'The technology works': How wind will fill the power gap

DNV GL chief Ditlev Engel talks exclusively to Windpower Monthly about the pandemic's effect on clean energy production

The Covid-19 crisis has disrupted the wind-power industry’s supply chains and hindered project installations, while worldwide economic uncertainty has slowed transactions.

But as governments draw up stimulus packages to fight recessions, the pandemic has indirectly presented a chance to set the foundations for meaningful, long-lasting change.

With fewer flights being made and commercial activity declining as millions work from home, DNV GL believes carbon emissions may well have already peaked in 2019.

However, the analysis firm’s CEO, Ditlev Engel, warns that if the world is to keep global warming to 1.5C above pre-industrial levels and limit the dangerous consequences of this change, the 8% reduction in energy demand forecast for 2020 will need to happen every year until mid-century.

"We should be mindful that this tremendous impact that Covid has had on everything needs to happen every year," he explains. "Hopefully, not through pandemics. Next year, we can’t stop flying: We need to find ways with new technology to reduce emissions in a sustainable way. We need a paradigm shift."

Effectively and sustainably combating global warming will require a fundamental rethink — greater electrification of hard-to-abate sectors such as heating, transportation and buildings; more robust, transparent and stable carbon pricing; much more renewables and increased use of digital technologies that enable variable renewables to play a greater role in the grid.

Technology solutions exist for these challenges, Engel says, but successful implementation at scale will need a policy push. And this push will need to happen now.

It will also require rethinking spatial planning, shipping routes and the role of ports as offshore wind capacity increases and generation rises to more than a quarter of total wind production by mid-century.

"This is not something that can be done in a split second. It will take a while," he admits. "What we would like to give to the regulatory people is the confidence in the technology, so that they shouldn’t worry about whether the tech will deliver. It will. But we can’t wait on these decisions."

Engel points to the UK’s offshore wind sector as an example. In 2010, the country decided to push offshore wind through competitive auctions. It did not become a global leader overnight, but ten years later, the UK has the most offshore wind capacity installed, and the industry is calling for its auction model to be replicated in markets throughout the world.

Economic recovery

The pandemic spread rapidly from China, touching all aspects of society. Governments are now deciding packages and policies that not only stave off recession in the near term, but that also include measures — which could include electrification, renewables and more advanced grids — to enable the "paradigm shift" needed to reach net-zero emissions.

Engel welcomes big-budget, big-vision packages such as the European Green Deal, but stresses that more specific, localised changes will be needed to make such packages a success.

Describing himself as "tech-optimistic, regulatory-pessimistic", Engel explains: "The amount of money that is needed to deploy these projects is definitely there. It’s not just a capital-constraint issue we are dealing with. We need much faster permitting and grid build-out. Brussels has made a tremendous amount of money available. Now it’s up to the member states to enable the projects to be built."

There will also need to be huge investments in grids to match the growth in electricity demand and the increased generation and integration of renewables, DNV GL stated in the "next five years" section of its latest Energy Transition Outlook report. The analysts forecast the world’s wind and solar fleet more than doubling between 2019 and 2025 — from 1,250GW to 2,690GW. Grids will need to be reinforced to better integrate this expansion, and to be aided by digital tools to better handle renewables’ variability. They should also be equipped with high-voltage direct-current cables to help long-distance interconnection between local grids and connect offshore wind farms, DNV GL suggests.

Glimpse of the future

Engel says the Covid-19 pandemic has not only illustrated the scale of the challenge needed to decarbonise, but also offered a glimpse of the power grid of the future.

"Because of the low power demand, we have seen the market share of renewables go up because more fossil fuels have been switched off and renewables given priority access to the grid," he explains.

In Germany, renewables reached 70% penetration of the power mix on some days during lockdown, while the UK grid managed 67 days without coal this summer, the longest coal-free period since the industrial revolution. "It has been a huge challenge to handle this volatility, but there have been no blackouts."

These developments should give policymakers the confidence to commit to setting in motion long-term societal changes with a power-system based on renewables. However, he concedes that there will likely be uneven growth between different countries, different regions and different companies.

There will largely be a split between "more sophisticated" OECD countries and "developing countries", he explained: "Over the period, OECD countries will reduce energy consumption by half.

"But in other countries, like India and China, it’s important what they decide as they develop, because they will have a huge increase in energy demand as they increase their GDP. We have to remember, it’s not just a build-out, but a switch-off."

Engel also points out that there appear to be differences in the development of stimulus packages.

For example, the US Congress approved $2 trillion in stimulus packages, but none of these funds are targeted specifically at energy projects or infrastructure. Meanwhile, the EU plans to spend €503 billion of its own money and leverage a further €500 billion to pursue carbon-reduction goals through its European Green Deal.

But beyond big-vision measures setting courses of action through to 2050, renewable-energy companies, grid operators and the finance community need to see how the paradigm shift needed to reach net-zero emissions will work, and how it will work in stages.

"What we need to see is long-term targets that we are committed to in 2022, 2023, 2024 and 2025," Engel explains. "It is about stepping stones. We need a more granular, five-year outlook.

"There is a difference in what will be happening in 2050 and what will be happening in 2025. This is really what we have to focus on."

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