Articel Content
What challenges does the energy transition bring, Mr. Weigt?
Text: Hannes Weigt
Renewable energies are intended to replace fossil fuels. Many questions, however, remain unanswered. Some thoughts from experts in economics and in environmental sciences.
The electricity system of the 20th century ran primarily on fossil-fuel and nuclear power plants, which were turned on and off as required. In the future, our electricity supply should come from wind and solar, which are heavily dependent on the weather. We are currently in the midst of transitioning from the old system to the new, and must therefore address a number of unresolved issues. One key issue concerns the right mix of technologies that could fill the supply gap on windless, overcast days. Answers include hydropower and biomass, but they can’t do the job alone. Storage technologies, hydrogen, power-to-gas and flexible consumption could also play a part.
Wind and solar power plants will have to provide significantly more capacity than conventional power plants if they are to supply enough energy. In other words, instead of a few big power plants here and there, we’ll need to install large numbers of much smaller systems all over the country. This will also make local supply grids more important – because when the sun shines on one roof, it also shines on all the neighboring roofs, and the electricity from these photovoltaic systems has to go somewhere. The old system was designed to bring electricity to customers, not carry electricity away from them. The grid of the future must be able to do this.
The energy transition will also impact the electricity market: Previously, electricity prices on the European market were usually higher during the day than at night, because we use more during the day. Today, they increasingly depend on the weather: On sunny days, electricity being fed in from solar panels can significantly push down prices. In the future, these dynamics will intensify and put pressure on conventional power plants by causing their revenues to decline.
This will, however, also create incentives for using storage technologies that charge batteries or produce synthetic fuels when electricity prices are low. The stored or transformed energy can then generate profit for electricity providers when prices are high. Another unanswered question is the extent to which these dynamics will affect us as end consumers.
Today, we usually have fixed tariffs for our electricity use. They’re either entirely independent of the time of day, or we have a day tariff and a night tariff. That was a reasonably good fit for the old system, but it’s not a particularly good fit for the future system. Academics are currently discussing when and how any adjustments can be made. But if we don’t want to lose the potential of electric vehicles, heat pumps and home batteries, households must be given the right incentives.
Transitioning our electricity system to renewable energies will therefore do more than just change the generation landscape. It will also create new system dynamics that we will have to manage, and it will require us as consumers to play a different role than the one we have played so far.
Hannes Weigt is Professor of Energy Economics. His research focuses on current issues in the energy debate, with a special focus on the Swiss and European electricity market.
More articles in this issue of UNI NOVA (November 2023).