Authors: WEO Energy Analysts Stéphanie Bouckaert, Timothy Goodson and Brent Wanner
As a fundamental rule, electricity supply and demand must be balanced at all times. Traditionally, this has been achieved by adjusting electricity supply to match demand that varies at different times of the day. But this poses a problem as the share of power generation from variable renewables such as wind and solar PV rises. Demand-side response is one of several measures that can help integrate higher shares of variable renewables, including electricity storage, greater interconnection and more flexible power plants.
When the sun is shining and the wind blowing, electricity generation from these sources may exceed demand, leading to the curtailment of otherwise low-cost and carbon-free electricity. Inversely, when the wind doesn’t blow or on cloudy days, power systems may need to rely on flexible yet expensive and carbon-intensive sources of generation. Both of these outcomes are economically and environmentally undesirable.
Demand-side response can significantly reduce such outcomes by shifting and shaping electricity demand to match the availability of renewables-based electricity generation.
Traditionally demand-side response has been confined to large-scale industrial consumers manually shedding demand in times of system stress. But over 75% of the global potential in demand-side response lies in buildings, with space heating, water heating and air conditioning loads contributing the most. The thermal inertia of buildings and hot-water storage allows electricity demand from heating and cooling equipment to be shifted in time to suit the needs of the grid at low cost without compromising user comfort. Loads from appliances such as refrigerators and washing machines can also become demand-side response resources, facilitated by the growing market share of smart appliances.
Expanding demand-side response – beyond manual shedding of large loads – is a relatively recent phenomenon, with Europe and the United States currently leading growth. In several markets consumers can receive payment for various forms of short-duration “fast frequency response” to keep the grid in balance, larger volumes of “load shifting” to respond to changeable weather, or contracts for guaranteed changes to future consumption patterns.
In addition to balancing loads, demand-side response measures can provide benefits to the grid by mitigating congestion in transmission and distribution systems and delaying or avoiding network upgrades, resulting in important savings. Power systems with greater flexibility are also better able to respond to short-term variations in electricity supply or demand that can be created by sudden changes in output from variable renewables-based generators.
The flexibility provided by demand-side response is therefore both a valuable resource facilitating the integration of a high share of variable renewables, and a symbol of the shift away from the traditional paradigm of supply following demand.
Identifying demand-side response potential
Globally, the theoretical potential of demand-side response today is estimated to be nearly 4,000 TWh per year, or more than 15% of total electricity demand (WEO 2017). Based on IEA modelling of electricity consumption profiles by end-use, this potential represents the sum of all loads than can be shifted for every hour of the year.
In the central scenario of the World Energy Outlook 2017, annual demand-side response potential is expected to increase to almost 7,000 TWh by 2040, the buildings sector leads future growth as demand for appliances and electric heating and cooling expands in Asia and Africa. Within developed economies, the electrification of heating and transport are major drivers of future growth. Smart charging of electric vehicles (EVs) uses charging (and discharging) of EV batteries to facilitate balancing of the power grid.
The IEA estimates that by 2040 almost 1 billion households and 11 billion appliances could participate in demand response programmes. While the majority of potential may lie in buildings, this potential can also be the most difficult to tap. This is especially the case in residential buildings, where participating in demand-side response programs may require behaviour change while offering limited economic benefits to households due to the small size of residential loads. As such, aggregation and automation of small scale demand-side response resources is often the most viable path to market for the residential sector.
The demand-side response potential in industry and large commercial buildings can be more accessible, as energy management systems optimize decisions to consume electricity or offer demand-side response services to the market.
Connectivity as a key enabler
Digital connectivity is the key to expanding demand-side response into new sectors and realising a greater share of its total theoretical potential. By enabling the linking, monitoring, aggregation and control of large numbers of individual pieces of electricity consuming equipment, connectivity allows for matching demand to the needs of the overall system in real time (Digitalization & Energy, 2017). Smart meters, smart appliances, electric vehicles and load management software are therefore central to efforts to increase demand-side response resources.
Capitalizing on demand-side response potential also requires appropriate price signals and regulatory frameworks to incentivize participation. Retail tariff structures such as time-of-use pricing or real-time pricing can deliver the necessary price signals to consumers, while enabling aggregators and other demand-side resources to participate in wholesale energy, capacity and ancillary services markets can create the necessary environment to stimulate investment.
