spill,’ unwanted power that sends spot market prices to zero, reducing revenues from existing plant and increasing the redundancy of more flexible plant. This might be good news for consumers but bad for investment in non-intermittent sources of power, presenting the risk of a decline in reserve capacity.

The article, The Unbearable Lightness of Wind, which first appeared in the February 1 edition of Platts Energy Economist, looks at the pricing effects of a high penetration of wind and the consequences for the supply of power from non-renewable resources. It also discusses possible means of amelioration.

Since writing this article, new reports and articles have come out shedding more light on the subject. One is a report by U.K. consultancy Redpoint Energy, which looks at the impact of a marine/wind renewables mix on output variability. While the report is limited by its original brief, it highlights the idea that a mix of renewables may overcome the inadequacies of each. I’d also emphasize the other obvious conclusion: that too high a dependence on any one renewable source imposes costs. The Redpoint report is critically assessed in the next edition of Energy Economist, out June 1.

A second recent article referring to the disconnection of wind farms in Spain appeared in the Spanish business daily Expansion. It said, “Due to the fall in demand, it has become necessary to disconnect the wind parks which already produce more electricity than the system can absorb.” No sources were cited. Wind parks are the first power generators to be disconnected when demand for electricity falls, because it takes them longer to stop production than other sources, such as nuclear plants, the report said.

If that is the case, then it suggests that wind power producers are turning off plant to support prices, or that companies with a broad portfolio are taking wind down first. It seems very strange to me — why “turn off” a wind farm that has zero fuel costs and is supported by a feed-in tariff? Surely wind output can be reduced quicker than nuclear. The article needs much further explanation, and perhaps others can throw more light on the subject. But it does illustrate the central economic problem discussed in the Unbearable Lightness of Wind – that high levels of wind power penetration have increasingly large pricing implications for wind power producers and the rest of the industry alike.

4 Comments


  1. Drew Thornley  

    Good thoughts, all, Ross. One more thing: All we will have is problems with grid management and higher consumer electric rates, if we try to penetrate the CURRENT grid with large amounts of power from intermittent sources. The grid simply wasn’t built for it. However, even with an improved grid and other, without commercial-scale electricity storage, wind will make nothing more than a small contribution to our electricity supply. By the way, that’s OK! Not every fuel source should be a huge player. If wind can only give us, say 5%, then great. We’ll take it. But throwing taxpayer dollars and new infrastructure at wind, in hopes that it will start replacing thermal resources, does nothing but burden us with higher costs over the long run. Ross, if you’re interested and haven’t seen it, I discuss some of this in my study on Texas wind energy: http://www.texaspolicy.com/pdf/2008-09-RR10-WindEnergy-dt-new.pdf. Thanks for the post!

    Reply

  2. Wilko Fokken  

    Contrary to the alarmism about global warming, there is little doubt about our fossile energy ressources coming to an end, sooner than we like to exspect.

    Over here in Germany, the top “windmills” have reached a performance above 5 megawatt. Their increased wing size requires a lower turning speed in order not to exceed a maximum speed at their tips; so their calm turning puts practically no stress on human nerves any more, compared to those faster running smaller windmills of the past. In calm winds, they make no noise, while during strong winds, the noise of the wind in my ears exceeds the noise of the windmills by far, when I drive along with my bicycle, since a lot of research has been done to make todays windmills operate nearly without noise.

    The best is, they are about to economically break even – without tax support anymore.

    Still, people (tourists + their serving business people) insist that nature is supposed to be a paradise – even the best technology won’t be able to satisfy those demands.

    Windmills contributing up to a third of the electric demand (there is hardly more wind to “harvest”) will hardly ever run into a situation of overproducing electric current, and if such a condition schould really happen: Every single windmill can be disconnected from the net right away by some digital command from a controlling agency. All that would be lost is some kilowatt hours: “gone with the wind”.

    Electric current from wind is to be combined with current from solar panels, from organic waste, from water tubines, maybe even from little gas engines at home producing electric current + warm water. Big gas powerplants are able to startup within 5 minutes, while those huge steel cookers require old fashioned coal or nuclear powerplants ensuring a stable level of electric supply.

    The main challenge will be the optimal regulation of all those little producers. But that’s what our digital age is for.

    Btw. here in Germany, we have a much higher share of electricity from renewable sources; the stability of our supply doesn’t seem to be affected.

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  3. Wilko Fokken  

    Contrary to the alarmism about global warming, there is little doubt that our fossile energy ressources will come to an end, rather sooner than later.

    Over here in Germany, the top “windmills” have exceeded 5 megawatt by now. Their increased size requires slow wing turning; so they put little stress on human nerves. They operate allmost noiseless and are about to run without tax support.

    Windmills contributing at the most to a third of the electric demand will hardly produce too much electrical current, and in case it really happens: Every single windmill can be instantly disconnected leaving just some kilowatts “gone with the wind”.

    Windmills should work together with solar panels, organic waste plants, water tubines, maybe even from little gas engines at home (producing electric current + warm water).

    Big gas powerplants connect to the net within 5 minutes, while the big steel industry still requires old fashioned coal or nuclear powerplants.

    The main challenge will be the optimal regulation of all those little producers. But that’s what our digital age is for.

    In Germany, we use considerable electricity from renewable sources without affecting our stable supply.

    Reply

  4. Craig Goodrich  

    Contrary to Wilko Fokken, wind power at industrial level is an utterly insane idea and has worked nowhere. In addition to its unreliability, which strains grid operators even in so huge a grid as Germany’s, it requires about a thousand times more land than a conventional fossil or nuclear plant of the same capacity. Electricity from the conventional plant would actually be useful, i.e. dispatchable; power from the turbines is just a nuisance.

    For decades we have been hearing endless Green sermons about how our wilderness and wildlife habitat was irreplaceable; now the same Greens are enthusiastic about permanent, grotesque spoliation of enormous swaths of countryside and wilderness.

    This is utterly insane. Has everyone completely lost their minds?

    Reply

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