A while back, I had a chat to Cory Budischak, lead author of the paper we looked at in XIV – Minimized Cost of 99.9% Renewable Study. He recommended a very recent JP Morgan document for investors in renewable energy – Our annual energy paper: the deep de-carbonization of electricity grids. And it is excellent. Best to read the paper itself. When I was in the middle of this article I saw an article on Judith Curry’s blog referencing the same paper, so rather than spend more time writing this article, here it is..
Still, for those who don’t read the paper, a few extracts from me and no surprises for readers who have worked their way through this series:
This year, we focus on Germany and its Energiewende plan (deep de-carbonization of the electricity grid in which 80% of demand is met by renewable energy), and on a California version we refer to as Caliwende.
- A critical part of any analysis of high-renewable systems is the cost of backup thermal power and/or storage needed to meet demand during periods of low renewable generation. These costs are substantial; as a result, levelized costs of wind and solar are not the right tools to use in assessing the total cost of a high-renewable system
- Emissions. High-renewable grids reduce CO2 emissions by 65%-70% in Germany and 55%-60% in California vs. the current grid. Reason: backup thermal capacity is idle for much of the year
- Costs. High-renewable grid costs per MWh are 1.9x the current system in Germany, and 1.5x in California. Costs fall to 1.6x in Germany and 1.2x in California assuming long-run “learning curve” declines in wind, solar and storage costs, higher nuclear plant costs and higher natural gas fuel costs
- Storage. The cost of time-shifting surplus renewable generation via storage has fallen, but its cost, intermittent utilization and energy loss result in higher per MWh system costs when it is added
- Nuclear. Balanced systems with nuclear power have lower estimated costs and CO2 emissions than high-renewable systems. However, there’s enormous uncertainty regarding the actual cost of nuclear power in the US and Europe, rendering balanced system assessments less reliable. Nuclear power is growing in Asia where plant costs are 20%-30% lower, but political, historical, economic, regulatory and cultural issues prevent these observations from being easily applied outside of Asia
- Location and comparability. Germany and California rank in the top 70th and 90th percentiles with respect to their potential wind and solar energy (see Appendix I). However, actual wind and solar energy productivity is higher in California (i.e., higher capacity factors), which is the primary reason that Energiewende is more expensive per MWh than Caliwende. Regions without high quality wind and solar irradiation may find that grids dominated by renewable energy are more costly
They also comment that they excluded transmission costs from their analysis, but this “.. could substantially increase the estimated cost of high-renewable systems..”
Their assessment of the future German system with 80% renewables:
- Backup power needs unchanged. Germany’s need for thermal power (coal and natural gas) does not fall with Energiewende, since large renewable generation gaps result in the need for substantial backup capacity (see Appendix II), and also since nuclear power has been eliminated
- Emissions sharply reduced. While there’s a lot of back-up thermal capacity required, for much of the year, these thermal plants are idle. Energiewende results in a 52% decline in natural gas generation vs. the current system, and a 63% decline in CO2 emissions
- Cost almost double current system. The direct cost of Energiewende, using today’s costs as a reference point, is 1.9x the current system. Compared to the current system, Energiewende reduces CO2 emissions at a cost of $300 per metric ton
They contrast the renewable options (with no storage and various storage options) with nuclear:
Nuclear is the bottom line in the table – the effective $ cost of CO2 reduction is vastly improved. Their comments on nuclear costs (and the uncertainties) are well worth reading.
They look at California by way of this comment:
Energiewende looks expensive, even when assuming future learning curve cost declines. Could the problem be that Germany is the wrong test case?
This is the same point I made in X – Nationalism vs Inter-Nationalism. The California example looks a lot better, in terms of the cost of reducing CO2 emissions. If your energy sources are wind and solar, and you want to reduce global CO2 emissions, it makes (economic) sense to spend your $ on the most effective method of reducing CO2.
Basically, they reach their conclusions from the following critical elements:
- energy cannot be stored economically
- time-series data demonstrates that, even when wind power is sourced over a very wide area, there will always be multiple days where the wind/solar energy is “a lot lower” than usual
The choices are:
- spend a crazy amount on storage
- build out (average) supply to many times actual demand
- backup intermittent solar/wind with conventional
- build a lot of nuclear power
These are obvious conclusions after reading 100 papers. The alternatives are:
- ignore the time-series problem
- assume demand management will save the day (more on this in a subsequent article)
- assume “economical storage” will save the day
Many papers and a lot of blogs embrace these alternatives.
Articles in this Series
Renewable Energy I – Introduction
Renewables II – Solar and Free Lunches – Solar power
Renewables III – US Grid Operators’ Opinions – The grid operators’ concerns
Renewables IV – Wind, Forecast Horizon & Backups – Some more detail about wind power – what do we do when the wind goes on vacation