Heather Johnstone, Senior Editor
Despite disposing of its mechanical power generating equipment business almost nine years ago, ABB is serving the power generation industry via a portfolio of systems, products and services for many different types of power plants from combined-cycle to renewable energy, and from fossil fuel to waste-to-energy.
Dr. Joachim Schneider
So it was no surprise when I spoke with Dr. Joachim Schneider, ABB’s Regional Division Manager for Central Europe, that he was keen to discuss the changing face of power generation and how this will influence the way we transmit and distribute electricity to consumers in the future.
The changing face of power generation
According to Dr. Schneider, the future structure of power generation will be markedly different from the existing one not only in terms of the type of fuels we will use, but also in the locations of our power plants.
It will no longer be necessary to locate plants close to areas of high demand; instead their locations will be dictated by a variety of factors, including the ease of access to the fuel source and environmental regulations. These changes to the power generation infrastructure will have an impact on the transmission of electricity, says Dr. Schneider, and this means the transmission grid will have to keep up.
NorNed cable section for HVDC power link
One important change that should not be underestimated is that renewable energy will play an ever-greater role in the world’s generation mix. In Germany, for example, it is estimated that over the next ten years the investment in renewables will be double that of investment in conventional thermal power plants. With regard to wind power, in particular offshore, says Dr. Schneider, the transmission grid will not only have to be upgraded, but it will need to change its fundamental structure to be able to transport electricity generated by offshore wind farms located in the North Sea or Baltic Sea to consumers living in the south of Germany.
Another important change will be the coexistence of large-scale centralized power generation and a larger number of distributed power generation, such as small-scale biogas plants or combined heat and power plants. Again, the greater use of decentralized power production will create new demands on and requirements for the grid in particular the distribution grid.
According to Dr. Schneider, there will need to be a lot of development work done in order to enable the distribution grid to accommodate the new demands that will be placed upon it.
This is because in the future it will not only be necessary for grid operators to know the consumption behaviour of its consumers, but as more and more consumers produce electricity themselves, it will be essential that information on this decentralized power production is integrated into the load management of the distribution grid. This will require the integration of a raft of new technologies in the information, communication and power technology fields to create a smart grid.
European economic stimulus package
A significant proportion of the European Commission’s recently approved €5 billion ($6.6 billion) economic stimulus package is focused on energy projects. A total of €3.5 billion is earmarked for investment in carbon capture and storage (€1.2 billion), offshore wind projects (€500 million) and gas and electricity interconnection projects (€1.8 billion). When I asked Dr. Schneider to comment on the Commission’s stimulus package, he chose his words carefully.
He said that the economic stimulus package was “most welcome.” However, the amount set aside for electricity transmission, which is in the region of €700 million, can only in reality be described as a “starting point,” said Dr. Schneider, when you compare it to the huge need for investment in Europe’s grids. The UCTE recently reported that the grid investment required to meet the Commission’s 20:20:20 targets was €17 billion up to 2013.
Dr. Schneider also mentioned that the stimulus package only focused on the transmission and not the distribution grid. As Dr. Schneider makes clear above, it is essential that we invest in the distribution grid too. We can but hope that his comment that “maybe we need a little bit more” does not fall on deaf ears. Looking longer term and past the economic stimulus package, he believes that what is most important is that we have a regulatory framework in place that motivates companies to invest in the transmission and distribution grids.
North Sea grid and beyond
I asked Dr. Schneider how important was the development of a transmission grid in the North Sea. Without hesitation he said it was extremely important to establish such a grid rather than building line by line the connections for wind farms. However, he added that its creation would not be without challenges one of the most important being how to stimulate investment and how to ensure we generate acceptable returns for investors.
According to Dr. Schneider, it is not difficult to imagine the situation whereby if we start to build up a grid in the North Sea it will require major upfront investments, i.e. well in advance of any wind farms being connected to the grid. In Germany, for example, its regulatory framework allows an investor to recover his investment costs only if the wind farms are connected. Thus, we need to find a way of financing the costs that run ahead of the connection of the wind farms.
An HVDC Light valve enclosure
“The realization of a North Sea grid is highly dependent on having the right regulatory framework in place,” says Dr. Schneider. Furthermore, we are talking about the utilization of new technologies, and new technologies are always perceived as risky, he added, so to convince an investor to finance a high-risk project will require some additional support.
Thus we need the combination of a regulatory framework that secures an acceptable return for investors, as well as additional support funds from the European Union, says Dr. Schneider. In the longer term he emphasized the need for a pan-European grid because this would enable us to fully capitalize on the wealth of hydropower in Scandinavia, for example, and also potentially other power generation sources further afield, such as solar power generated in South Africa. However, such a grid faces the same challenges highlighted above for a North Sea grid, again emphasizing the need for a regulatory framework that allows a coordinated investment approach.
POWER-GEN Europe Keynote
Dr. Schneider will be giving one of the keynote addresses at this year’s POWER-GEN Europe event, which takes place 2628 May in Cologne, Germany. I took the opportunity to ask him what issues and topics he would be covering in his presentation.
He said when we look at the future from a power generation point-of-view there is a real risk that we forget that we are not only tasked with generating electrical power, but we are also tasked to bring that electricity to the customer. He added, “I know from experience that only a couple of years ago no-one recognized the important role the grid plays in the development of the power generation sector.” Thus, his speech will explore what the implications are for the grid and for the electrical system as a whole as we build new power plants.
He said he would also touch upon deregulation, which has resulted in a decoupling of the development of power generation from the grid. Although Dr. Schneider will not argue against decoupling, he will ask the audience to recognize that having this decoupling system means we have to do more to communicate in order to make everyone aware that coordination is needed between the development of new power plants and the grid.
A positive future
A country’s economic growth and the growth in demand for electricity are indisputably linked, and you only have to look to countries such as Russia to see what impact the current financial crisis can have on the demand for electricity. However, Dr. Schneider sees such falls in demand as a blip, a short-term phenomenon, and he remains upbeat for the future of the power industry. He expects the high demand for electricity from emerging economies, such as India and China, to continue and to translate into the construction of new plants. While in more mature economies such as Europe and the USA, he believes the emphasis over the next ten or so years will be on the replacement of aging power fleets.
The issue of energy, especially in respect to climate protection, will require us to develop new and better technologies in the fields of power production, transmission and distribution. Thus, as Dr. Schneider says, “energy will be one of the key issues that occupies us over the coming years.”
He ended our discussion by saying, “I can tell you that being an engineer in this field has never been more exciting, and I believe a lot of young talent will be attracted by the challenge to create solutions that can shape the future when it comes to us solving the energy issues we face.”
Dr. Schneider, who is also the current President of Germany’s VDE (the Association for Electrical, Electronic & Information Technologies), will give his POWER-GEN Europe keynote address entitled ‘New Power Plants Need New Grids A Chance of Investments in Europe’ on the morning of Tuesday, 26 May 2009.