Unsubsidized renewable spot prices in many markets are now equal to or below gas power prices, prompting substantial changes in generation requirements. “We are in the midst of transition to a new energy paradigm and this implies consequences for traditional generation. The first need is a much higher efficiency for all plants along with greater flexibility,” Enrico Viale, Enel Group’s head of global thermal generation said at the opening of Power-Gen Europe in Milan today.
“Spot prices are generally falling. In Italy we have experienced the lowest prices since the beginning of the free market,” Viale said, pointing out that “these price signals represent difficulty for the old market model and also the regulatory system.”
Role of CCGT redefined
The sharp fall in spot prices in electricity markets across Europe has led many operators to see the role of their power plant fleet, and in particular combined-cycle gas turbine (CCGT) plants, fundamentally changing. Their ability to react flexibly to demand from national grid operators is creating a new role for CCGT, according to distributed energy company IREN Energia.
Much doubt has been cast on the traditional role of combined-cycle power plants as baseload power providers, yet manufacturers expects significant investment in CCGT technology as it is needs to be adapted to suit rampant flexibility requirements.
“The mission of CCGTs has changed from generation to balancing load. In order to meet the new mission of flexibility, operators have to make considerable investments. There are a number of important trends and investments on the horizon,” Giuseppe Bergesio, CEO of IREN Energia, said.
Penalizing RES for intermittency?
With changes to the energy market imminent, the need for new regulation and capacity-driven policies is one key issue for the sector going forward. “Under current European regulatory environments it is very difficult for renewable to be sustainable. The big problem is its intermittency,” commented Robert Guest, foreign editor at the Economist.
“There is a strange confusion in regulatory systems that support intermittent renewable and yet at the same time do not support baseload generation,” he said, suggesting “What we need to have in Europe a better system that charges for emissions but also penalizes renewable operators for intermittency.”