Electricity from newly built renewables is now cheaper than in cases where investors build new conventional sources – gas, coal or nuclear. The breakthrough in energy has already manifested itself, for example, in Germany, which has announced a retreat first from nuclear and then coal-fired power generation, and must therefore invest heavily in new sources.
In 2020, Germany produced 50.5 percent of its electricity from renewable sources – 27 percent from wind, 10.4 percent from the sun, 9.3 percent from biomass and 3.7 percent from water. Last year was extremely favorable due to the reduction in consumption caused by covid and high wind to green resources, but the trend is clear.
In the first half of this year alone, the Germans completed wind farms with a capacity of 971 MW, which is almost the capacity of one Temelín unit. And this is only the number of the increase in resources on the mainland of the western neighbor. Offshore wind farms are growing more slowly, their construction is more expensive, but they then add more substantial performance to the overall balance.
Depends on weather
However, the capacity of renewables is not a number that speaks of the same possibilities as the capacity of electricity sources, which can run almost continuously. These are biomass, water, nuclear, gas, waste or coal.
The performance of photovoltaics and wind power plants fluctuates strongly depending on the weather or daily cycle. Their year-round use is therefore significantly lower than for continuous sources. So they partially need some backup. As the Deputy Chairman of the ČEZ Board of Directors, Pavel Cyrani, points out in Balance Sheet, paradoxically, solar panels and wind are partially backed up on their own – there is a surplus of solar energy in summer and windy in winter.
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At the same time, windiness often increases when the cold front passes, when there are more clouds and solariums produce a minimum of electricity. Pavel Šolc, a member of the management of the Czech ČEPS transmission system administrator, adds that in the near future, backup will be not only on battery sources, but above all across Europe due to the interconnection of systems.
Smart grids will help
Lack of wind or sun in one place on the continent can always be replaced by plenty in another part. But for the electricity grid to handle this, billions of euros must be invested in it. The European Union is planning these investments under the Pandemic Recovery Plan and the Modernization Fund.
According to Šolc, the key technology for managing large fluctuations in distribution will also be smart grids, which will also be able to stop consumption at a time when there will be a shortage of energy. They include information on how much electricity is currently produced and consumed, what is the forecast and what is the current price. Smart household appliances that do not need a continuous power supply, such as a boiler, washing machine or electric car, will then choose according to the price of electricity whether they are switched off or on.
The Association of Modern Energy estimates that in the Czech Republic, renewable sources can cover more than thirty percent of electricity consumption in just ten years. However, it depends on the attitude of the government. After 2011, it stopped supporting the construction of new clean electricity sources. The reason was the uncontrollable solar boom in 2009 and 2010, which still costs the state treasury twenty-nine billion a year. However, more than half of these costs will be reimbursed to the state and municipalities in taxes and fees.
Gradual end of coal
However, the countries of the European Union have agreed to reduce their share of global warming and to reduce greenhouse gas emissions by 55% over the next decade compared to 1990. This commitment means investing heavily in zero-emission energy sources.
The coal sources will be switched off gradually. According to experts, this will slowly end the export of electricity from the Czech Republic, which today accounts for about fifteen percent of its production. The transition source should be a gas that produces almost half less carbon dioxide during combustion, but at the same time its extraction and storage is associated with the leakage of an even more dangerous greenhouse gas methane.
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Almost all the professional public in the Czech Republic also counts on the need to build additional nuclear units to ensure a reliable and low-emission electricity supply.
Energy transformation can cost billions, maybe trillions of crowns
Estimates of the costs of an overall energy transformation vary according to different sources. The state operator in the electricity market OTE estimates that the total investment in the renewal and development of power plants of the transmission and distribution infrastructure by 2050 may range between 1.8 and 3.1 trillion crowns. These costs will be partly paid by investors, partly by consumers and partly by the state.
Estimates of the necessary state aid for carbon-free electricity sources are significantly lower. For example, Deloitte CR estimates that in the next ten years, the state will have to support key changes in electricity and heat production in the amount of up to thirteen billion crowns per year.
It was cheaper
In any case, the time of cheap electricity is over, the costs of transformation will certainly be borne by the consumer. Electricity prices in Europe rose sharply during the autumn of 2021. One of the reasons was also the rise in the price of emission allowances on the market. These must be purchased in the European Union by every electricity producer who emits greenhouse gases. Sixteen years ago, Europe burdened polluting sources with this system in order to benefit investors in savings and zero-emission energy.
At the same time, it sends revenues from the sale of allowances to reduce consumption – for example, in the Czech Republic it is the subsidy program Green Savings. Thus, for the first time in history, the social costs of coal mining and burning began to be reflected in the price of electricity from fossil fuels. These are the damage that coal causes to the health and property of the population, as well as to the environment and the climate system. According to economist Milan Ščasný from Charles University in the Czech Republic alone, these externalities reach one hundred billion crowns a year.
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