Renewable energy’s steep cost reductions may be tapering off, as investments levels are flat and system costs are becoming more important than component costs, writes independent energy expert Roger Arnold. According to Arnold,this implies that policy support should shift to storage and infrastructural approaches.
A few weeks ago, Ed Kelly posted a new blog entry at Stratosolar. He reviewed a recent Bloomberg report on global clean energy financing.
As Ed sees it, the figures reported spell trouble for conventional views of RE. Anyone counting on wind and solar alone to cut carbon emissions in time to avoid the worst effects of climate change may be sadly disappointed.
The numbers that Bloomberg reports are quarterly RE investments, broken down by global region. The key bar chart is shown below.
Source: Bloomberg New Energy Finance (BNEF). All values nominal. This includes investment into all asset classes except EST asset finance and R&D, which are compiled on an annual basis only
As one would expect, there’s a lot of variability quarter to quarter, year to year, across different regions. While open to interpretation — the uptick starting in 4Q 2016 could be taken as the start of a new growth phase — the moving average looks roughly flat since 2011. As Ed points out, that is not the sign of the booming market we’d expect if RE resources were truly competitive with fossil fuels. If something doesn’t change, RE will notgrow fast enough for us to hold a 2℃ line on global warming.
Subsidies still rule
Despite impressive reductions in the specific cost of solar panels and wind turbines, it seems that investment is still heavily dependent on subsidies. The type and size of subsidies vary across regions, but whether they be feed-in tariffs, investment tax credits, accelerated depreciation allowances, renewable portfolio standards, or whatever, the pattern looks the same: cut back on subsidies and investment drops.
Each investment dollar is buying more installed capacity than it did earlier. That’s encouraging, but is it enough?
The pattern is not so evident if one looks only at quarterly installed capacity. Globally, that’s been rising pretty consistently. But the rise over the last six years seems due almost entirely to cost reductions. Each investment dollar is buying more installed capacity than it did earlier. That’s encouraging, but is it enough? Can reductions in the cost per kWh for RE resources alone get us to where we need to be while monetary investment levels remain flat?
In theory they could, if prices continued an exponential decline and if costs for the components declining in price remained dominant for the systems as a whole. But both predicates are problematic.
Basic problem #1
There are two basic problems here. The first is rooted in the fact that the RE cost reductions, though impressive, still follow the scaling pattern characteristic of industrial learning curves. Each doubling of production volume tends to bring some percentage of cost reduction. For a surprising range of products, it’s roughly a 20% drop in the cost per unit of production. That’s only a rule of thumb, and there are factors beyond production volume that affect costs. But a 20% reduction in unit cost seems to be the typical return on the capital spending associated with a doubling of production volume.
The point to understand is that cost reductions of this sort depend on a growing market — or on a growing market share for the most efficient manufacturers in the case of market supplied by a number of competing vendors. The cost reductions are the result of increased productivity after investment in new equipment, new designs, and new, more efficient processes. Manufacturers have to expect that the investment will pay off in increased sales revenue. Otherwise it’s a losing proposition and won’t happen.
The market has become dominated by a small handful of large super-efficient producers who have little to gain from undercutting each other’s margins
A consequence of that dynamic is that if the market stops growing, these “learning curve” type cost reductions taper off. There can still be “collateral” cost reductions due to spillover from other still-advancing technologies that play a role in production. The cost of factory robots is an example. But unless they affect the cost of inputs, collateral cost reductions still require capital investment in new equipment. Capital investment in new equipment becomes hard to raise in a market that isn’t growing in monetary terms. So it’s a general rule of manufacturing that when the market stops growing, cost of product stops dropping. It may even begin to rise.
For the last six years, the overall global market that manufacturers see — i.e., the monetary revenue they receive from sales of new RE capacity — has been relatively flat. Market share for efficient producers, however, has been growing as vulnerable competitors are squeezed out. But for PV panels, that process seems largely played out. The market has become dominated by a small handful of large super-efficient producers who have little to gain from undercutting each other’s margins. Hence the long term outlook for PV panel prices would appear stable to rising. A similar situation likely applies to wind turbines, though it’s a different set of players.
I should note that this is by no means a consensus view. The overall BNEF report itself, of which the cited clean energy investment report is a chapter, projects a continuation of price declines. But the basis is not clear. If it’s merely a forward extrapolation of trend lines for the last two decade without recognizing the role of market dynamics, it doesn’t inspire confidence.
Basic problem #2
The second problem is that the elements that have been falling in price — wind turbines and PV panels — have fallen so far that they’re no longer the dominant elements in the systems required to deploy them. Not, at least, if one honestly considers the full extent of those systems. In fact it’s not clear that the rate of deployment would be much accelerated if the cost of PV panels and wind turbines per se fell to zero. Other factors have become limiting.
Some of those other factors are obvious and non-controversial. For grid-scale PV, there’s land acquisition and the permitting process, plus site preparation, installation, and grid connection. Similar considerations apply for wind farms as well. But the biggest cost factors beyond solar panels and wind turbines are indirect. They relate to intermittency, and are more controversial.
