Tidal Wave of Green Energy Swamping Europe. Coming to a Utility Near You.

June 7, 2014


Europe’s drive toward a power system based on renewable energy has gone so far that output will probably need to be cut within months because of oversupply.

Network operators are likely to curb solar and wind generation at times of low demand to prevent overloading the region’s 188,000 miles (302,557 kilometers) of power linesEntso-e, the grid association in Brussels, said last month. Renewable output is poised to almost double to 18 percent by 2020, according to Energy Brainpool GmbH & Co. KG, a consulting firm in Berlin.

Europe’s fivefold surge in green energy in the past decade pushed prices to a nine-year low and wiped out $400 billion in market value of utilities from Germany’s RWE AG (RWE) to GDF Suez SA in Paris. There’s so much power available on windy and sunny days in Germany and Austria that the number of hours producers had to pay consumers to use it doubled in the first five months of 2014, data from the Epex Spot SE exchange in Paris show.

“The system is costly and we need intelligent answers,” Johannes Teyssen, chief executive officer of Dusseldorf, Germany-based EON SE, said June 2 in an interview at the Eurelectric conference in London. “There are some hours where it is inevitable that we will be oversupplied.”

The expansion of renewables is at the center of the European Union’s unprecedented effort to cutcarbon emissions by 20 percent from 1990 levels by the end of the decade. Governments in the 28-nation bloc are discussing accelerating reductions to 40 percent by 2030.

Eight countries from Germany to Bulgaria will need to export or curtail generation, including renewables, at times of low demand during most of this summer, Entso-e said in its May 22 Summer Outlook. Risks to grid operations will be most acute in Bulgaria, Spain and Romania, where capacity to ship power to neighboring countries is less than what’s needed, the 41-member group said.

“It is hard to predict when the grid operator will intervene and for how long and it’s a big problem,” said Burkhard Steinhausen, whose team at Trianel GmbH manages the output of 3,000 megawatts of renewable capacity on behalf of producers. A supply of 1,000 megawatts is enough to power about 2 million European homes.

“If the grid isn’t expanded at the same pace as renewables expansion, then it will happen more often,” he said June 4 by phone from Aachen, Germany.

Carl Pope in Bloomberg View:

Deregulated electricity generators make most of their profits on hot summer afternoons, when air conditioners and offices force grid operators to call up their most expensive electricity: natural gas “peaker” plants. Cheap to build but expensive to operate, these plants are essentially jet engines, producing power on demand for a few hours at a time. However, the entire industry benefits when peaker plants kick in, because every other generator, including the cheapest hydropower operator, receives the same top dollar during those peak hours.

Solar panels — whether utility scale or residential rooftop — generate maximum power on exactly those hot afternoons when demand peaks. What’s more, they do so at no marginal cost; the sun is free. This reduces reliance on peakers, causing prices to fall across the board, including for customers without solar power.

This is what terrifies power companies. In California, the afternoon peak has effectively collapsed. CAISO, the state’s grid manager, projects that the peak will become an afternoon chasm, so low that even power plants designed to operate 24 hours a day as “baseload power” (nuclear energy is a good example) may face difficult decisions about when to operate.

The first victims among utilities will be generators that sell electricity from peakers and other plants in the open market. Soon, their plants will be needed only for the few hours around dusk when the sun is weak but demand is still relatively high.

The monopoly utilities will be hit next. Edison Electric Institute warns of “irreparable damages to revenues and growth prospects” due to the spread of distributed power generation from renewable energy sources.

Why is solar growing so fast? Because in the past three years, the cost of panels has been halved. As prices continue to decline, more rooftops will sprout polysilicon. At the same time, increased energy efficiency is cutting waste. A new generation of efficient appliances — no more heat-generating incandescent light bulbs, for one — is already shaving 7 percent off U.S. electricity demand.

Utilities used to be paid handsomely for keeping idle power plants ready for peak hours on those hot summer days. Now, as an increasing share of peak demand is met by solar panels owned or leased by customers, distribution utilities will simultaneously face slumping volume and lower prices.

To safeguard their revenue, utilities are trying to slow development of rooftop solar by refusing to pay what’s called “fair value of solar” — essentially equitable prices for the electricity that solar panels generate. At the same time, utilities are increasing the fees they levy for access to transmission lines that provide customers with electricity at night.

