Denmark is a striking example of just how successful the switch to renewables can be. In 2013, the modern but comparatively small country of just 5.6 million inhabitants set a number of world records in the field of wind energy. These records not only highlight Denmark’s commitment to wind energy, but also clearly illustrate just how significantly wind energy can contribute to a country’s power supply.
Denmark has set itself the political goal of generating 50 percent of its electricity from wind by 2020. The country is already well on its way to achieving this target: in 2013, wind turbines accounted for over a third of the overall energy supply. In December, the share of nationwide electricity generation covered by wind turbines surpassed the targeted magic threshold for the first time, reaching 55 percent. During the week from 23 to 29 December, average wind energy production reached two thirds of the total load for the first time; the daily average for 21 December 2013 was as high as 102 percent.
Taking the hourly figures for the proportion of wind energy in overall electricity production, the highest value was recorded on 31 December between 2 and 3 a.m., a staggering 140 percent. These figures made international headlines as soon as they were published by Danish power company energinet.dk. Detailed figures for January 2014 have yet to be published, but promise to be even more spectacular than those of the previous year, with a monthly average of 62 percent for wind energy, besides other impressive figures from individual wind energy projects.
For example, the Anholt offshore wind farm alone, with a total capacity of 400 megawatts (MW), met eight percent of Denmark’s energy needs. The Horns Rev II wind farm, with its 209-MW capacity, contributed four percent, while the country’s two wind farms in the Baltic Sea, Nysted and Rødsand II, jointly accounted for six percent.
In other words, these four Danish wind farms together provided 18 percent of the country’s energy needs in January. Meanwhile, a twelve-year-old type SWT-2.3-82 Siemens wind turbine in Frederikshavn in North Jutland recorded an average utilisation factor of 89 percent of its rated power.
In short, during the three winter months from December 2013 to February 2014, Danish wind turbines supplied a total of 55 percent of the country’s energy needs. The conclusion is unequivocal: Danish wind energy has given a striking display of its potential to become the key energy source in a successful switch to renewables. The reliability and availability of wind have been demonstrated, and provide an environmentally friendly way for modern societies to get by with minimal reliance on coal.
However, in the wake of 2013 – the first time an entire country succeeded in meeting over a third of its energy needs by recourse to wind power – one question remains: what are the costs involved? Can Denmark afford the fleet of offshore and onshore wind turbines it needs to guarantee its energy supply? The answer is quite simple: yes it can.
Calculations by the Danish Wind Industry Association for 2013 show that an energy mix relying on wind for one third of production leads to a maximum increase of 5 percent in the price Danish consumers pay for electricity. The evidence is plain: a third of the country’s energy can be generated domestically, from environmentally sound sources, at very low additional cost.
What is the situation like in other EU countries? Would citizens elsewhere be prepared to pay five percent more for their electricity if it was environmentally sound and produced domestically? My guess is that they would. Not just to help fight climate change, but also to profit from the economic benefits of renewables. In Denmark, a significant portion of the population are benefiting directly or indirectly from the effects of wind energy on the labour market. Indeed, the wind industry is regarded as a mainstay of the Danish economy. Both the costs and the benefits are undisputed.
While the downsides, such as aesthetic impact or noise pollution, have been extensively discussed in the country, the lively and balanced debate on wind energy issues conducted in the Danish media has laid the groundwork for a broad social consensus in favour of the switch to renewables.
That said, it is clear that the fundamental unresolved drawback of wind energy – volatility of supply – has yet to be overcome. A corollary of Denmark’s impressive results is the fact that production of wind energy regularly exceeds the capacity of its power grid. As a result, the country is heavily reliant on its good export relationships with Norway, Sweden, Germany and Poland. Meanwhile, precisely in the record-breaking month of January 2014, an 18-hour period was recorded in which wind energy was only able to cover around ten percent of overall electricity needs.
