In an event that went largely unnoticed save for a select handful of expert news services – ICIS included of course – Europe’s largest electricity market, Germany, supplied all of its power from renewable sources for a brief hour-long window on Sunday 15 May.
This was a milestone of epic proportions, and one worth putting in context to fully grasp just how epic – as well as to highlight a potential problem such a supply mix can bring with it, and how to deal with it.
First, the scale of the achievement:
- Germany erected its first wind turbine in 1983 as part of the long-term fallout from the 1970’s oil crisis that also triggered neighbouring France’s permanent drive into nuclear power
- By the end of that decade, just 55MW of wind power was in place – effectively a meaningless amount – and it was not until 2000 that the country had enough wind turbines in place to equate to the output of a single, modern-day nuclear power plant
- Then along came solar. By 2003, Germany had barely 100MW of solar power production capacity installed, and it was not until 2009 that the country had a significant amount in place of 4GW, meaning it began to have influence on energy prices
- It was as recently as 2011 that Germany announced its permanent phase-out of nuclear power by 2022, upping the ante on renewables developers to plug a very large gap in production
What all of this means, with it really being the start of the 2000s until Germany had any meaningful renewable power capacity, is that the country had, for a brief hour-long spell on a Sunday in May 2016, engineered the transformation of an entire industrial sector in around 15 years. Half of a blink of an eye in macroeconomic terms.
Disparity
And so inevitably, when change happens at such a rate, accompanying problems arise. In this case, when reliance switches from what is termed programmable sources of power generation – thermal plants such as coal- and gas-fired – to more unpredictable forms, supply security becomes an issue.
As an interesting aside to this story, just six days previous, the UK power market recorded its second system warning in six months, meaning the safety margin between supply and demand was about to drop below statutory requirements. Consider this: One of Europe’s major economies awash with power, pushing the commodity price to a negative value as happened in Germany, meaning producers were effectively paid to stop generating; another major economy, days earlier, forced to pay out a fortune for emergency supplies.
Fair enough, the two events occurred days apart, but it does highlight the disparity between countries as the low-carbon transition goes on. The long-term fix? Build more wires.
Connecting up markets with a disparate mix of supply-side characteristics is one of the EU’s goals for the end of this decade, allowing power to flow from where it is in abundance to where it is needed, regardless of borders. But development in this area is lagging, often caught up in national planning disputes and delays to what are complex projects.
For example, when ICIS looks at short-term power prices, it is often the case that, even in Germany which is one of Europe’s most connected markets, export capacity is insufficient to allow for the most efficient use of resources and the most effective flows of power.
The EU’s goal to connect up Europe makes sense, and the drive to a low-carbon economy cannot happen unless it is achieved. It’s time to get serious about building more wires.