1 00:00:06,370 --> 00:00:07,980 Welcome back! 2 00:00:07,980 --> 00:00:11,660 We have shown three series of web lectures this week. 3 00:00:11,660 --> 00:00:17,680 The first part was about complexity in general: what is it and what consequences does it have? 4 00:00:17,680 --> 00:00:23,250 In the second part, we showed you the physical complexity of infrastructures. 5 00:00:23,250 --> 00:00:30,009 This physical complexity interacts and interferes with the social complexity, 6 00:00:30,009 --> 00:00:33,430 which we explained in part 3 and vice versa. 7 00:00:33,430 --> 00:00:42,000 Now we will explain all this on the basis of one concrete example: Germany's so-called 8 00:00:42,089 --> 00:00:44,200 Energy Transition. 9 00:00:44,289 --> 00:00:46,539 What is going on in Germany? 10 00:00:46,539 --> 00:00:51,949 Recently there have been substantial investments in renewable energy in Germany, 11 00:00:51,949 --> 00:00:54,859 particularly in wind and solar energy. 12 00:00:54,859 --> 00:00:59,359 You can see the effects if you drive through Germany. 13 00:00:59,359 --> 00:01:04,420 Everywhere you go you can see PV solar panels. 14 00:01:04,420 --> 00:01:10,120 There are also lots of wind turbines, both onshore and offshore. 15 00:01:10,120 --> 00:01:15,740 German people and businesses were attracted to investing in solar and wind energy. 16 00:01:15,740 --> 00:01:20,610 This is not just because they like the idea of renewable energy. 17 00:01:20,610 --> 00:01:26,900 It is also because they see it as an attractive investment. 18 00:01:26,900 --> 00:01:33,210 Any power they produce in excess of their own demand will be purchased at an attractive 19 00:01:33,210 --> 00:01:36,180 feed-in tariff. 20 00:01:36,180 --> 00:01:43,180 Investing in renewable energy offers far better returns than a saving account with interest 21 00:01:43,310 --> 00:01:46,610 rates at an all time low. 22 00:01:46,610 --> 00:01:51,040 Yes, but that's not the whole story. 23 00:01:51,040 --> 00:01:56,030 The German green energy transition was given an extra boost when the nuclear power plant 24 00:01:56,030 --> 00:01:59,780 in Fukushima was hit by the tsunami. 25 00:01:59,780 --> 00:02:04,310 Following the melt down, the German government decided to immediately 26 00:02:04,310 --> 00:02:10,140 close seven nuclear power plants dating from before 1980. 27 00:02:10,140 --> 00:02:16,560 The ten remaining nuclear plants will have to be closed by 2022. 28 00:02:16,560 --> 00:02:20,269 That decision was a big deal for Germany. 29 00:02:20,269 --> 00:02:27,269 Nuclear power plants supplied as much as 23% of the country's electrical power needs. 30 00:02:29,079 --> 00:02:33,200 At first glance, this may seem like a straightforward decision 31 00:02:33,200 --> 00:02:36,049 with predictable consequences. 32 00:02:36,049 --> 00:02:40,930 You would expect the power producers to be eager to fill the gap created by the closure 33 00:02:40,930 --> 00:02:43,420 of the nuclear plants. 34 00:02:43,420 --> 00:02:48,139 After all, the demand for electricity is only increasing. 35 00:02:48,139 --> 00:02:53,810 However, as it turns out, the power producers are not willing to take 36 00:02:53,810 --> 00:02:55,799 the bait. 37 00:02:55,799 --> 00:02:57,799 Why not? 38 00:02:57,799 --> 00:03:01,540 For the energy companies, the forced early closure of their nuclear 39 00:03:01,540 --> 00:03:05,260 power plants, implies that they have to write them off at 40 00:03:05,260 --> 00:03:07,819 an accelerated rate. 41 00:03:07,819 --> 00:03:14,300 Another costly problem for them is that green electricity is given priority access to the grid, 42 00:03:14,300 --> 00:03:20,400 at the expense of the traditional, sometimes lignite fired power plants. 43 00:03:20,459 --> 00:03:27,459 Such power plants need to operate at least at 30 or 40% of their capacity to be economical. 44 00:03:27,920 --> 00:03:30,760 They cannot easily be shut down. 45 00:03:30,760 --> 00:03:34,859 It will take more than a day to get them restarted. 46 00:03:34,859 --> 00:03:41,859 Frequent shutdowns and restarts will severely reduce the technical lifetime of the plants. 47 00:03:42,359 --> 00:03:46,489 More and more, it happens that Germany's wind parks and solar 48 00:03:46,489 --> 00:03:52,269 panels supply enough electricity to meet Germany's demand. 