Don't let wind power be blown out
A power system based on renewables needs both wind and solar.
It is common to present the recent uptick of renewables as mainly the rise of both solar and wind. Undeniably, both technologies have undergone remarkable cost reductions in the last decade1. However, we stand at a pivotal juncture where solar is rapidly advancing while the fortunes of wind energy seem to wane. Can we seamlessly substitute a wind-generated kWh with its solar counterpart? Let's delve deeper into the matter.
The complementarity of solar and wind
Wind and solar power exhibit a complementary relationship, particularly within the European context. Throughout the colder months, wind power boasts higher capacity factors, while it is the opposite during warmer months.
This is further depicted in the correlation factors between wind and solar energy. Hereunder is the correlation matrix for wind, solar, and demand in various European countries. A correlation factor is a statistical measure of the strength of a linear relationship between two variables. It can vary from 1 (perfect correlation) to -1 (perfect inverse correlation2). A coefficient of 0 means no correlation at all. By examining the table, the subsequent insights come to light:
Solar and wind have always a negative correlation, meaning that they are complementary.
Solar between countries (the square in the middle of the table) is strongly correlated. When it shines on one country, it generally shines on the neighboring countries.
In contrast with solar, the correlation factors for wind are much lower, suggesting a larger geographical dispersion of wind3.
Correlation factors between wind and the demand are generally higher than between solar and the demand (wind is better matching the demand pattern), especially in France and in Nordic countries. This is due to the higher share of electricity for heating in these countries and the fact that wind output is stronger in winter.
Only in Germany (large industrial demand during the day4) and in Spain (more cooling and less heating5), solar is better correlated with the demand.
Rising costs and problems for the wind industry
Lately, the wind industry has been garnering attention for less favorable developments. Primarily attributed to escalating commodity prices, the expenses associated with wind turbines have witnessed a surge over the past two years. When coupled with elevated interest rates, the Levelized Cost of Electricity (LCOE) for wind energy has encountered an uptick, notwithstanding its competitive stance against conventional fossil fuels.
Wind industry players have been also impacted. Recently, the share of Ørsted dropped by 25% after writing down the value of its US portfolio by nearly £2bn. Earlier, problems were reported to Siemens Energy's wind turbine division that could cost more than a billion euros to fix, decreasing investor confidence in the wider industry6. Furthermore, this excerpt is from an opinion of the wind lobby in Europe:
But at this watershed moment, the European wind industry is facing its own crisis. A combination of high input costs, a struggling supply chain, and uncoordinated market interventions across Europe have all taken their toll. Europe’s turbine manufacturers have struggled to make a profit in 2022. Turbine orders have dipped significantly and investments in new wind farms are down by almost 60% year on year. And the EU is still only installing half the new wind capacity it needs to reach its renewables targets.
Finally, the recent offshore wind auctions in Germany, which led to negative prices, might not necessarily translate into positive outcomes, as elaborated in this featured article.
The EU targets
The prevailing EU objectives entail reaching 510 GW and 592 GW of wind and solar energy capacities by 2030, as outlined by the REPowerEU plan, a substantial increase from the present capacities of 255 GW and 209 GW. However, as expounded in a previous post, the prospects for solar energy remain promising. In fact, SolarPower Europe anticipates a remarkable surge, forecasting an installed capacity of 920 GW across the EU by 2030. This optimistic outlook sharply contrasts with the ongoing challenges faced by the wind industry, where attaining the target of 510 GW by 2030 appears increasingly uncertain.
A noteworthy point of interest arises when considering targets established just a few years ago, outlined in a document from September 2020. These objectives projected wind capacities of 433 to 439 GW and solar capacities of 363 to 370 GW by 2030 under various policy scenarios. Back then, the prevailing expectation was that wind capacity would exceed solar capacity by 2030.
The electrification of heating
The emergence of significantly greater solar capacity in relation to wind raises a pertinent concern — the reduction in the synergistic complementarity between these two resources. This concern is even more prominent when factoring in a prevailing trend: the widespread adoption of heat pumps for heating. Within Europe, heating demands notably outweigh cooling demands. As demonstrated in the correlation table above, nations with extensive electrified heating systems exhibit a more pronounced relationship between wind energy output and demand. Opting for a higher proportion of solar over wind energy carries the heightened risk of a potential imbalance between demand and renewable energy output, particularly with the integration of heat pumps.
Green hydrogen
Green hydrogen is produced through the electrolysis of water, a process reliant on renewable energy sources like wind and solar power. The EU guidelines governing green hydrogen production are based on the following key principles: additionality, geographic correlation, and temporal correlation. To avoid delving into intricate specifics, this translates to the requirement that green H2 production mandates the utilization of dedicated new renewable resources, precisely aligned on an hourly basis within the same bidding zone.
Given the substantial investment outlay associated with electrolyzers, maximizing their utilization rate becomes a pivotal consideration. Presented below are two graphs depicting the cost dynamics of green hydrogen in relation to the number of full-hour utilization periods annually. The graph on the left illustrates various capital cost scenarios for the electrolyzers, while the graph on the right displays varying electricity price scenarios.
A green hydrogen production facility relying solely on solar power is capable of delivering a maximum of 1800 full-load hours in optimal European locations7. To attain a cost-effective outcome for green hydrogen, it is advised to target a minimum of 4,000 full-load hours or potentially even more. This considerable number of operational hours can only be attained through the synergistic utilization of both wind and solar resources.
In conclusion
While it holds true that solar projects tend to offer a favorable cost per unit of electricity generated when compared to wind projects, as previously highlighted, the interchangeability of these sources is not a straightforward matter. Wind and solar possess a complementary nature that extends beyond mere cost considerations. This synergy significantly benefits the entire energy system. Furthermore, in light of the ongoing shift towards heating electrification and the production of green hydrogen, the significance of wind energy is poised to heighten even further.
For solar, the cost decline has been more pronounced.
Inverse correlation means that if values in one series are rising, those in the other decline, and vice versa.
For offshore wind in the North Sea, this assertion might be less valid.
This is an assumption to be verified.
This other assumption is to be verified as well.
For additional details, this article presents a review of the mounting issues in the industry
It would be much less in the Northern part of Europe.
That's the hard part. In temperate or further north climates, a 'mostly VRE' approach is really a mostly wind bet, with PV filling in a few spots.
Do we really have much expectation that wind will get all that much cheaper?
There are negligible efficiency improvements available, the onshore size is probably near its limit due to transport and siting restrictions, but size is also about the only way to improve CF.
It's a primarily mechanical system so material costs will not improve much (need all the material for mechanical strength, which has been an issue of late anyway).
Offshore is considerably more expensive and likley always will be due to the sea, even if the size cap is larger...
The time function of output has a large enough period that really only resevior hydro has a long enough 'duration' to absorb a Dunkelflaute period without excessive cost.
And wind cost needs to keep ahead of the 'frictions' around canobalization of value and the best sites being taken.
I see very high risks in assuming wind will be able to be the primary driver for temperate climate deep decarbonisation.
Sure use it where it fits, but seasonally firm resources are going to be the driver (hydro, nuclear, goethermal) or there is an unacceptable high risk it doesn't happen.