Buffering volatility: A study on the limits of Germany's energy revolution

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European Economic Review, ISSN: 0014-2921, Vol: 99, Page: 130-150

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Hans-Werner Sinn
Elsevier BV
Economics, Econometrics and Finance
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article description
Squaring hourly demand and wind-solar production data for Germany and a number of neighbouring countries with the results of the EU's ESTORAGE project, this paper studies the limits of Germany's energy revolution in view of the volatility of wind and solar power. In addition to pumped storage, it considers double-structure buffering, demand management, Norwegian hydro-dam buffering and international diversification via grid expansion. If Germany operated in autarchy and tried to handle the volatility of wind-solar production without using stores while replacing all nuclear and fossil fuel in power production, on average 61%, and at the margin 94%, of wind-solar production would have to be wasted, given the current level of other renewables. To avoid any waste, the wind-solar market share in an autarchic solution must not be expanded to more than 30%. By using Norway's hydro plants the share could be expanded to 36%. If Norway were to build all the pumped-storage plants the ESTORAGE study deems feasible, Germany's wind-solar market share could be expanded by another 24 percentage points to about 60%, which corresponds to 48% of the combined German and Norwegian markets. Additionally expanding the market to Switzerland, Austria and Denmark and building the maximal number of pumped stores would increase the combined wind-solar market share for all five countries to nearly 50%.