For success in the electricity market, it’s the overall cost of full solutions that matter, not the cost of as-available kilowatt-hours
The issue with intermittency — and the reason, in my opinion, that RE deployment remains tied to subsidies — is that there is no established market for energy “as and when it happens to be available”. The market that exists is for energy on demand. Wind and solar don’t deliver that. On their own, they can’t. They can only be elements within a larger system that is able to address the market that actually exists.
Grid-connected wind and solar systems are currently parasitic, in the sense that they exist on top of and depend on a host system from which they siphon resources. Specifically, the revenue they generate is diverted from revenues that would otherwise go to the owners and operators of the host system. So long as the host system’s generation capacity is still required to meet demand when the RE resources are not delivering, the total system cost is raised. The result is that the cost of electricity rises — a giant indirect subsidy to renewables at the expense of ratepayers.
Toward market-based RE deployment
For success in the electricity market, it’s the overall cost of full solutions that matter, not the cost of as-available kilowatt-hours. A “full solution” is one able to reconcile available supply with demand. There are three avenues of approach: energy storage, long distance transmission, and demand side management. They aren’t mutually exclusive; competitive solutions will involve mixes of all three. But however the reconciliation is achieved, the cost of doing so must be considered as part of the cost of intermittent RE. When that’s done, wind and solar are still not competitive with untaxed fossil fuels.
Advocates for intermittent RE would prefer to dismiss or play down those costs. Many contend that the required pieces are already in place, needing only modest upgrades to accommodate high levels of RE penetration. The data in Bloomberg’s global investment report suggest otherwise. So too does the way regional investment levels drop when subsidies are cut back.
There is no single market for energy storage. There are different application domains within the overall storage market
Of the three approaches for reconciling electricity supply and demand, energy storage gets the most attention. And most of that attention is focused on batteries. The electric vehicle market has led to sharp gains in cost-performance of battery systems — a trend expected to continue. That should be of major benefit for RE systems. However, there’s a lot of confusion about how much storage capacity is actually needed, and what cost targets the storage must meet.
The confusion is understandable when one considers that there is no single market for energy storage. There are different application domains within the overall storage market. There’s a degree of overlap, but overall the capacity and cost requirements span orders of magnitude. Different technologies are likely needed. Let’s take a quick look.
Domains for energy storage
There are four application domains for energy storage that I find useful to distinguish. They’re based on cycling times and capacity:
- At the low end is peak shaving and supply firming. Cycle time is minutes to at most about an hour. This level is enough to keep the output from wind or solar farms smooth and predictable. It avoids bumps in the curve of demand that other generators must supply. That in turn reduces forced cycling of those other generators on short notice. It doesn’t, however, eliminate the need for those generators to be available.
- An order of magnitude above that is the storage capacity needed to accommodate the regular diurnal cycle of solar power. The cycle time is one day. If storage at this level is available, it can reduce the need for peaking generators. It also establishes a floor on hourly wholesale prices of otherwise surplus power. When there’s no other demand for it, the as-available energy can be stored.
- Above that is the storage capacity needed to bridge extended periods of adverse weather — dunkelflauteas Germans now refer to periods of dark overcast skies with little to no wind. The storage required for this is many times the requirement for diurnal cycling. The fact that it may only be tapped a few times per year makes the economics particularly challenging.
- The highest and most demanding level of storage would be for addressing seasonal variation. Here the issue isn’t a few days of near-zero output during adverse weather, it’s a whole season of substantially reduced RE output that has to be covered.
Electric vehicles have pushed down the cost of battery storage a long way, but batteries are still only cheap enough to address the first of these application domains at a cost that’s competitive with dispatched generation from untaxed fossil fuels.
Diurnal cycle buffering requires several kWh per kW of RE capacity. It’s the minimum level of storage needed to break intermittent RE free from its “as available” trap. Consequently there’s a lot of interest in it. However the battery technologies currently available are still too expensive. There’s hope that continued growth in the EV market will change that, but it remains to be seen. It may be that other technologies will prove more suitable.
The next level, bridging for extended periods of adverse weather, requires yet another order of magnitude capacity increase and cost reduction. That’s if it’s to be accomplished from storage. There’s no prospect that conventional storage batteries will ever become cheap enough to address this segment of the storage market. New types of flow batteries might possibly manage it, but presently, generation from stored fuel is the only economically viable option.
Though support for “100% renewables” and opposition to nuclear seems more ideological than rational, I’m not prepared to dismiss the “100% renewables” vision entirely
Harder still is sufficient storage to address seasonal variation in supply. Seasonal variation is a non-issue for nuclear power, but for high penetration RE scenarios excluding nuclear, the only 100% RE solutions would involve mixes of seasonal industries, heavy overbuilding of capacity, and curtailment.
One scalable possibility for a seasonal industry is fuel synthesis. It’s a popular idea among RE advocates. The problems are low efficiency and cost of capital. At best only around 40% of energy input to the process can later be recovered. And even if the fuel produced is simply hydrogen from electrolysis, the capital cost of the plant is high enough to make intermittent seasonal operation problematic. Against untaxed fossil fuels, it’s very hard for synthetic fuels to compete.
