The share of renewable energy has been gradually increasing in the global electricity mix. Some of the European countries such as Denmark obtain nearly 60 percent of their needs from renewable energy sources.
In other countries like Germany and Portugal, the renewable electricity, excluding large hydro, accounted for about 32 percent and 30 percent of the total power generated.
With ambitious plans and supporting mandates, several Asian countries will witness their renewables share in the total energy mix soon cross the 20 percent mark. This presents immense challenges for utilities to manage intermittency and uncertainties presented by solar and wind power.
As renewables move from niche to becoming mainstream sources of energy, it is also necessary to ensure that the relevant infrastructure is in place to manage the increased output. Possible issues encountered include the need for increased accuracy of supply and demand predictions and problems with controlling the voltage and frequency in the local grid.
This means that the power utilities have to invest heavily on backup power generators using gas or coal and also in transmission & distribution (T&D) network upgrades to handle intermittency. Utility companies worldwide are spending an average of $25 billion annually on T&D maintenance and upgrades.
According to Ravi Krishnaswamy, Vice President, Energy & Environment, Frost & Sullivan, Asia Pacific, utilities will face the double impact of reduced revenues from selling energy.
"This is due to the fact that several customers have started to generate their own renewable electricity in addition to the increased need to invest in T&D upgrades to support renewable integration," he noted.
However, to tackle this challenge some of the utilities such as RWE and E.On from Europe and NRG Energy from the US have started deconstructing their business model. These companies are helping their own electricity customers to install and own renewable energy plants, thus effectively turning them into 'prosumers' and creating a virtual power plant through an asset light approach.
This move by the utilities only addresses one side of the challenge, which is customer owned generators, mainly rooftop solar. The bigger challenge will still be to integrate several gigawatts of large solar and wind farms into the power grid.
Frost & Sullivan's new research, 'Global Perspective on Integration of Renewable Energy into Grid' focuses on several case studies and best practices.