Addressing the renewables challenge

Pressure on the wind sector to reduce the cost of wind-generated electricity to consumers is unremitting. Discussions at the major Husum WindEnergy trade fair in Germany in September revealed that more and more countries are attracted to using clean energy sources but want to know how to deal with the costs and transmission network capacity limitations.

Information transfer on these issues is vital, a fact recognised by Germany's environment ministry, which is working to speed up the flow of wind-energy know-how into eastern European countries. Under the banner of Windtec, in association with German wind energy association BWE and engineering federation VDMA, the ministry is opening up a political dialogue on using renewables potential, starting with Poland, Bulgaria and Romania, said Katharina Reiche, permanent secretary of state at the ministry. "With the help of the ministry we can also open doors for German exports," added Thorsten Herdan, managing director of VDMA's power systems association.

"There are doubts in eastern Europe whether a renewables strategy can be implemented without a drop in living standards," said Hermann Albers, BWE president. "We want to share our experience, make clear where the opportunities lie and enter into discussions before decisions are made to build new conventional power stations, especially when assumptions are made that these will be able to supply the German market."

History lessons

The German market is switching to renewables, making it increasingly difficult for coal and gas stations in the country to operate profitably. While Germany does not have all the answers, stressed Albers, its past history of wind and other renewables development and current battles to reduce costs can provide pointers to other countries on the pitfalls that may be avoided.

Germany is having to speed up its own learning to meet the challenges of the government's policy to transfer its mainly fossil-fuel and nuclear-based electricity system to one based 80% on renewables by 2050. This has put the wind and renewables sector under pressure to prove the target is achievable and fears remain that an electricity generation gap may open up.

Overshooting targets

But for the moment, enthusiasm for wind energy, specifically onshore, is so high that the government fears its target of a 35% renewables contribution to the electricity supply by 2020 may be overstepped by as much as 60%. Implementing the many onshore wind projects planned could cause unacceptable costs to the consumer, it warns. The Free Democratic Party (FDP), the minority partner in Germany's three-party federal coalition government, has even presented a paper calling for Germany's renewables growth to be restricted within a European or national quota model.

Albers protests that the government's aim to cap wind developments is designed to meet the interests of the conventional energy sector. "The government's energy hallmark is to go back to monopoly company dominance," he told delegates. According to data from federal energy regulator Bundesnetzagentur, four energy giants - E.on, RWE, EnBW and Vattenfall - represent around 77% of the country's conventional electricity generating capacity. Against this background, the German wind sector, dominated by small and medium-sized firms, has to react fast to ensure its own survival. In the run-up to a revision of the Renewable Energy Act due in 2014, the wind industry is looking at how to reduce costs and improve wind integration.

Financial models

One model put forward by the BWE is to reduce the feed-in tariff - currently around EUR0.09/kWh - and offer an additional incentive for wind-farm operators that are able to provide positive or negative reserve power. The turbines could then participate in the reserve power market to increase or lower output on demand - naturally only possible when the wind is blowing. This way, the need to keep fossil-fired power stations online on a daily basis to provide reserve power could be reduced. But, the BWE stresses, such arrangements for wind must be based on long-term contracts to ensure that project finance remains possible and low cost.

The guaranteed feed-in payment period could be extended to 25 years from the current 20 years, with a corresponding reduction in the feed-in tariff per kilowatt hour, suggests Matthias Willenbacher, managing director and co-owner of developer Juwi. Average payments over the whole period would not change but are spread out further to bring down the cost per kilowatt hour very close to that of new conventional coal, gas and nuclear power stations, he says.

This could help counter political opponents who claim wind is getting too much support, and may encourage conventional power-station operators in other countries to reconsider plans for new coal or gas units and look at wind energy instead.

Any efforts to cut feed-in tariffs would help to cushion the increase to EUR0.05277/kWh from the current EUR0.03592/kWh of the renewable-energy charge to Germany's electricity consumers in 2013, as announced last month. This levy is charged on electricity bills to cover the difference between the market price of electricity and the feed-in tariff payment rates, a difference that has increased as more solar power during daylight hours is driving down the wholesale price of power. Currently the rate is 14% of the standard electricity cost (see chart). This includes a component due to falling wholesale electricity prices as wind and solar power are sold in the national and cross-border electricity market in which, currently, the price is steered by the cost of fuel. Solar and wind have no conventional fuel.

The German wind sector and many other electricity market players are already investigating possibilities for a new market design that can overcome the issue of wind and solar reducing the wholesale price of power. Initiatives being explored include people's wind stations, where individuals own all or a substantial share of the wind farm and then sell the wind power to themselves at a price that could be a couple of cents per kilowatt hour lower than that charged by the local electricity retailer, Rainer Heinsohn, spokesman for German wind developer PNE Wind, said at Husum. To make this work, the wind project and its local customers would need to be granted relief from certain price parameters such as network usage as part of the transmission network arrangements.

System integration was another widely-discussed topic at Husum, a problem that almost every country faces at some stage. Many players now see one answer in a more even distribution of wind turbines across the country. This is being made increasingly possible through the growing trend towards much higher onshore turbine towers with longer blades, and medium-sized generators. These can generate for longer periods, becoming economically feasible at locations far inland, and creating a wider geographic spread of wind energy, thus reducing the need for transmission network expansion (see graphic).

Number of full load hours per year for different onshore turbine types

Temperature control

The emerging potential for onshore wind energy in inland regions is prompting a closer look at how to squeeze more transmission capacity out of existing cables. The norm for electricity transmission capacity of cables uses an assumed wind speed of just 0.6 metres per second (m/s) with ambient temperature, and therefore of the cables themselves, of 35 degrees centigrade. Yet, the cables are cooled when wind speeds are high - in Germany at an average 10m/s wind speed it can fall down to an average 8 degrees centigrade. With a considerable safety margin, this means transmission capacity could be raised by around 50% without the danger of cable sagging due to overheating, argues the BWE. Grid operator E.on Netz is now implementing temperature monitoring to allow it to increase transmission capacity on its network.

Another helpful measure would be to allow groups of wind-farm operators to build their own underground cable connections to the highest voltage network to take the strain off the medium-voltage network into which most wind projects are currently connected. The investment could be financed by charging network usage fees just as traditional network companies reap back their investments, argues the BWE.

The industry is now waiting to see how the major electricity network operators will respond to the latest challenge and suggestions from the wind sector.