A – The upcoming massive scale-up
It is remarkable how the expansion of renewable energy is progressing. However, it is also observed that in the case of a year with high wind producing a great yield of wind energy, the share of regenerative energy can fall purely due to weather despite expansion taking place.
A key aspect is that electromobility is establishing itself as a mass market, as observed by the IEA (International Energy Agency), which currently reported an estimated 10 million e-vehicles will be driving in Germany by 2030 and Ceresana recently reported a further 34 million e-vehicles are expected to be in Europe.
It goes without saying how difficult these predictions are, especially since any political intervention such as subsidies, availability and costs of e-vehicles, prices for raw materials, charging infrastructure and prices for charging can cause a significant shift.
Although the 2022 energy crisis has and continues to deal with a lack of natural gas supply, it would be too reduced to refine this crisis down to a lack of supply. Very many aspects play a role here, with supply and demand being central and, of course, that infrastructure and thus supply cannot be arbitrarily adapted.
In principle, scalability in the power grid is to be expected, coupled with electromobility scaling on the mass market alongside regenerative energy feeding into the power grid and as well as scalable energy concepts with heat pumps and air conditioners; a massive expansion in the power grid is undoubtedly foreseeable. This will continue to be the case as long as there is still no further foreseeable parallel infrastructure where all market participants agree to invest in it.
With these forecasts in mind, one inevitably gets into the discussion of how a German or European power grid can manage this if there is no massive investment in grid expansion, both in the distribution grid and in the transmission grid.
Basically, you can observe the bottleneck in the individual supply line to existing properties like houses and parking lots. I still remember in 2019, where the power supply line to a newly built parking garage was so small that it was almost impossible to install a fast-charging station at a company’s premise because the supply line was just designed for a few AC chargers.
If the whole ecosystem is not aligned- to few e-vehicles, insufficient charging stations, lack of raw materials and further expansion of PV systems and wind energy- the whole energy transformation is slowed down and a bottleneck is clearly foreseeable. Importantly, there is a shortage of the skilled workers we need to plan and install solar systems.
However, this decelerated transformation process doesn’t necessarily mean a blackout in the power grid, but rather a big delay in expansion due to a lack of resources required to switch the system over.
B – Grid expansion and technological progress
The pressure on the expansion of the power grid is enormous. The main reason for this is that the required performance could never have been expected and new planned targets must be considered.
One example of this is the beginning of standardization for HPC charging of trucks. A new MCS standard has been developed for this, which allows charging powers of up to 3.75 MW; previous CCS for cars was limited to 350kW. You have to imagine that basically the power of a small wind turbine could be used to charge a truck. This comparison, which at first glance sounds completely ludicrous, can become real, as long as one reconciles the charging needs of the individual truck and charging capacity of the grid. If truck charging is scheduled early enough and parking and grid are prepared, then that amount of energy and power is reserved in a smart grid and thus charging becomes a standard occurrence.
Again, the goal is an intelligent and robust system that can also cope with the fact that the wind turbine described above is not running at the time of charging or if the truck gets caught in a traffic jam.
Basically, we can assume that the grid expansion is progressing and every new interconnection in the grid and every new line leads to better transmission performance. The energy network will become more robust and stable as a result of expansion. The key words that come to my mind here are new HVDC lines, establishing land and sea connections and grid-forming inverters. Additionally, every new overhead line laid and new types of overhead lines have higher transmission capacities.
Many important decisions have also not either been made or finalized and have a lot of lead time. This expansion will therefore not take place overnight. All points are relevant and expansion speeds must be synchronized in principle and it is certainly system-relevant if a truck HPC charging network comes on top or eFuels are used instead. The fact that there will be bottlenecks is system related. For example, here in Germany we experience times where there is more wind energy being generated than can be transported in the grid.
Here, too, it must be taken into account that the first wind turbines with an electrolysis function are now planned, which will change the calculation to the effect that hydrogen will be produced in part, leaving the power grid unloaded.
C – Energy crisis in connection with the conversion of the system
The energy crisis and the many worries about our power grid are driven by many press reports because base load is lost due to the removal of power plants (gas, coal, nuclear, oil) and renewable energy is increasing, which are more and more determined by the weather.
However, the discussion is more complex because we are talking about different bottlenecks-this can be local, nationwide, Europe-wide, or even international. If this bottleneck affects the whole market. Prices are very much relevant as a surplus lead to falling prices and vice versa… The fact is, there have already been negative prices on the electricity market shows this special feature of the electricity market and the lack of a favorable, scalable storage solution at any location.
The current very high energy prices are not only a crisis of the system, but also a certain kind of crisis of confidence. It’s a kind of lack of confidence in being able to cope with the transition of the system and the supply shock in natural gas and being able to counteract it quickly enough.
