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By Salvatore Repici
Feb 7, 2023
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How energy transport can save the world
How Energy Transport Can Save the World

The rapid economic recovery after COVID-19 lockdowns led to a significant increase in electricity demand in 2021, estimated 5.8% worldwide by IEA1. Although the recent geopolitical evolutions and the renewed public health restrictions in some of the biggest world economies are slowing down the trends, with an expected 2.4% in the latest reports for 2022, the shift from fossil fuels to electricity for home heating, buildings, industry and transport2 is being confirmed and accelerated by public policies and regulations in many countries. More efficient renewable energy sources (RES) generation technologies allowed the amount of installed capacity to rapidly increase in the last decade, especially in leading market economies like China or India. However, at least until the recent developments in electricity market, the price of energy was determined by the cost of generation of fossil fuel plant, characterized by lower fixed-costs technologies and variable operative costs compared to renewable energy, with capital-intensive technologies and lower and stable operating costs. The mechanisms introduced to limit gas prices skyrocketing is changing electricity market paradigm, and renewable energy sources are gaining more grid parity with fossil fuel as the merit order of generation activation is changing.

Nevertheless, the current configuration of energy transportation has intrinsic limits that do not allow to completely disengage from non-renewable sources. The shift from centralized to distributed generation is neither fully compatible with the current features of transmission networks. Production from RES is variable and discontinuous, as well as completely disconnected from demand. In certain situations, these characteristics may result in curtailment of RES resources that are momentarily available but not needed. Full transition to renewable sources will be effective, efficient, and sustainable only through maximizing the use of these resources when and where they are available.

The aim of the paper is to provide evidence to underline the key role played by transmission and distribution of energy to nurture the transition towards a more sustainable model for security of supply. The paper will also highlight the encouraging opportunities for the development of hyper-local transport through Energy Communities that will increase citizen awareness on climate change and potentiate the sense of cooperation and involvement on the low-carbon transition.

Connecting markets: greater interconnectivity amongst grids

The world is already shifting towards a greener and more sustainable environment where RES play an essential role in the transition. However, RES present a high variability in their generation capabilities, as, for example, wind and solar are heavily weather-dependent, which poses substantial risk in its generation and management. The variability of RES generation in each geographical area may be smoothed with the construction and aggregation of more generation units3, enlarging the geographical area covered by them. However, it may be expensive, inefficient, and difficult due to limitations in the grid, permitting issues and geographical unsuitability and even unsustainable. A greater availability of grid connection and capacity to transport energy from one area to another would allow wind and solar generation units to be concentrated in the geographical areas in which RES are most efficiently generated, where they are easier to install and less often curtailed.  

It becomes clear that the role played by energy transport is crucial in the dismission of conventional fossil fuel generation. The increase in variable, discontinuous and non-programmable RES generation is bringing complexity in a system based on the modulation of the available conventional resources according to the forecasted level of consumption. To accelerate the dismission of fossil fuel, TSOs and DSOs will have to anticipate network needs by introducing advanced forecasting and nowcasting tools and new procedures to manage the variability of RES availability with the help of digitalization, technological evolution of system operation assets and capital-light investments on the grid. Capital-intensive investments will also be necessary to increase the transmission and distribution capacity of existing sections and allow effective RES connection to the grid and reduce curtailment procedures and non-distributed energy. 

As the number of requests from medium and large renewable plants for grid connection raises4, the inadequacy of transport capacity on long-distance may also become a limit to effective energy transition. To overcome this issue, already available technical solutions and new technologies under investigation will enable to achieve technical and economic efficiency:  the replacement of cables may allow greater current transits, but it is costly5; the use of digital tools to monitor the operating conditions of the grid may allow greater level of performance, pushing the grid to its limit without compromising the safety of transport and security of supply (i.e. the use of IoT technology monitoring, dynamic thermal rating technology to increase the capacity of transmission based on the dynamic measurement of cable temperature, use of wide area measurement systems (WAMS)…).  The energy storage systems applied to energy transportation may act as “digital grid”, storing surplus renewable energy during peaks in production and feed the stored energy back into the power grid as soon as it is needed6. The “supergrid” technology, consisting of very high voltage transportation on long distance, will enable high volumes of renewable electricity to be moved with very low power loss over long distances. Supergrids technology enables to imagine intercontinental connection with a reduction of costs and best integration of RES, even if on a techno-economic perspective the advantages may be modest7 . Together with the widespread deployment of RES, such technology would concur to the development of new energy scenarios for all geographical areas rich in renewable resources that are currently not exploiting their potential.  

