12-14 November 2019
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13 Jun 2018

Hitting targets for renewables requires not just new tech, but new thinking too

Florence Coullet

Dolf Gielen is the man in charge of renewables innovation at IRENA, the International Renewable Energy Agency. He’s also chairing European Utility Week’s Low Carbon Energy System Summit session: Managing a high renewable system, We asked Gielen about the way ahead for variable renewables.

 

  • We’re edging closer to a smart, sophisticated, decentralised energy system that will be able to respond to supply and demand better than ever before. What hurdles remain to be overcome to achieve this transition?

While the power sector is very important, it constitutes only part of the overall energy system. The majority of fossil fuels today are used directly for building heating, for transport and for industrial processes and feedstocks. Increasing the share of electricity in final energy use is critical and it opens up an important venue for accelerated deployment of renewable energy.  

On a global scale, solar and wind account for around 10% of power generation. There is still a long way to go before variable renewables dominate global electricity generation. As indicated in our recent analysis for the European Union, Europe is leading the way and has made great progress in terms of power system flexibility but scarcity pricing for electricity and, smart equipment that responds to such prices is still lacking. Power market design needs to evolve as well. Price signals need to reflect new market conditions and encourage resources to provide flexibility. This needs to be a joint-venture between the utility industry, regulators and government as it entails incentives to encourage flexible behaviour on the supply side and dynamic rates on the demand side, together with changing regulatory framework that rewards distribution system operators for their performance as opposed to energy sales. 

  • What are the big trends and innovations in renewable generation technologies?

We have observed significant innovation activity in renewables, as indicated for example by the more than half-a-million patents filed for renewable energy by 2017. Concerning renewable power generation, last year we have seen spectacular cost reductions for concentrated solar power and offshore wind power plants to be commissioned in the coming years. We have high hopes that these cost reductions will result in accelerated deployment worldwide. Also, developments in offshore wind with floating foundations are remarkable and could have profound implications for the future of European electricity supply.

Looking at bioenergy; biogas is receiving more attention in Europe as an option for dispatchable electricity generation that adds flexibility. Projects, such as the one at the Technical University of Munich on new control systems for flexible biogas power plants, aim to provide services to the electricity grid and balance out the energy production from renewable sources. According to data from the European Biogas Association, there were around 17,376 biogas and 459 biomethane plants operating in Europe in 2015, able to generate around 60.6 TWh of electricity. That capacity offers interesting opportunities.

 Hydropower is also innovating to benefit from new revenue streams by, for example, changing operation of hydro-pump storage units to increase the number of cycles, modernising old hydropower stations and developing control systems for hybrid-generation units combining PV and hydro.

Also, Europe has a significant ocean energy resource which could contribute to the decarbonisation of the energy system and create a new industry with export opportunities worldwide. Despite advancements in the last two decades, tapping into this resource has turned out to be a challenge.

However, continuous technological innovation remains a constant in the renewable power generation market. IRENA’s analysis on innovation for the energy transition , shows that digital innovations that use big data and machine learning to unlock efficiencies in manufacturing, and reduce installed costs or improve performance for power-generation equipment will take on increasing significance.

  • The grid will have to be ready for much higher shares of renewable generation. What will be the role of utilities in all this?

While numerous start-ups have already realised the business opportunities in the ongoing transformation of the power sector, many utilities have been late entrants. However, the industry has begun to understand its critical role and is designing new strategies and business models in a distributed, decarbonised and digitalised electricity sector.  It’s hard to predict what the outcome will be in the coming decades. I don’t think that we have reached a steady state yet. It’s likely that grids will continue to play an important role. But the role of distribution companies may change. They may evolve more into service companies than kWh suppliers. Utilities might have an important role in bringing distributed energy sources to the wholesale market, in order to maximise the benefits of the services these resources can provide to the system. 

We note that last year 60% of all new German rooftop PV systems was equipped with batteries, and electric vehicle sales are picking up throughout Europe. These developments on the battery storage side could have profound effects. In Europe, more than twenty energy firms such as EDF, Endesa, Eneco, Engie, Enel, E.ON, Iberdrola, Vattenfall and RWE are engaged in a peer-to-peer energy trading platform based on blockchain technology. This type of leadership by the utility industry to transform grids is critical if we are to achieve an energy transition that is affordable, reaches all consumers and exploits our vast renewables potential.

We see therefore that the combination of distributed renewable sources, demand-side management and the digitalisation of the energy system is changing the industry boundaries and dynamics. New business models involves services that enhance the system’s flexibility, providing the growing flexibility needs that originate from the variability of solar and wind generation. But innovative business models also involves services offered to the consumer, in order to empower their control over consumption and production, turning them into active participants in the market.

  • "Innovative business models offer new services to the consumer, giving them control over consumption and production, and turning them into active participants in the market"
    Dolf Gielen
    Director of Innovation and Technology at IRENA

 

  • The power sector is an important part of the overall energy system but there are important other forms of energy use. What is the potential of electrification and power-to-X to cover such other energy services?

In our new Global Energy Transformation – a roadmap to 2050 report , released in April 2018 at the Berlin Energy Transition Dialogue, we sets out a vision for how the world can dramatically scale up renewable energy and energy efficiency to meet the “well below 2ºC" goal of the Paris Agreement. To do this, the world needs to see significant electrification in transport and heating and cooling – which must also coincide with a dramatic shift to renewable power. In that report, the share of electricity consumed in TFEC would rise from 20% in 2015 to 40% in 2050. The role of renewable electricity would similarly gain in importance over the period, increasing from making up just under 30% of final renewable energy consumed today to 60% in 2050.  

In the transport sector, the share of electricity rises from just above 1% in 2015 to 33% in 2050. There will be over a billion electric vehicles on the road by 2050. Electricity in the buildings sector is set to rise from 31% in 2015 to 56% in final energy use, and in industry it will increase from 27% in 2015 to 43%. Heat pumps in buildings are a key solution, and the number would need to increase from 20 million today to over 250 million in 2050. In addition to electric vehicles and heat-pumps, mechanical vapour recompression and dielectric heating are industrial electrification solutions. Also, hydrogen from water electrolysis and even synthetic chemicals from CO2 and electricity may also start to play a role in the future. Utilities can embrace these opportunities and work with other stakeholders to define strategies for a successful energy transformation while creating additional revenue streams and economic growth. 

Come and hear Dolf Gielen speak at the EUW Summit Session: Managing a High Renewable System.

Other C-level utilities and industry experts speaking in this session include: Boris Schucht, CEO - 50Hertz, Bram Smeets, Associate Partner - McKinsey & Company, Edouard Sauvage, CEO – GRDF, Ole Rolser, Associate Partner - McKinsey & Company, Philippe Monloubou, CEO – Enedis, Søren Dupont Kristensen, CEO, Energy System Operator – Energinet, Thomas Zimmermann, CEO, Digital Grid – Siemens. These speakers will be exploring the new industry dynamics. 
 

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