International Dependency on Security of Electricity Supply Calls for More Cross-Border Coordination

Source: www.gulfoilandgas.com 1/12/2022, Location: Europe

A further reduction in the capacity of gas and coal-fired power plants will result in a greater interdependence among countries in Northwestern Europe to meet their security of supply requirements in the medium to long term (2025-2030). This will also create greater risks for the security of supply for the Netherlands. These are the findings of the report ‘Monitoring Security of Supply 2021’, an annual analysis by TenneT that is commissioned by the Dutch Ministry of Economic Affairs & Climate Policy. In this report, TenneT analyses whether the Netherlands has enough production capacity to meet the national electricity demand in the short, medium, and long term. After 2025, uncertainties increase and security of supply drops. A robust electrification of society, decreasing coal and gas-fired capacity, and increasing production of wind and solar power make the system increasingly dependent on weather conditions and imports.

Conclusions from the report
- Until 2025, the Netherlands has enough domestic production capacity to meet national electricity demand. With the help of TenneT’s transmission links with other countries, the norm* of a 4-hour annual shortfall in electricity supply compared to demand is not expected to be exceeded, even in extreme scenarios.
- After 2025, uncertainties increase and security of supply declines. A robust electrification of society, a decrease in the operating capacity of gas and coal-fired power plants and an increase in sources with variable production will make the system increasingly dependent on weather conditions and imports.
- Interdependencies between countries are rising. Due to increased dependency, security of supply is no longer a national matter; national decisions have international consequences.

“Balance between supply and demand becoming more dynamic”

In the Netherlands, security of supply is still very high. The availability of the high-voltage grids in the Netherlands was 99.9999% last year, but the energy system and the electricity market are in a state of flux. Maarten Abbenhuis, COO at TenneT: “Climate targets are being fine-tuned in coalition agreements. Ins 2030 coal will no longer be allowed to be used to generate electricity in the Netherlands. The scale of decentralised power generation is increasing rapidly. On the demand side, we are seeing an increase due to the electrification of mobility, for instance, and industry employing more sustainable practices. It is becoming increasingly important that the demand for electricity moves flexibly with the weather-dependent supply. The balance between supply and demand is becoming more dynamic and requires new concepts, like storage.

These developments are creating increasing risks for security of supply. Therefore, promoting electrification will have to go hand in hand with measures to boost flexibility and storage on both the supply and demand side. Energy exchange with other countries also needs to be looked at. The interdependence among countries in Northwestern Europe to meet their security of supply in 2030 is as great as ever. In its 2030 forecast, the number of hours the Netherlands depends on supply from other countries has grown from 453 hours in last year’s report to 593 hours in this year’s edition. It is crucial that the Netherlands discusses and aligns its policy with neighbouring countries to continue to guarantee security of supply in the long term. As such, it’s a good development that a similar monitoring exercise is being carried out on a European level, namely the European Resource Adequacy Assessment (ERAA).”

Developments in the short term
While the report Monitoring Security of Supply mostly focuses on the medium and long term, there are several short-term developments at play that can affect security of supply. The Dutch cabinet decided at the end of last year that coal-fired power plants could only run at 35% of their capacity from 1 January 2022. In addition, gas supplies will be limited this year.

Patrick van de Rijt, Head of Market Analysis Energy System Planning at TenneT: “We haven’t been able to include the coal production limitations in our calculations for this report. If this 35% coal production is reached before the end of the year, this decision could have a negative impact on the available capacity in the Netherlands. Within the 35% production limit, owners of coal-fired power plants decide when to apply this. As a result, gas plants will produce more in the coming years and more electricity will most likely be imported.”

Coalition agreements with bigger ambitions
Very recent new coalition agreements concluded in both the Netherlands and Germany may have an impact on developments in the energy market. For instance, Germany recently decided to close all coal-fired power plants sooner than planned, in addition to the well-known Kernausstieg, i.e., halting all nuclear power. At the end of last year, the new coalition in Germany announced that coal-fired power plants must close in 2030 instead of 2038. This, too, may have an impact on security of supply. Van de Rijt: “Due to the increased dependency, security of supply is no longer a national matter; national decisions have international consequences”. Together with bigger ambitions for wind and solar, Van de Rijt therefore believes it’s essential that EU countries work closely and transparently together to agree on what capacity should be phased out in the coming years and what sources or capacity should replace it.

* This norm is the expected value of the number of hours per year that available production capacity will not be able to meet demand, i.e., the so-called Loss of Load Expectation (LOLE). A maximum LOLE value is set as a criterium for the adequacy of a system, i.e., the acceptable risk that during a certain number of hours per year demand cannot be met; this value translates unambiguously to the minimum amount of required production capacity. The LOLE average used to assess the Dutch system is 4 hours per year.


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