Exchanges through efficient and reliable interconnection will be necessary as long as security of supply, sustainability and competitiveness will remain the core values of any energy system. Connected networks enable the excess energy capacity to be transported from where the surplus is generated to where the available capacity is low or even nonexistent. It ensures solidarity between the interconnected areas to provide mutual assistance when internal adequacy is not met8, it reinforces grid stability in a context of increased share of renewable electricity and lower levels of inertia, and it helps to mitigate the effects of extreme weather conditions. Interconnection is not just a matter of technical solidarity: it also brings more competitiveness to integrated energy markets. It contributes to lower the prices and avoid generation costs. Energy prices fluctuations are driven by demand and supply, each variable being affected by a numerous of factors, such as: 

Weather, directly impacting energy consumption and supply, following the seasonal cycle as well as depending on both predictable and unexpected extreme weather events (e.g., floods, hurricanes);  

Outages, scheduled (e.g., for maintenance of power plants) or unexpected (e.g., due to weather conditions); 

Economics, e.g., the increased economic activity necessary for the recovery after Covid-19 or development of industries that represents an increase in energy demand; 

Sources fuels market costs, due to their interdependency with energy generation; 

Government Regulations, as changes can trigger a market response; in the last years, mainly those regulatory changes needed to achieve environmental goals and impacting fuel industries; 

Geopolitical events, such political unrest, war, and hostage crises; a very recent example is the record levels reached in electricity prices following Russia’s invasion of Ukraine; Nonetheless, there are positive effects on prices when trade agreements are made that open a new stream of fuel supply; 

The interconnectivity amongst grids, with cross-border infrastructure that integrates different markets, contributes against price and supply fluctuations by providing a broader energy source capable of being transported where demand requires it. Moreover, the greater availability of energy supply from different producers located in different markets allows for a boosting in competition, fostering the development of new business models and innovations to be able to produce at a lower cost, also including the investment in the production and management of renewables. 

Therefore, the impacts of market interconnectivity are non negligeable, as they do not only consider the reduction of price differences between markets and their volatility, but also supports transition to a greener world encouraging the boosting and connection of renewable energy sources over a broader area, which combined will be ultimately translated into an appeasement in energy prices for consumers, and thus their welfare. 

Finally, in times of high geopolitical tensions, interconnections also play a major role in reducing energy dependence on third-party communities. The availability of nonrenewable sources is still high and consequently the cost is relatively low. However, growing energy consumption gives rise to concerns about future availability of fossil energy and the latter may be subject to fluctuations in purchase prices for supply due to geopolitical tensions between different countries, as the largest non-renewable energy reserves known to date are located only in certain geographical regions of the planet, under the jurisdiction of nations. The situation that occurred since the conflict between Russia and Ukraine began has triggered several repercussions, including raises in gas prices, which was reflected on the prices of all other commodities as well as on the cost of electricity generated from renewable and nonrenewable sources. Increased energy production from renewable sources along with grid upgrades could result in a clean break from fossil-bound energy dynamics, as they could provide a truly inexhaustible, affordable, and less polluting alternative, reducing energy dependence on other countries and giving to new players to enter the club of the most energy efficient and powerful countries in the world. 

