Flexibility Solutions for High- Renewable Energy Systems · 6 Flexibility Solutions for High-Renewable Energy Systems Battery storage costs continue to fall quickly (based on BNEF

Flexibility Solutions for High-Renewable Energy Systems

A BNEF study in partnership with Eaton and Statkraft

Albert Cheung

December 5, 2018

1 Flexibility Solutions for High-Renewable Energy Systems

U.K. and Germany:

● Renewables dominate on economic basis

● Growing need for flexibility at all timescales

● Little room left for ‘baseload’ generation

● More days, weeks and months dominated

by renewables…

● …but still days, weeks and months with little

renewables too

Nordics:

● Hydro resource allows very high renewable

penetration; might have surplus flexibility

2017 flexibility study recap

-20

0

20

40

60

80

23/Feb09:00

24/Feb09:00

25/Feb09:00

26/Feb09:00

27/Feb09:00

28/Feb09:00

29/Feb09:00

GW

Curtailment

Offshore wind

Onshore wind

Solar

Other generation

Demand

High and low renewables weeks in the U.K., 2030

-20

-10

0

10

20

30

40

50

06/Jun18:00

07/Jun18:00

08/Jun18:00

09/Jun18:00

10/Jun18:00

11/Jun18:00

12/Jun18:00

GW

Curtailment

Offshore wind

Onshore wind

Solar

Other generation

Demand


2018: solving the flexibility gap U.K. and Germany

Flexible demand Interconnectors

to Nordic hydro

EVs with flexible

charging Energy storage

● To what extent can these

technologies solve the

flexibility challenge?

● How do they influence

overall outcomes in the

energy system? Are there

trade-offs?


U.K. and Germany reports


Our seven scenarios ● New Energy Outlook as the base

case

● Technology scenarios that can be

interpreted through a policy lens

● Each is a least-cost optimisation to

2040 (market design-agnostic)

● All scenarios successfully solve

the flexibility challenge, but in

different ways…

● …giving different outcomes in

terms of cost, emissions, etc.


NEO (base case) scenario

A world with good

amounts of ‘new’ flexibility


● Battery storage costs continue to fall quickly (based on BNEF experience curve)

● Electric vehicles grow to 13% of the fleet by 2030 and 48% by 2040

– They charge inflexibly to begin with, but become smarter over time (50% smart by 2035)

● Demand response grows to 5.5% of peak load (2.7GW)

● Interconnectors not modelled

NEO base scenario: key flexibility assumptions


Source: Bloomberg NEF

Electricity demand breakdown

Total demand

0

50

100

150

200

250

300

350

400

2015 2020 2025 2030 2035 2040

TWh

EV demand Behind-the-meter generation

Technology 2018 2030 2040

Total demand 331 100% 326 100% 348 100%

EV demand 1 0% 15 5% 53 15%

Behind-the-meter generation 4 1% 9 3% 14 4%

EVs account for

15% of demand in

2040


Source: BloombergNEF

Evolution of U.K. generation mix

0

50

100

150

200

250

300

350

400

2015 2020 2025 2030 2035 2040

Generation (TWh)

Flexi

Solar

Wind

Biomass

Hydro

Other

Oil

Nuclear

Gas

Coal

Renewable energy shares:

● 74% by 2030

● 80% by 2040



Evolution of U.K. generation capacity

0

50

100

150

200

250

2015 2020 2025 2030 2035 2040

Capacity (GW)

Other flexible capacity

Demand response

Small-scale batteries

Utility-scale batteries

Small-scale PV

Utility-scale PV

Biomass

Offshore wind

Onshore wind

Hydro

Nuclear

Oil

Peaker gas

Gas

Coal 22 11

59

32 40

30 28

6 6

24

729

15

8

33

1

2030 2040


Source: BloombergNEF. Note: Flexible EV demand not shown.

Cumulative new flexible capacity Typical demand profile, Q1 2040

Flexibility

0

20

40

60

80

2015 2020 2025 2030 2035 2040

Capacity (GW)


Demand response



Peaker gas 0

10

20

30

40

50

60

00:00 03:00 06:00 09:00 12:00 15:00 18:00 21:00

GW

General EV demand (fixed) EV demand (dynamic)

General demand

Fixed EV

charging

Flexible EV

charging


Solving for all types of weather, 2040

0

20

40

60

80

100

Oct 29, 2040 Oct 30, 2040 Oct 31, 2040 Nov 01, 2040 Nov 02, 2040 Nov 03, 2040 Nov 04, 2040

Generation (GW)

0

20

40

60

80

100

Aug 06, 2040 Aug 07, 2040 Aug 08, 2040 Aug 09, 2040 Aug 10, 2040 Aug 11, 2040 Aug 12, 2040

Generation (GW)

0

20

40

60

80

100

Dec 20, 2040 Dec 21, 2040 Dec 22, 2040 Dec 23, 2040 Dec 24, 2040 Dec 25, 2040 Dec 26, 2040

Generation (GW)

Week with low

renewable output

Week with median

renewable output

Week with high

renewable output

Gas Solar

Wind

Curtailment

Charging Discharging

Nuclear

Gas runs for days

Lots of curtailment


Metric Units 2030 2040

System cost GBPm/TWh 32.8 39.8

Emissions MtCO2 16.8 11.6

Fossil capacity as share of peak

demand % 49% 34%

Renewable share of generation % 74% 80%

Key metrics for NEO scenario


Low-flex scenario

What if we don’t manage to

integrate new forms of flexibility?


