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Do we really need big power plants any more?

Governments obsess about baseload energy. This is an outdated approach

"We have to secure baseload electricity," said Amber Rudd, the UK's then energy secretary in August 2015. She was arguing the case for building Hinkley Point C, a hulking great nuclear power station that the UK government wants to see built in the southwest of the country.

It will be the first nuclear power plant to be commissioned in the country since 1987, and the debate about it has dragged on for 20 long years. Opponents point to its unproven design and environmentalists cry foul of nuclear's hazards. Cheerleaders talk of energy security. In September this year, the latter won.

That's par for the course. Governments always look at baseload supply when they consider their energy economy and power demand. Because electricity still can't easily be stored and is consumed as soon as it is produced, generation and consumption must be balanced across the entire grid at any given time. So the baseload number is naturally quite significant-it's what is available, for certain, at a given time. In Germany, it's about 45 gigawatts, in France 32 GW, and in the UK it is around 20 GW.

Historically, governments try to take care of the baseload by using large power plants, usually nuclear or coal. More flexible power stations, sometimes called "peakers", are used to adjust production when electricity demand rises above the baseload. The most common peakers are natural gas turbines and hydroelectric dams.

It's this baseload logic that justifies megaprojects like Hinkley Point C, while leaving not much of a role for variable, renewable energy. Supporters of that kind of electricity say the baseload-power-plant rationale is a myth propagated by the nuclear and coal industries to win political support for controversial and sometimes uneconomical projects. In fact, from a technical point of view, even if baseload is your obsession, there's no need to confine the means of supply to coal or nuclear.

Generally speaking, coal and nuclear plants have a ramp rate-the possible change in output-of between 1 and 5% per minute. They are less flexible than natural gas turbines, which can lift their output by between 10% and 30% per minute. Still, coal and nuclear can be malleable, at least on the margins. France depends on nuclear power for 75% of its electricity, so sometimes needs to use its reactors that way: EDF claims that it can modulate the output of its nuclear reactors by up to 80% in 30 minutes.

Conversely, with almost a third of its electricity generated by renewable sources, including 12.3% from wind and 6% from solar, Germany frequently uses intermittent energy to meet its baseload, with coal plants mainly reserved for peaker status. At the time of writing, German wind farms were producing approximately 25 GW and solar parks 20 GW: combined they provided half of the country's electricity for two days-and accounted for more output than nuclear, hard coal and lignite. Another example can be found in South Australia where 37.8% of electricity was produced from renewables in 2014, including 31.5% from wind energy and 5.7% from solar. The state's last baseload coal-fired power station was shut down in May.

Such cases are still the exception, not the norm. Increasingly, though, research is showing that other countries can emulate them; and that with today's technology, grids could rely on renewables for 80-100% of their load. These studies were conducted in the US, the UK, Australia, northern Europe and France. They found that the grid can balance power generation and demand at any given time, even with very high renewable penetration and virtually no fossil or nuclear energy.

Winds of change

Cost is the other area of dispute. Power from nuclear plants and, to a lesser extent, from large coal-fired plants, has long been considered to have the lowest marginal cost among a basket of available fuels. Once the plants are built, the thinking goes, it makes sense to use them as much as possible.

But the widespread deployment of solar and wind energy can only disrupt coal and nuclear baseload. As their marginal cost of production is near zero, renewables will, all being equal, have preferential access to the grid. And that's regardless of any support policy and anti-coal or anti-nuclear agenda.

The shift from big centralised plants to distributed and intermittent power producers has significant implications. Electricity networks have to be revamped to connect new production sites with consumers. Better coordination, long-distance transmission and interconnections between grids are also crucial to make renewable energy sources more diverse. Plans are afoot. Germany, for instance, is going to reinforce 3,050km of lines, and create a further 2,750km to link the windy north to its industrial south. On the demand side, widespread residential power production, such as rooftop solar, can alleviate urban grids: a recent study by SolarCity, the US' biggest solar-panel firm, suggests that distributed energy can save the Californian grid about $1.4bn annually.

A larger proportion of intermittent energies requires more flexibility on both generation and demand. On the production side, that means plants that can be started on short notice to balance the grid. Natural gas turbines can be held in reserve, as can dispatchable renewable, like hydro with dams, geothermal power or concentrated solar with thermal storage. On the consumption side, it means encouraging residential, industrial and commercial consumers to use less electricity during peak hours or when production is low. This involves everything from financial incentives to education.

Energy storage can also play a significant role by absorbing excess power and returning it during peak hours or when generation is low. Electricity storage has come on leaps and bounds in the past few years-pumped-storage hydroelectricity and home-battery storage are just a couple of technologies gaining market traction.

Obviously, all this comes at a cost. Reinforced grids and electricity storage need investment, while most global energy infrastructure has been built for established baseload-power plants.

Meanwhile, because they produce at zero marginal cost, solar and wind energy also tend to draw wholesale electricity price down. This can lead to the premature shut down of fossil and nuclear stations and power plants that are still needed to support an energy economy while its green capacity is being built up.

And with fewer baseload-power plants, electricity prices tend to become more volatile. In Germany, it was not unusual during the first years of the Energiewende-the country's transition to low-carbon renewable-electricity-based energy, launched in 2010-to see wholesale prices drop below zero before spiking above €50 per megawatt hour. And there were extreme cases: in November 2012, for example, prices briefly reached €95/MWh only to plunge as low as -€50/MWh one month later, on Christmas day. South Australia also experienced price spikes this summer.

This is due to insufficient flexibility: when production is higher or lower than expected, in the absence of more efficient mechanisms, prices will vary to encourage or discourage consumption. This phenomenon may happen on any inflexible electricity system; that is, those with limited interconnection and low capacity reserve. The UK often experiences negative prices and sharp variations even though more than 90% of its electricity comes from non-intermittent sources.

Nuclear or coal baseload-power plants are not indispensable. Steve Holliday, chief executive of National Grid, the company that operates the power transmission network in the UK, stated last year that "the idea of baseload power is outdated". For Liu Zhenya, chairman of State Grid of China, the largest utility company in the world, it is merely "a state of mind".

Using baseload-power plants is a proven and safe way to manage a power grid but it is far from the only one. Getting rid of these plants is possible, although it bears its own risks and disadvantages, especially for small or isolated grids. In the end, it boils down to the kind of energy a government wants its citizens to consume. Energy policy and plans for the electricity mix should determine how the grid is managed. Not the other way round.

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