Stratosolar’s logic
The unfortunate reality is that it’s very challenging to bridge between “as available” energy resources and the “energy on demand” model on which developed economies have long relied. Not technically challenging; there are any number of workable approaches if cost is no object. The problem is economic viability. Economic viability is signalled by a self-sustaining spiral of rising investment and market size with declining prices. As the Bloomberg report makes clear, that has yet to happen. Dispatched generation from untaxed fossil fuels sets a high bar for clean energy solutions to clear — or one could say a low bar, cost-wise, under which they must limbo.
That, of course, is no news to advocates of nuclear power. That message is central to their advocacy. It may well be that one or more of the next generation nuclear technologies now under development will succeed. If so, it will ultimately leave our present obsession with wind and solar looking quaint.
Or not. With the world ecosphere and future climate at stake, it’s important to hedge our bets. Though support for “100% renewables” and opposition to nuclear seems more ideological than rational, I’m not prepared to dismiss the “100% renewables” vision entirely. It has mainstream momentum, and there are technical approaches to it that could prove economically viable. Leading the pack, in my view, is the approach laid out in the Stratosolar site I mentioned in the opening.
The course that we’re on will not get us where we need to be quickly enough to prevent sea level rise — as one example — from submerging southern Florida
The logic of deploying PV capacity in the stratosphere on tethered platforms is simple enough. The low temperatures and more intense sunlight improve panel efficiency, and the absence of high winds, rain, or hail, and the bone dry atmosphere, could ultimately reduce the cost of the panels deployed. But those are not actually the major benefits. The major benefits relate to taming of intermittency issues.
The Stratosolar approach could, in principle, provide the kind of complete systems solution that would enable a market-based exponential growth in investment levels and capacity. It could support (in this case, literally “support”) sufficient integrated gravity-power storage to cover the diurnal cycle. With conditions in the stratosphere unaffected by cloud cover and weather, PV deployment there would eliminate issues of extended periods of adverse weather. And while it couldn’t eliminate the problem of seasonal variation entirely, it would reduce it.
At the latitude of London, for example, winter sunrise 12 miles above the surface occurs almost 45 minutes earlier, and sunset 45 minutes later, than it does on the surface. More importantly, sunlight reaches the panels with nearly full intensity whenever the sun is above the horizon. As a result, the difference between summer and winter PV production would be much smaller than at ground level. It would be easier to bridge via seasonal industries and generation from fuel.
Policy implications
The Stratosolar approach remains speculative. Tethering of large lighter-than-air platforms floating in the stratosphere has never been demonstrated, and many assume that it is not possible. Calculations based on fluid dynamics and strength of materials say that it should be, but doubts will remain until the concept is physically demonstrated. However, Stratosloar is only one possible approach for taming intermittency. There are many technically feasible ways to do so without resort to dispatched generation from fossil fuels. It’s a matter of finding one or more that can be economically viable against stiff competition from untaxed fossil fuels.
Whatever technology or combination of technologies ultimately get us rolling toward net zero carbon emissions, it’s clear that change is needed. The course that we’re on will not get us where we need to be quickly enough to prevent sea level rise — as one example — from submerging southern Florida.
The current regime of RE subsidies has done what it was intended to do. It has brought the LCOE (levelized cost of electricity) for as-available RE down to levels that in favorable locations would be quite competitive with electricity from fossil fuels. “Would be”, that is, if LCOE for as-available energy, rather than on-demand power, were the basis for competition. But it isn’t.
The market appears to have limited appetite for as-available energy, even at bargain prices. What’s needed now to advance RE are systems and infrastructure that increase its utility. The approaches, as already noted, are cheap long-distance transmission, cheap energy storage that scales to terawatt-hours, and commercial applications heavily dominated by the cost of energy and able to operate intermittently. Those are now the areas in need of policy support.
Editor’s Note
This article was first published on our sister website The Energy Collective and is republished here with permission.
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S. Herb says
I see the logic for 100% renewables thus:
1. Do we know how to get to 60 and then 80% renewable generation with modest extrapolations of current technologies and acceptable costs?
– from my reading of models for Germany (e.g. Fraunhofer ISE) the answer is yes (and Germany is more problematic than the US wrt availability of resources). The solutions include considerable use of natural (and bio-) gas to fill in the holes in the variable renewable generation (including some seasonal storage). I assume that in such a system dispatchable power and variable renewables will indeed have different pricing systems so that the flexible generation does not operate at a loss.
2. Is this path (or another) compatible with later build-out in the direction of 100% decarbonization, whether with renewables or other options such as nuclear, in the sense that there would not be a massive waste of resources due to change of direction?
– for the case above I do not see that options are being precluded by progress toward the 80% goal (exception high percentage nuclear).
In summary I want to break this into two problems, practical steps to achieve 80% renewable generation, and possible further steps towards 100% decarbonization, and then to look at interactions between them, rather than planning now for 100% renewables.
