Tension runs high on long-distance cables

EUROPE: New transmission grid capacity to take electricity from where it is generated to where it is required is urgently needed for new wind energy development in Europe. But despite the broad public and political support that wind energy enjoys, enthusiasm stops short when it comes to building new overhead high-voltage lines to carry the power.

"Good intentions alone won't work in getting the new lines built," says Torsten Herdan of German engineering association Verband Deutscher Maschinen und Anlagenbau (VDMA). Yet renewables capacity is growing faster than network expansion and the balance has to be redressed. Altogether, 42,000 kilometres of new high-voltage electricity cables are required in Europe by 2020, of which 20,000 kilometres to integrate electricity from renewable energy sources.

When the prospect of new pylons carrying high-voltage wires emerges, local communities often express fears about potential negative effects on health and the value of property, the landscape and local tourism. As a result, permitting processes for new high-voltage transmission lines can take years to reach fruition. All this must be addressed, says Peter Ahmels of Deutsche Umwelthilfe, a German environmental protection organisation. In late November, it published a document entitled Plan N, reflecting almost two years of forum discussions on network integration of renewable energy sources, how to avoid disputes and how to achieve swift expansion of electricity networks.

Alternative options

A network study released in November by the German energy agency Deutsche Energie-Angentur (Dena) illustrates the range of possibilities for network expansion (Windpower Monthly, January 2011). The authors found that some 3,500 kilometres of new high-voltage network will be needed by 2020 to accommodate the expansion of wind energy generation in Germany. If existing cables were replaced with so-called high-temperature cables, which can carry more electricity than conventional cables, just 1,700 kilometres of new route would be needed. But total investment using the new technology would be higher.

A new report on European grid scenarios released on January 18 by consultancy Energynautics for green group Greenpeace calculates that EUR70 billion and 258GW of grid upgrades will be needed if renewables are to supply 68% of Europe's electricity needs by 2030 - a scenario that is considered feasible by organisations such as the European Renewable Energy Council.

Magnetic radiation

The high profile enjoyed by speculation about the alleged health risks associated with electricity transmission combines with a wide degree of variation in national limits for electromagnetic radiation to engender confusion among the general public. At the Grids 2010 conference in Berlin, Ahmels asked rhetorically what the German public might think of the country's limit of 100 microtesla - which the government considers adequate to protect public health - if it knew that Ireland sets the limit at 16 microtesla, Switzerland and Israel at 1 microtesla and the Netherlands as low as 0.4 microtesla. To add to the confused picture, national comparisons are hard to make as different parameters are used, such as duration of exposure to electromagnetic radiation or distance from radiation source (see box at end of story).

Health and other concerns can be tackled best by talking directly to the people potentially affected, says Ahmel. He believes they want to know if the proposed new grid is really necessary or whether new solutions such as demand management, sophisticated network management, or simply increasing the capacity of the existing cable routes might be sufficient.

Strengthening dialogue

Opposition from the communities through or near which new networks would pass can only be overcome through better dialogue between local residents and network agencies. But transmission system operators cannot do the job alone. Other stakeholders including politicians and the wind industry have to help in the process of explaining why a particular transmission project is necessary.

Compensation is an issue that needs to be looked at, according to Olivier Feix, spokesman for 50Hertz Transmission, itself a company that has faced big delays in getting necessary overhead cable links built in eastern Germany. Planning law is very specific when it comes to protection of the environment, habitats, flora and fauna but it does not say clearly how people should be protected. Project costs can increase by 5-10% because of environmental protection measures or compensation to people that are deemed to have suffered disadvantage in connection with transmission cable projects not benefiting them directly. At times, personal feelings of unfairness are inevitable, says Feix. In his view, federal legislation is required.

Border conflict

Lack of social acceptance is not just a German phenomenon. Public opposition has led to substantial delays in a 63-kilometre cross-border cable from Baixas, near Perpignan, in France, across the Pyrenees to Santa Llogaia, near Figueres, in Spain. The new interconnector cable will provide 2GW of new transmission capacity between the French and Spanish high-voltage networks. A route for this Electrical Interconnection France-Spain (Inelfe) project was identified in 2001, but emotions ran so high - and trust in the transmission system operator and the local administration dropped to such a low level - that in 2006 the French and Spanish governments requested the European Commission to provide a mediator. In 2007, former European Competition Commissioner Mario Monti was appointed to the task. One year later, a memorandum of understanding was signed for the construction instead of an underground high-voltage direct-current line.

Without putting a figure on the costs of the long planning and preparatory procedures for Inelfe, David Landier, of French transmission operator RTE, described the process as "dramatically expensive".

Third party

Landier stresses the importance of involving a neutral third party, the need to reach and share a common understanding of what is at stake in building the new transmission line, the importance of creating small working groups with local representatives and of answering all questions. He warns, though, that providing such transparency opens the door to bargaining attempts for compensation, even though the decision to use more expensive underground cable "is in itself an expensive form of compensation".

The underground cable investment for the Inelfe Pyrenean line will amount to some EUR700 million, which is between eight to ten times higher than that of a conventional overhead line, according to Spanish transmission system operator Red Electrica. The new line, the first new interconnector between the two countries since 1982, is an EU priority project scheduled for commissioning by the end of 2013.

In view of the considerable planning effort and years of time involved in getting the cables permitted and built, public acceptance and support is vital.

