Context

The current situation in Germany provides a first real-life illustration (see box), since the intermittent power it has already deployed means that it is obliged to export its grid management problems to its neighbors, be they over- or under-production. An overly approximate analysis of the real impact of high production variability can subsequently lead to the need for oversized investments in capacities suffering from low load factors, both for power generation and transmission. The over-equipment of wind and solar power plants, the large and unprofitable traditional back-up capacity, the oversizing of national and international high-voltage grids and the need to create storage facilities for surplus electricity will result in very high electricity prices, thereby weakening Europe's economic competitiveness. In our view, this risk has not been sufficiently assessed in the absence of an...