SOLAR AND WIND POWER ON MARKET TERMS - NEW APPROACHES
In parallel with the promising possibilities for offshore wind power, especially in the North Sea, there is ongoing successful development of onshore facilities. A successful development which requires new market solutions and planning approaches if the success is to be converted into more climate-friendly energy consumption and with the best possible socio-economic benefits.
Wind power and, in particular, pv power plants seem to be spreading at a pace that far exceeds our expectations just a few years ago. Solar panels which are installed on commercial terms and without subsidies will accelerate the transition.
This poses a number of challenges which can be said to be closely related to the actual strength of spreading solar energy and wind power on market terms:
The strength is that the establishment and location of production facilities for renewable energy are not to be planned and financed centrally, but are diffused more rapidly and in line with the commercial incentives which stimulate the activities of RE developers around Denmark.
The challenge is that the market-based establishment of RE facilities takes place unpredictably and without being managed in terms of where it would be beneficial to place RE production facilities in relation to consumption, the electricity grid and the overall energy system in general.
The figure shows wind and solar power compared to electricity consumption per municipality. The substantial color difference illustrate the need for transporting renewable energy.
New approaches to energy markets and planning are necessary. In line with the increasingly rapid and unpredictable expansion of RE facilities, there is a need to find the best ways of
meeting the above challenge.
RE investors do not currently need to take into account electricity grid capacity or energy consumption in the local area when deciding on the desired geographical location of the solar panels or onshore wind turbines that are to generate renewable energy.
For example, a developer pays the same costs for locating a photovoltaic cell or a wind turbine close to the place of consumption and a strong electricity grid as for locating these facilities far from consumption centres in areas in which the grid already handles large volumes of RE electricity. The business potential is the same regardless of the grid capacity, as downward regulation of production as a result of grid restrictions triggers compensation once the plant is connected to the grid.
Energinet works with both physical grid reinforcements and alternatives to this. We can achieve part of the objective based on optimised planning, but it will also be necessary to establish incentives for players and developers to deliver consumption and production flexibility as well as a more expedient geographical location of new RE production and consumption.
How Energinet focus on SOLAR AND WIND POWER ON MARKET TERMS
Energinet seeks to:
- Strengthen the collaboration with authorities and players to develop stronger incentives for location of new consumption and new production, taking into account the electricity grid capacity.
- Work for higher agility in decision-making processes, so that the expansion of the electricity grid is adjusted to the uncertainty and pace of change connected with renewable energy on market terms.
- Contribute to the development of favourable areas and supporting a framework for energy clusters which can accommodate large-scale offshore wind power and large volumes of renewable energy from onshore facilities, and give impetus to sector coupling.