It is a given that within 15 to 20 years we are going to face a huge surplus of cheap renewable electricity, but also a significant annual shortfall that cannot be covered by storage methods. This E-mismatch is going to have a major impact on prices: during moments of surplus they will be very low, during moments of shortage extremely high. What will this new reality mean concretely in daily practice soon?
We analysed the energy balance in the Netherlands according to the new energy system. We applied the average weather pattern of the past 10 years to this. Below from this time series are the energy balances of 2 random months, a summer month and a winter month. In these energy balances, positive means surplus solar and wind energy. Negative values require 'fossil power' to be added.
What turns out?
- There will clearly be more fluctuations in summer than in winter. In summer, solar panels do their work during the day; the troughs are logically in the night.
- Winter will show a slower alternation of peaks and troughs. After all, this one is driven by wind power. The intervals between surplus and deficit are longer here, between 1 and 5 days.
- On balance, there will be more surplus than deficit in both summer and winter. However, the period during which the energy system can be kept in balance with storage will be too small. The capabilities of batteries and other storage systems will simply be too limited (yet).
Variable generation does a lot to the price. For individuals as well as businesses and industries, it will matter when energy is purchased. The price spikes up and down due to solar and wind generation that occur exceptionally today (see example below, Sunday 6 June 2022) will become the new standard. Moreover, the outliers will become much more severe.
This is both a threat and an opportunity. As these situations become more common, the incentive to adjust your consumption or business process accordingly becomes greater. For energy contracting, this means that the days of fixed-price contracts are over. Working with hourly and quarterly pricing still applies to some businesses today. This model will become the new reality for almost all customers.
For bulk goods-producing industries in particular - glass, paper, cardboard, wood, building materials, food, packaging, bricks, and the like - periods of shortage will be too long and costs too high. For these companies, the possibilities of 'demand shifting' (shifting your energy demand) are just around the corner. There is value to be gained by adjusting production times to make maximum use of the (cheap) surplus periods. Our question then is: which processes lend themselves to this? Should you shift your operating hours or even shut down your business once in a while? Do you then send your employees home? Do you then spend that time on other work, training and so on?
We look forward to the first reactions
Let us hear from you with your thoughts, questions and insights. We look forward to hearing your responses. And look out for our next post on this topic.