Demand-side resources active in markets today represent only the tip of the iceberg in terms of the total potential. Digitalisation presents an opportunity to unlock this enormous potential and significantly enhance grid flexibility. As prices for digital technologies continue to fall and electricity consuming equipment is increasingly connected and controllable, expansion of demand-side response becomes technically feasible and economically attractive.
Electricity consumers benefit from reduced electricity bills by providing demand response services, but even larger savings are realised on a system level. Digitally enabled demand response is often a more cost-effective and climate-friendly measure facilitating the integration of variable renewables than building new power plants or electricity storage. Rapid expansion will act as a key accelerator for the clean energy transition. Moving forward, government policy will need to provide clear rules and a long-term vision for increasing demand-side response resources.
First published in International Energy Agency
Renewables and Improved Cooling Technologies Key to Reducing India’s Water Use
A new policy brief co-authored by the International Renewable Energy Agency (IRENA) and the World Resources Institute (WRI) finds that increasing the share of renewables, in particular solar photovoltaic (PV) and wind, in India’s power mix, and implementing changes in cooling technologies mandated for thermal power plants would not only lower carbon emissions intensity, but also substantially reduce water withdrawal and consumption intensity of power generation.
The brief, Water Use in India’s Power Generation – Impact of Renewables and Improved Cooling Technologies to 2030, finds that depending on the future energy pathways (IRENA’s REmap 2030 and the Central Electricity Authority of India), a power sector (excluding hydroelectricity) transformation driven by solar PV and wind, coupled with improved cooling technologies in thermal and other renewable power plants, could yield as much as an 84% decrease in water withdrawal intensity by 2030, lower annual water consumption intensity by 25% and reduce carbon emissions intensity by 43%, compared to 2014 levels. It builds off of the findings of Parched Power: Water Demands, Risks, and Opportunities for India’s Power Sector, also launched today by WRI.
“India has emerged as a global leader in renewable energy achieving record-level growth in deployment, rapid cost reductions and many socio-economic benefits of the energy transformation.” said Dr Henning Wuester, IRENA Director of the Knowledge, Policy and Finance Centre (KPFC). “Scaling up the use of renewables, especially solar PV and wind, will yield further benefits, in particular long-term reductions in the dependency of the power sector on freshwater.”
More than four-fifths of India’s electricity is generated from coal, gas and nuclear power plants which rely significantly on freshwater for cooling purposes. Moreover, the power sector’s share in national water consumption is projected to grow from 1.4% to 9% between 2025 and 2050, placing further stress on water resources. Renewable energy, with the added potential to reduce both water demand and carbon emissions, must hence be at the core of India’s energy future.
“India’s move towards renewable energy is essential, especially as water stress puts increasing pressure on India’s thermal power plants,” said Dr O.P. Agarwal, CEO, WRI India. “Water risks to thermal power plants cannot be ignored when considering the cost of thermal energy. Renewables, especially solar PV and wind energy, present a win-win solution for both water and climate.”
The joint brief was launched at the World Future Energy Summit 2018 in Abu Dhabi.
Going Long Term: US Nuclear Power Plants Could Extend Operating Life to 80 Years
The last couple of decades have witnessed increased interest in the extension of the operating life of nuclear power plants. Extending the life of a plant is more economical than building a new one, and where it makes business sense, many plant operators in the United States are seeking licence renewals. This helps avoid supply shortages and support the country in reducing carbon emissions.
“It is very important for us as a world community to care how electricity is produced,” said Maria Korsnick, President and Chief Executive Officer of the Nuclear Energy Institute. “You can produce electricity of an intermittent nature, like wind and solar, but you are going to also need 24/7 baseload energy supply that is kind to the environment, and nuclear is just that.”
The US Nuclear Regulatory Commission (NRC) issues licences for nuclear power plants to operate for up to 40 years and allows licences to be renewed for up to 20 years with every renewal application, as long as operators prove that the effects of ageing on certain plant structures and components will be adequately managed.
About 90 percent of US plants have already renewed their licences once, extending their operation to 60 years. But most of these will soon reach the end of their 60-year term. If they cease to operate or are not replaced by new plants, the percentage of energy generated from nuclear will drop. A subsequent renewal extends a plant’s operation from 60 to 80 years.
Nuclear provides 20 percent of the United States’ electricity supply and more than 60 percent of the country’s CO2 emissions-free generation. Electricity demand is expected to rise by more than 30 percent by 2035.
