The Future Dominance of Solar and Wind Energy
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industrydecarbonization.com
That being said, where is the disconnect between people claiming industrial-scale solar and wind is cheaper than burning fossil fuels, and the reality (in Europe, others?) that electricity prices have risen steadily with an increase in renewable energy production (even before COVID and Ukraine)?
Is it the largely unaddressed battery storage problems? Other effects?
I get the intended logic behind the system, which is to incentivize cheap sources (if you run cheap sources, you keep the difference with respect to gas as pure profit), but IMO it's prone to gaming (a lot of incentive to have that single MW of gas up, and electricity companies are an oligopoly...) and doesn't work well even without gaming (if the price of gas is disproportionately high with respect to the rest of sources, things begin to just not make sense).
Spain and Portugal negotiated to (temporarily, I think) get out of this system and change it to something saner (with the same basic principles but some compensations so that gas price doesn't dominate anything). The so-called Iberian exception. And it's working: while our prices are still high with respect to historical standards (due to Ukraine and the general underlying energy crisis), they now tend to be much lower than the rest of the EU most of the time.
Since the power is exactly the same, people don't buy a MW of solar or wind, they just buy a MW, regardless of the source. If you were (owning) a generator, why would you sell your electricity for €12/unit when people are willing to buy it at €150/unit? And since it's a free market, otherwise a middleman will come swooping in to rake in the difference.
Market dynamics dictate that when people/businesses are no longer willing to buy a MW for €150, the demand drops, the most expensive generators are not needed anymore and the overall price drops to the new equilibrium price.
Also: my fixed contract price per kWh is about €0.81 always, which is, uh, a lot. A friend of mine recently switched to a dynamic tariff and payed about €0.30-0.40 when I last asked him about it. Pondering...
Not an economist, but “inelastic market / supply” answers that, I think.
This is of course dampened by middlemen who sell for a fixed price and take the risk of having buy for a high price. And a few small NL energy companies (or rather middlemen) have gone bankrupt when they didn't have the reserves.
The thing is that this so-called free market works well for generating companies, but makes no sense for consumers. It doesn't matter how cheap producing the bulk of the electricity is, as long as gas isn't turned off completely the consumer always pays the price of gas. In a country evolving from (say) 100% gas to 90% renewables and 10% gas (I know I'm simplifying, these simple mixes don't really exist) the cost of electricity generation would fall through the floor, but the consumer would pay exactly the same. This is clearly dysfunctional, regardless of how nice it can be in theory.
It's also not inevitable. You can set a cap to the prices, but then compensate sources that go over the cap (in practice, gas) so they don't operate at a loss. This is what the Iberian exception system is doing, and it works.
That is a much less efficient system with larger risks.
It often happened in Spain (pre Iberian exception) that gas isn't even used, but the price of hydro was set to something like (expected price of gas - 5 €) because they knew they could. So we end up paying the price of gas even when we don't use gas!
Honestly, some people talk about the existing system as if it's this perfect free market... but in practice the bar is very low.
The Iberian exception system is already showing in practice that it works better.
The incentive with the 'normal' merit order model is that the most expensive generator is that they make barely a profit if at all. Not too attractive. Better build generation capacity that has lower operating costs (ie. no fuel, ie. renewables). At least, that is the theory. I really wonder what happens to this model and the incentives once renewables are the majority and stretch further along the merit-order curve's X axis, pushing out fossil fuels.
Why? The response to that question is inevitably political (because it's a political question). My personal opinion: because the EU has swallowed neoliberal ideological kool-aid hook, line and sinker, and will blindy follow it even if it leads to self-harm (which is funny, because the US, which is the main source of that ideology, has a much more pragmatic approach and will happily ignore it when it's not beneficial: see all the bans going on with China, etc.)
Unpopular opinion here, I guess, but that's my take on it.
So changing this system means meddling in the free market. There are times and places where meddling is appropriate and this is likely one such, but there are significant consequences and side effects to doing so, so shouldn't be done lightly.
I'm putting 'free market' in quotes, because even beyond externalities, the current system with zonal uniform pricing is only 'free' for a very narrow view of what constitutes a commodity or a marginal cost.
Consider two households: (a) in northern Germany close to the Danish border, located in a small town with lots of local wind turbine capacity, (b) in Southern Bavaria with very limited renewable energy production close by. There's also no adequate power transport infrastructure to get the renewable energy from the North (or elsewhere in Europe) to household (b), mostly because local politicians in Bavaria oppose putting up any visible infrastructure, whether power lines or wind turbines).
Now, during peak wind hours, a significant portion of the wind turbines in the north will go offline because the network cannot handle the load, while household (b) still needs to get their power from gas. [This is not a contrived example, but reality in Germany.] Yet (a) and (b) both pay the same price -- that of the gas producer. How is this a 'free' market?
But to your point, the good news is that people are taking electricity market design very seriously, not lightly. (Section 6 of this white paper is a good read that outlines many of the current market inefficiencies (Disclaimer: my former academic advisor and a few former colleagues are coauthors)): https://synergie-projekt.de/wp-content/uploads/2021/12/Elect...
On the other hand I may be able to put a wind turbine on my premises and get subsidised for doing so which has the opposite effect of the mentioned tax on nuclear power in that it makes it easier to generate wind power profitably.
