30 July 2020

The COVID-19 pandemic and the subsequent lockdown measures resulted in low economic activity throughout Europe. Consequently, the electricity demand during the spring declined by approximately 10% on average, while wind and solar power plants continued to produce electricity as normal. This increased the share of renewable electricity in the European power system to levels not expected for another ten years. The Wärtsilä Energy Transition Lab offers a closer view into understanding how renewable-rich power systems function.

For example, in late-April we witnessed a week in Spain when the electricity demand was significantly lower (-12%) compared to the same period in 2019. At the same time, renewable generation was extraordinarily high (+45%) due to favourable wind and solar conditions. This increased the daily share of renewable generation up to 65% over the whole week in question, and to around 70% for three consecutive days of 29 April – 1 May in the country. The surge of low-cost renewable energy from wind resources (visible in Figure 1) forced the electricity price to plummet well below 20 EUR/MWh. During 1 May, the price remained barely above zero (Figure 2a). Simultaneously, the CO₂ intensity decreased by nearly 44% to 87 g_CO2/kWh.

The drop in electricity price meant that thermal assets had to either shut down or sell electricity at loss. Coal has been most affected. Already in 2019, its capacity factor was down to 13%¹. In 2020, the capacity factor has been only 8%, and during the week in question it was down to 3%. Nuclear plants ran production to bare minimum and avoided shutdown at all costs: from 7 GW installed, only ca. 4 GW was being produced throughout the week. Most of the gas-powered plants (80% of which are efficient but inflexible combined cycle gas turbine plants²) had to shut down completely. Only 3-5 GW of gas capacity remained online in cogeneration selling heat. Yet, there was still excess electricity in the system, and it was dumped to France and Portugal at a very low cost (Figure 2b).

The Transition Lab data for Spain suggests that not only coal, but also the modern combined cycle gas turbine fleet, designed to provide baseload electricity, seems to be redundant in a system built around renewables. The whole gas-fired capacity (30 GW) has had a capacity factor of 21% in 2020 (29% in 2019), making them struggle for profitability. This is the reality already now with the renewable-rich energy system we have seen in 2019 and 2020: gas is used for peaking and flexibility, not baseload. A continuing trend of this can be expected in the future when power systems reach 60%-70% renewable share frequently, and weeks like the one studied here become the new norm.

The increasing renewable penetration, intensified by the COVID-effect this spring, shows that renewables are the way towards cleaner and more affordable electricity, and they force inflexible thermal baseload out of the market. If countries like Spain had enough energy storage and flexible thermal assets, they could fully utilise the renewable energy resources even during high winds, instead of dumping excess energy to neighbours. The “COVID-spring” has offered us a glimpse into Europe’s renewable energy future, and that future demands for more flexibility to keep the system stable.

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