Use of Regional Interconnections Crucial for Successful Integration of Renewable Energy into the Grid
Integrating the growing share of renewable energy (RE) into the power grid is becoming a key challenge owing to its stochastic nature. One of the most efficient ways around this situation is to establish well-managed interconnections that allow surplus RE power to be transferred to other countries. Denmark’s success dealing with RE through existing transmission interconnections with Germany, Norway and Sweden, when it recently experienced a booming 140 percent over-generation, demonstrates just this. As European countries like Denmark, Germany and Spain are the frontrunners in integrating RE into the grid, best practices adopted in these nations could act as a strong reference point for developing countries in the Asia-Pacific region.
“Ancillary and intra-day markets are also considered to be effective strategies to provide additional power on short notice and manage imbalances that occur due to the variability of RE power,” said Frost & Sullivan Energy & Power Systems Senior Research Analyst Adwaith Visveswaran. “In Germany, these intra-day power markets have been modified to provide greater flexibility for RE.”In the United States (US) and Europe, two-way power generation is pushing utilities to devise a prosumer model either by becoming enablers or investing in distributed power projects. In other regions too, utilities will continue to play a dominant role as power generation will remain a centrally-planned activity.
“Collectively, utilities are spending US$25 billion a year to modernise and expand their infrastructure,” noted Adwaith. “Some utilities in the US are also investing in distributed wind and solar power, while European utilities are restructuring their business model to move away from large-scale thermal production.”Excess investment in fossil fuel and nuclear power, ongoing subsidies for these sources, and declining natural gas prices have however been operational challenges for utilities globally. With the increasing share of renewables likely to lead to a significant fall in electricity prices, financial challenges will also begin to burden utilities.
Furthermore, as markets tend to dictate key RE policy initiatives globally, countries in Europe are experiencing a slackening in feed-in-tariff (FiT) schemes in contrast to an increase in Asian countries. For instance, Japan has raised its FiT rates for offshore wind by 63 percent and Thailand has deployed a three-tier FiT rate system for residential and commercial solar photovoltaic installations.