In the short term, the challenge presented by production troughs is the simplest task we face. Gas turbine power plants are able to power up to full load in a very short time, and cause around half of the carbon emissions associated with coal or lignite power plants. This makes them a clear first choice to compensate for fluctuations in the production of wind energy.
However, energy from gas-fired power plants does not solve the problem of excess electricity in high wind periods. This is where storage facilities come into play. When we have found an effective solution for storage of electricity on an industrial scale, the overall picture will change once again. Making wind energy available when it is needed is our most important goal. Only then will we achieve the right combination of minimal auxiliary power from coal, and the flexibility we are accustomed to from fossil fuels.
We are still some way away from a reliable solution to the problem of industrial-scale electricity storage. However, a number of current projects are showing signs of delivering highly promising results in the next three to five years. For example, Siemens is currently installing a test plant in Hamburg using a technology which in principle offers infinitely expandable storage capacity.
We hope to be able to offer more information about our test results around a year from now. But Siemens is not the only company doing pioneering work on the problem of storage. My impression is that right now our industry is taking the decisive steps needed to overcome the last obstacle to the switch to renewables this year.
Let us turn our attention from Denmark’s wind turbines and their impressive achievements to the wider picture. There is no reason to doubt that these results can be achieved elsewhere. Of course, Denmark has the advantage of having been the first country to actively pursue modern wind energy. However, other countries such as Germany or Great Britain are hot on its heels.
The number of countries with double-digit wind energy penetration will rise sharply in the coming years.
Needless to say, there are still major obstacles to overcome before wind energy is rightfully acknowledged as the most promising future energy source for European states. One such obstacle is the issue of volatility, as described above. Another is the cost, often considered too high.
Both issues merit examination in the larger context of the overall costs of energy supply to our society.
At present, the Levelised Cost of Electricity (LCOE) is the generally accepted yardstick for comparison of energy sources and evaluation of investments. The LCOE represents the electricity generation costs in relation to the expected life span of the power plant. It is calculated by dividing all capital and operating costs incurred over the life span of a power plant, including fuel, by the energy yields obtained in the same period, corrected for present value, a method known as discounting.
However, in order to properly assess the situation, other factors must be taken into account:
1. The hidden funding for many conventional energy sources such as coal or nuclear, enabling prices to be kept artificially low.
2. The cost of developing the power grid’s transmission capabilities to make use of decentralised energy sources. This is particularly relevant to the cost of renewable energies.
3. The cost of gas power plants, which must be kept on standby to ensure reserve capacity. This cost is particularly relevant to renewable energies – at least until storage capacity in the power grid is developed.
4. Additional costs to society, e.g. for the water required by conventional power plants, or declining real estate prices in the immediate vicinity of power plants – including wind farms.
5. Impact on the labour market: the job creation resulting from regional energy projects boosts economic growth and consumption.
6. Geopolitical factors: Independence from oil and gas imports offers protection against price fluctuations and ensures political independence.
Each of these factors can be determined and assessed as a component of the overall costs incurred by a society for the energy it consumes, or Society’s Cost of Energy (SCOE). Some of the calculations are complex, e.g. because the data is not yet available. For instance, it is difficult to put a precise figure on the hidden funding for energy obtained from fossil fuels.
The costs of peak-load power plants can easily be included in the equation on the basis of available data. In a projection for Germany in the year 2025, the costs of gas-fuelled reserve capacity are around EUR 0.015/kWh. If we take every factor into account – i.e. the projected cost reductions for PV, wind energy and infrastructure, and the expected cost of carbon certificates, we arrive at the following figures for SCOE in Germany in 2025:
nuclear power – EUR 0.94/kWh; electricity from coal – EUR 0.77/kWh; electricity from gas – EUR 0.74/kWh. PV electricity will cost EUR 0.77/kWh, onshore wind energy EUR 0.58/kWh, and offshore wind energy EUR 0.62/kWh.
This is why I believe wind energy deserves to become the primary source of energy in the EU.