Europe is in an energy crisis. The EU is rapidly adopting major action plans to secure energy supplies.
Countries are spending huge sums to help businesses and citizens with the security of gas, electricity and heating supplies. A common theme in the EU, and all countries is to maintain their capacity to produce electricity.
However, there is one exception – Denmark. Here, work continues unabated to close CHP plants.
Investment in solar and wind power remains a high priority in Europe, which is good for the green transformation and for our climate goals. It is just not enough.
The energy crisis this year has offered important lessons. Most importantly, that there can be long periods without wind and electricity prices can become extreme when there is a lack of power generation.
In August, there were 17 days without wind and electricity prices set new high price records. There have been many extra hours of sunshine this year, but no matter how many solar cells are installed, there will be no production at night.
Electricity generation is needed to balance solar and wind. Hydropower has long played a key role in this in Europe.
However, a lack of rainfall in Norway has meant that we have had a year with drought in the middle of the energy crisis.
There is a need for thermal plants that can be switched on and off at night when there is no wind or rain.
Lack of controllable power generation
EU countries are recognising the need and power plants that were otherwise due to close are now being given life extensions. Coal plants have been ordered to stand by and large sums are now being invested in new gas-fired power stations.
In Denmark, the authorities have ordered three power plants, Studstrup, Esbjerg and Kyndby, to be ready for operation and ensure electricity supply, even if they have to use coal and oil.
In the EU, many countries have warned that there could be disruptions to electricity supplies, just as new payment schemes are being worked on to give customers money for reducing their electricity consumption.
In Denmark too, the Danish Energy Agency has warned that there may be periods of planned power cuts, known as ‘brown outs’. This is new for Denmark and a sign of an imbalance, which is growing.
No matter how many new wind turbines are erected, they will all stand still if there is no wind. Something else will have to take over. Here we have been good at having efficient centralised and decentralised CHP that can take over at short notice and secure the electricity supply.
That is why we have not needed Brown Out before. But why now? What has changed?
In the drive to go green, politicians and governments have focused so much on establishing solar and wind power, and betting that electricity links with our neighbours would help us.
Now it turns out that neighbouring countries don’t even have enough electricity generation to meet their own needs. So now we have to look at what resources we have ourselves.
It should preferably be electricity capacities that already exist, and not new expensive CHP plants. CHP plants will not get many operating hours when they have to help fill in the gaps left by wind power, and therefore it will be far too expensive to build new ones.
Fortunately, we don’t need to – we have well-functioning CHP and we’re ready. The demand on government, parliament and central government is therefore not for huge investments.
What is required is for them to stop closing existing CHP plants and safeguard their status. It is as simple as that.
Five concrete solutions
We can avoid Brown Out and maintain the world’s second highest security of electricity supply simply by stopping doing stupid things. Here are five concrete solutions that should be part of an urgent political agreement.
- Stop the closure of waste-to-energy CHP plants. The agreement to close many of these valuable plants must be stopped. In Denmark, waste that cannot be recycled is turned into electricity and district heating. If these CHP plants are closed down, we will lose valuable electricity production, which cannot be replaced by solar cells. These plants represent 400 MW of electricity generation capacity on a 24-hour basis.
Introduce a new settlement mechanism whereby the many gas-fired CHP plants can receive a capacity payment for always being ready to operate at minutes’ notice. The challenge is that CHP gets very few operating hours and therefore lacks contribution to fixed costs. Many countries in the EU have introduced capacity payments. The European market is moving from an hourly market to a 15 minute market. Here many Danish CHPs will be challenged as they are tied to the efficient co-generation with district heating etc. This must be compensated.
The tariff payment to the electricity grid needs to be adjusted. New high tariffs for the supply of electricity to the grid may cause CHPs not to supply electricity because it is too expensive and not in line with the price development on the electricity market. This will increase the imbalance in the electricity system and electricity companies will have to sacrifice investments in even stronger grids. Flexible CHP, which helps to maintain security of supply and avoid Brown Out, must have a fair tariff.
- CHP based on gas is fast and efficient while the fuel is available from the gas grid. The green transition is happening fast. With a huge effort from the biogas industry and gas distributor EVIDA, we are now at 30% climate-friendly upgraded biogas in the system. This is helping both the agricultural and energy sectors to meet their climate targets. Already in 2030, all piped gas will be green gas and the fossil natural gas from the North Sea will be exported. Some of the green gas will be used for industry and transport. But we must not overlook the possibility that efficient CHP can be preserved with green fuels.
- The authorities need to modernise and adjust the framework conditions for CHP. Today, CHPs have to pay full natural gas tax and CO2 tax to the state for all their gas consumption, even though 30% of the gas is upgraded biogas and not fossil natural gas. This must change so that a fossil tax is not unfairly paid on non-fossil energy. Now we are at 30% renewable gas, how long will the authorities maintain the tax? Even when the gas is 99% renewable gas? This is an outdated approach and needs to change. On top of the CO2 tax, CHP also has to buy CO2 allowances and get ready for the new CO2 tax. This is triple taxation, which makes the competitive situation unfair for CHP.
Denmark remains in a strong position to maintain a high level of security of supply for electricity and district heating. We can avoid brown outs and uncertain electricity supplies.
We can continue the green transition and achieve our climate targets. All that is required is that we maintain the many efficient CHP plants that we have already paid for in socio-economic terms – in other words, no need for major billion-dollar investments.
All that is needed is for the five points mentioned to be implemented.
By: Kim Behnke, Head of Development at the Danish District Heating Association, and 11 district heating companies