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Does sourcing 100% of power from renewables create unintended

consequences? Some quick thoughts:

The corporate goal of 100% of power purchased from renewable sources under the umbrella

of RE100 has undoubtedly played an important role in the widespread acceptance of

renewable electricity across companies and mainstream society.

As momentum grows in this area, greater than 25% of intermittent renewable generation is

now a phenomenon on the grid, which creates strains on the system and starts to have

unintended consequences. Currently, the approach to electricity procurement and markets

means that it is the grid and its operator that has to deal with this strain.

This paper argues that companies can also play a leading role in resolving some of these

challenges to grid resilience and in so doing help create greater security of energy supply for

all. We would call this – “going beyond 100% renewables”.

The answer isn’t just more renewables, but taking a more nuanced approach. An approach

focused around matching generation with consumption at time of use, either by demand

management or by energy storage.

Some Background The role of the electrical system operator has traditionally been to match the power

produced to the demand placed on the network. Operators have been able to do this with full

control of the power that is produced by switching on and off thermal power plants. Whilst

they had this control of switching power they could provide the balance.

With the introduction of variable renewable power sources (mainly wind and solar) there

have started to be sources of power that the operators do not have control over. Whilst the

percentage was small, this did not have a significant impact on the role of system operators.

With the percentage of renewables starting to reach 40% or more, however, system

operators have to create a balance between an uncontrollable load and an increasingly

uncontrollable supply, which is starting to create some unintended consequences.

For example in California, with a target to generate 50% of its retail electricity from

renewables by 2030, and the resulting high volume of solar PV generation now installed, the

amount of power that the system operator needs to provide becomes increasingly complex

over each day.

The Unintended Consequences The graph (see below), known as the Duck-Curve by some, shows that as the amount of

solar deployed in California is increased, the load that the system operator needs to provide

becomes increasingly complicated with an ever increasing amount of power needing to be

deployed in a short period of time as the sun sets. The shape of this curve changes through

the year, the graph shown is an example of one day.

The ‘missing’ power is currently provided by fast responding gas power plants which are

generally only 30-40% efficient. Although not the optimal solution, the market structure does

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not provide the system operator with many other options for the supply of this power. More

efficient plant is available, but it is not widely deployed in mature markets.

For this reason, if the country that a business is operating in has a base energy mix of 5, 10,

or 45% of power generated from renewable sources, then without taking specific steps it

cannot be said that the company is consuming more than that 5, 10 or 45% level of

renewables over an extended period of time.

It can also be seen that as the volume of solar power increases then quickly the risk of over

generation in the middle of the day becomes a reality, potentially leading to negative

wholesale prices.

To look at it another way, we see a difference between funding or supporting renewable

energy to a tune of 100% of a company’s total needs versus actually consuming 100%

renewables. This leads to further consideration of the time dimension.

So, what should a business do? To map this out, we must look at what the end point of this argument might be. It might be to

ensure that all the power requirements at a plant are definitely met from renewable sources

– are zero carbon – at any point in time. To achieve this, a plant must be able to generate /

source its power demand and balance it on a daily basis through load management and

storage.

Although a plant will likely still be connected to the grid, it would theoretically be possible to

operate in ‘island mode’.

Now let’s think about what a road map towards this might look like.

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The same responses that a grid operator will consider using, but regulations and market

structure prevents direct action, so at a plant or facility level, a business can:

• Ensure electric water heating loads match generation profiles incorporating heat storage;

• Ensure all large air conditioners include thermal storage;

• Deploy electrical energy storage in targeted locations and seek to use electric vehicle charging as part of a storage strategy;

• Actively manage demand;

• Target energy efficiency to the hours when load ramps up sharply;

• Orient any fixed-axis solar panels to match local demand profile.

Conclusion and next steps Increasing renewable penetration much beyond 50% will only be possible with a major roll-

out of effective storage and demand management.

The current regulatory regimes in most countries, however, support fast response gas

powered thermal power and thus present barriers to effective storage and demand

management.

Although the need for much more energy storage is widely accepted, it is very challenging to

fund because the market, as it stands currently, is not structured to provide clearly defined

revenue streams (which are needed for an IPP investment) and, in addition, this burdens

projects with costs as if they were both generators and consumers.

If companies considers that their next goal is to ensure that all the power that they actually

consume is truly 100% renewable, then we would argue that a third dimension needs to be

brought into the assessment of that consumption profile.

So the logical next step is to assess what would be required to enable them to effectively

operate in “island mode”. In practice, what storage capacity1 would be required to achieve

this goal, if delivered in parallel with increased on site generation and load management, and

making that investment now, then following it up with increasing generation investment.

Sam Mackilligin, Sally Vivian & Robert Spencer

AECOM, June 2016

1 It is worth noting that the cost of easily deployable Li-ion storage solutions is falling fast and battery

life of 20 years is now easily achievable. It is possible to configure these systems to meet multiple functions (use cases) and therefore if funded on the balance sheet are potentially going to payback.