Renewable energy has achieved a major milestone: in many cases, it's the cheapest source of electrons you can put on the grid. But the intermittency that comes with renewable energy also poses challenges for the grid, as it has to be able to respond to sudden changes in supply. That creates an economic challenge as well, as we may need to provide incentives for other sources of electricity (including storage) to make up for the sudden changes. These costs are the subject of a new paper that finds that in Germany, costs won't be all that bad.

On the most basic level, the variable output of renewables means that existing fossil fuel plants may need to be switched on and off at short notice. This process has a cost, since it isn't like throwing a light switch; it takes time and fuel in order to get the plants up to speed. Earlier studies have shown that there's a cost from the strain on the equipment involved in cycling on and off, but the cost is dwarfed by the money saved on fuel when the plant isn't run.

Still, cycling doesn't only involve fuel savings. There's also some wasted fuel, as the plants can take time to begin effectively producing energy. The simplest way to think of this is in terms of a steam boiler. You need to burn a fair bit of fuel to get the water to boil before you can start generating electricity, and that fuel costs money. How much money? That's precisely what the new study tried to determine.

The approach was similar to that of other analyses performed for the US grid: a model was built that could take hourly data on demand and try to match that demand with available generating resources. The authors then took projections for future demand and generating capacity and plugged those into the model as well. These runs allowed them to see how the grid would change with time—specifically in the years 2020 and 2030 for this study.

The goal here was to identify plant start-ups, cases where low renewable supply causes a fossil fuel plant to be switched on. This is already happening in Germany; data from 2013 shows that plants had to undergo a start-up slightly more than 2,500 times that year. As renewables expand, those numbers go up, but not by much considering the amount of renewable energy that Germany is projected to have in the near future. By 2020, there will only be a bit more than 2,600 plant start-ups. Things change more dramatically by 2030, when the numbers rise to 4,500, an 80-percent rise in start-ups.

The surprise is which plants are doing the starting. Many of them will be gas turbines, which are normally used for quick response to demand. But a lot of others will be small oil-fired plants, which currently don't play a major role in responding to renewable demand. The authors suggest that the plants' role will expand precisely because they're small, so they can change their output relatively rapidly.

Relative costs

What do these costs add up to? Right now, start-up costs are around €65 million. Not surprisingly, they go up only slightly by 2020, but by 2030, they reach €141 million, an increase of nearly 120 percent. The authors say that these costs are dominated by the shift to larger natural gas turbines, which is clearly an adaptation to the intermittent renewables. But the researchers also identify two other potential issues: rising fuel costs and a heavier carbon tax.

Put another way, adding a Megawatt-hour of renewable power to the grid causes an additional €0.70 of costs. That's in line with estimates from the US grid, though the fuel costs and carbon tax make them slightly higher.

The authors also look at how start-up costs affect the economics of running a fossil fuel plant. And the answer is surprisingly little: "In relative terms, this appears to be a large increase [in cost], yet the overall share still remains on a low level." Although the start-up costs rise considerably, the costs of running the plant also go up considerably because of those rising fuel costs and carbon taxes. Thus, the share of start-up costs in the overall costs of a fossil fuel plant go from 0.6 percent up to 0.9 percent in 2030.

The authors say there are ways to bring costs down as well. To increase the share of renewables, Germany is planning on building more biomass plants, and these could be designed from the ground up for more efficient intermittent operation. There are also plans to expand electrical storage, like pumped hydro, in Germany. Either of these would cut down on the costs of starting these plants as needed.

So while there are some costs associated with renewables in Germany, they appear to be relatively moderate for the near future. But that doesn't mean electricity in Germany will be cheap. There's a lot that goes into the price consumers see that isn't a direct cost of generating the electricity.

Nature Energy, 2017. DOI: 10.1038/nenergy.2017.50 (About DOIs).