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Several heavyweights in the EU reached over 50% renewable electricity in their national energy mix in 2023. This shift increases price volatility and strains electrical grids.
It's an undeniable sign that the energy transition is accelerating: in 2023, the club of European countries producing over 50% of their electricity from renewable sources has gained new heavyweights on the Old Continent.
In early January, Germany announced that it had reached 52% renewable sources on its electrical grid. Portugal also claims 61% green electricity, as does Spain, which crossed the symbolic threshold of 50% renewables in its national production in 2023.
This surge has been facilitated by the depressed electricity consumption in Europe, which remains on average 3% lower than its pre-crisis levels since these green energies are prioritized on the grid.
However, in 2023, there was also a significant acceleration in solar installations: in Germany, 14 GW of new installations were connected, and 8.2 GW in Spain. Overall, in the European Union, new solar installations increased by 40%, compared to a limited 6% increase for wind power.
France is also accelerating, but it started from a much lower point: in 2023, it connected 30% more new solar capacity than the previous year, but it only totals 3.1 GW.
"Now, more than 40% of the electricity produced in Europe comes from renewable sources," says Peter Osbaldstone, Director of Electricity Research in Europe at Wood Mackenzie.
This shift to intermittent clean energy production is nearly invisible to consumers. "At this stage, we have not observed any major incidents; we've done the job," says Olivier Arrivé, Chairman of the Operations Committee at Entso-e, the association of electricity transmission system operators in Europe.
However, managing the "variability" of electrons generated by wind turbines and solar panels is not without challenges for high-voltage line operators.
In Germany, where connections to transport electricity generated in the north to consumption areas in the south are insufficient, the costs of managing congestion on electrical lines have skyrocketed. According to ICIS, these costs have tripled since 2020, reaching 4.3 billion euros, with a total of 8 TWh of reduced or curtailed production.
"To prevent bottlenecks when renewable production is too high, the grid operator asks producers to reduce it and activates non-renewable production means in the south to meet demand," explains Olivier Arrivé.
Overall, renewable installations are developing at a much faster pace than the grids that need to connect them. In a report published in October, the International Energy Agency warned: "Investments in renewable energy have nearly doubled since 2010, while those allocated to electrical grids remain almost stable, at around $300 billion per year."
This leads to another collateral effect of the growth of renewable energy. "In some markets, such as Portugal and Spain, there were periods of negative prices in 2023 on an unprecedented scale," notes Peter Osbaldstone at Wood Mackenzie.
This situation is related to the lack of connections from the Iberian Peninsula to the rest of the continent, while it faced a surge in renewable production amid depressed electricity demand. Unable to export, prices plummeted.
However, southern Europe is not the only affected area: in Finland, where Europe's first EPR-type nuclear reactor started in 2022, record negative prices were also reached. "There is an awareness of the need to develop more flexibility at the European level; otherwise, investments in renewable energies will become less attractive," points out Peter Osbaldstone.
In fact, the interconnections between countries that need to develop in the coming years may not solve all the challenges posed by the growth of renewable energies.
"So far, interconnections have greatly strengthened the overall resilience of the system because, in Europe, countries had very different electricity mixes. However, this effect will be less in the future: when all countries install wind farms in the North Sea or nearby, it increases production convergence. That's why the development of flexibility will be essential in France," says Thomas Veyrenc, a member of the board of RTE, the French grid operator.
This involves batteries as well as "demand response" tools. In other words, involving consumers in disconnecting their electrical devices and interrupting industrial production processes during peak consumption times. To achieve this, means of automating all voluntary actions taken, willingly or by force, during the energy crisis will need to be found, and much more. In this regard, there is still much work to be done.