When we speak of renewable energy sources as we mentioned already, we have two kinds. There is a kind which is under our control. For example, hydro is pretty much under our control because if we have a reservoir, there is water in the reservoir, we decide when to produce electricity, while we can implement that decision easily by opening or closing the flow of water through the turbines. So that is a source of electricity which we control. Equally, when we produce electricity out of biomass, we decide when to produce it because when we need the electricity, we will be burning biomass to produce steam to produce electricity. So these are sources that we control. But when it comes to wind and solar, we can't control it. We don't know or we don't decide when wind will blow and we don't decide when the sun will shine. We can predict it maybe to some extent. Sun is easier. We know that the sun rises at a certain hour, sets at another hour. We can reasonably well predict whether it will be a cloudy day or a clear day. For wind, it's much more difficult. We can more or less forecast the maximum wind speed in one day, but wind is very variable. The wind doesn't blow at the same speed all the time. It has burst of force or gusts and then pauses or there is short periods when it doesn't blow. So the production of electricity out of wind is much less than stable. We can with difficulty predict exactly how much electricity will be produced out of wind. Now, the important thing to understand is that electricity is difficult to store. We really don't know how to store large amounts of electricity. Of course, we have batteries, but the battery is not a very efficient way to store and release electricity. In any case, the capacity is very limited. So in essence, power grid electricity system needs to be able to produce electricity in the moment when this electricity is demanded. If demand exceeds supply at any moment in time, the frequency and the tension will fall and the grid will collapse. So you'll have extensive blackouts. That happens when there are major storms or accidents that affect the stability or model, the integrity of the grid. So the problem for an electric grid is to have enough supply readily available in real time when electricity is demanded. The demand for electricity is not stable. There is some customers that demand electricity 24 hours a day 365 days of the week. We call this the base load. This is a demand that is always there and that therefore can be satisfied on a continuous basis. Then we have some middle-merit, middle level, and that is demand that is frequently there but not always, at certain times it's not there. Finally, we have a peak load. A peak load is demand that is there for a very few hours over the entire course of the year in special moments when for some reason or another, depending on the country, on the weather, on the time of the day, the customers demand more electricity than is common. So each of these different demand sections need to be supplied with different kinds of power plants. For baseload, we normally use either coal fire power plants or nuclear power plants. These are power plants that do not easily increase or decrease their production. So they don't have much flexibility, and they are very expensive in terms of capital cost and they only are justified if they can work and be active and be productive for many hours in the year. Therefore, they are always used for baseload. Then we have certain kinds of power plant. For example, combined cycle gas turbines, which are less expensive, much less expensive than coal or nuclear power plant, are more flexible, and they use fuel that is more expensive which is gas and therefore, they are specially adapted for satisfying the kind of demand which is medium load. Okay. Which is there for several hours during the year but not quite always. Finally, there are power plants such as open cycle gas turbines, which are very flexible, they can easily start producing at a moment's notice and they cost very little in terms of capital investment. They use a fuel which is expensive. That is the gas, and they don't use it to the full extent like combined cycle power plant for example. But, they are very flexible and even if they use expensive fuel because they are expected to be in use only a few hours over the entire course of the year. The rest of the time, they're just sitting there, waiting for the moment when demand will increase and reach a peak. So then, it's the most economical solution. What is the impact of renewable sources in this context? The intermittent renewable, the variable renewable need to be given a guarantee of access to the network. In other words, when the wind is blowing, I am the producers of wind power. I must be guaranteed that I will be able to sell my electricity to the grid, and even have a guaranteed price for doing that. So basically, this intermittent renewables eat into the baseload because when they are available, they have automatic access to the grid and are immediately dispatched, that is utilized and paid for. So they reduce the amount of load which is available for those power plants like coal or nuclear that need to work for many hours during the year in order to be economically justified. In contrast, the intermittent renewables require more of the flexible other sources such as gas turbines because, what you need is a power plant that is capable to come and produce electricity, to come on line and produce electricity promptly if by any chance the wind stops blowing, which is something that happens or if there is variability in the speed of the wind. So in order to accommodate a large share of intermittent renewables, it is important to know how flexible is the rest of the power generation fleet because if the rest of the power generation fleet that you have is flexible, then you will have no problem accommodating a significant amount of intermittent renewables. But if it is not flexible, if it is composed mostly of coal plants or nuclear power plants, you will have a problem accommodating the intermittent renewables. So in that respect, flexibility is important. As you can see in this slide, flexibility is very much different from different kinds of power plants. If you have a coal power plant or a nuclear power plant after 15 minutes, suppose that you decide to start producing electricity from coal power plant, if it is hot, so already you are keeping the plant hot ready to start, you will still need quite some time before it reaches full capacity. After 15 minutes, you will have less than 20 percent of the full capacity available. In the case of a nuclear power plant, after 15 minutes, you have five percent of the total capacity available.You need to wait 36 hours before you have the full capacity available because the process of eating is gradual. It does not flare up or ramp up easily. In contrast, if you have an open gas turbine or a hydro plant, you can very easily increase the amount of electricity that you produce. So there are combinations that work well and combinations that do not work well. Gas and intermittent renewables works well. Hydro and intermittent renewables works well. But coal or nuclear and intermittent renewables do not work well. In essence, what happens if you have coal and nuclear with intermittent renewables is that, you will be using those plants, the coal plant and burning coal even when you are not producing electricity, and that electricity is produced by the intermittent renewable. But if I'm burning the coal, I might as well produce electricity. If I have nuclear power plant, I might as well produce electricity. So why am I building the intermittent renewables if the only outcome which I achieve is simply to keep a plant either? That's the basic dilemma. So in terms of flexibility, the condition of different countries again is much different. You have countries like Brazil again. I'm talking a lot about Brazil, but it's a country that has a lot of renewables and uses them very well. It's blessed in this respect. You have a lot of hydro in Brazil, and so it's very easy to integrate intermittent renewables. You have a large portion of the total fleet which is flexible, and so it can easily accommodate a portion that is variable. But if you are South Africa, that is basically relying on coal, and so has only a small portion of the fleet which is flexible and large portion which is not flexible, then it is much more challenging to integrate variable renewables. We have several scenarios, especially about the future of European supply, and you understand that the challenge is in creating a combination of different sources of energy of electricity specifically, and you can aim at a high proportion of electricity being produced by variable renewable, if you have a flexible fleet. So here are different scenarios produced by the International Energy Agency. In one case, there is decarbonization reached in 2050, thanks primarily to a significant share of nuclear. Nuclear of course is free from CO2 emissions and you reach about 18 percent of intermittent renewables. At the same time, you have other renewable. So the total contribution of renewables is higher than 18 percent. But, this is hydro biomass and only 18 percent is the share of renewables that is variable, intermittent, that we don't control. In the other scenarios, the share of intermittent renewables reaches somewhat more than 30 percent, and this is already a very challenging scenario technically to be implemented. It is normally considered that unless you have an extraordinarily flexible system such as might be the case in Brazil or Norway, going beyond 25 or 30 percent of share of intermittent renewables constitutes a significant problem.
