Towards carbon-free energy systems
Successfully integrating the rapidly growing Variable Renewable Energy Sources (VRES) into our energy system is one of the most daunting challenges facing modern society.
Since 1990, the share of renewable electricity in the global supply mix has grown from 19 to 26 percent. During the next 30 years, the UN (IPCC) predicts that the share of solar, wind and other renewables must increase to 85 percent in order for us to meet the target of a maximum increase in global temperature by 1.5 degrees. Such a rapid transition, coupled with the two trends of increased electrification and a decentralization of energy production, poses a great challenge to our current energy system.
Growth of VRES
There are two major reasons for why the growth of especially solar and wind power – currently the two most important VRES – is outpacing that of traditional sources such as coal, gas and nuclear. Political goals of limiting climate change by replacing fossil fuels plays a major part in the rapid growth of renewables. But the growth is also driven by major technological advances that have both led to lower costs and higher output of both PV panels and wind turbines.
According to the International Energy Agency (IEA), global capacity to produce renewable energy will increase by 50 percent the coming five years, with solar and wind power leading the way. In just three decades, the share of renewables in the energy supply mix could increase from 26 to 85 percent, greatly increasing the need for affordable integration solutions.
For more than a century, our society has relied on a linear, centralized energy system. In this system, energy is produced in large plants with good access to required inputs (coal, oil, rivers, cooling water) and are typically located far from residential areas. This traditional setup requires a large infrastructure that allows for the energy to be distributed to consumers, there is a clear line between producers and consumers and the energy only flows in one direction.
The emergence of prosumers and energy communities, where end users both produce and store electricity, further increases the need for a more flexible energy system based on new technologies, market models and policy frameworks.
As the share of intermittent sources in our energy supply mix continues to grow, it becomes increasingly difficult to match supply and demand for electricity. Since the output from VRES is largely determined by changing weather conditions, and since demand for electricity can vary significantly from hour to hour, there is a constant risk of oversupply or shortage.
When conditions are favourable, we are producing more electricity than the system can handle, and when conditions are unfavourable, we are not producing enough electricity to meet spikes in demand. The intermittency problem is a significant challenge to affordable integration of renewables and calls for major advances in our ability to store electricity and backup generation.
Even though wind and solar combined currently account for no more than 9 percent of global production of electricity, we are already seeing examples of more volatile and sometimes even negative electricity prices due to the growing importance of VRES.
For the first time in history, Nord Pool recorded negative prices for electricity in the beginning of 2020 due to mild weather and favorable wind conditions, leading to low demand and high output from the rapidly expanding onshore wind sector in the Nordic countries. As the share of VRES rises, the need for better forecasting and new market models increases.
Towards a new, flexible system
In order to enable and reap the full benefits of a transition to renewable energy, we need not only change the way energy is produced, but also how it is stored, distributed, used and priced. We need to create new flexible energy systems based on new market models, new technologies and energy communities.
This new flexible system will ensure grid stability, the quality of electricity, less volatile prices, a more efficient use of energy, an increased capacity to store electricity and a greater role for ICT and digital services within the system. It will ensure that we are to achieve truly affordable renewables integration. To learn how, continue reading about the solutions we offer.