Energy transmissions / Distribution costs

The inflation that is causing the current soaring in raw materials costs is leading to an expected increase in renewables costs. At the same time, this condition is leading to an increase in the gap with fossil fuel generation as the increase in fossil fuel prices is even more evident. This context in which renewables are becoming cheaper and cheaper helps accelerate the green transition. This transition phase has the drawback that it could lead to lengthening a period of higher energy inflation; in order to mitigate this risk, therefore, the role of TSOs and DSOs becomes fundamental, as they are responsible for ensuring the transport of low-cost energy between the various geographical areas according to variable production and demand. 

The regions favourable to the installation of large wind and photovoltaic parks are often geographically far away from consumers. To increase the penetration of alternative energy sources into consumption share, the transmission of large quantities of electricity over long distances and at low cost is essential. The costs of the transmission network are currently high and depend in particular on: 

Materials: conductor cables, support towers and electronic devices 

Electrical losses 

Land purchase 

Installation and maintenance 

In order to moderate these costs, one solution is the development of a specific integrated supply chain that would reduce the costs of material procurement. Furthermore, the advent of network digitalization is able to optimize the management of energy flows with the benefit of reducing losses on the lines. Furthermore, the development of innovative technologies such as the wireless / laser energy transport is interesting for a costs break-down. 

DER integration & Self-consumption / self-production

Another solution to cut the costs of energy transport is the development of distributed energy resources. They are distinguished from the traditional generation for their smaller size, the proximity to the areas of energy use, the diffusion on the territory and lower power density. Some examples are small Diesel or natural gas generators and microturbines, although the main settled ones are renewables such as run-of-the-river hydro units, solar arrays, wind turbines, and battery energy storage units. The purpose of these plants is to power local communities without burdening the electric system. 

Their nature can provide positive net value to the electricity grid, such as reduced infrastructure investments, improved resilience, and increased integration of clean energy, with benefits on an economic, environmental and social perspective.  

First of all, DER from renewable sources diffusion can bring to a lower-cost energy in two ways: Avoiding power generation from fossil fuel-fired generation resources, which are characterized by fluctuating costs (i.e. Natural Gas price fluctuation), and avoiding line losses on the transmission and distribution grid with increased system efficiency (i.e. DER trading for ancillary services)9. 

A second benefit is provided a system-level capacity value as they defer or avoid investment in generation and transmission assets; in fact, their local utilization and the self-consumption can resolve grid contingency and bottlenecks (i.e. DER as flexibility service providers within electricity systems)9. The system capacity value of DERs depends on the DERs’ utilization capability during peak load times. In addition, DERs improve the operating reserve as they can be used to increase supply or reduce demand on the grid in place of central generators that would otherwise be used in case of contingencies, like forced outages. Furthermore, DERs provide distribution-level capacity value when they defer or avoid investment in distribution assets. The distribution capacity value of DERs depends on the DERs’ utilization capability during local peak periods. In particular, smart DER management can improve the response of the grid to changes in energy demand, reduce congestion on the transmission grid, provide an additional reserve to the grid operator; moreover, in emergency cases, it can supply the local distribution network even following an interruption in the transmission network as an island grid system. DERs has also the capability to provide efficient ancillary services which are nowadays requested by thermal power plants: in fact, they can respond rapidly to frequency control calls.  

Finally, from a social point of view, DERs can avoid investments on intensive generation plants switching consumers in prosumers and making them active part with benefits on their awareness of the energy transition. In order to reach all the benefits described the role of TSOs and DSOs is fundamental: even though the request of new infrastructures is lower, they must be focused on the creation of a smart grid is the enabling factor to manage efficiently in real-time the energy fluxes on the grid. 

Despite the major investments described above on transmission grid, the efforts of energy transport may still not be sufficient to cope with the exponential growth1 of requests to connection to the grid in a full renewable generation scenario. For this reason, actions to facilitate the creation of local aggregated energy systems with the purpose of producing and consuming renewable energy within defined geographic perimeters that are completely or partially untied from the grid must be undertaken in parallel with the introduction of grid upgrades. 

New technologies for decentralized energy-generation and the grow and diffusion of information technologies have brought new opportunities to manage energy infrastructure in a more flexible way. When also considering citizen demands for control over energy, these two converging trends have raised Energy Communities as one key factor of energy transition. 

