The death of baseload

By Fredrik Bodecker (LinkedIn),

Read the full article here.

There is no natural law stating that power should be supplied, first of all, by inflexible baseload, and then topped up with flexible production to meet the variable demand. It is just the way it happened as historically we built relatively cheap, but inflexible, coal, gas and nuclear production. Technically that production had to be run as “always on” to minimise maintenance and other costs. 

 What if this is changing and we are seeing the early signs of the death of baseload?

The traditional way is challenged by more and more renewables with variable power production. The dramatic decrease in cost of wind or solar power, and the recent strong political will to phase out coal is accelerating the transition from the old way of dispatching. Variable renewable power production is no longer something on the fringe and a somewhat annoying activity [for the grid operator] that must be managed. Soon it will be the foundation of our energy systems. It is time we reinvent how we think about the delivery of power.

Baseload’ refers to an old paradigm that has to go away 

As an American grid executive recently put it: ‘Baseload’ refers to an old paradigm that has to go away.”

The 1968 Olympic gold medal in high jump went to Richard “Dick” Douglas Fosbury. The “Fosbury flop” was an entirely new way of high jumping. The physics student Fosbury realised that by jumping with the back first, it was possible for the athlete to clear the bar while his or her body's centre of gravity remained as much as 20 cm below it. 

Unfortunately, there are no Olympic gold medals in power dispatching. 

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Just as the less known Debbie Brill invented the same high jumping style in parallel to Fosbury, there are now several markets emerging that are turning traditional baseload thinking on its head. Germany and California are the biggest, Denmark the most progressive. Fosbury and Brill transformed the whole sport, just as renewables is transforming national energy systems. 

Inflexible baseload could actually become a worse problem than variable renewables 

Inflexible baseload could actually become a worse problem than variable renewables, as the negative prices in Germany and Denmark already have shown. The grid operator can easily curtail wind and solar power. And the discussion is not if but when we have an intelligent grid in combination with flexible production and demand response. Downregulating a nuclear plant or a coal plant is much harder. And more expensive. 

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Admittedly, a few negative prices are hardly the same as a paradigm shift, and this looks to be five to ten years away, depending on the continued cost reduction in renewables and battery storage. But we have another factor to weigh in - Germany. Or rather - Angela Merkel. It is said that technology beats politics, but the former physics doctorate Angela Merkel has several times showed to be tougher than technology. At high costs for taxpayers and energy giants like EON, RWE and Vattenfall but non-the less. With the Energiewende and the decision to shut down German nuclear power until 2022, Mrs Merkel did in a way put the wagon in front of the horse. She forced a shift to renewables well before it made economic sense. Guaranteed feed-in tariffs resulted in a massive buildout, the beauty of learning curves in technology then pushed the costs dramatically down. Now the horse is in front and onshore wind is the cheaper than coal and gas power. Batteries already outcompete peak gas power in some markets.

Merkel is not only tougher than technology 

Merkel is not only tougher than technology but also tougher than most politicians, as she recently showed again by negotiating a coalition to form a new German government. The conservatives party CDU and the social democrats SPD reached a grand coalition agreement on February 7th. The future of coal power and emission reduction targets was a major piece of this agreement. 

It was obvious that Germany would not reach the 40% emission reduction target (compared to 1990) by 2020. According to Agora Energiewende, Germany is closer to reaching 30% by 2020. Everyone already understood that, and the 40% target was scrapped in the agreement. However, Merkel and Schulz did stress their determination to stick to the 2030 goal of cutting 55 percent on 1990-levels. The real shocker, though, was that they raised the ambition for renewables and will now have 65% renewable energy production by 2030! Up from the previous target of 50%. A roadmap for the phase-out of coal is requested before year-end, and they intend to table a legislative proposal to that effect in 2019.

Germany raised the ambition for renewables and will now have 65% renewable energy production by 2030 

One of the few announced specifics of the deal is the promise of an eventual coal exit. “We will set an end date for coal-fired power production, both for hard coal and lignite,” said SPD energy spokesperson Bernd Westphal. Stating that Germany will “absolutely” come up with an end date for coal in early 2019. He stated that the promised coal exit plan will include a “gradual reduction and phase-out of coal-fired power production, including end date, and the necessary accompanying legal, economic, social, and structural policy measures.” 

An actual phase-out plan is one thing, but regardless of the timing, all the renewables in the target, if reached, will squeeze coal out of the electricity mix by the nature of their zero-margin cost of production. What does this mean in real figures? About 216 TWh of electricity was generated from renewable sources in Germany in 2017. That equals a share of 33 percent of the total generation of 654 TWh in 2017, and more than twice the production in 2010 when the share stood at 16 percent.