D – Demand Response, DERs and Energy Flexibilities
Basically, the assumption is that private households as well as industry and commerce and mobility will be powered by renewable energy in the future. Baseload generating power plants for renewable energy on a scalable scale are not currently expected and probably not won’t be in the near future… at least not fast enough to cover the increase in energy that we can currently envision.
The concept of a smart grid offers several solutions that are already in development or partially and rudimentarily on the market.
The first idea starts on a small scale, on the one hand, with private households and also company solutions that decouple themselves to some extent from the power grid. Especially with a larger PV system, a lot of energy self-sufficiency can be achieved. In the case that a company building is newly constructed and energy-optimized, energy self-sufficiency can be achieved to a high degree, even if the energy demand of mobility and own energy consumption in the form of heating and electricity are included.
If you expand this concept further and cooperate with neighbors or in districts, or if a company cooperates with a neighboring operator of a solar plant, DERs (distributed energy resources) are created. What is particularly exciting about this is the type of cooperation, the mutual guarantees that are given and, of course, the technical energy management.
The second approach is purely digital, using demand response signals to control consumers. Such solutions are already in use and the IT standards for this are now also defined and standardized to make that system request. The communication of prices and the communication of times when energy should be saved, or simply the energy mix, is the basis of the concept, supplemented by a mechanism for adjusting the consumption. What is challenging here is that the consumers are connected to these mechanisms, which is not an easy task considering that not every relevant consumer is IoT enabled and connected, but most importantly, they do not speak the same language. And in some cases, the consumer is just a machine, sometimes the energy consumer is a human interacting with a machine.
The complexity here only begins when you consider that the right market partners and devices, such as a distribution network operator with a heat pump, have to be found for this. It sounds harmless, but there’s a long way to go because we must recreate the user interaction and basically the entire customer journey for the energy use cases.
Yet, I think the concept will catch on broadly, simply because as digitization progresses, the barrier to entry will lower, and presumably policymakers will recognize the potential for pool heaters, saunas, and electric car charging stations being subordinately controlled. Thus, a potential crisis with scenarios for blackouts and overloading will become a standard incident with small and tolerable restrictions, perhaps even individually incentivized.
Likewise, the electric fleet operator will be able to run his fleet greener and he may also decide to pay less attention to ‘green’ but to optimize personnel costs. In the event of a crisis in the power grid, the demand response signal will lead to grid-serving charging. Basically, this can be used to adjust, or at least approximate, the overall energy consumption and the energy consumption of a region to the availability of green energy. I think it’s a very strong concept, considering how much baseload energy it can save. The concept of Demand Response is rather linked to volatile prices, because in free markets it is rather difficult to force end customers to all these new concepts. Presumably, the Demand Response concept will resonate with end customers in such a way that there is some compulsion, in some cases incentivization in the form of visibility or reputation or in the form of energy credits, to be paid.
This is a very big area of activity in the next few years because the principle here is both simple and effective. Let’s take electric cars as an example. If I as a user decide to charge with maximum power whenever I want, then I must pay more. However, if I opt for an external control which determines the charging time and power by a climate neutral and grid friendly plan, I get incentivized.
The third concept is an energy flexibility market. This concept goes a step further than demand response because flexibility is offered specifically in a free market. A location-dependent marketplace for energy flexibility is created because the energy surplus or shortage is not national or international, but rather at a specific location at a specific time.
The concept is based on the fact that an energy customer will have a contract which grants a supply of a certain power level. As a customer, I am allowed to call up this supply of power or not. This concept can be simply explained: a market partner who is responsible for the energy supply or a “small” balancing group tends to make short-term agreements with the consumer that more or less energy will be purchased in order to guarantee network stability, or at least this prevents him from having to buy expensive energy or wasting it. The concept seems a bit strange when you consider that a market participant is paying for energy to be purchased, basically accepting a negative price.
It can be a win/win situation if, for example, an industrial company has flexible production. This principle of an energy flexibility market can be applied to private households in the same way, for example by using electric vehicles or storage batteries in the household to receive, store and release surplus energy as a kind of service for a grid operator who otherwise could not have sold the surplus energy profitably.
The energy flexibility market is a vision of the future and in many ways there are still hurdles. One example is the interaction with users; such a market is basically only conceivable if it runs automatically and is capable of making decisions for itself. For this to happen, however, each market participant must know exactly its flexibilities, and not just the generic limits, but the real-time behavior. In the case of a household, the exact impact on the end user, i.e. the residents, must be known; in the case of an industrial enterprise, the impact on production must be modeled.
E – Standards under development
All three concepts are closely linked to the energy transition and will become necessary because the power grid cannot be economically expanded indefinitely. Smart grid in this context means that data-driven and real-time-based concepts are emerging that intelligently balance the grid.
Currently, it is much more important that these data and communication standards are established, because all the concepts described are based on the fact that market partners can interact in an automated manner. Without these standards, it is very difficult to deploy these concepts on a broad scale. However, these concepts usually only make sense if many market partners are convinced to participate.