That may encourage the nation’s hundreds of thousands of rooftop solar owners to pair their solar panels with batteries to store power for the evening. As utilities raise prices — for both power and grid access — individual customers and even entire communities will end long-standing arrangements with traditional utilities altogether, as Chicago, Cincinnati and Marin County, California, have already done, citing discontent over poor utility service and prices.

Utility insiders call this, bluntly, “a death spiral.” In its report, Bernstein noted that utilities had only three choices: suppress growth of cheap solar by refusing to buy the power, raise the costs of connecting to the grid or become rooftop solar developers themselves. “We cannot think of a fourth option.”

There is one. Public utilities have an enormous advantage over the distributed solar companies that are disrupting their afternoon peak-load model. Solar power has very high capital expenses; the costs of borrowing determine who can deploy panels cheaply. Utilities, meanwhile, have access to the cheapest capital in the private sector.

In the very early days of electric power, utilities owned the arc lights that illuminated cities. Over time, they left those appliances to their customers and simply delivered power to the meter. They should return to that earlier, capital-intensive model now.

Why? Utilities are uniquely positioned to provide the capital, storage and connectivity needed to construct the cheapest possible clean-energy power system. They also generally have the best relationships with the customers for rooftop panels, the deepest knowledge of the market and, because they control the grid, a clear advantage in deploying electricity storage technologies such as batteries (another capital-hungry component of the renewable revolution). Apple and Amazon.com fight to accumulate information about their customers and what they consume; electric utilities have a meter in everyone’s house that delivers information on energy consumption free.



16 Responses to “Tidal Wave of Green Energy Swamping Europe. Coming to a Utility Near You.”

  1. Oversupply is the perfect time for energy storage and conversion. Water electrolysis for hydrogen manufacture, pumping water for physical storage, converting electricity to long-term heat storage, and any other form of energy conversion work. Oversupply is opportunity.

    • Oh no, not the “hydrogen storage” argument. Here is a source of info from a very “pro-hydrogen” website:


      Even they admit that the energy efficiency of hydrogen storage is about 30 to 40%, but they are hopeful that this can be approved to 50%. Even that improvement would require very expensive fuel cells. Without fuel cells, you’d need a gas turbine to produce electricity from stored hydrogen – whose goning to operate a gas turbine in their home? Aside from expense and poor efficiency, also consider that hydrogen (colorless and odorless) leaks like nothing else, and is an explosive gas.

      By comparison, battery storage energy efficiency is around 90%. Unless you’re an idiot and install positive-to-negative, you’d have a hard time blowing up a battery. There’s a reason why EVs use batteries and not stored hydrogen. George W Bush (remember him?) came up with that whole “hydrogen highway” idea because his administration wanted to kill off EVs, not actually build them.

      If you really want solar and wind to work, you need to get away from this whole hydrogen nonsense. Hydrogen is good for powering rockets – sometimes with seriously negative results:


      • Yes. Hydrogen is rocket fuel and, as such, very valuable.

        Although, with a mind-set that assumes every rocket is a challenger disaster, I can see how you’d be blinded by pessimism.

      • Oh, and just one more thing…

        Because Bush was so, so in favor of a renewables based economy in which the base cost of energy just keeps falling…


  2. Gotta love Bloomberg News!
    Let’s re-do the ancient grid,too!

  3. I’d like to put in a shout for Spain, who regularly meet more than 50% of electricity demand from low-carbon sources. At the moment:

    Wind 30%; Solar 15.5%; Nuclear 18%; Hydro 4.00% (This can be up to 25%)


    They export to France and Portugal from time to time.

    • redskylite Says:

      Thanks for sharing that great real time monitor and Spain look well on the way to eliminating coal. ¡Hurra por España

  4. Craig Morris is a consistently reliable and accurate source of information. Tidbits:

    – New data from German utilities organisation shows brown and black coal generation, gas and nuclear all fell in 1st quarter, as renewables rose.
    – The German public never asked for nuclear power but now has to pay for the entire mess
    – The New York Times’ article arguing Germany’s energy transition proves that the world needs nuclear required an astonishing level of ignorance to write.
    – In northern Europe, demand for heat makes up around 40 percent of total energy demand. Passive House architecture can nearly wipe out that demand entirely.
    – Large industrial power users in renewable-focused Germany will pay 35% less for their electricity next year than those in nuclear powered France.
    – Reports that the Energiewende is hurting German industry come at a time when the German economy has never looked better.
    – These four charts dispel some myths about cost of technologies, impact on households, and the energy balance in Europe.
    – Germany is continuing to shut down their nuclear plants as they become increasingly unused and unprofitable.
    – Contrary to widespread belief, CO2 emissions from Germany’s electricity sector did not rise in 2013. They actually fell slightly.
    – Germans are increasingly investigating “energy poverty” – and discovering that electricity is a smaller item than motor fuel and heat.

