Renewable energies are all the trend and there are many reasons why: they never run out, they are modular (they do not usually need large power plants), they reduce the dependence on foreign countries and reduce any geopolitical risk, they do not produce direct emissions or these are lower, they are found natively, energy can be produced close to where it is consumed, they favour local goods and service industries, they improve the external balance of countries which do not have raw materials for energy production as well as a large number of other advantages.
However, they do have some important disadvantages. The difficulty to integrate them into the electricity grid is one of these disadvantages. I shall leave the issue of the cost of these for another occasion, as this need to be looked separately as the answer to this question is very complex and varied.
When we think about integrating renewable energy into the global electricity grid and centre our attention specifically on the electricity sector, we are faced with the challenge that some of these renewable energies cannot be easily managed, especially two of the most important: solar (photovoltaic and thermo-electrical) and wind power. The majority of renewable energies, to a greater or lesser degree, are variable and more or less unpredictable depending on the prediction range of these renewable energies. However in the case of solar and wind power, two of the most widespread and fastest growing energies, we are not able to predict when they are going to produce electricity or how much. We are able to predict, at the most, very short term production by looking at meteorological forecasts a few hours before, but even still errors of up to 10% with forecasts of only 6 hours are made, seen in the case of wind power.
The high variability in electricity production, especially evident in wind power, means that some countries like Spain have already surpassed, during high winds, 50% coverage of national demand in an instant or 40% of national demand over a whole day. The other side of the coin is that there are hours or days when wind energy production does not reach 2% of national demand. The average coverage of national electricity demand was 13% in 2009. This means that it is a very important challenge for electricity grids which, as in the case of the Spanish-Portuguese Market, have a large installed wind capacity. What is more, Iberian mainland is an energy island given the lack of interconnections with France.
This makes it necessary to integrate renewable energies efficiently, especially wind power, without having to resort to more and more frequent and prolonged disconnections from the grid, due to the instantaneous excess production in the grid, which would slow down or even stop the development of these energies as they are not profitable. Therefore, and from the point of view of managing the electricity grid and the market, it is necessary to have technical and market regulation mechanisms, which have an effect on supply as well as demand through the use of relevant economic incentives to the different agents of the market.
The main regulatory mechanisms to be found on a supply level are versatile energies that enter the grid rapidly, such as combined gas and hydraulic cycles. As far as demand is concerned, an area where there is a large possibility for improvement, one could think of devices which store energy when there is too much or it is cheap so that it can be used later on in some way. This is where pumps come into the equation. This is an area where we should invest much more decidedly where possible (mountainous area, permanent availability of water and close to power plants and where the energy is consumed). It is also important to think about promoting night tariffs (or tariffs based on supply which are a lot more flexible), interruptible contracts, pumping water for farming, which occurs mainly during the summer months (demand highs) and in a country like Spain this represents a vast amount of energy. Promoting desalination plants is also important, especially in areas where a lot of energy is consumed. These plants could desalinate and store water in reservoirs when there is a lot of energy and it is cheap. Also, thinking about a not-so-distant future, we should invest more in improving intelligent consumption and storage devices like batteries for electric vehicles, intelligent management of industrial refrigeration and heating, or making the electrical consumption of different industrial processes suitable and flexible to the energy availability in the grid. More intelligence and flexibility, through the use of technology, is needed for all this in the electricity grid as well as the market and also in those who work in supply and demand.
Mechanisms which control supply as well as demand should have greater economic advantages for the future due to the role that they play as stabilizers within the grid. It is also important to put market mechanisms which favour this greater flexibility between supply and demand in operation as soon as possible.
These are the questions that need to be answered: Can we carry on integrating renewable energy into the Spanish electricity grid? How far can we go? At what price? What incentives should there be to take on this challenge and which members of the market should be rewarded/penalised?
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