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Key Findings

According to the International Energy Agency (IEA), the global average wind and solar penetration today is 5%, and will rise to 13-34% by 2040, depending on the ambition of energy policies adopted.

All nine of the countries/markets described in this report already achieve far higher levels of solar and wind than the global average today, with two near or above 50%.

Both wind and solar power have near-zero operating costs. As a result, they are delivered first, pushing other forms of generation further down the merit order, meaning they operate less often and make less money.

Executive Summary

In this study, we show how nine leading countries and regions have adapted to high market shares of wind and solar power using existing integration technologies and policy measures to improve their diversity of domestic generation without compromising reliability or undercutting supply.

This research is timely, given rapidly growing levels of renewables globally, concerns about climate change and air pollution, and the renewable energy sector’s growing competitiveness with fossil fuels.

Renewable sources of electricity can be divided between variable sources, notably wind and solar power, and firm sources available on demand, such as biomass, geothermal, concentrated solar power (CSP) and hydropower. The focus of this study is grid stability and the challenges for grid operators posed by variable wind and solar power.

Our nine case studies are among the top 15 countries/markets worldwide by wind and solar market share, ranging from 14% to 53% of total electricity generation, compared with a global average of 5%. The case studies span the globe: four are from Europe, two from the U.S., one from South America, one from Asia, and one from Australia. They are, in descending order of wind and solar market share of total net generation in 2017: Denmark (52.8%); South Australia (48.4%); Uruguay (32.2%); Germany (26%); Ireland (24.6%); Spain (23.2%); Texas (18%); California (15%); and the state of Tamil Nadu, India (14.3%).

Data for major cities in the national case studies indicate that none have suffered major grid problems. If anything, power outage data suggest that these are among the world’s most robust electric grids and are performing better than their peers by national income.

This report focuses on the practical changes in market rules and resources required to manage the shift to higher levels of wind and solar power. All of the grid integration solutions discussed below are available and proven today. The broad use of emerging technologies, particularly battery storage, that could enable even higher levels of variable renewables is not considered. But we note that battery storage is an emerging solution among the leaders, notably in South Australia.

We draw attention to nine options for system operators to consider, all of which can help ease the integration process and assure supply security and grid reliability. Countries can select from these, according to their circumstances, and so avoid radical redesigns of their power markets. Our view is that solutions are tied to specific conditions and that a broad sharing of state-of-the-art solutions is the best way to encourage market growth. The nine options are listed below, with examples drawn from our case studies.

  1. Timely investment in the transmission grid: Texas is the lead example of a highly organized program of transmission network investment connecting wind farm regions with cities.
  2. Boosting transmission interconnections and cooperation between neighboring countries and power markets: In 2014, the California independent system operator (CAISO) and PacifiCorp launched the western energy imbalance market, which extended into seven states the area that CAISO could call upon to balance variability in demand and supply, thus reducing renewables curtailment.
  3. Ensuring flexibility in domestic generation: In Uruguay, domestic hydropower provides flexibility for wind generation that has grown more than 30-fold in the past five years.
  4. Market reform to boost flexible back-up: Ireland is in the process of introducing real-time balancing and intraday markets to provide important price signals to potential investors in flexible generation, demand-side response, and storage, aiding the development of a more flexible grid to respond better to increased renewables penetration.
  5. Supporting demand-side flexibility: Following a one-in-a-100-year storm that caused a statewide blackout in 2016, South Australia devised an energy plan backing new sources of flexibility, including 1,000 megawatts (MW) of contracted demand-side management.
  6. Better wind and solar forecasting: In Spain, modelling advances at the national wind power forecaster, Sipreolico, have halved day-ahead forecasting errors.
  7. Enhancing the responsiveness of the distribution grid: Germany has changed grid codes for household solar inverters to make them responsive to variations in grid frequency and thus stabilize the grid, while avoiding any prospect of sudden, large-scale disconnection.
  8. Making renewables more responsible for grid balancing: Beginning this year, wind power aggregators in Denmark will have to provide firm power from across their portfolios, including the oldest turbines, meaning they will pay for inaccurate forecasts.
  9. National leadership: India’s ambition to drive five-fold national growth in variable renewables over the next decade has spurred initiatives such as its Interstate Green Power Corridor, favoring local integration of solar power in the state of Tamil Nadu.

Our findings are particularly relevant against the backdrop of the rapidly rising global market share for wind and solar generation. As the market share of variable renewables grows, system integration issues will become even more important. Our case studies provide valuable lessons, documenting how national or regional market share of wind and solar power is up to 10 times the world average. Significant market share has been achieved in a handful of years, defying decades-long transitions projected by some analysts. For example, Uruguay’s wind and solar share of generation rose to 32% in 2017, from 1% in 2013.

This report is timely also in the context of political and industry pushback against renewables. Political resistance has been particularly pronounced in the U.S., with the Trump administration looking for ways to bolster coal and nuclear power. But resistance has been raised elsewhere as well. We note that Germany in 2018, for instance, gave in to the coal lobby and abandoned its 2020 carbon emissions goals. Fossil fuel firms have spun a false narrative around the supposedly negative impacts of renewables growth on electric reliability and affordability.

Regions trends have outpaced national trends in three of our case studies: South Australia, California and Texas. These examples show how regional markets can play leadership roles as early adopters of wind and solar power. When national governments are on board, as in India, regional growth can be even faster, as in the state of Tamil Nadu.

Finally, our report finds that concerns about the impact of wind and solar power on grid reliability are over-stated. We show that grid operators can assure security of supply at levels of wind and solar power of at least 50% of total generation by boosting system flexibility and grid interconnection and by ensuring strong price signals. Operators can achieve this through a series of technical engineering adjustments, investments and reforms to power market design and without resorting to new out-of-energy market subsidies for conventional generation.

Press release: Record US$14.5 billion investment in Indian renewable energy sector in last financial year

Please view full report PDF for references and sources.

Gerard Wynn

Former IEEFA Energy Finance Consultant Gerard Wynn is a U.K.-based 10-year veteran of energy and economics reporting at the Thomson Reuters News Agency and has authored numerous papers on energy issues ranging from solar power in Great Britain to coal-burning in China and India. He blogs at

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