49 00:03:52,269 --> 00:03:58,319 This results in excess supply and even negative electricity prices because the lignite fired 50 00:03:58,319 --> 00:04:03,569 power plants cannot operate below their minimum working capacity. 51 00:04:03,569 --> 00:04:11,500 The consequence of all this is that the major German energy companies face serious financial problems. 52 00:04:11,939 --> 00:04:16,209 For them, there is no sense of urgency when it comes 53 00:04:16,209 --> 00:04:19,560 to investing in new power generation capacity. 54 00:04:19,560 --> 00:04:23,250 However, they do need to invest. 55 00:04:23,250 --> 00:04:29,200 At least 15 new plants will be required to make up for the closure of the nuclear power plants. 56 00:04:29,400 --> 00:04:34,250 After all, the availability of wind and solar power is 57 00:04:34,250 --> 00:04:37,080 not guaranteed at all times. 58 00:04:37,080 --> 00:04:42,639 It is even more complicated than that. 59 00:04:42,639 --> 00:04:47,870 Since the German grid is not an island, but part of the continental European grid, 60 00:04:47,870 --> 00:04:54,780 the consequences of closing the German nuclear plants reach far beyond the German border. 61 00:04:54,780 --> 00:05:00,259 Neighboring countries are confronted with large fluctuations in the power flows on their 62 00:05:00,259 --> 00:05:06,090 national grids since Germany is dependent on the international grid for transport of 63 00:05:06,090 --> 00:05:09,990 electricity between the North and the South. 64 00:05:09,990 --> 00:05:15,409 Neighboring countries thus also feel the price fluctuations. 65 00:05:15,409 --> 00:05:19,360 As in Germany, their energy companies are not willing to 66 00:05:19,360 --> 00:05:26,360 invest despite the urgent need to invest in generation capacity that can be easily adjusted 67 00:05:26,370 --> 00:05:29,430 to the fluctuations in wind and solar power. 68 00:05:29,430 --> 00:05:33,509 Gas fired power plants are the best solution. 69 00:05:33,509 --> 00:05:37,669 But because of the high gas prices and the low electricity prices, 70 00:05:37,669 --> 00:05:42,349 gas fired power plants are not economical. 71 00:05:42,349 --> 00:05:44,530 They are being shut down. 72 00:05:44,530 --> 00:05:48,550 Instead, for example, new power plants being built in the Netherlands 73 00:05:48,550 --> 00:05:54,590 are coal fired. 74 00:05:54,590 --> 00:06:02,400 What I would like to add is that the Netherlands not only receives occasional cheap electricity 75 00:06:02,400 --> 00:06:09,900 from Germany, it also receives cheap coal from the USA. 76 00:06:09,900 --> 00:06:12,080 What is happening there? 77 00:06:12,080 --> 00:06:18,030 The successful shale gas programs in the United States have made the US self sufficient in 78 00:06:18,030 --> 00:06:22,990 its gas demand, forcing out coal as a source of energy. 79 00:06:22,990 --> 00:06:28,770 American coal is therefore cheaper than ever, and finds its way into other countries, 80 00:06:28,770 --> 00:06:31,669 including the Netherlands. 81 00:06:31,669 --> 00:06:37,960 The combination of cheap coal from the West and cheap power from the East has virtually 82 00:06:37,960 --> 00:06:43,000 eliminated any incentive for the Netherlands to invest in renewable energy. 83 00:06:43,000 --> 00:06:49,000 Even if we are still continuing to build new wind farms on the North Sea, 84 00:06:49,000 --> 00:06:57,000 we are far behind Germany when it comes to the share of wind power in the total electricity mix. 85 00:06:58,099 --> 00:07:03,060 Coming back to this course, the developments just described can well be 86 00:07:03,060 --> 00:07:08,669 described in terms of complex socio-technical systems. 87 00:07:08,669 --> 00:07:13,830 Different systems interact with each other as a result of which relationships between 88 00:07:13,830 --> 00:07:18,810 artefacts and actors are influenced in unexpected ways, 89 00:07:18,810 --> 00:07:24,590 leading to unanticipated emergent behavior of the electricity infrastructure. 90 00:07:24,590 --> 00:07:30,289 Firstly, the economic system interferes with the physical system. 91 00:07:30,289 --> 00:07:35,969 The economic system balances the supply and demand of electricity where the balance is 92 00:07:35,969 --> 00:07:39,210 reached at a specific price. 93 00:07:39,210 --> 00:07:44,409 The physical system needs to balance the actual generation and use of electricity, 94 00:07:44,409 --> 00:07:46,639 at all times. 