Jan Veselý says
[…] You write about the problem of “other cost” of RE buildout and than you propose to build 10+km tall structure just to host some panels…?
Roger Arnold says
You’re referring to the Statosolar concept. It’s at 10+ km altitude, yes, but it’s by no means 10 km “tall’. It’s a lighter-than-air “platform” that’s tethered to the ground. The tethers are analogous to kite strings, not structural columns. They hold the floating platform down.
You should visit the Stratosolar web site that was referenced in the article if you want to learn more about the concept — or tethered aerostats in general. There’s a lot of interesting material there.
Roger Arnold
Jan Veselý says
How many 10+ km long cables will you need to hold it in place?
Roger Arnold says
Actually it’s 20 km, not 10. 10 km would be in the mid-upper part of the troposphere, where winds can be very strong and turbulence severe. Storm clouds reach that height, and there can be a lot of ice. For calm, bone dry conditions, one needs to be into the lower stratosphere. 20 km is safely into the stratosphere at temperate latitudes, above the reach of thunderstorms and even hurricanes. It’s also safely above the jet streams.
As to number of tethers, the requirement is on total cross section for tensile strength to anchor the platform against its natural buoyancy. It could be distributed among any number of individual tethers. The design that Ed has sketched out, I believe, calls for one tether per 100-meter cube. A 100 meter cube, at 20 km, displaces 10^6 cubic meters of air. That volume of air at 20 km masses about 100 tonnes. Net lift that the tether would need to counter is roughly half that, or 50 tonnes. A Spectra or Dyneema tether rated for 50 tonnes (~ 0.5 MN)) with a 2:1 safety margin would need a cross section of 2.5 cm^2 (comparable to an adult’s forefinger). A 20 km length would mass about 5 tonnes.
Those numbers are off the top of my head. Ed has done more precise calculations. I think they’re on the public part of his web site, but I haven’t checked.
Modern ship’s hawsers, BTW, are also made of Dyneema or similar fibers, but with about 10x that cross section. Their working strength is around 5000 tonnes, and they’re sufficiently light and flexible to be handled by a single crewman.
Mike Parr says
An interesting article. However, the section “subsidies rule” fails to mention an important element much discussed in the EU – putting a price on carbon & thus “pricing in” renewables (= no need for RES subsidies). In the USA, there has been no attempt to “put a price on carbon” (quite the reverse fossil fuels still get subsides). The EU has the ETS – but it is ineffectual. Nevertheless, PV in the Med’ Basin and wind in the North are pretty much at parity (with arguments now shifting to dispatchability). PV in many cases might be best placed on roofs (zero cost real estate & putting a generator close to load – surely to be desired?) – a point not mentioned by the writer.
In the case of wind and PV, from a technology point of view one is comparing apples & bananas. A 10MWoff-shore WT has a fundamentally different production process from a solar cell (or a PV panel). One is engineering in the “traditional” sense (e.g. building a locomotive) the other is mass production – e.g. like making a flat panel TV. Quite different processes, quite different economies of scale.
The author also fails to mention PV technical advances, 20% efficiency is common-place to the point of being normal. 25% in pre-production development and 35% in the lab. The author notes: “The overall BNEF report itself, of which the cited clean energy investment report is a chapter, projects a continuation of price declines. But the basis is not clear” – there you go Mr Arnold – I’ve just given you the basis for the price declines – increased production efficiency from a given cell – lower cost energy and probably lower cost panels.
In the case of “no longer the dominant element” (in a given RES system) – & taking off-shore wind as one example: the move to larger WTs (10MW+) has changed that (WT still account for around 25% of project costs). RES continues to change – & that is the only generalisation that will hold into the future: change. However, Mr Arnold suggests that change will not happen. The PV tech’ advances show that this is not the case.
The section starting: “Grid-connected wind and solar systems are currently parasitic….” was an interesting, but wrong take on RES. In the EU, electricity is dispatched from a given company’s portfolio of generation – RES is part of that portfolio – whether directly owned or part of a PPA with an independent RES generator. Parasitical? nope. As for “cost of electricity rises…” due to RES – I think the Germans would rather disagree (ditto Nordpool) – the problem being RES drives down elec prices. Maybe it’s different in other locations?
I will stop here. I have many other comments & criticisms with respect to the section on storage (which I found one dimensional) but will finish with wishing Mr Arnold good luck with the tethered PV – be interesting to see if it succeeds.
Roger Arnold says
Mike, thanks for the comments.
You’re right that a price on carbon emissions would change the economic equations. At least it would if it were what I’d call a “meaningful” price. That’s one high enough to reflect the real external costs of the emissions. A good metric for that, IMO, is the cost of capturing and sequestering an equal amount of CO2 from the atmosphere.
You noticed that I always wrote “untaxed fossil fuels” when talking about the economics of competing alternatives for reconciling electricity supply and demand. That’s because untaxed fossil fuels are what we currently have. And I’m sufficiently pessimistic about that changing anytime soon that I didn’t think it worth discussing in the article.
