While the UK has just committed to a huge taxpayer spend on a new nuclear power station and supine politicians wring their hands over our rigged energy market, Germany’s controversial renewables policy is showing signs of delivering cheap power in the future.
On JUNE 16th 2013 something very peculiar happened in Germany’s electricity market. The wholesale price of electricity fell to minus €100 per megawatt hour (MWh). That is, generating companies were having to pay the managers of the grid to take their electricity. It was a bright, breezy Sunday. Demand was low. Between 2pm and 3pm, solar and wind generators produced 28.9 gigawatts (GW) of power, more than half the total. The grid at that time could not cope with more than 45GW without becoming unstable. At the peak, total generation was over 51GW; so prices went negative to encourage cutbacks and protect the grid from overloading.
The trouble is that power plants using nuclear fuel or brown coal are designed to run full blast and cannot easily reduce production, whereas the extra energy from solar and wind power is free. So the burden of adjustment fell on gas-fired and hard-coal power plants, whose output plummeted to only about 10% of capacity.
In this remarkable event, renewables helped push wholesale electricity prices down, and could one day lead to big reductions in greenhouse-gas emissions. For established utilities, though, this is a disaster. Their gas plants are being shouldered aside by renewable-energy sources. Their cartel is being threatened and they have the opportunity to either develop low price, low carbon technology or risk further public disgust leading to emboldened politicians taking action.
There are still issues with the unpredictability of renewable generation and how this might follow demand more closely, however this will even out as more capacity comes on stream.
Further reading here: Europe’s electricity providers face an existential threat