BNEF: Flexible energy options will make the electricity system cheaper

Two new reports from Bloomberg New Energy Finance (BNEF), in partnership with Eaton and Statkraft, find that flexible energy options such as energy storage, smart charging of electric vehicles, demand response and connectivity are needed to ensure the energy transition proceeds along the optimal path.

Two studies for the UK and Germany found that energy storage, smart-charged electric vehicles, demand response and interconnection represent four types of flexibility that can accelerate the transition to a cleaner electricity system and ultimately enable the efficient integration of more than 80% renewable energy by 2040. Otherwise, our expensive electricity system will rely on fossil fuel backup and the potential installation of excess wind and solar capacity.

The report, Flexibility Solutions for High Renewable Energy Systems, sets out a number of alternative scenarios for future electricity systems in the UK and Germany respectively, depending on how each flexibility technology develops over the next few years.

Energy storage and smart EV charging provide flexibility, shifting large amounts of renewable energy to times of high demand, or shifting demand to times of high renewable generation. Dispatchable demand response reduces the need for fossil fuel backup power plants in the power system, reducing emissions. Connecting to Nordic hydro can address both oversupply and over demand, providing different benefits over decades as system needs evolve.

The two studies highlight that policies and regulations that accelerate the adoption of these technologies are key to making cleaner, cheaper and more efficient electricity systems possible.

Specific findings for the UK include:

None of these scenarios prevents the country from transitioning to a low-carbon electricity system. In all scenarios, wind and solar become the dominant energy source with a renewable share of more than 70% in electricity generation by 2030, thanks to falling costs. However, without new sources of clean flexibility, the system will become oversized and wasteful, increasing costs by 13% and emissions by 36% by 2040.

Greater electrification of transport could save large emissions with little risk to the power generation system. In the UK, the avoided fuel emissions from transport electrification far outweigh the increased power sector emissions, and the power generation system would easily integrate all these electric vehicles, with system benefits being even greater if most electric vehicles could be flexibly charged. However, local distribution networks may face challenges.

Accelerating the development of energy storage could speed up the UK’s transition to a renewable energy system, with a 13% reduction in fossil fuel emissions and 12% less fossil fuel reserves required by 2030.

Specific findings for Germany include:

In Germany, increasing flexibility will support coal through 2030, even as renewables dominate the market. This counterintuitive finding isn’t because of batteries, electric vehicles, demand response or interconnection – cheap coal is to blame. Flexible technologies are important because they can integrate inflexible generation, and Germany’s cheap lignite plants benefit from this. To decarbonize, Germany needs to address its existing coal generation while investing in renewables, flexibility and interconnection.

Nonetheless, more batteries, flexible electric vehicles and interconnection with the Nordic countries would allow for higher renewable energy penetration and emissions by 2040. On the other hand, more flexible demand reduces the need for battery investments.

Even if Germany uses coal-fired electricity, adding electric cars would reduce transportation emissions.

“The next challenge is to ensure these resources are complemented by flexible, clean forms of energy – storage, demand and interconnection – that enable cheaper and deeper decarbonisation,” said Albert Cheung, global head of analysis at BloombergNEF.

Cyrille Brisson, vice president of sales and marketing at Eaton EMEA, added that continued advances in solar and wind technology are inexorably driving the world towards an electricity system dominated by variable renewable generation. Coupled with the expected growth in electric vehicles, the world is now in the midst of an energy transition that will significantly reduce carbon emissions and improve air quality. However, unless energy markets are designed and regulated to fully exploit the flexibility of the power system, this opportunity will be limited.

“The time has come to prepare and start investing in the technologies, services and adaptations that will enable our energy system to handle this massive shift in the way we generate and consume electricity,” Brisson said.

(Original text from: Renewable Energy Magazine New Energy Network Comprehensive)