SUPPLY AND DEMAND BY DIRK KAISER AND MORTEN MADSEN

When supply exceeds demand in energy markets prices turn negative, meaning firms generating power must, at times, pay to offload electricity to the grid. These negative prices provide a strong incentive for fossil-fuel plants, which incur high marginal costs to generate electricity, to save money by stopping production.

A reduction in fossil-fuel generation provides a short-lived opportunity for wind generators, as more transmission space becomes available. But, in the longer term, negative prices will shut down wind turbines too. Supply and demand will then be brought back into balance.

Negative prices were introduced to the Nordic electricity market, operating in Norway, Denmark, Sweden and Finland, via the NordPool spot exchange in 2009. They are closely linked to the increasing penetration of wind in the European grid.

The concept of negative pricing represented a game changer for European power operators. There are two key challenges associated with buying wind power. One is how to offer a fixed price on wind power when including the risk of negative prices. The second is how to deal with imbalances in a negative-price scenario.

Denmark-based Nordjysk Elhandel (NE) is a private firm that trades power and manages the output of most of the wind turbines operating in Denmark's market, along with several wind power facilities in Sweden. Its total installed capacity across the two countries is 1.7GW.

NE's clients include combined heat and power (CHP) plants, carbon emissions and financial risk management operators. NE uses a number of tools to manage negative prices, including CHP plants, weather forecasting, closing down wind turbines, financial experts trading across national borders and pricing areas.

The process

This is how it works. A wind farm enters into an agreement to sell NE at a fixed price the electricity it estimates it will generate during a certain period. NE then sells this power to the grid assuming the full risk of fluctuating market prices - including negative prices.

If negative pricing does occur, a CHP plant can quickly lower the electricity supply by turning off power and heat production and, if necessary, produce only heat on a gas-fired or electric boiler. Negative prices can thus generate unique business opportunities for firms like NE that manage both CHP and wind turbines.

Another tool available is weather forecasting. NE has an in-house meteorologist that uses advanced forecasting methods enabling NE to turn off specific turbines when necessary. The issue is how to honour the guaranteed price promised to NE's customer - the wind farm - if a shutdown is impossible.

One way is to trade power across regions at the best price available. NE pays for the hedging premium with some of the value generated in high-price scenarios. This way, both the customer and NE are covered against the risk of negative prices.

Nordic power markets are structurally similar to Germany's, but the national transmission system operators (TSOs) handle imbalances differently. In Germany, the TSO has considerable authority to intervene, while in the Nordpool area prices are left to the market to work out.

In Germany, several TSOs have framework agreements, known as bilanzkreizverantworlichkeit, on how to balance power supply and demand in their respective price zones. This applies to various sources of power and prioritises those under the Erneuerbare Energien Gesetz (EEG) renewables subsidy scheme.

This means that, in Germany, negative prices only exist for wind power sold on the market and not EEG-subsidised wind power.

Sweden has just one TSO but the market is soon to be split up in four different price areas. As a result, the areas with the most installed turbine capacity will also suffer the most from generally lower prices and an increased risk of negative price spikes.

Differences

The different pricing areas necessitate the creation of contracts for difference (CfDs), financial instruments that require buyers of electricity to pay the difference between the power price at the time contracts were agreed and the spot price. CfDs are traded exactly as any amount of power traded in the Nordpool area and are increasingly important for anyone offering to buy energy from wind farms in Northern Europe.

One of the most cost-efficient tools to avoid negative prices is to level out oversupply with lack of supply across national borders or across different pricing areas. This is true anywhere in Europe and makes sufficient grid capacity decisive for price levels. If the electricity grid is not upgraded as needed, it is widely expected the Nordpool will become a low-price area. This scenario creates a challenge for those responsible for balancing power, either for a TSO or a market operator.

There are two main ways to put grid restraints and the probability of negative prices in a larger perspective. One is to create limited pricing areas where consumers will pay prices that reflect supply and demand within the grid's physical capacity in that pricing area. In this way, NE reacts on negative prices if there is oversupply.

Alternatively, larger grids can be created, allowing supply and demand to find equilibrium within a larger geographical area, ensuring that the most value is derived from distant wind farms and other renewable energy sources. In the former perspective, there is room for the solutions presented by NE. The latter perspective is more about old-fashioned border balancing.

Morten Madsen and Dirk Kaiser work at Danish firm Nordjysk Elhandel, which trades power in Scandinavian and continental European energy markets

MAGNETIC FIELD - LEVELS OF EXPOSURE

- The unit microtesla is a measure of the magnetic field created by an electricity cable when current flows through it. The magnetic field increases in strength with the amount of current flowing through the wire. Generally, at a distance of 40 metres from the cable, magnetic radiation does not exceed 1 microtesla, according to overhead cable protest group Burgerinitiative Pro-Erdkabel NRW.

- The Swiss Federal Office for the Environment points out that buildings walls cannot block out magnetic fields effectively. High-voltage overhead power lines can increase exposure to magnetic fields in neighbouring houses up to a distance of 200 metres. Further away, exposure is on a par with the normal background level of 0.02-0.04 microtesla in residential dwellings connected to the electricity mains.

- Electromagnetic radiation can be much higher from domestic appliances. For example, a hair dryer can measure up to 2,500 microtesla in the immediate vicinity of the head, a 1kW electric kettle 1.5 microtesla at a distance of 10 centimetres and a television can measure up to 4 microtesla at a distance of 3 centimetres, according to Bundesamt fur Strahlenschutz, Germany's federal office for protection against radiation.

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