Solar Beats Coal in Europe for First Time – But There’s a Glitch

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(Bloomberg) — The European Union’s transition to clean energy marked a milestone in May, when solar panels generated more electricity than all coal plants in the bloc for the first time — and that was before the summer sun boosted production even further.

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While the furious expansion of solar power generation bodes well for efforts to replace fossil fuels, the breakthrough has also exposed flaws in the power system. Energy prices turned negative during some sunny days in May as grid operators struggled to deal with the rally.

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“This summer is going to be something we have to look at like a postcard from the future,” said Kesavarthini Savarimuthu, an analyst at BloombergNEF. “The bigger message will be: We are not ready.”

Although solar power was a quick and easy solution to responding to an energy crisis last year triggered by Russia’s moves to squeeze natural gas supplies, the downside is that the technology is best in the sunny months when demand is usually lowest. Systems for storing this energy in batteries or by producing green hydrogen are not advanced enough to allow summer sun to keep lights on at night or help heat homes in winter.

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Read more: Europe’s unused coal heads to new shores in post-crisis glut

Nowhere is the solar boom – and the risks of adaptation – more evident than in the Netherlands. There are more than 100 megawatts of solar panels per 100,000 Dutch residents, double the penetration of sunny Spain and more than triple the rate in China – by far the world leader in total solar power.

The Netherlands’ claim to the largest solar grid on earth owes much to longstanding government support. The program rewards households for installing solar panels, with every watt of electricity offsetting energy bills, regardless of whether usage matches the sunniest part of the day.

“The Dutch government has done this to incentivize solar panels, but it has been fairly successful,” said Jorit de Jong, a spokesman for Dutch grid operator TenneT, which has seven rooftop solar panels that produce at least 80% of its annual electricity. Electricity consumption. “If I do laundry or charge my car at moments when there is no sun, I don’t care because I get paid by my energy company.”

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The government in the Netherlands plans to change the system starting in 2025. Under the new rules, households that send energy back into the grid will be able to deduct a diminishing amount from their annual bill. By 2031, producers will benefit only from the energy they actually consume and will not be compensated for any excess.

All over Europe, people are following Holland’s example. Since the start of the Russian invasion of Ukraine, installations of solar panels in the European Union have accelerated. In May, production increased by 10% compared to the previous year, reaching a record high of 27 TWh.

In contrast to wind, hydro or geothermal energy, solar energy has the main advantage of being quickly installed. All it takes is an incentive for homeowners or real estate companies to convert rooftops into mini-energy collectors. But the power grids are built around massive generators that can work in conjunction with grid operators to keep the grids balanced. A more distributed system is difficult to manage and will be seriously tested this summer.

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Read more: Europe’s green transition under attack as political costs rise

While record production of solar and wind power has helped crank out coal and gas plants at an impressive rate this year, the EU still has a long way to go to reach its goal of net emissions cuts by 2050. Germany, with the largest energy market, is under even greater pressure. In Europe he aims for a carbon-neutral grid by 2035. Getting there will require not only a massive expansion of clean energy, but also changes that better match consumption.

There are already signs of a mismatch between supply and demand. Last weekend, electricity prices turned negative at times as solar energy production reached a record high in Germany, Europe’s largest producer. Negative prices are unheard of and are usually associated with the generation of strong winds at night or on weekends when demand is weak.

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When there is a power surge, suppliers have to pay consumers for the use of electricity. This does not mean that 100% of energy comes from renewable sources. Some traditional factories cannot switch on and off flexibly or are required to run to maintain network stability.

Increased price volatility and persistent low or negative rates during peak renewable energy production periods could put further investment at risk, according to Axel Thiemann, CEO of Sonnedix, one of Europe’s largest solar developers.

Read more: Emissions in Europe fall below 2020 level due to energy crisis

Since the end of 2021, Sonnedix has nearly doubled its pipeline of European projects, but Thiemann cautioned that development will become more difficult without changes in how energy is managed.

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“As more investment is made, the network will become more and more saturated during certain parts of the day in the summer,” he said in an interview. “Even if you had unlimited amounts of solar projects allowed, they wouldn’t be built unless there was a clear path to market.”

Better dealing with the ebb and flow of renewable energy generation will require a new kind of flexibility in the power system, which wasn’t necessary when all the electricity comes from a few fossil fuel giants and nuclear plants that can be turned up or down on demand.

“Our current energy system is not planned to meet these types of resilience needs,” said Thorsten Lenck, project manager at the Berlin-based think tank Agora Energiewende.

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There are different ways to adapt. Grid-connected batteries can use power during the sunniest or windiest part of the day to sell when renewables aren’t producing as much. Consumers can also be incentivized to use energy during times of peak production. This could be especially important as more electric cars hit the roads and homes switch from traditional boilers to heat pumps.

“We’re going to get an unprecedented amount of solar production this summer, and it tends to drive up volatility in energy prices,” said Jock Steinwart, an analyst with Aurora Energy Research. “This provides great opportunities for flexible technologies such as batteries.”