February:- Any country can reach high shares of wind, solar power cost-effectively, study shows

Any country can reach high shares of wind, solar power costeffectively, study shows
Transformation of power systems is necessary to
guarantee flexibility over long term, but this will be
more difficult in some markets than in others
26 February 2014 Paris
Wind power and solar photovoltaics (PV) are crucial to meeting
future energy needs while decarbonising the power sector.
Deployment of both technologies has expanded rapidly in recent
years one of the few bright spots in an otherwise-bleak picture
of clean energy progress and IEA scenarios indicate that this
trend will continue for decades. However, the inherent variability
of wind power and solar PV is raising concerns: Can power
systems remain reliable and cost-effective while supporting high
shares of variable renewable energy (VRE)? And if so, how?
A landmark study released today by the International Energy
Agency addresses these concerns and confirms that integrating
high shares i.e., 30 percent of annual electricity production or
more of wind and solar PV in power systems can come at little
additional cost in the long term. However, costs depend on how
flexible the system currently is and what strategy is adopted to
develop system flexibility over the long term. Managing this transition will be more difficult for some countries or power
systems than others, the study says.
Integrating high shares of variable renewables is really about transforming our power systems, IEA Executive Director
Maria van der Hoeven said as she launched The Power of Transformation - Wind, Sun and the Economics of Flexible
Power Systems, the latest in a series of IEA reports shedding light on the challenges and opportunities of integrating
VRE into power systems globally.
This new IEA analysis calls for a change of perspective, she explained. In the classical approach, variable renewables
are added to an existing system without considering all available options for adapting it as a whole. This approach
misses the point. Integration is not simply about adding wind and solar on top of business as usual. We need to
transform the system as a whole to do this cost-effectively.
Currently, wind and solar PV account for just about 3 percent of world electricity generation, but a few countries already
feature very high shares: In Italy, Germany, Ireland, Spain, Portugal, and Denmark, wind and solar PV accounted
respectively from around 10 to more than 30 percent of electricity generation in 2012 on an annual basis.
The report says that for any country, integrating the first 5-10 percent of VRE generation poses no technical or economic
challenges at all, provided that three conditions are met: uncontrolled local hot spots of VRE deployment must be
avoided, VRE must contribute to stabilising the grid when needed, and VRE forecasts must be used effectively. These
lower levels of integration are possible within existing systems because the same flexible resources that power systems
already use to cope with variability of demand can be put to work to help integrate variability from wind and solar. Such
resources can be found in the form of flexible power plants, grid infrastructure, storage and demand-side response.
Going beyond the first few percent to reach shares of more than 30 percent will require a transformation of the system,
however. This transformation has three main requirements: deploying variable renewables in a system-friendly way using
state-of-the art technology, improving the day-to-day operation of power systems and markets, and finally investing in
additional flexible resources.
The challenges of such transformation depend on whether a power system is stable, meaning no significant investments

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February:- Any country can reach high shares of wind, solar power cost-effectively, study shows

are needed to meet demand in the short term, or dynamic which requires significant investments short-term, to meet
growing power demand or replace old assets.
The publication helps to clarify the very different perception of wind and solar around the globe. In stable systems, such
as those in Europe, the existing asset base will help to provide sufficient flexibility to increase VRE generation further.
However, in the absence of demand growth, increasing VRE generation in stable systems inevitably comes at the
detriment of incumbent generators and puts the system as a whole under economic stress. This outcome is based on
fundamental economics; market effects are thus not only a consequence of variability. The transformation challenge in
stable systems is twofold: scaling up the new, flexible system while scaling down the inflexible part of the old.
Governments with stable systems face tough policy questions about how to handle the distributional effects, in particular
if other power plants need to be retired before the end of their lifetimes and, if so, who will pay for stranded assets.
Meeting these challenges will only be possible through a collaborative effort by policy makers and the industry. In any
case, these surmountable challenges should not let us lose sight of the benefits renewables can bring for energy
security and fighting dangerous climate change. If OECD countries want to maintain their position as front runners in this
industry, they will need to tackle these questions head-on, Ms. Van der Hoeven said.
By contrast, in dynamic power systems such as in India, China, Brazil and other emerging economies, wind power and
solar PV can be cost-effective solutions to meet incremental demand. VRE grid integration can and must be a priority
from the onset. With proper investments, a flexible system can be built from the very start, in parallel with the deployment
of variable renewables. Emerging economies really have an opportunity here. They can leap-frog to a 21st-century
power system and they should reap the benefits, the IEA Executive Director concluded.

The Power of Transformation - Wind, Sun and the Economics of Flexible Power Systems is on sale at the IEA bookshop.
Accredited journalists who would like more information or who wish to receive a complimentary copy should contact
ieapressoffice@iea.org.
To read Executive Director Maria van der Hoeven's remarks at the launch, please click here.
To see the presentation that accompanied the report's launch, please click here.
To hear the launch webinar, including the presentation, please click here.
To read the executive summary, please click here.
To see a fact sheet for The Power of Transformation, please click here.

About the IEA

The International Energy Agency is an autonomous organisation which works to ensure reliable, affordable and clean
energy for its 28 member countries and beyond. Founded in response to the 1973/4 oil crisis, the IEAs initial role was to
help countries co-ordinate a collective response to major disruptions in oil supply through the release of emergency oil
stocks to the markets. While this continues to be a key aspect of its work, the IEA has evolved and expanded. It is at the
heart of global dialogue on energy, providing authoritative research, statistics, analysis and recommendations.
Homepage photo: GraphicObsession

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