● Battery storage costs fall more slowly (top-end of BNEF expectation)

● Electric vehicles charge inflexibly

● Demand response doesn’t grow from today’s levels

● Interconnectors not modelled

Low-flex scenario: key flexibility assumptions


Source: BloombergNEF. Note: percentages show relative change

against the NEO scenario

2030 2040

Generation capacity changes for low-flex scenario, versus NEO base case

+52%

-6%

+8%

+5%

-53%

-9%

-82%

-40 -30 -20 -10 0 10 20

Peaker gas

Onshore wind

Offshore wind

Utility-scale PV

Small-scale PV



Demand response


Capacity (GW)

+100%

+11%

+9%

+5%

-85%

-5%

-82%

-40 -30 -20 -10 0 10 20

Peaker gas

Onshore wind

Offshore wind

Utility-scale PV

Small-scale PV



Demand response


Capacity (GW)


Source: BloombergNEF. Note: percentages show relative change

against the NEO scenario

2030 2040

Power generation change for low-flex scenario, versus NEO base case

+5%

+6%

-2%

+4%

-10 -5 0 5 10

Lignite

Coal

Gas

Nuclear

Biomass

Wind

Solar

Generation (TWh)

+29%

-4%

+18%

-4%

+1%

-10 -5 0 5 10

Lignite

Coal

Gas

Nuclear

Biomass

Wind

Solar

Generation (TWh)



Metric Units 2030 2030 2040 2040

Value D vs NEO Value D vs NEO

System cost GBPm/T

Wh 33.9 +3% 45.2 +13%

Emissions MtCO2 18.4 +9% 15.8 +36%

Fossil capacity as share of peak

demand % 54% +10% 50% +45%

Renewable share of generation % 73% -0.7% 79% -1.2%

Key metrics for low-flex scenario, vs. NEO


● None of the scenarios halt the transition to low-carbon

– In all cases renewable energy achieves roughly three-quarters of the energy mix by 2030, and four-

fifths by 2040.

● However, a lack of ‘new’ flexibility would have a real cost

– For both 2030 and 2040, the low-flex scenario is the least desirable across all metrics.

– This means a greater reliance on gas peakers, leading to higher system costs (13% by 2040), higher

emissions (36% by 2040) and a greater level of back-up capacity.

● New sources of flexibility are needed relatively soon

– For example, in the U.K. by 2025, 4GW of storage capacity required in our base case NEO scenario.

Interconnectors coming online in the early 2020s will also bring benefits (covered later).

Key messages from base case and low-flex scenarios


● A full switch to EVs won’t overload the

power generation system

– System costs are raised just 2% and 4% in

2030 and 2040 on a per-TWh basis

– Fossil fuel capacity share is raised by just 3%

in 2040 (and not at all in 2030).

– Emission reductions in road fuel far outweigh

rises in power sector (net 19% improvement in

2030 and 88% in 2040).

● …especially if they are flexibly charged

– In our high-EV, high-flexibility scenario, the

results are even better: net emissions down

30% and 96% in 2030 and 2040 respectively.

Key messages on specific technology scenarios

● Energy storage accelerates the transition, but

doesn’t solve the seasonal gap

– High-storage scenario reduces fossil back-up further by 12%

and emissions by 13% to 2030 vs. base case. But gains are

gone by 2040.

● Flexible demand is needed in the long run

– Greater demand flexibility allows the energy system to

operate with 10% less fossil capacity, 42% less battery

capacity and 5% lower system costs in 2040.

● Interconnections with highly flexible markets can

improve outcomes across decades

– The interconnector scenario delivers the best performance on

emissions (excl. the high-EV scenarios) with 24% and 25%

reductions in 2030 and 2040 respectively. The interconnectors

displace 11% and 10% of fossil capacity in these years.



Metric Units 2030 2030 2040 2040

Value Δ vs

NEO Value

Δ vs

NEO

System cost EURm/T

Wh

40.9 +0% 52.4 +8%

Emissions MtCO2 139.5 -3% 92.8 -15%

Fossil capacity as share of

peak demand

% 80% -1% 66% +19%

Renewable share of generation % 76% +1% 85% +3%

Surprising result for Germany

Low-flex scenario comparison vs. NEO base case, Germany


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Flexibility Solutions for High- Renewable Energy Systems · 6 Flexibility Solutions for High-Renewable Energy Systems Battery storage costs continue to fall quickly (based on BNEF

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