95 00:07:46,639 --> 00:07:53,600 The contracts between suppliers and clients in the economic system represent financial transactions. 96 00:07:53,700 --> 00:07:58,830 They do not represent real power flows in the physical system. 97 00:07:58,830 --> 00:08:04,219 The actual flows are dictated by the net result of all the transactions between the economic 98 00:08:04,219 --> 00:08:08,069 actors, and each of these transactions represents 99 00:08:08,069 --> 00:08:11,909 an estimate of the projected power supply and use, 100 00:08:11,909 --> 00:08:18,129 by a specific producer and a specific user, at a specified time in the future, 101 00:08:18,129 --> 00:08:24,930 necessitating corrections to be made close to real-time in the physical system. 102 00:08:24,930 --> 00:08:30,210 The fluctuating flows that the Netherlands occasionally have to deal with result from 103 00:08:30,210 --> 00:08:36,890 transactions between German actors, in which Dutch actors have no part. 104 00:08:36,890 --> 00:08:40,070 This makes the physical system unstable. 105 00:08:40,070 --> 00:08:49,400 Let me add that the technical system interferes with the system of actors. 106 00:08:49,400 --> 00:08:54,889 The logic of the technical system suggests that the closure of the nuclear power plants 107 00:08:54,889 --> 00:08:58,019 must result in the construction of new plants. 108 00:08:58,019 --> 00:09:03,740 But actors, reasoning on the basis of their own interests, 109 00:09:03,740 --> 00:09:10,500 reach very different conclusions, partly as a result of the current incentive structure. 110 00:09:10,500 --> 00:09:17,200 Furthermore, technical characteristics of power plants, create situations of excess supply, 111 00:09:17,200 --> 00:09:22,000 which occasionally result in negative electricity prices. 112 00:09:22,010 --> 00:09:26,180 This makes the economic system unstable. 113 00:09:26,180 --> 00:09:30,490 Furthermore, national systems and different energy systems 114 00:09:30,490 --> 00:09:35,550 interfere with each other, even if their electricity systems are not 115 00:09:35,550 --> 00:09:37,279 directly coupled. 116 00:09:37,279 --> 00:09:42,870 Events in one country have unforeseen consequences in other countries. 117 00:09:42,870 --> 00:09:48,850 The nuclear disaster in Japan encouraged the German government to initiate the accelerated 118 00:09:48,850 --> 00:09:51,970 closure of its nuclear plants. 119 00:09:51,970 --> 00:09:58,269 The global economic crisis resulted in extremely low interest rates in Germany, 120 00:09:58,269 --> 00:10:05,269 which in turn accelerated the adoption of PV solar panels in German homes. 121 00:10:05,389 --> 00:10:11,690 Germany's Green Energy Transition periodically causes an excess of cheap power in neighboring 122 00:10:11,690 --> 00:10:16,200 markets, and threatens the stability of the electricity system, 123 00:10:16,209 --> 00:10:20,110 within and beyond German borders. 124 00:10:20,110 --> 00:10:24,880 In the Netherlands, the supply of cheap power interferes with 125 00:10:24,880 --> 00:10:31,870 the cheap coal shipped from the United States, which in turn is a consequence of the shale 126 00:10:31,870 --> 00:10:37,899 gas revolution in that country. 127 00:10:37,899 --> 00:10:42,420 In short, seemingly unrelated events and developments 128 00:10:42,420 --> 00:10:48,990 in Japan and the US turn out to interfere with the German and wider European electricity 129 00:10:48,990 --> 00:10:54,880 infrastructure in unanticipated ways, causing the electricity infrastructure of 130 00:10:54,880 --> 00:11:02,800 Germany and its neighbors to move to near-critical operating conditions. 131 00:11:02,900 --> 00:11:11,649 You could also say that the earthquake in Japan triggered a virtual earthquake in the European electricity system. 132 00:11:11,649 --> 00:11:20,000 It is hard to imagine a better illustration of co-evolution and emergent behavior of complex systems: 133 00:11:20,000 --> 00:11:29,000 it is almost like the proverbial butterfly in China that causes a hurricane in the United States. 134 00:11:29,240 --> 00:11:31,350 Where do we go from here? 135 00:11:31,350 --> 00:11:33,550 What should the government do? 136 00:11:33,550 --> 00:11:35,620 What should the regulator do? 137 00:11:35,620 --> 00:11:38,809 I would be eager to hearing your answers.