Energy Communities are based on a self-production and self-consumption dynamic, and its benefits can be classified in: 

Environmental 

reducing CO2 emissions through a reduction in fossil fuel use in favor of a grow in renewable energy generation 

promote DER use, ownership and management by Energy Community participants 

Socio-economic

empowering local citizens to generate and manage cost-effective green energy autonomously 

calm energy bill prices 

ease up energy poverty areas and stimulate rural and isolated areas development 

foster job creation 

behavior transformation by increasing the awareness of climate change and potentiating the sense of cooperation and involvement on the low-carbon transition 

Evolving from a historically centralized energy system, which relies heavily on large power plants, to a distributed energy production, which is based on renewables sources and ultimately led by citizens of a region, is a movement that has already been started. However, being still a socio-political challenge, Energy Communities creation and expansion will most likely benefit from the increase in incentives for the different energy system players, with proper policy and regulatory framework that enables and promotes required investments. 

Conclusions

In conclusion, multiple actions might be put in place to enhance the infrastructure, and its development, which can be a lever to change the world. Although there is a bast range of aspects in which it can contribute on transforming the way we live and our surrounding, also in terms of sustainability (Environmental and socio-economic benefits). 

Historically, economic growth and socio-economic development has been closely related to a causal increase in energy-related emissions, mainly of carbon consumption. Hence, the challenge is to keep boosting socio-economic growth but at the same time reaching a close-deadline objective of net zero greenhouse gas emissions (GHG) in the EU. The consequent need to decouple both factors, together with the increasing energy demand and dependency in the current globalization era, has already started, and it is driven by an increase energy systems efficiency and the growth of renewables penetration in the market. The intrinsic nature of renewables brings the focus on the enhancement of energy network infrastructure (transport and distribution) and their costs reduction. In addition, both the development of distributed storage systems and the creation and extension of Renewable Energy Communities can enable a self-consumption mechanism, boosting a reduction of energy demand. Furthermore, the digitalization of the grid is the enabling factor to optimize energy transport and consumption.  

Nowadays, it is increasingly important to reckon that to ensure safe, equitable, inclusive and sustainable access to energy, and thus carrying into effect world change, energy transport needs to be at a feasible cost with careful attention on long-distance and large-scale, which does not exacerbate the problem of rising energy prices but tries to mitigate it where possible. The interconnectivity of networks and markets is a fundamental factor, and this article has explored how connected distribution network enables the use of energy surplus to be transported from where it is not used to where production is low or even nonexistent. Energy transport is able to optimize resource usage when and where renewable energy production is possible and balances out energy needs when and where worse energy production resources are found, contributing to ensure energy access and to manage the variability of increased renewable generation. Only by granting low-cost energy transport and distribution, the benefits up until now considered can be escalated from a local/national level to a trans-national/worldwide transformation. To this extent, power infrastructures might also help mitigate geopolitical tensions by integrating and interconnecting an increasing number of different countries able to truly diversify their sources of supply, reduce energy dependence on third-party communities and converge average energy prices between markets. Moreover, it is essential to invest in the improvement of innovative technologies on energy transport (i.e., wireless energy transmission via laser). 

Nonetheless, energy transport alone does not exploit the maximum potential for world energy transformation. In this context, Energy Communities must be added to the equation to balance the grid and optimize resource usage.  Energy Communities, well-defined by EU Directive 2008/2001, can be acknowledged for its great environmental and social benefits, able to ease up energy poverty areas by empowering local citizens to generate and manage cost-effective green energy autonomously, reducing CO2 emissions and calm energy bill prices. Moreover, they can foster a behavior transformation by increasing the awareness of climate change and potentiate the sense of cooperation and involvement on the low-carbon transition.  This entails a reduction in energy consumption and a reduction in fossil fuel use in favor of a grow in distributed renewable energy generation. Furthermore, the development of an “energy token economy” can increase citizen awareness for a paradigm shift towards a more sustainable energy system. 

The authors

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