Nations with large amounts of wind and solar on their power grid are particularly vulnerable to surging energy bills due to spikes in the price of gas. The relationship between decarbonisation and price volatility has been a contentious issue as governments consider clean energy strategies, but an analysis of power prices in Europe has now provided evidence to inform the debate.
Vast quantities of wind and solar capacity have been deployed in recent years across the continent. But these power sources are intermittent, generating electricity only when the wind blows or the sun shines.
Gas power plants, which can be switched on and off relatively easily, are frequently relied on to provide power when renewable generation is low. But gas is often the most expensive source of power, and electricity market rules mean the most expensive generator sets the price for the entire market.
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That means even when lots of cheap renewables are being used on the grid, using just a small volume of gas power can hugely push up the overall wholesale power price. Across Europe, gas sets the price of electricity around 60 per cent of the time, according to at the International Institute for Applied Systems Analysis in Austria. “Because gas is flexible, it is still needed in high-renewable-energy systems, with wind and solar.”
The effect on bills is particularly extreme when gas prices soar, as they did in 2021 when covid-19 lockdowns lifted and industrial demand bounced back. at the University of Navarra in Spain worked with colleagues to identify why some countries in Europe saw much more dramatic increases in the price of electricity during a spike in gas prices between April and October 2021.
They found that nations with more intermittent renewable power – namely wind and solar – in their power systems were more vulnerable to natural gas price shocks. Spain, for example, has large volumes of solar and wind in its system, while Italy has large amounts of solar power. Both countries scored highly on the power price vulnerability index developed by the research team.
The UK wasn’t part of the analysis, but its grid, which is heavily reliant on wind power and gas generation, is also highly vulnerable, says Bajo-Buenestado. “If you have natural gas, wind and solar, this is going to make the perfect cocktail for you to be vulnerable.”
It is the need for flexible generation alongside wind and solar that is the issue, stresses Bajo-Buenestado. He points out that other nations with very low-carbon power grids, such as Norway and France, rely on hydropower and nuclear technology, which are reliable generators. “We don’t see a clear correlation between decarbonisation and vulnerability to strikes in natural gas prices,” he says. “Natural gas is what is making countries more vulnerable.”
Solving the problem will require nations to replace gas as the back-up fuel of choice, says Bajo-Buenestado. “As long as natural gas is a marginal technology, this is going to make the country vulnerable,” he says. “So the key is, how can we get rid of natural gas as the marginal technology?”
Coal could do the job, but it is much more polluting than gas and, in some nations, it is subject to a high carbon price. Nuclear is low carbon, but tricky to power up or down in response to demand signals. Battery storage and pumped hydropower may be among the best options for stepping in to meet short-term demand, says Bajo-Buenestado.
Large volumes of wind and solar also cause power problems when they are generating plentifully. During windy, sunny days, renewable generation can sometimes far exceed a nation’s power demand. This can lead to negative electricity prices – an increasingly common occurrence across Europe – which damage the business case for building more renewables.
In the UK, the government is targeting a 95 per cent clean power system by 2030. This will require a huge increase in solar and wind deployment, says at University College London. Such a vast uptick in renewable capacity will mean more instances when the power grid is producing more electricity than it needs. “The [renewable] targets that we’ve got will imply that, within five or six years, for half of the hours, a combination of nuclear and renewables is enough to meet demand,” he says, .
The answer to both undersupply and oversupply of intermittent renewables is the same, says Grubb. Grid operators must push the system to become better able to absorb peaks and troughs in generation. This involves building out cables so countries can share power supplies, using batteries and hydropower to store power when it is plentiful and even calling on electric car drivers to hold excess power in their vehicles to send back to the grid when needed.
This will have the benefit of all but removing gas from power systems, says Grubb, meaning it no longer determines the price consumers pay for power. “The underlying message is actually getting a flexible system is now just as important as building renewables.”
Nature Sustainability
