In mid-May, European grid regulators spoke out against priority grid dispatch for renewables. If the European Commission adopts their suggestions into law, it will be hard to add more wind or solar capacity. Craig Morris explains what this means for Europe.

Before we get started today, we will need to understand two terms (feel free to skip this paragraph if you already know them). Priority dispatch for renewables simply means that the grid must take up power from wind, solar, and biomass (along with hydro, geothermal, and anything else you give priority to) even if sources with no priority (such as coal, gas, and nuclear) have to be curtailed. Curtailment is when power has been generated already or can be generated, but the grid cannot take it up, so it is thrown away. For more terms, see our Glossary.

In late May, the Environmental and Energy Law Foundation of Würzburg – simply called the “Würzburger” in German – produced a review (PDF in German, but with an English abstract on pp. 7-9) of the Commission’s Winter Package for “clean energy,” which had the following main items in this context:

Renewable systems larger than 500 kW (and 250 kW or smaller, depending on how much is built, after 2025) would be curtailed first; conventional systems, later.

The renewable generators would be compensation for 90% of loss revenue nonetheless.

The Würzburger say that “priority grid access” (a term I have often used as synonymous with “priority dispatch”) for renewables could remain unchanged, meaning that a grid connection would need to be provided. The loss of priority “dispatch” means that the power would no longer have to be paid for, however – and since that’s where the money is made, the economic incentive for wind and solar would be gone. That’s where the 90% payment is crucial; foregone revenue would be limited to 10% when power is curtailed.

Furthermore, the Commission would still curtail conventional power first, cogeneration second, and renewables last, as the Würzburger point out: “one can hardly argue that the priority dispatch is abolished by the Commission’s suggestion as {is} often worried.”

In contrast, recent proposals from the CEER and ACER are worrisome. In its White Paper on Clean Energy from January, the Council of European Energy Regulators (CEER) “welcomed the European Commission’s proposals to remove priority dispatch.” But the CEER would expose all generators to the “real-time value of energy.” In mid-May, the Agency for the Cooperation of Energy Regulators (ACER) issued a joint press release with the CEER arguing the same – and adding that compensation for curtailed renewable power should be done away with as well.

You might as well say you don’t want wind or solar

The problem, as the experts certainly know, is twofold. First, wind and solar react to the weather, not to prices. From the grid operator’s perspective, this situation is undesirable: they want generators that produce more power when needed and less when not. Solar and wind cannot be switched on.

Second, solar and wind cannibalize themselves. When the wind blows and the sun shines, more power is generated, so power prices on spot markets go down. If no payment is ensured for curtailment, it doesn’t matter how cheap solar and wind get; they price themselves out of the market. In other words, if you want wind and solar, you want guaranteed payments for them. Calls for them to make do with spot prices (and, eventually, forgo curtailment payments) are tantamount to saying, let’s just not have wind and solar, shall we?

The Commission’s use of the term “clean energy” is dangerous. That could be anything: renewables, nuclear, coal with CCS, gas. If the climate is the only issue, nothing speaks against all these sources. Surprisingly, in this complex world, our best minds often reduce everything to one issue, if not one number (GDP, ppm of CO2, etc.). The only complication that CEER and ACER allow for other than cost is that wind and solar are not dispatchable, so let’s do nuclear, gas, and coal with CCS. Nothing else matters.

According to the Würzburger, the regulation proposed in the Winter Package – unlike a directive – would become law immediately; it would not need to be ratified by members states first. The Commission will take account of comments, including those from ACER and CEER, in moving from its Winter Package to the upcoming Clean Energy Package 2020-2030, expected in 2018.

Craig Morris (@PPchef) is the lead author of Global Energy Transition. He is co-author of Energy Democracy, the first history of Germany’s Energiewende, and is currently Senior Fellow at the IASS.