In a fascinating article, Jon Berntsen and Anders Nordeng at Thomson Reuters Point Carbon, did an analysis of the implications for coal and gas power from the agreement. They concluded that it would result in pushing out roughly 300 TWh coal on top of the already decided closing of 170 TWh of nuclear production. All the available gas power would remain in operation.

It means Germany has in reality killed baseload! 

It means Germany has in reality killed baseload! It just doesn’t know it yet. If the goals are reached by 2030 only about 100 TWh coal remains and 130 TWh of more flexible gas. 

In 1985 the Swedish ski jumper Jan Boklöv lost his balance in a jump. For some reason, he flipped out his parallel skis into a V-shape and managed to avoid an accident. To his surprise, he also jumped 4 meters longer than he used to. It was the birth of the V-style, now used by all professional ski jumpers. Despite jumping longer than everyone else, for a long period he struggled. Ski jumping also includes getting points for the looks of the jump and several authoritative judges found the style unaesthetic. Eventually, the conservative aesthetics couldn’t hold back, and now all jumpers use the V-style.

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Wind and solar are stilled called intermittent by the defenders of baseload and proponents of capacity markets. Merriam Webster’s dictionary defines intermittent as “occurring or appearing at intervals”. It has a bad connotation, and the understatement is that it is unreliable. 

Actually, nuclear is the least flexible generation ever invented 

What is worse? Intermittency vs inflexibility? Actually, nuclear is the least flexible generation ever invented. For several years I mocked the Swedish nuclear power plants for being the real intermittent power in the Nordic system. They often tripped, and the revision plans were seldom kept. Quite similar to the Danish coal power plants that had a tendency to get “boiler leakages” when prices were low. Admittedly the Swedish nukes have now been running quite well for some time; I am sure it has nothing to do with higher prices and a removed nuclear tax.

I would argue that nuclear, gas and coal power is the real unreliable production. When nuclear and fossil power plants trip, we lose all power at once. David Olsen, a member of the board of governors of the California Independent System Operator is of the same opinion in a recent interview: “I got the ISO to stop using the word ‘intermittent’ for wind and solar,” said Olsen. “They have variable output; what used to be called baseload is constant output, but it doesn’t have to be the ‘base’ of your energy stack. In fact, I consider fossil-fuel plants to be the intermittent ones because they have to be taken offline completely for maintenance or when there’s a problem.”

The final piece in the death of baseload is the combination of several buzzwords: internet of things, big data, intelligent grids, block chains and artificial intelligence. Denmark has already shown that it is possible to run a whole country with only wind. Germany the same with wind and solar. Admittedly only for a few days or hours but the genie is out of the box. There is a versatile toolbox to control the variable production: intelligent forecasting, flexible and open import and export possibilities, utilizing district heating as energy storage, grid scale batteries and intelligent software and new business models for demand side flexibility.

 focus shifts to balancing net load, not load on top of baseload 

If the ambitious targets are met, Germany will move to an electricity market 2.0 where the focus shifts to balancing net load, not load on top of baseload. Inflexible baseload generation will infrequently be used because it is not competitive with more flexible supply-side and demand-side resources in many hours. Wind and solar would provide the bulk of energy over a regional grid, with smart demand-side flexibility and more flexible load-following thermal generation helping to balance out the system.

As a spokeswoman for the German Federal Ministry of Economics and Energy has put it, “baseload is no longer needed,” otherwise it could “block the grid.” This has consequences for the inflexible thermal generation that remains on the system. “Continuing to rely on inflexible baseload would require curtailment of less costly energy. The alternative is an economic mix of variable renewable supply and load-following plants that displace baseload operations. By removing inflexible baseload in favour of more flexible load-following plants, consumers realise the full benefit of the lowest-cost resources while receiving the same quality of service.”

There will most likely still be plenty of coal and gas-fired power in the (German) energy system by 2030. But what if they are not the baseload anymore?

we are already “jumping longer” with onshore wind being cheaper than coal and gas 

Power markets are probably not ready to fully accept the equivalent of the Fosbury flop or Jan Boklöv’s V-style yet. But we are already “jumping longer” with onshore wind being cheaper than coal and gas. Sooner or later we will have aesthetically beautiful supply and demand side response mechanisms in place. 

Anyway, the sport will never be the same again.

Source: https://www.linkedin.com/pulse/death-basel...