Flexible and dispatchable: The grid balancing technology shaping our renewable future

Flexible dispatchable power generation can stabilise electricity markets by reducing negative pricing and enable the integration of increasing levels of renewable energies.

By the end of this decade, the deployment of renewable energy sources globally is set to double, while inflexible generation will significantly decrease, with coal and oil generation alone expected to decline by 2,300TWh.

The availability of low-cost renewables and government-mandated climate targets are driving this change at an unprecedented rate.

This rapid shift places immense stress on our power grids as we transition from inflexible centralised power to large volumes of decentralised intermittent wind and solar energy. To adapt to this new reality, we need flexible power generation that can respond rapidly to fluctuations in renewable energy output instantaneously.

Negative electricity prices rampant across Europe

Recently, there has been a significant increase in negative power prices across Europe.

Negative prices occur when electricity plants generate more power than is needed. While this might initially seem beneficial for households struggling with inflation, negative electricity prices do not necessarily lower household energy bills. Moreover, these occurrences undermine the financial viability of solar and wind developers, slowing down the expansion of renewable energy sources.

In Germany, power prices have been negative 5% of the time in 2024, up from 1% in 2022 and 2% in 2023. Europe’s largest economy is by no means alone with this phenomenon – Belgium, Finland, France, the Netherlands, and Sweden have also experienced negative prices for more than 5% of the time during 2024. Finland and Northern Sweden are topping the leaderboard with 9% and 8%, respectively.

Spain is yet another example of this recent development: the country experienced its first-ever negative price event on the day-ahead market in April 2024. Since then, negative prices have become commonplace as prices in Spain have been negative for 6% of the time.

In total, the record for maximum duration of a negative price event was broken in 16 countries in Europe.

Flexible dispatchable power generation stabilises electricity markets

In electricity markets, supply and demand must be continuously balanced. Many generation assets are constrained by technical limitations and economic or regulatory factors, often forcing producers to pay others to take excess energy rather than shutting down. Negative prices, therefore, act as a critical market signal, prompting those who can reduce production and increase consumption.

However, inflexible power plants, such as coal, nuclear and combined cycle gas turbines, cannot handle multiple starts and stops daily.

This results in unnecessary fossil fuel consumption, even when renewables could meet all electricity needs. In contrast, flexible engine power plants can respond frequently and in minutes to accommodate variable renewable generation, producing electricity only when renewable generation is insufficient to meet demand.

Grid balancing flexible gas engines enable renewables to thrive

At Wärtsilä, we have created power system modelling for almost 200 markets around the world and frequently conclude that a small amount of grid balancing gas engines in a system can provide the balancing and flexibility needed for renewables to flourish.

Crucially, the price of electricity does not need to increase when power systems move to net zero. Utilities are shifting from a costly opex model, where capital is continually drawn into fuelling and maintaining legacy inflexible coal, oil, and gas plants, to a new model where up-front capex is invested in low maintenance but often unpredictable, renewable energy technology.

While traditional gas plants are part of the opex-heavy model, flexible gas engines play an essential but evolving role. They provide a carbon-efficient strategy for balancing the grid, operating only when necessary to support renewables and reduce overall emissions.

Flexibility creates the conditions where renewable energy is the most profitable way to power our grids: ensuring backup power can be dispatched when there’s insufficient wind or solar, reducing curtailment, and earning rewards from capacity mechanisms.

These flexible power plants are not designed to run continuously but to adapt quickly to changes in power demand and renewable output, thereby minimising unnecessary fossil fuel consumption. Excess renewable power can then be used to create sustainable fuels for our engines, creating fully renewable power systems.

This decade will be crucial in laying the foundations of the clean energy future we envision. It presents a unique opportunity to significantly increase renewable energy capacity, build the right level of flexibility into our power systems, and phase out inflexible assets while exploring sustainable fuel options.

By embracing a diverse range of technologies and solutions, we can ensure a resilient and sustainable energy system that supports the growth of renewables.

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