‘The main challenge is getting started. We are all locked into centralized electricity systems’
August 13, 2012
Exclusive interview with Christine Wörlen, internationally renowned renewable energy expert, who is delivering the keynote address at Clean Power Africa in September. Here is a sneak preview.
You are delivering the keynote address at Clean Power Africa in September, what will be your main message?
I was asked to speak on “Global best practices on renewable energy integration”. The topic reminded me of an initiative triggered by the Renewables 2004 Conference in Bonn. In the wake of that large conference, we brought together all developing countries that were doing on-grid renewable energy projects with the support of the World Bank or UNDP. They came to Mexico City to vet their experiences against those of some of the front runner OECD countries. A number of messages came out of that meeting which still hold true today, for example:
- You need a stable regulatory environment in order to encourage anybody to invest in renewable energy. The “wave” of deployment will be slow in the beginning, as few investors delve into a new technology in a new country right away.
- Deploying renewables (or any innovation, for that matter) will work the better the more the regulatory environment takes away investment uncertainty from the investor. This will not only lead to more investment, but the resulting project costs and power prices will also be lower.
- On the other hand there needs to be a regular incremental adjustment of the regulatory framework as technologies develop and become more competitive, and as the integration of increased power output from intermittent technology becomes more complicated and new regulatory detail is required.
8 years later, a number of additional lessons have been learned, some of which I will discuss in my speech.
I will also put this into the context of a very interesting change that is developing right before our eyes: Renewables are the only energy sources that are coming down in price. They are getting cheaper over time. All other technologies and energy sources are on an upward trend. This is a unique situation and one that merits close watching. For example, for one of “our” most expensive technologies, solar photovoltaics, we have seen an unprecedented drop in technology costs. They will soon reach grid parity in many places. This together with the IT revolution will allow us to “think renewables” in many more applications, decentralized, modularized, flexible and even mobile. In the long run the way we look at energy will be different. In the near term, competitive solar electricity will open up new markets and new opportunities that are independent of policy interventions.
What would you say are the main challenges in integrating renewable energy?
The main challenge is getting started. We are all locked into centralized electricity systems. “Modern” renewable energy – and I am not looking at large hydro dams here – is a new industry in almost every country, coming up against the established competition. It requires paradigm changes in power sector planning and operation. The power sector is a very important sector for economic activity, security and welfare. At the same time it is hard understand its technical sides. Thus the discussion is often left to the technical experts. Typically, experts resent change. Creating a room for innovation, discussing alternative paradigms, trying them out, letting them grow is therefore difficult and runs into many obstacles. It can easily be bogged down by too much other business.
Once you have started a discussion in your country, renewable energy integration poses a number of regulatory, economic and technical challenges. The relative weight of regulatory vs. economic vs. technical challenges is not fixed but changes constantly. Sometimes the policy environment is more important, sometimes the technical constraints or the economic aspects outweigh the others. But you need to work on all challenges in parallel.
In particular the technical challenges are often discussed as if they were insurmountable. They are in fact somewhat elusive and hard to discuss, but places like Germany, Spain, and also the US are developing ways to technically manage fluctuating power. I have had the opportunity to discuss these issues with utilities in the US and Germany, and can bring some insights from these parts of the world.
What country/countries are great examples of making renewable energy part of their energy mix?
If we look only at the non-traditional renewables, a number of countries have exhibited great growth trends for renewables. Obviously, Germany is reporting astonishing figures of consistent growth in renewables for 20 years and counting. More than 300.000 jobs have been created in the industry and yet more earn money from producing and selling solar power to the grid. This year, 25% of our power comes from renewables, so that we have increased our energy security.
But many developing countries are also providing great examples of what you can do with renewables, and the audience will be familiar with some of them. Brazil has been running its car fleet on sugar cane for a long time. In Mexico, it can be cheaper to buy wind and solar power for your business than traditional electricity from the national utility. China is successfully growing a solar and wind industry and also increasingly using the technology at home. Even smaller countries like Morocco are now demonstrating commitment and attracting a lot of business in the renewable energy field.
What did they do right?
Firstly, they understood that renewables offer various advantages that they found to outweigh the challenges: Renewables are not only clean, they are innovative and help create more jobs than conventional energy. In addition, they can create jobs and income wherever they are used, in every village, on every farm, and also in the cities. They are democratic in that sense. These are attractive aspects for many countries, in addition to enhancing energy security. Policy makers in the successful countries understood these advantages and put in place policies to attract the industry and help foster its growth.
Often they chose rather smart policies. These were focused on the specific objectives that the countries found most important – jobs or energy security or investment, depending on the context. By misdesigning policy support schemes, you can spend a lot of public tax money on renewables without reaping all the benefits. You want to design your policies in such a way that you produce high quality renewable energy equipment locally to the extent possible. The Germans and the Chinese have done that very well while keeping local prices for the equipment low.
Thirdly, these policies are constantly monitored and adjusted. When supporting renewables you constantly need to monitor the market so that on one side, you can keep your regulation efficient under changing market conditions and save money. On the other side, you can keep the conditions for growth in place, and update infrastructure and legal regulations.
And what did they do wrong?
A lot of things can only be learned through experimentation, so we are grateful for mistakes. We learned that abrupt changes are poison for the industry. We had a number of really bad “collapses” of industries, like the Spanish solar sector or the German Biodiesel industry, through sudden change in policies. So, while it is not helpful to fix every detail of your support scheme without possible alterations for a very long time, you still need to think through the longer term development and assess your options realistically.
What is your vision for this industry?
I expect that everywhere, we will move more to distributed energy – more generation places, more power providers, more general interest in this commodity – energy – that we all need in our daily lives. Consuming more energy is still a symptom of economic growth, and renewable energy is plentiful and (comparatively) harmless. This means that renewable energy can help us to allow for growth for all in a more sustainable manner than conventional energy.
The solar industry in particular but investment in general is in a lull right now. But I strongly believe that this slowdown is temporary. Soon, solar will join the other renewable energy technologies on the upward trend again. The price trend is on the Renewables’ side.
Last but not least, the industry will develop more of their own tools for renewables integration, on small and large scales; solar inverters that provide reactive power, virtual power plants and integrated storage systems are just the beginning. I expect a lot of technical innovation in this field, with a focus on systems and integration rather than on just a solar cell or just a wind blade.
What is your specific message for Africa?
The sun is on your side!
Anything you would like to add?
Just how happy I am to come to Cape Town and get in touch with the community there. I have been observing South Africa for the last 10 years and am seeing encouraging signs. I look forward to the discussions in September!