The EU’s current ETS, as you note, is ineffective. You may hope for that to change someday soon; I believe it’s a futile hope. One must appreciate just how powerful the opposing forces are. A price on carbon emissions that was high enough to let carbon-emitting and non carbon emitting energy systems compete on a level playing field would be devastating to the fortunes of a great many very wealthy and influential persons. It is literally trillions of dollars in assets that would become stranded and worthless.
It may be that in the EU, politics is somehow less influenced by wealthy inside players, media moguls, and hired lobbyists than in the US. It would be truly wonderful if that were so. But I don’t believe it is. It’s just that the influence is more discretely clothed, less out front and naked than it is in the US.
No, I’m pretty sure that whatever balancing technology (or combination of technologies) is able to displace dispatched generation from fossil fuels will have to win out over untaxed fossil fuels. The good news is that I think that’s possible. It may require a degree of enlightened government policy support, but it wouldn’t be the direct frontal assault that a push for a meaningful price on carbon emissions would be. It might escape focused opposition.
That’s enough for one reply. I’ll try to address your other points later. But thanks again for commenting.
Roger
Roger Arnold says
There were two key points I was trying to address in the article, Mike. One was a general point about the dynamics of cost reductions for manufactured products, The other was specifically about global investment levels in new RE capacity each year, and why it’s been more or less flat, in monetary terms, for the past six years. The bottom line is that deployment has become limited by system issues, not component cost. You appear to have missed both points.
Yes, efficiency for production cells has been boosted to 20%+, and 35% has been demonstrated in labs. However, a relatively small part of the cost reductions for panels coming out of China has been due to cell efficiency improvements. And most of that efficiency improvement has come from a switch from polycrystalline to monocrystalline PV cells. Incremental advances in manufacturing technology have largely eliminated the cost premium for monocrystalline silicon.
Technical feasibility, as demonstrated in a lab, is necessary but very far from sufficient for an advance to be realized in the market. Especially when the new technology is trying to displace a well-established incumbent technology. I can’t begin to tell you how many instances I’ve seen of good technically feasible concepts that failed to make it into volume production. The gap between working prototype and competitive product is enormous.
Will PV cells with 35% efficiency be on the market anytime soon? I don’t know. I do know, however, that the technology they employ is different enough from that of current production cells that it can’t be implemented just by tweaking a few process parameters in current cell production lines. It will require new processes and new capital equipment to pull it off, and I guarantee it won’t happen just because it’s technically possible. Someone will need a good reason to make it happen.
Flat investment levels in new capacity do not provide such a reason. Picture it: “Hey, let’s invest all this money to upgrade out production lines so we can lower the prices on our PV panels and reduce our revenues!” Sounds like a terrific business plan.
Which brings us back to the question of WHY global investment levels have been flat. To me, the answer seems pretty clear: RE penetration in markets that previously accounted for the bulk of capacity additions have reached the point that piggybacking (or less charitably, freeloading) on top of existing grid facilities is becoming problematic. To go further, major systems upgrades are needed. The cost of those upgrades will have to be counted as part of the cost of new RE capacity.
Bob Wallace says
“Which brings us back to the question of WHY global investment levels have been flat.”
Here’s what I think is the reason.
For 2017 the decision makers (governments, utility companies, etc.) set a target of installing a certain amount of new clean generation. They looked at their financial resources and said we can afford xMW of solar and yMW of wind. Then they set out to purchase that amount of new capacity.
While they were planning using 2015 numbers the cost of wind and solar fell. A lot.
The result was that they installed the amounts they intended to install but it cost them less than they had anticipated.
They’ve bought a bushel of apples and the cost of apples dropped. They didn’t go to the market and say “Give me $25 worth of apples”. They said “Give me a bushel” and then were surprised at how low the price was.
Mike Parr says
” The bottom line is that deployment has become limited by system issues”. I’ll engage on this point – rather than efficiency etc.
I did like ” I can’t begin to tell you how many instances I’ve seen of good technically feasible concepts that failed to make it into volume production.”……If I had a $ … etc.
In an interview in 2016 the CEO of 50Hertz a German TSO (covering most of East Germany) noted that reaching well north of 70% penetration of RES into the network would not be a problem & could be accomodated through “classical methods (DR) – not storage. In North Germany most RES is wind – although there are some monster PV plants. In Calif – one solution to PV (roof top or utility) would be Ice bear (disclaimer -= zero contact with the company). I just do not see a big deal with system constraints – & I’m an ex-UK systems engineer. At a miniature level I’m consulting on an island RES solution where the only thing that happens is that RES displaces elec’ that would otherwise flow down the wires – is all.
BTW: like the tethered solution – most excellent. I’d go for it.
Bob Wallace says
Let me change your sentence a bit…
“I want to break this into two problems, practical steps to achieve 80% renewable generation” while considering “possible further steps towards 100% decarbonization”
The practical step for getting to 80% renewable, or at least close to 80% is to just start installing lots of wind and solar generation and working hard to further decrease their costs. We’re now seeing unsubsidized solar reaching $0.03/kWh and unsubsidized onshore wind reaching $0.025/kWh. Offshore is, I think?, best price around $0.05/kWh.
