TO ACHIEVE our climate targets, we need carbon emissions to peak by 20251 and halve by the end of this decade.
The urgency of the situation is unequivocal, and the solution is equally clear: We need to triple renewable energy and require a seismic change in the level of investment — up to $5.7 trillion per year by 20302 — to put us on course for the 1.5C Paris Agreement scenario. The final quarter of this year, as we build up to COP28, the UN Climate Change Conference, is the critical moment to shift our focus from targets to implementation at pace.
However, renewables alone are not enough to deliver the change we need. To enable wind and solar to thrive, we need to build flexible energy systems that are reliable and affordable. We cannot delay any longer.
WASTING RENEWABLE ENERGYAround the world, renewables are quickly becoming the cheapest form of new energy generation. Setting ambitious renewable energy targets and deploying wind and solar at scale is essential to enabling rapid decarbonization. However, investing trillions of dollars into wind and solar will waste energy and money if they are built into inflexible power systems.
For generations, we have been reliant upon traditional, inflexible power plants, such as coal and combined-cycle gas turbines (CCGT) to provide baseload power for our energy grids. These traditional power systems now need to adapt, as renewable energy is expected to meet 35% of global power generation by 2025. In the Philippines, the government published the National Renewable Energy Program (NREP) 2020-2040, providing the strategic building blocks to decarbonize electricity by increasing renewable energy production and investment. The NREP has set a target of 35% renewable energy by 2030 and 50% by 2040. Although this is an important step in the right direction, lacking a clear net zero commitment is a challenge for the Philippines to join other countries in reaching climate targets.
As wind and solar power are intermittent, running them alongside inflexible baseload power plants, which cannot quickly ramp up and down to match the changing levels of renewable power, can create significant issues, such as instability or unreliability for our power grids. As the level of renewable power on our grids increases in the coming years, a large share of these inflexible power plants will become obsolete, uneconomical stranded assets in our power grids.
We therefore need to combine the build out of renewables with a substantial increase in flexible capacity, such as grid balancing engines and energy storage, which can quickly ramp up and down to support wind and solar power. Because this flexible capacity can respond to sudden changes in demand and supply, it can also serve as different ancillary services in the grid. This includes, for example, frequency control, maintaining the stability and reliability of the grid, preventing blackouts and power disruptions.
A lack of flexibility often leads to renewables being switched off, or curtailed, as it is cheaper and easier to stop wind and solar from generating power than it is to switch off or ramp down a baseload power plant.
Flexibility is not an optional addition to our power systems with an increasing amount of renewables — it is an essential part of our future power grids. If we fail to deliver flexibility at scale, it will threaten our ability to provide affordable and reliable power to industry, homes, and businesses — while reaching our decarbonization targets. It will inhibit our ability to deliver reliable renewable power, which could have a significant impact on lives and livelihoods.
BUILDING AFFORDABLE POWER SYSTEMSWärtsilä has studied and modelled over 190 energy systems around the world, using energy market simulation software. We have found that anywhere in the world, the most cost-effective approach to reach 100% renewable energy is to combine renewable power with flexibility in the form of grid balancing engines and energy storage. These solutions offer high levels of dispatchability and can ramp up and down quickly in any conditions. This setup delivers reliable renewables at a low levelized cost of electricity, making clean energy affordable for all.
For example, according to the latest modelling work by Wärtsilä for the Philippines3, by investing in renewable-based power systems backed by grid balancing engines and energy storage, the Philippines would be able to reach net zero by 2050, cut its levelized cost of electricity by 23% and avoid nearly $7 billion per year in forecasted carbon taxes.
FUTURE-PROOFING OUR POWERThe path to net zero is not linear and the last few years have demonstrated that we cannot see exactly what is around the corner. Therefore, policy makers must establish market conditions and policies to enable us to build flexibility into power systems today and ensure they’re adaptable for tomorrow.
The balancing of renewables requires both energy storage and grid balancing power plants. They work together to cover sub-second, minute, daily and seasonal variations and ensure a steady supply of electricity when renewable output fluctuates.
Grid balancing engine technology can also be converted to run on hydrogen and other sustainable fuels in the future. These include fuels produced from excess wind and solar power, to enable a closed loop, fully renewable system and avoid stranded assets.
Such flexible engine technology is the optimal choice to supporting our increasingly renewable power systems compared to alternatives like gas turbines. This is because they can quickly ramp up and down an unlimited number of times per day, are highly efficient at any output and can maintain efficiency and power output at different loads and at high ambient conditions. That means they can better match the variability of renewable power to match the energy requirements of the grid.
THREE PRINCIPLES FOR OUR FLEXIBLE FUTUREBased on our modelling and expertise, Wärtsilä has outlined three crucial principles for policy makers and the wider energy industry to follow when designing our future power systems.
Firstly, we need to ensure that we are choosing the right technologies. The build out of wind and solar power must be matched with flexible grid balancing engines and energy storage to ensure the optimal, lowest cost power mix.
Secondly, we must design our energy markets to support flexibility — for example, creating capacity markets to ensure developers receive a return on their investment, even if a plant runs only intermittently with short hours to balance demand.
Thirdly, there should be proper market mechanisms for the procurement, utilization, and compensation of ancillary services. Assigning a real price to ancillary services and subjecting these services to competitive bidding will increase incentives for generators to make such services available and to invest in flexible technologies.
EVERY SECOND COUNTSIn 1896, a seminal paper by Swedish scientist Svante Arrhenius first predicted that changes in atmospheric carbon dioxide levels could substantially alter the surface temperature through the greenhouse effect. Over 120 years later, we still haven’t been able to stop CO2 levels from rising.
Our window to reduce emissions and keep our planet habitable is closing. We have the technologies, expertise and finance available now to create a greener future and there is no time to waste: every second counts.
Kari Punnonen is the energy business director in Australasia of Wärtsilä. Wärtsilä, headquartered in Finland, is a global leader in complete lifecycle power solutions for the marine and energy markets.