Renewables surge in European power mix
Wind and solar energy generation have increased even though total energy demand has fallen during the pandemic
The coronavirus pandemic and the resulting lockdowns across Europe have resulted in an acceleration of renewable energy’s growth in many countries, even as power consumption has fallen by more than 6pc.
Data for the period from 1 January to 16 June 2020 from the grid operator association the European Network of Transmission System Operators for Electricity (ENTSO-E) and compiled by data platform Wartsila Energy Transition Lab shows that wind, solar and biomass generation across the continent has grown by an average of 7pc over 2019 levels.
While overall power generation year-to-date has declined by an average of 6.1pc from 2019, the data show this shrinkage has been almost entirely absorbed by gas, coal and nuclear.
Solar and wind generation increased by an average of 12pc over the first five months of the year, thanks in part to a strong surge in German wind generation in February, which saw 45pc of the country’s entire generation come from turbines.
In the UK, renewables have increased total generation to 46.54TWh in the year to date, a rise of 24.3pc from the same period in 2019. After averaging 4.6TWh/month in 2019, wind generation reached nearly 7.5TWh in the first quarter of this year.
The surge in renewables reflects several factors. Firstly, wind and solar installations are given priority access to the grid when they are generating—so they naturally replace sources such as gas or coal.
Secondly, due to cheap natural gas and the high cost of carbon permits, coal-fired generation is losing money. German coal-fired baseload power for one month and one quarter ahead has been losing money for much of the last two years and during June generated losses of around €6-7/MWh, while gas-fired electricity generation for the same periods earned more than €11-12/MWh.
As a result, coal-fired generation in Germany shrank by an average of 28pc from January to May, while gas-fired power declined by 15pc.
Both of these factors are magnified by the drop in overall demand that came with the lockdowns across Europe. At the peak of the restrictions, total demand fell by as much as 20pc in Germany and France, by around 23pc in the UK and by nearly 30pc in Italy, according to the IEA.
The question now becomes whether this shift in the merit order for power generation is sustainable in the longer term.
Much has been made of the opportunities for government stimulus programmes to ramp up the deployment of wind and solar power, and this is given further weight by analysis that suggests renewables are now the cheapest energy source in two-thirds of the world, according to research company BloombergNEF.
7pc – Average year-on-year growth in renewables generation
Crucially, the IEA notes that “the share of variable renewables remains high as lockdown measures are softening. Nuclear and coal have adjusted to generation levels still significantly lower [as well as] growing renewables availability.”
This growing predominance of renewables is beginning to cause problems for grid operators, some of which have been forced to pay fossil-based generators to reduce operations and to sell excess power to other countries.
Another outcome has been that wholesale electricity prices have flipped into negative territory when supply is particularly high. German day-ahead prices settled at negative values six times so far this year compared with just two times for the same period in 2019.
The coronavirus has given Europe a taste of how the transition to clean energy will raise issues of security of supply and grid resilience. The drive to implement the Green Deal may make the disruption the power market has experienced this year a more regular feature.