These are excellent prices. Let’s quit screwing around, cut FF use, and make electricity cheaper than it now is.
Just set a schedule to hit the maximum within 30 years and then try to get there early.
One thing that is not considered enough is the role battery powered vehicles are likely to play. I just ran some numbers and if all California cars and light trucks were battery powered and used 0.28/kWh per mile CA would need to generate an additional 80%.
Much of that EV load would be dispatchable. By adjusting the actual time of charging it is possible to achieve a much higher RE penetration with less curtailment. If you charge during solar output peaks and during late night low demand hours it’s possible to add much more wind and solar capacity and waste little potential output.
Put money into researching ideas for solving the “last 20%”. We won’t need to put those ideas into play for a long time. Pick the low hanging fruit now and cut FF use as rapidly as possible.
We have workable solutions for the ‘last 20%’. Pump-up hydro storage works. Storing energy as hydrogen works. We know the worst case solution. And we have a lot of time to invent better options.
Roger Arnold says
“The practical step for getting to 80% renewable, or at least close to 80% is to just start installing lots of wind and solar generation and working hard to further decrease their costs.”
I have to disagree. We can’t ignore the systems issues. Blindly implementing new capacity without providing the means to reconcile instantaneous supply and demand would a recipe for market disaster.
Bob Wallace says
We can install wind and solar like mad, the system can handle it. Use the fossil fuel plants we have now as fill in, shutting down the unneeded fossil fuel plants as we now longer need them.
We have to operate with the assumption that nothing new and better will be invented. Climate change is too large a risk to take a wait and see attitude. We have run out of time.
If solar blimps, solar panels in space, wind kites, or some other technology proves out then we can include that new approach just as we would switch to more efficient solar panels or wind turbines if they appear.
For now greatly increase inexpensive wind and solar installations (which will drive their costs even lower). Displace as much fossil fuel use as possible.
At the same time, provide the resources to advance our clean energy technology. But don’t count on something not yet invented to save our bacon.
Peter Farley says
Of course we can’t ignore the system issues but many of them are sorting themselves out at much lower cost than expected. All modern grids have some sort of dispatchable renewables in hydro, biomass and geothermal. Grid connected car battery chargers and hot water services as well as more sophisticated demand response from companies such as Nest are all coming to the aid of the system.
In 1993, German utilities were running adds saying that the total of wind solar and hydro could not exceed 3% of total supply. In 2017, Wind solar and hydro contributed 29.6% without any investments in storage. In the meantime nuclear fell to 13% of generation and all coal 39.2% vs all renewables at 38.3% and yet wholesale prices are lower than they were 10 years ago
As 6 GW of wind and 2 GW of solar was added last year and more is being added as we speak, it is likely that Germany will exceed 40% renewables in 2018 without significant additional storage.
By 2020 almost all new wind and solar farms will find it commercially imperative to install or contract storage so they do not sell into negative power prices and guarantee some sales at high peak prices. However these storages won’t be massive, even 15% of peak capacity for one hour completely smooths turbulence induced power fluctuations and allows the windfarm to participate in the FCAS market thus lowering its break even power cost
As the capacity factor and geographic dispersal of both solar and wind keeps increasing through improved design, grid integration issues decline. So as the CEO from 50 Hz said, when we get to 60-70% renewable penetration we need to worry about storage. However by that point advanced demand response, very low wind turbine designs, tracking solar and more efficient management of hydro and biomass may push the needle toward 70-80%
Bob Wallace says
I think the low cost solution for many grids is going to be to highly overbuild wind and solar.
The prices of wind and solar are becoming so inexpensive that overbuilding is likely to be significantly cheaper than installing lots of storage.
Roger Arnold says
Deliberate overbuilding is one way to achieve higher penetration levels for RE. Expensive, however, and it requires socialized control.
Since the marginal cost of wind and solar production is essentially zero, competition among independent, non-colluding wind and solar producers would drive wholesale market prices to near zero whenever available production capacity exceeded demand.
In order to recover capital expenses, there would have to be a mandated minimum wholesale price, and an imposed rationing system controlling who got to produce how much and when. i.e., a strong cartel or a regulated monopoly. Then, having banished competition, there would need to be some other mechanism to avoid abuse and keep things running efficiently.
Bob Wallace says
Overbuilding is most likely our best route to very inexpensive electricity. With wind and solar becoming so inexpensive we can greatly overbuild and still have cheap electricity.
If, for example, we see wind and solar drop to $0.02/kWh, unsubsidized, we can overbuild to the extent that half of our potential production goes unused,and the cost of electricity would be only $0.04/kWh. That is cheaper than any other source of electricity.
(We are approaching $0.02/kWh and I am talking only about new generation which is still covering capex and finex.)
Our other low carbon options cost far more or are resource limited, as in the case for hydro.
