Power supply and transport benefit from sector coupling.

Electricity from wind and solar power is projected to become the main energy source for future transport (see Insights 6 and 7). But national CO2 emissions will decrease only if additional amounts of renewable energy are generated. Accordingly, it is crucial for the clean-energy transition to keep pace with the transformation of the transport sector.

Though the share of wind and solar power in Germany’s electricity generation is rapidly growing, they are unpredictable, weather-dependent sources of energy. Hence, it’s all the more important to coordinate flexible levels of supply and demand. Electric cars can be part of that solution when equipped with smart or bidirectional charging capacities. The transport and energy sectors stand to benefit greatly through this type of collaboration, known as sector coupling.

  • Additional wind and solar power will drive the energy transition in the transport sector

    In 2015, Germany generated 651 terawatt hours (TWh) of electricity,152 of which its transport sector consumed a mere 12 TWh.153 Current scenarios predict that by 2050 electricity demand in the transport sector will increase to around 900 TWh hours (see Insight 7). This increase is in part due to the greater demand for transport services. Predictions differ greatly on how direct and indirect demand will rise after 2030 due to increasing use of electricity-based synthetic fuels.154 Given that the sustainable annual total potential of renewable energy is a 1,000 TWh, it appears likely that Germany will become reliant on imports of electricity and/or electricity-based fuels.155

    The German government aims to reduce total electricity consumption 25% by 2050 relative to the 460 TWh used in 2008. During the same period, the government aims to increase the share of renewable energy to 80% of total power generation. If these goals are met, renewable energy sources will generate around 370 TWh annually. But the reduction in total energy use is unrealistic given the additional demand projected for the transport sector. By the same token, the renewable energy targets are incompatible with the goal of decarbonising the economy, including the transport sector. The expansion of renewable energy needs a significant boost if the 2050 climate targets are to be met.

    152. See AGEB (2016a).
    153. In 2015, renewable electricity made up 30% or 196 TWh of gross electricity generation in Germany. See AGEB (2016b).
    154. The highest projected total electricity use for the transport sector amounts to 2,000 TWh. See LBST (2016).
    155. See DLR, Ifeu, LBST, DBFZ (2015).

  • Electromobility offers flexibility to the power sector

    The coupling of the transport and energy sectors can ensure that demand for electricity in the transport sector corresponds with the supply of renewable electricity. However, such coupling might also destabilise the power system, if, say, many electric vehicles are being charged at once or demand for electricity in other sectors is high, and only small amounts of electricity are being generated.156 If smart power management systems are used, however, such that charging takes place only when there’s supply, additional flexibility benefits will accrue to the power system.

    Sector coupling can also include bidirectional charging – feeding energy back into the grid from an electric vehicle’s battery. This new technology converts electric vehicles into temporary batteries, providing energy when wind and solar power are in short supply and demanding energy when there is excess production (figure 9.1). To bridge the gap between supply and demand, both producers and consumers need to become more flexible. Smart charging and bidirectional charging are two ways to achieve this.

    As it stands, however, no viable business models exist that use electric cars for this purpose.157 It is also unclear how vehicle batteries will handle bidirectional charging in the long run. Be that as it may, smart charging is the only practicable option for electric vehicles running on renewable energy.

    Policies need to be found to make smart and bidirectional charging possible. In particular, it is important that planners make sure that the charging infrastructure they create possesses this technology (see Insights 6 and 10). Power grid operators and electricity producers could use tariffs to create incentives for smart and bidirectional charging. Doing so will require appropriate regulation in addition to technological capabilities. Yet it is also important to expand power distribution grids while keeping future requirements for quick charging stations in mind.158
    Though intelligent cost-based charging can supplement photovoltaic installations when demand for renewables is high, it can also lead to increased demand at night for cheap electricity from lignite-fired power plants, which are heavy emitters of CO2. To ensure that generation keeps up with transport sector demand, capacities for renewable energy electricity generation in Germany must be increased at a much faster rate than they are today.

    Home battery units charged by roof-top PV installations are another option for overnight charging and for decreased dependence on conventional power plants. The energy stored in batteries at home can be used to partially charge electric vehicles overnight. (Even partially charged batteries can be an important factor for the short distances cars typically travel on any given day.) Moreover, households with their own solar units save on state-imposed costs in the electricity price. Such decentralised generation represents an appealing alternative for many people and can be understood as a means of speeding up the energy transition in transport.

    In the future, second-life batteries – batteries whose performance no longer suffices for supplying propulsion energy to vehicles (their original purpose) – could be used in households. So far, repurposed batteries have found profitable use only in the industrial sector, where they are linked together to form larger units that provide extra stability for the grid. Currently, however, there are no economic policies or regulations governing the use of second-life batteries in households. One reason is because repurposed batteries have to meet the same safety standards as new ones, and it is doubtful that providers will vouch for the safety of the batteries given that they don’t come with information about temperatures and charging cycles from their first life. Another reason is that the production of more efficient and cheaper batteries will presumably lower the cost benefits that might have been gained from using second-life batteries.

    Another storage option for flexibility is the production of hydrogen using excess power. Hydrogen can then be used directly or converted into methane or liquid fuel for vehicles. But this option has its difficulties. Electrolysers – facilities that generate hydrogen via electrolysis – are most efficient and cost effective when run at full capacity, considering their high investment costs.
    Their occasional use for load management doesn’t make economic sense.159 Once Germany’s energy transition has reached a point where renewable energy is the principal source of power, reconversion from stored hydrogen could be used to balance out seasonal differences in electricity production. This can be crucial on days or during weeks when neither wind nor solar power supply sufficient energy levels. P2G technology has a similar function to that of a safety buffer.160 With existing technology, however, the total efficiency of hydrogen production, storage and reconversion amounts to no more than 40%.161 One final point to consider is that, in a post-fossil economy, the chemicals industry will also require large quantities of hydrogen and carbonated compounds such as electricity-based methane.

    156. See Schill, W.-P. et al. (2015).
    157. See Volkswagen AG; Lichtblick SE; SMA Technology AG; Fraunhofer IWES (2016).
    158. See EU COM (2016b).
    159. See UBA (2016a).
    160. See BMWi (2016d).
    161. See EFZN (2013).

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