Investment in power generation is finally transitioning from fossil fuels to renewables. In May, the International Energy Agency revealed that investment in clean energy technologies, especially solar power, is significantly outpacing spending on fossil fuels, with low-emissions electricity technologies, led by solar power, expected to account for almost 90% of investment in power generation.
In May, for the first time, energy generated by solar panels in the EU exceeded the amount generated by coal plants, according to Bloomberg. However, this has brought to light the unpreparedness of Europe’s electricity grid to handle the transition to renewables, with a problem as old as renewables themselves: dependency on natural factors.
This summer will be something we’ll have to look at like it’s a postcard from the future. The biggest message will be: we’re not ready.
Kesavarthiniy Savarimuthu, analyst at BloombergNEF
1. The problem
Solar power provided a quick solution to the energy crises prompted by Russia’s invasion of Ukraine last year. Unlike hydro, wind or geothermal plants, solar panels are much easier to install, people being able to simply transform their own “roofs into mini energy parks”, Bloomberg said.
The downside is that solar panels only produce energy during the day and a lot more in summer months than in winter. Thus, while at less sunny times the supply has to be aided from the traditional power plants, during peak production hours the surcharge can be too much for the grid. This means conventional power plants need to be turned off or at least have their capacity reduced and energy prices can even become negative.
As more investment gets realized, the grid will get more and more saturated during certain parts of the day in the summer.
Axel Thiemann, CEO Sonnedix
However, power plants are not that easily turned off and, since electricity grids and distribution systems were created to work around major producers, the transition to renewables posts a serious infrastructure challenge. “Our current power system wasn’t planned for these kinds of flexibility needs”, said Thorsten Lenck, project manager at Berlin-based think tank Agora Energiewende.
“Even if you have unlimited amounts of solar projects that are permitted, they will not be built unless there’s a clear route to market”, explained Axel Thiemann, CEO of Sonnedix, one of Europe’s biggest solar developers.
The “simplest” solution would be batteries, but technology for energy storage is far from advanced enough to handle such a high intake. Even when affordable and suitable storage methods are developed, the grid will still need to ensure some flexibility, this remaining the main challenge.
2. The Dutch example
The Netherlands has the densest solar network in the world, with more than 100 megawatts of solar energy produced for every 100,000 residents. The government first ensured enough panels would be installed, offering incentives for residents who supplied energy back into the grid. However, unlike other subsidy schemes that only account for energy surcharge, the Dutch can offset their bills with every watt of used energy, regardless of the time of day they use it.
“The Dutch government did this to stimulate solar panels, but it’s a little too successful”, Jorrit de Jong, spokesman at Dutch electric grid operator TenneT, who has seven roof-top solar panels that produce at least 80% of his annual household electricity consumption told Bloomberg. “If I do my laundry or charge my car at moments when there isn’t sun, it doesn’t matter for me because I get paid by my energy company.”
Now that the supply is ensured, the government is changing the subsidy rules. As of 2025, residents will be able to deduct less and less from their bills and by 2031, they will only be compensated for the energy they actually supply back into the grid.