How we price supply in a 100% RE grid is something that will have to be arranged. What we are now seeing to a large extent is “pre-selling” via long term purchase agreements. We may see much less market pricing in future years.
The market will work itself out. No one will build a new wind or solar farm unless there is some assurance that they will earn back their costs and make some sort of profit.
Mike Parr says
I guess you could do this (over build), but perhaps looking at demand as well as generation could be profitable. Broken record starts (I’ve said all this before):… in places where demand has a significant A/C component – Ice Bear (or similar tech) could offer a way of addressing the “lots of PV daytime but none after sun-down and bat storage is still expensive”. Maybe a combo of Ice-Bear & batss could work? Heat storage for northern lattitudes?
Bob Wallace says
North America has a lot of hydro at northern latitudes, as does Europe. And both have a lot of offshore wind. Solar would not be the primary source of energy toward the pole.
As one moves closer to the equator then solar will play a larger role and hydro, in general, a lesser role.
The way to get the lowest cost electricity is going to be to get as much ‘use it as generated’ as possible and minimize storage.
At this point we don’t seem to have any long term storage for less than $0.10/kWh. There’s a lot of room to overbuild $0.02 generation before one gets close to $0.10.
The other part of the solution is to find as much dispatchable load as possible. EVs will be a major load that can be moved around to use what generation ‘regular load’ can’t use.
Thermal storage is an interesting idea. If buildings had an insulated container of water (or more efficient heat storage mass) then unneeded (overbuilt) electricity could be used to heat or cool that water. Then a water loop heat pump could use that source to heat or cool a structure using less grid energy at that point in time.
Bob Wallace says
The Stratosolar idea is interesting. Perhaps not practical, but interesting. Might be worth testing out (after some careful economic modeling).
The tethers could be both structural and electricity conducting. It should be possible to tilt the array through the solar day by changing the tether lengths.
The issue I see is strength. There’s going to be a lot of wind to deal with, especially in storms.
I suspect it’s going to be cheaper to install panels on the ground in sunny places and ship the electricity to less sunny places in the winter.
Roger Arnold says
Wind and storms are issues in the troposphere, below where the stratosolar platform is intended to float. However, the tethers must pass through the troposphere, and there’s legitimate concern that wind drag on the tethers could pull the platform down to elevations where wind loading would affect the platform itself. That *could* be disastrous.
That problem can be avoided with “faired tethers”. A faired tether isn’t round, but has a streamlined cross section. The faired shape reduces wind drag by an order of magnitude, but might require active control to suppress fluttering.
Are Hansen says
It is misleading to think that lower investments (or at least not growing as fast as predicted) means that RE installations taper off. The fact that less money is used is just a result of lower prices! RE installations still keep rising year over year. But of course, it should be speeded up
Roger Arnold says
It isn’t RE installations that taper off. It’s reductions in the cost of new capacity. The amount of new capacity that each investment dollar buys will stop growing.
That man not seem like a big deal, given that the cost has already dropped to the point that the levelized cost of energy — kilowatt hours — for RE installations is already lower than that of fossil-fueled generation. So why would we need further cost reductions?
If annual investment levels were rising — or if it didn’t matter how long it took us to replace most fossil generation — we wouldn’t need further cost reductions. But then, if annual investment levels were rising, cost reductions would probably not be tapering off.
The point is that flat investment levels will not get us to where we need to be in the time we need to get there. So we will have to address the overall system issues that have caused annual investment levels to stagnate. Or find another path. It doesn’t matter, but something needs to change.
Bob Wallace says
Yes, we must move away from fossil fuels faster. Much faster.
But the cost drop of wind and solar has made that an easier sell. With wind and solar produced electricity becoming cheaper than fossil fuel produced electricity it will make sense to those who care much more about money than climate change to switch to renewable energy.
For those of us who would have been willing to pay more for electricity in order to combat climate change we will not longer have to fight with the ‘my money first’ crowd. They are becoming our allies, fighting the same fight. Just for different reasons.
Nigel West says
On the Stratosolar idea, it would be interesting to know the views of the Civil Aviation Authority and the RAF about the hazard posed by the anchor cables. During WW2 barrage balloons on tethers were flown as a deliberate aircraft hazard.
Bob Wallace says
Obviously such a system would create a ‘no fly zone’. Aviation can deal with this as long as the devices are not placed on typical air routes and are very well identified.
Take a 180 degree approach from the barrage balloons. Figure out how to make them as little disruptive as possible.
Nigel West says
Look at ‘flight radar24’ during the week and you’ll see the UK skies are very congested particularly in the south of the country. One major accident involving say a commercial jet with hundreds on board and investors might bitterly regret their involvement.
Bob Wallace says
And if I look at that map I see vast areas with no planes.
Try looking at the map while wearing your problem-solving goggles.
Nigel West says
Strange how some people reject nuclear because they perceive it to be very risky, but when a renewables scheme is proposed that is likely to be a hazard to aircraft they would rather put peoples lives at risk to improve solar’s performance. Perhaps not that surprising when wind turbines have been sited in locations that have killed many rare birds despite objections.