  5. rayduray Says:

    Re: “the number of hours producers had to pay consumers to use it doubled in the first five months of 2014”

    This number of hours is

    This is misleading. No retail “consumer” benefited from negative pricing in Germany. The brief benefit accrued to utilities who had the ability to acquire supply at negative prices and then resell the power at normal rates. Nice work when you can get it.

    And unfortunately for society most of the benefit of negative pricing (itself a completely arbitrary “market” ideology superstition) accrues to Enron-type phony financiers and greed-driven traders.

    Reuters has more: http://www.reuters.com/article/2014/01/09/us-europe-power-prices-idUSBREA080S120140109

    More about EPEXSPOT, which to me appears to be a glorified Enron type trading scheme based in Paris: http://www.epexspot.com/dib/detail.html#

  6. The good news is that the ‘fix’ is already underway. Germany’s got one wind-to-hydrogen plant in operation and 17 others under construction. Austria has a joint project with Audi turning excess renewables into H2 and methane made with atmospheric carbon. The German natural gas grid can store many months worth of energy as H2.




    Five pillars of the movement to 100% renewable energy (electricity, heat, and transportation) uses H2 as the universal energy carrier/storage medium for providing electricity, heat, and electric transportation.

  7. The high cost of German retail electricity despite low wholesale costs may have some explanation in industry not paying their fair share. Retail prices have large taxes, so the government sets prices. Likewise, European governments keep high taxes on petrol, which keeps those fuel costs high. So it’s the government that sings the tune.
    Utilities that have the ability to acquire energy at low rates and sell back later
    That would be storage, wouldn’t it?
    Seems like the biggest problem is setting policy. Given that most german utilities are losing money, who are these benefitted? An inference was made about epex compared tomenron, but the references do not support that.
    You are confusing epex spot, a European energy exchange in this discussion. They don’t set retail price. 50% of german electric retail price is taxes. That is the single largest factor in high german residential retail prices. It is government policy to keep residential retail prices high and industry prices low to maintain international competitiveness. Unless you can show something more than those references, which show little more than that, the conspiratorial hint is running out of steam.

  8. climatebob Says:

    The electricity companies will have a surplus of power unless they find new markets. They are so lacking in imagination that they are not looking at transport. Transport is powered by oil which is a diminishing resource with a volatile price and is ripe for a take over. http://www.climateoutcome.kiwi.nz/clean-energy-alternatives.html

  9. andrewfez Says:

    And then this happened:

    World first: Australian solar plant has generated “supercritical” steam that rivals fossil fuels’

    A solar thermal test plant in Newcastle, Australia, has generated “supercritical” steam at a pressure of 23.5 mpa (3400 psi) and 570°C (1,058°F).

    CSIRO is claiming it as a world record, and it’s a HUGE step for solar thermal energy.

    “It’s like breaking the sound barrier; this step change proves solar has the potential to compete with the peak performance capabilities of fossil fuel sources,” Dr Alex Wonhas, CSIRO’s Energy Director, told Colin Jeffrey for Gizmag.

    The Energy Centre uses a field of more than 600 mirrors (known as heliostats) which are all directed at two towers housing solar receivers and turbines, Gizmag reports.

    This supercritical steam is used to drive the world’s most advanced power plant turbines, but previously it’s only been possible to produce it by burning fossil fuels such as coal or gas.

    “Instead of relying on burning fossil fuels to produce supercritical steam, this breakthrough demonstrates that the power plants of the future could instead be using the free, zero emission energy of the sun to achieve the same result,” Dr Wonhas explained.


  10. Solar furnaces back to the 1960’s generated temperatures high enough to melt the most resistant of refractories; supercritical steam would only have required a proper boiler at the focus.

    Generating supercritical steam for a single test begs the question:  can you get a sufficiently ample and steady supply to generate useful amounts of electricity?  Can you avoid damage to the turbine from thermal cycling?  If either answer is “no”, then this is of questionable usefulness and isn’t even part of the solution to GHG emissions.

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