Flexible energy systems urgently needed to meet climate goals

To achieve our climate targets, we need carbon emissions to peak by 2025 and halve by the end of this decade, writes Anders Linberg, president of Wärtsilä Energy.

The urgency of the situation is unequivocal, and the solution is equally clear: We need to triple renewable energy and require a seismic change in the level of investment - up to $5.7 trillion per year by 2030 to put us on course for the 1.5C Paris Agreement scenario.

The final quarter of this year, as we build up to COP28, the UN Climate Change Conference, is the critical moment to shift our focus from targets to implementation at pace.

However, renewables alone are not enough to deliver the change we need. To enable wind and solar to thrive, we need to build flexible energy systems that are reliable and affordable. We cannot delay any longer.

Wasting renewable energy

Around the world, renewables are quickly becoming the cheapest form of new energy generation. Setting ambitious renewable energy targets and deploying wind and solar at scale is essential to enabling rapid decarbonisation. However, investing trillions of dollars into wind and solar will waste energy and money if they are built into inflexible power systems.

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For generations, we have been reliant upon traditional, inflexible power plants, such as coal, combined-cycle gas turbines and nuclear to provide baseload power for our energy grids. These traditional power systems now need to adapt, as renewable energy is expected to meet 35% of global power generation by 2025.

As wind and solar power is intermittent, running them alongside inflexible baseload power plants, which cannot quickly ramp up and down to match the changing levels of renewable power, can create significant issues, such as instability or unreliability for our power grids. As the level of renewable power on our grids increases in the coming years, a large share of these inflexible power plants will become obsolete, uneconomical stranded assets in our power grids.

We therefore need to combine the build out of renewables with a substantial increase in flexible capacity, such as grid balancing engines and energy storage, which can quickly ramp up and down to support wind and solar power.

Because this flexible capacity can respond to sudden changes in demand and supply, it can also serve as different ancillary services in the grid. This includes e.g., frequency control, maintaining the stability and reliability of the grid, preventing blackouts and power disruptions.

A lack of flexibility often leads to renewables being switched off, or curtailed, as it is cheaper and easier to stop wind and solar from generating power than it is to switch off or ramp down a baseload power plant.

This issue becomes increasingly prominent as renewable energy generation increases. Last April, Spain had to curtail its solar power production due to an unforeseen drop in electricity demand. This sudden development led to a drastic decline in the wholesale electricity price, plummeting from €168.50 per megawatt-hour (/MWh) to a record low €3.70/MWh on April 17th.

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Flexibility is not an optional addition to our power systems with an increasing amount of renewables– it is an essential part of our future power grids. If we fail to deliver flexibility at scale, it will threaten our ability to provide affordable and reliable power to industry, homes and businesses, alongside achieving our decarbonisation targets. It will inhibit our ability to deliver reliable renewable power, which could have a significant impact on lives and livelihoods.

Building affordable power systems

Wärtsilä has studied and modelled over 190 energy systems around the world, using energy market simulation software. We have found that anywhere in the world, the most cost-effective approach to reach 100% renewable energy is to combine renewable power with flexibility in the form of grid balancing engines and energy storage. These solutions offer high levels of dispatchability and can ramp up and down quickly in any conditions. This setup delivers reliable renewables at a low levelised cost of electricity, making clean energy affordable for all.

For example, Europe can cut its power sector gas consumption in half, reduce energy costs by $356 billion (compared to the baseline modelling in the IEA’s Renewables 2021 forecast) and increase energy independence by 2030 if it rapidly scales up its renewable capacity and flexibility.

Wärtsilä’s modelling found that if Europe was to deliver up to 80GW per year of renewable capacity, backed by flexible balancing technologies, we would see the renewable energy share in electricity generation increase from around 33% today to over 60% by 2030. This would have a direct impact on reducing electricity bills in the short and long term, by up to 10%.

Future-proofing our power

The path to net zero is not linear and the last few years have demonstrated that we cannot see exactly what is around the corner. Therefore, policy makers must establish market conditions and policies to enable us to build flexibility into power systems today and ensure they’re adaptable for tomorrow.

The balancing of renewables requires both energy storage and grid balancing power plants. They work together to cover sub-second, minute, daily and seasonal variations and ensure a steady supply of electricity when renewable output fluctuates.

Grid balancing engine technology can also be converted to run on hydrogen and other sustainable fuels in future. These include fuels produced from excess wind and solar power, to enable a closed loop, fully renewable system and avoid stranded assets.

Such flexible engine technology is the optimal choice to supporting our increasingly renewable power systems compared to alternatives like gas turbines. This is because they can quickly ramp up and down an unlimited number of times per day, are highly efficient at any output and can maintain efficiency and power output at different loads and at high ambient conditions. That means they can better match the variability of renewable power to match the energy requirements of the grid.

Read more: Safeguarding the stability of the grid

Three principles for our flexible future

Based on our modelling and expertise, Wärtsilä has outlined three crucial principles for policy makers and the wider energy industry to follow when designing our future power systems.

Firstly, we need to ensure that we are choosing the right technologies. The build out of wind and solar power must be matched with flexible grid balancing engines and energy storage to ensure the optimal, lowest cost power mix.

Secondly, we must design our energy markets to support flexibility – for example creating capacity markets to ensure developers receive a return on their investment, even if a plant runs only intermittently to balance demand. There should be proper market mechanisms for the procurement, utilisation, and compensation of ancillary services.

And finally, we should introduce shorter timeframes i.e., using 15- or even 5-minute time resolution in the power market trading instead of one hour to reduce the imbalance within the hour. This will also improve the overall planning of the power grid, make it more accurate, and will require less reserves.

In 1896, a seminal paper by Swedish scientist Svante Arrhenius first predicted that changes in atmospheric carbon dioxide levels could substantially alter the surface temperature through the greenhouse effect. Over 120 years later, we still haven’t been able to stop CO2 levels from rising.

Our window to reduce emissions and keep our planet habitable is closing. We have the technologies, expertise and finance available now to create a greener future and there is no time to waste: every second counts.