To obtain licence renewal, a plant must provide the NRC with an assessment of the technical aspects of plant ageing and show how any issues will be managed safely. This includes review of system metals, welds and piping, concrete, electrical cables and reactor pressure vessels. It must also evaluate potential impact on the environment, assuming the plant will operate for another 20 years. The NRC verifies evaluations through inspection and audits, and its reviews of licence renewal applications can last anywhere between 22 and 30 months.
“In the very beginning, an NRC review took years to complete,” Korsnick said. “Now that the process is better understood, we are just under two years. For subsequent licence renewal, we will probably get the process down to 18 months.”
While there have not been any subsequent licence renewals yet, three plants have already expressed their intent to submit an application for such renewal.
“If a subsequent renewal is granted and plants are allowed to operate for 80 years, NRC could see increased interest by other utilities,” said Allen Hiser, Senior Technical Advisor for Licence Renewal Ageing Management at NRC. “NRC experienced a similar trend when the original licence renewals were granted back in 2000.”
Coping with government and market challenges
Most US Government policies favour renewables over nuclear, and according to Korsnick the market does not value all of the attributes that the nuclear plants bring. Three plants in the past six years have already shut down even before their original licence expired because they could not make sufficient money in the current market place. Korsnick maintains that the markets must be improved so that they value the products that nuclear is bringing — products that include clean air, constant 24/7 power and continuous operation for at least 18 months before needing to refuel. Full recognition of these benefits would prevent additional plants from shutting down prematurely.
“Fundamentally we want an electricity grid that boasts a diversity of generating technologies and that appropriately values the core attributes of each technology and the benefits they deliver to society,” Korsnick said.
The IAEA and long-term operation
The IAEA has benefited from NRC support in its long-term operation (LTO) activities. The NRC was an early funder and active participant in the IAEA International Generic Ageing Lessons Learned (IGALL) programme, which used technical information from the NRC’s Generic Ageing Lessons Learned report as its starting point. Other IAEA Member States added data for their plants to that US information, including information for pressurized heavy water reactor designs.
The USA has been an active participant in other IAEA activities related to LTO, including the development of safety guides on ageing management and LTO and presenting LTO workshops for international regulators and plants. The US also continues to provide expertise during IAEA Safety Aspects of Long-Term Operation (SALTO) missions to countries in Europe, Asia, North and South America.
New Global Commission to Examine Geopolitics of Energy Transformation
The International Renewable Energy Agency (IRENA), has today launched the Global Commission on the Geopolitics of Energy Transformation, with the support of the governments of Germany, Norway and the United Arab Emirates. The Commission will examine the immediate and longer-term geopolitical implications of global energy transformation driven by large scale-up of renewable energy in the context of global efforts to tackle climate change and advance sustainable development. The Commission will be chaired by Mr. Olafur Grimsson, the former President of Iceland.
“The global energy landscape is witnessing rapid and disruptive change that will have far reaching effects on geopolitical dynamics,” said Adnan Z. Amin, IRENA Director-General. “Renewable energy resources are abundant, sustainable and have the power to significantly improve energy access, security and independence.
“At the same time, the large-scale deployment of variable sources of renewable energy such as solar PV and wind, is fostering greater cross-border energy trade and cooperation between nations,” continued Mr. Amin. “Understanding these changing dynamics in a way that informs policy makers, will be the primary goal of the commission.”
“I am delighted to chair the Global Commission on the Geopolitics of Energy Transformation, and congratulate IRENA on this timely initiative,” said Mr. Olafur Grimsson, former President of Iceland. “The geopolitical implications of energy transformation is becoming one of the most debated issues in the global energy agenda. The Commission can make an important contribution to these global discussions, on the basis of solid evidence and analysis as well as a diverse range of perspectives,” added Mr. Grimsson.
While most geopolitical analyses of energy related issues have focused on conventional fuels such as oil and gas, the Commission will review the implications of the ongoing global energy transformation underpinned by the surge in renewables and report on how it would impact the geopolitics of energy based on rigorous and credible evidence.
The Commission will be composed by twelve leaders and experts on international energy and global security issues, with particular emphasis given to ensuring diverse geographical and expert background representation. The Commission will present its report at the 9th Session of the IRENA Assembly in January 2019.
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