Buffering Volatility: A Study on the Limits of Germany's Energy Revolution

33 Pages Posted: 19 Jul 2016

See all articles by Hans-Werner Sinn

Hans-Werner Sinn

CESifo (Center for Economic Studies and Ifo Institute); National Bureau of Economic Research (NBER); Ludwig Maximilian University of Munich

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Date Written: November 2016

Abstract

Based on the 2014 German hourly feed-in and consumption data for electric power, this paper studies the storage and buffering needs resulting from the volatility of wind and solar energy, focusing on a “double-structure-cum-storage strategy”. While buffering wind and solar energy jointly requires less storage capacity than buffering them separately, joint buffering requires a storage capacity of over 6,000 pumped-storage plants, which is 183 times Germany’s current capacity. Taking the volatility of demand into account would not reduce storage needs, and managing demand by way of peak-load pricing would only marginally do so, given that storage is primarily needed for seasonal fluctuations. Thus, only a buffering strategy based on double structures, i.e. conventional energy filling the gaps left in windless and dark periods, seems feasible. With this strategy, green and fossil plants would be complements rather than substitutes, contrary to widespread assumptions. Unfortunately, however, a buffering strategy based on double structures loses its effectiveness when wind and solar production overshoots electricity demand. This is shown to happen when average wind and solar power production exceeds about one third of aggregate electricity production. Voluminous, costly and inefficient storage devices will then be unavoidable to avoid progressively increasing efficiency losses. Buffering the overshooting production spikes associated with a market share of wind and solar of 50% would require an ideal, frictionless storage volume of 2.5 TWh or a storage capacity of 2.1 TWh in ordinary pumped-storage plants. This is about seven times the entire pumpedstorage capacity currently available in western Europe, including Norway and Switzerland; and 81% of the volume that the EU’s ESTORAGE project considers as “realisable” in western Europe. This will make it difficult for Germany to pursue its energy revolution towards green autarchy, as intended.

Suggested Citation

Sinn, Hans-Werner, Buffering Volatility: A Study on the Limits of Germany's Energy Revolution (November 2016). CESifo Working Paper Series No. 5950. Available at SSRN: https://ssrn.com/abstract=2811038

Hans-Werner Sinn (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute) ( email )

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National Bureau of Economic Research (NBER)

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Ludwig Maximilian University of Munich

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Germany

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