Bob Wallace says
You’re kind of presenting a twisted argument, Nigel.
First, wind turbines kill very few birds. So few that it’s really not an issue. There have been a couple problematic wind farms but those issues have been resolved.
Second, nuclear is being dismissed mainly due to cost. If nuclear was our only option to avoid climate change most concerned people would, I think, accept nuclear’s dangers.
Third, if this ‘floating solar panel’ idea did work it would be a clearly defined hazard. Set up small zones and simply do not fly there. Extremely easy to do in these days of electronic navigation.
Mike Parr says
You are right (consideration would need to be given to aircraft).
Looking at the thread & its development, all the usual (& endlessly repeated) arguments are wheeled out – people talking at each other. Nuclear, like RES (in all its forms) has a role to play in a no-carbon future. Most new RES tech has some problems to resolve. & I’m sure if there is sufficient will/money they will be resolved. Nuclear has cost and disposal “issues” & I have no doubt with sufficient will/money these issues could be/will be resolved.
In the interests of a discussion that informs could we move past things like WTs kill birds. Yes they do – so do cats & windows etc.
I suppose one could always off-shore the tethered PV? Why don’t we have a discussion on that? – given that aircraft routes out of, for example the UK – tend to have well defined paths. Come on chaps – bit more originality please. Go on – tell me something I don’t know & you do.
Roger Arnold says
Commercial airlines are equipped with GPS, terrain maps, and autopilot functions designed to prevent them from encroaching on no-fly zones or flying into mountains. A Stratosolar platform would appear as a new type of terrain feature — a (very) tall mountain that had to be avoided.
A suicidal pilot can override the systems and dive the aircraft into a mountain. That has, in fact, happened, with tragic results. The only defenses are stronger autopilots that can’t be overridden in critical safety situations, and / or better monitoring of pilot’s mental health and emotional stability.
Private planes not equipped with crash avoidance systems would still present potential problems. I don’t know about Europe, but in the US, there would be strong pushback from the general aviation segment against mandatory autopilots.
Chris IJsbrandy says
With more or less flat (though substantial) investment levels in RE the question whether we do enough to reach the 2050 carbon targets is valid (and the answer is no, according to most research).
But I do have a question about the logic of your argument. With fossil fuels the main production cost of power is the fuel itself. Equipment CAPEX is substantial but fuel cost dominates. This is the reason the wholesale merit order system only looks at marginal fuel cost.
RE is very different. Here all production cost is CAPEX and some maintenance. Fuel is essentially free. What we see in the Bloomberg chart is investment in RE assets that last for say 20 years. In assets that become cheaper over time. The same investment in 2017 buys you more MW installed capacity than in 2004. It would therefore be interesting to look at the cumulative installed capacity (and hence the MWh’s produced) deriving from these investment levels. Here you will see the exponential growth that is typical for a market that takes off. This is the output that end users buy. A steeply growing product market can therefore be compatible with a ‘stagnating’ equipment market of assets needed to produce the end product. Since new generations of production assets are typically orders of magnitude more efficient than the previous one, this pattern will be consistent with other manufacturing industries (capital expenditure growing slower than the product market it serves).
The key question is how to sell ‘green power’ at a price that is a) lower than fossil fuel power (including taxes and CO2-surcharges) and b) high enough to make the capital investment in RE profitable. This requires another system change: The fossil fuel based merit order price setting mechanism should be replaced by a cost-plus pricing system that provides wind and solar long term viability (with nuclear power and some bio fuels to fill in the gaps).
Roger Arnold says
“A steeply growing product market can therefore be compatible with a ‘stagnating’ equipment market of assets needed to produce the end product”
Not in general. Your statement assumes that technological advances and cost reductions “just happen”. They have a life of their own and will come about regardless of what we do. Admittedly, that can appear to be the case, if one’s view of technology is based on the last 60 years in the computer and electronics industry. It’s not actually true even there, but anyone outside the industry could be forgiven for seeing it that way.
Technological change always involves costs and always needs to be driven. Outside of academia, the driver is always expectation of profit. Or defense of market share, in segments that are contested. It’s my contention that the PV panel business is no longer contested to any significant extent. A few large Chinese producers own it, and good luck to anyone who thinks they can undercut them. If those producers don’t see further cost reductions bringing in higher revenues, what incentive do they have to invest in new production lines?
Not that they won’t continue with R&D, and implement small tweaks to lower their own costs. They need to do that as a hedge, to maintain their positions and avoid being blindsided. But that’s not a formula for exponential growth.
Hans says
There is still a PV industry outside of China. If China becomes innovation lazy other countries are willing to take over.
Furthermore, academic PV innovation is not trivial, and takes place all over the world. If China does not use these innovations coming from academia, someone else will, or new start-ups will emerge.
Finally, PV manufacturers are not just in competition with each other, but also with other power technologies. So even if PV panel production would only take place in China, and the Chinese manufacturers would act as a cartel, they would still feel price pressure from other technologies.