Renewable base load erodes the value of coal, improving energy independence
Major system-wide benefits can be achieved for European power producers who are rapidly replacing coal with renewables, ranging from avoidance of fuel and carbon costs to new opportunities to export electricity .
This is the conclusion of a modeling exercise by the Finnish technology group WÃ¤rtsilÃ¤ which studied in particular two energy systems: Germany and Ukraine. These two countries have very different power systems and coal phase-out policies, as evidenced by how the coal capacity gap can be bridged through renewable electricity, thermal power plants and energy storage. .
âOur analysis of both sides of the coal output spectrum is clear: The value of coal has been eroded by low-cost renewable base load,â said Jan Andersson, WÃ¤rtsilÃ¤’s market development manager for Europe.
“The phasing out of coal presents a myriad of opportunities for European countries to reduce production costs, achieve energy independence and generate income through sector coupling at the level of society”, added Andersson.
Under its âFast Phase-out 2030â scenario, the report concludes that Germany can phase out coal-fired electricity eight years ahead of the target, by 2030. According to the model, the value of electricity coal would be eroded by building 13 GW of new renewable energy capacity. This would make Germany less dependent on electricity imports, becoming a net exporter in the 2030s, and allow the country to save up to 600 million tonnes of CO2 by 2045, equivalent to 81% of its national carbon footprint today.
For Ukraine, WÃ¤rtsilÃ¤ modeled the outcome of modernizing or withdrawing coal from the country. He found that a modernized coal-based power system costs consumers â¬ 5.2 billion (US $ 6.2 billion) more over ten years, and the process would remove 53 million tonnes of CO2 more than removing the system.
A new system based on 32 GW of new renewable energy would save Ukraine 500 million euros (US $ 595 million) per year on the cost of electricity produced by 2031, according to modeling by WÃ¤rtsilÃ¤.
âUnlike Germany, Ukraine is currently unable to encourage its exit from coal, so it is essential that it finds the cheapest route to properly meet the demand for electricity. Our modeling gives a clear result: upgrading coal is much more expensive than retirement, âsaid Igor Petryk, Director of Market Development at WÃ¤rtsilÃ¤.