Deutsche Version  ACT
Interview | 4.4.2016
Interview with Professor Dr Ulrich Wagner

"Power-to-heat and thermal storage are of utmost interest"

Professor Dr Ulrich Wagner, scientific director at the Research Center for Energy Economics, explains which storage solutions are most suitable in which situation.
© FfE

In the merit-order study, researchers at the Research Center for Energy Economics (FfE) and 13 industrial partners jointly examined the nature of an economic system infrastructure for reliable energy supply until 2030. Professor Dr Ulrich Wagner, scientific director at FfE, speaks about the study in this interview. He explains the role of functional energy storage systems, and which storage options were most suitable in which situations. As part of the merit-order study (MOS) you analysed the role of functional storage systems up until 2030. What are functional storage systems?
Prof Dr Ulrich Wagner: Functional storage systems are all components, equipment and measures that are suitable to make asynchronous generation meet demand. Perhaps batteries come to mind first – they can do this very well. Naturally this is also about larger plants, such as pumped storage power plants, compressed air reservoirs for gas-fired power plants, and about load shifting and demand-side management. Especially the industrial sector holds a considerable potential. I would like to mention power-to-heat as an example. This also calls for a new function that will increasingly come to market: electromobility. Charging can be stopped and started depending on demand. In the future, electromobility will also be able to feed power back into the system.

You created merit-order curves for all storage options up until 2030. What can you derive from those curves?
Wagner: The special feature of our method is the combination of a pure technology assessment using the typical profile data: How much will that cost for the user? What are the efficiency levels, fixed costs, as well as variable costs with a benefit assessment, of the system? We looked at this from a micro-economic perspective and combined that with the macro-economic added value for the system. Both motivations may well differ. Operators have a vested interest in saving energy and costs, for themselves, for their houses and for their companies. But that usually leads to an entirely different result than would be optimal for the system.

In this respect, our method is special and the results reflect this. I could mention a few examples: Power-to-heat for industrial applications is at the top of the list and it is very attractive, micro- and macro-economically speaking. This also applies to thermal storage systems, for example, in combination with cogeneration for the temporal decoupling of electricity and heat generation. Pumped storage power plants have a macro-economic advantage but do not pay off from a micro-economic point of view, and are not really all too exciting for investors at the moment. This would require regulatory corrections.

And on the other end of the scale, so neither macro- nor micro-economically interesting, we have battery storage systems combined with photovoltaics on single-family houses. This case is usually not micro-economically motivated. Granted, there is the expectation that one can save power purchases; a kilowatt-hour will cost 0.30 euros and you will want to use as much of your own generated solar power as you can, given generation costs of around 0.10 euros. But the battery costs are underestimated from today's perspective.

Economic consideration of energy storage systems

When do things become more interesting from an economic point of view?
Wagner: There is still much to be done in terms of battery costs for them to be at least micro-economically attractive. Macro-economically speaking, things still are not terribly exciting. Allow me to consider an extreme case: If every single-family house were to have a self-sufficient supply consisting of photovoltaics and batteries, then this would eventually be attractive from an energy cost perspective within the building, but not from a systemic point of view, and neither from the viewpoint of maximum system reliability. The big picture suffers if everyone optimises for themselves.

Which system infrastructure do you envision for 2030, and which framework conditions make the most sense for the energy supply system in terms of costs? Can you give us any details?
Wagner: We can already say that we can integrate a few tens of gigawatts of additional storage capacity by 2030 into the system in a micro-economically attractive way. And then it becomes quite clear that the larger demand for storage capacity will be during the following period of 2030 to 2050. We have specified a so-called expansion corridor for the government in which renewables must be developed. The future demand for storages correlates strongly with that.

It was an interesting by-product of the study that, given the specified expansion corridor, renewables would be developed far quicker than originally assumed for the energy concept. In the future, onshore wind energy will no longer have 2,000 hours of full load annually but 3,000. This is due to higher towers and larger rotor diameters, as well as low-wind designs. In 2030 or 2035, the share of renewables in the energy supply system will turn out to be 70 per cent or more rather than 55 per cent.

"Making flexibility and coordination more rewarding"

What funding mechanisms would you consider sensible that would allow a system infrastructure to penetrate the market?
Wagner: There are two key words for the design of the future energy system: Flexibility, which we have already discussed in depth. And then there is the rising level of sector-coupling, as I had indicated earlier. That means that the connection between energy and transport systems needs to be developed and coordinated. As is stands, both aspects are not sufficiently rewarded or incentivised to ensure that they are attractive enough for stakeholders to invest in technology that would increase flexibility. I think the flexibility potential, for example of pumped storage systems and power-to-heat, would make for important leverage if it were to be funded. That does not necessarily mean heavily subsiding it but it could be rewarded through levies and fees. But purchasing power could be priced higher because it does incur infrastructural costs.

The distant future of storage systems after 2030

Where do you think we will be in 20 years?
Wagner: That is a very interesting question because it is very closely related to the way our planned grid expansion will proceed. Grid expansion in Germany has a clear development plan with an unclear outlook in terms of the extent to which it will actually be implemented, or whether at all. Storage and grid expansion are also complementary within certain limits. They can substitute one another, so they cannot be considered independently. What we really need is significant grid expansion along the north-south axis. Once that has been achieved, we can relax a little in terms of storage development and keep it within manageable limits. If we lag behind in grid expansion, we will have to put a lot of effort into distributed generation and storage systems.

Moreover, we will have a high share of electric vehicles in our system in 20 years' time. When we talk about a few million vehicles, that is roughly two TWh per million vehicles, this adds up to approximately ten TWh. That does not sound like much considering electricity consumption today amounts to 600 TWh. But it will require a marked increase in power management – specifically of the distribution grid – in order to manage the power peaks that are caused by the simultaneity of charging processes. That means that we certainly need more storage systems on the distribution grid level.

Storage system and grid development are important for the system

Why do you consider energy storage systems indispensable?
Wagner: They are absolutely essential in order to avoid temporary overproduction. If we want to live up to our claim of transferring as much renewable generation capacity as possible into the system, then we will need storage systems and grid expansion. You do not need a degree in power engineering to understand that. It is evident that we need more grids in order to compensate for local differences between wind power generation in the north and the high consumption densities in the south. We had already calculated the demand for storage capacity in MOS 2030. In terms of grid expansion, we are still working on it using a similar project construction of the Research Center for Energy Economics in co-operation with a dozen partners in the grid area.

You are speaking about the MONA project of the “Future-proof power grids” research initiative.
Wagner: Yes, exactly. The sister of MOS. In MONA, we focus on grid development up until 2030 and perspectively beyond. After all, it does not make any sense to stop thinking in 2030. Once we are firmly in control of grid expansion and storage systems—flexibility and electromobility are already part of the storage system package—then we will have two very powerful tools we can use to analyse the impact on the system in great detail.

Supported by: The Federal Government on the basis of a decision by the German Bundestag


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Professor Dr Ulrich Wagner carries out research in the efficient use of energy in plants and buildings, electromobility, the integration of renewable energy, energy life-cycle analyses and regional and national energy scenarios.
After studying electrical engineering in Bogotá (Colombia) and at the Technical University of Munich (TUM), he received his doctorate for his work on "Energy yield from traction batteries" in electric cars. Since 1995, Wagner has been the scientific director of the Research Center for Energy Economics; in the same year, he also accepted a full professorship at the Institute for Energy Economy and Application Technology at TUM.