Some users are freed from all sorts of taxes which all others have to pay, here in Sweden this is - or was, the current government seems to want to change this policy - the case for the likes of Facebook, Google and Microsoft who were allowed to establish data centres with the promise of nearly tax-free electricity. These data centres take so much power that the regions where they have been established have found it difficult to allow other energy-intensive industry to establish there for lack of power.
Margin pricing on electricity is counterproductive and should be abolished since it makes it more profitable to underinvest in more efficient power generation technologies since that would have a negative effect on market prices. It is better to keep a few inefficient gas turbines online and make sure these are needed at peak hours since they will drive up the market price for all generated power. As long as margin pricing is in place I do not expect something like grid-scale battery storage for peak demand to take hold since that has the potential to drive down prices.
[1] https://naringslivets-medieinstitut.se/det-var-marknaden-som...
The "effektskatt" was removed in 2018.
> On the other hand I may be able to put a wind turbine on my premises and get subsidised for doing so which has the opposite effect of the mentioned tax on nuclear power in that it makes it easier to generate wind power profitably.
The subsidies for wind power in Sweden was phased out in 2021 due to not being necessary anymore.
How would you do it? If you keep the current market with multiple independent actors then they would try to predict the most expensive generation required and bid at that price. Or you could tell them that since you are "coal" you get this price. But then that would be unfair to someone who made a different business case based on their availability, or their costs, or whatever.
You essentially end up in a quagmire of 5 year planned production. Marginal pricing solves this, and is what is applied to all raw resource markets due to these issues.
If you do not like marginal pricing you have all the possibility in the world to buy electricity futures, which of course nets you less income as a power generator and costs more for customers, because the risk is still exists.
To return to sane prices one extra step may need to be made depending on the transfer capacity from a region or country to one neighbouring it which has markedly higher prices: consumer prices need to be disconnected from export rates if the transfer capacity and export demand is high enough to saturate the national generating capacity or prices will still be pushed up unduly. Just like with many other goods there may need to be an export market running parallel to the domestic market with the domestic market being the first one to run its auctions.
Is this a fully worked-out proposal? No, it is not but the weighed average pricing mechanism proposed has all of the benefits and none of the downsides of the marginal pricing mechanism, at least from a market perspective - producers probably prefer the marginal pricing mechanism which allows the final kWh to be generated by the CEO sat astride a home trainer with a generator attached.
It's a lot cheaper if you price in the externalities.
[0] https://docs.energytransitionmodel.com/main/merit-order/
[1] https://naringslivets-medieinstitut.se/det-var-marknaden-som...
[2] https://www.dagensps.se/privatekonomi/bostad/analys-staten-s...
Wind turbines are built in the north for both countries, where the vast majority of the population live in the south. This means that power has to be moved for distances that span the equivalent of several countries (Norway and Sweden are very long).
South used to provide some ~30% of base power by nuclear, but due to political and economical[0] pressure they've been neglected and subsequently removed.
[0] Sweden had nuclear specific taxation for several decades, constantly increasing until the point where a lot of power plants were unable to finance themselves. Recently, the tax was dropped. The narrative now is that "the market has spoken" about their lack of profitability, neglecting three decades of economical and political/PR warfare against them.
That's definitely the reason OL3 is a boondogle. Not the other $8 billion of graft.
"Effektskatten" peaked at 7 öre per produced kw/h. That's a ~40-50% tax exclusively for, and on top of existing taxes when prices were a fraction of what they are now.
I don't know about Finland/OL3.
And if you sum up every cent they ever paid per GW including the capacity charge, you get roughly $1-2bn per reactor or a bit less than the bill that the taxpayer gets left with after decomissioning and waste management is underfunded.
It's also significantly less than insurance would cost without the Vienna convention and Paris convention.
What about the repercussions of closing them down prematurely? We're burning oil 24/7 at peak plants that are normally sleepibg most of the year. The amount of cheap coal power that we've imported to compensate for the closing of Barsebäck (more than a decade now) is terrible.
Given the (political) unfeasability of building wind turbines near people, is it worth closing down functional plants to burn fossil fuels in their place?
Genuinely curious; I'm not comfortable with either solution, but burning coal/oil seems like the worse option.
Must be because the even less popular option of a nuclear refurb is the only option.
There couldn't possibly be a much better option
https://swedishwindenergy.com/external-news/plans-for-50-gw-...
I've paid as high as 700 öre ($0.7 USD) per kw/h, which is insane compared to the historical 15 öre. If building offshore wind parks in southern Sweden solves that problem, then I'm all for it.
AFAIK, we haven't been doing that, and every suggestion that we do is faced with political backlash, NIMBY etc. Instead, the emphasis seems to be new nuclear, which makes no sense, as an alternative to the old "Sverige har för mycket el", which isn't something you hear any more.
Afaik those are not solved at scale, as in they're not even "problems" yet, the "battery storage" just doesn't exist at an industrial scale. As in many other past cases a form of pseudo-religiousness has taken over the discourse, hence the disconnect between what certain people believe can be done and reality.
If you take solar and install it in Europe, you will not get the same bang for your buck, for the simple reason that Europe is well north of California. As for wind, most of Europe is less windy than the US wind corridor, but offshore areas in the North and Baltic seas appear to be exceptionally good. Still, building offshore wind can't be done at a snap of your fingers.
Going forward, both solar and wind will see huge increases in installed capacity, but only in the places where it makes sense.
[1] https://www.lazard.com/perspective/levelized-cost-of-energy-...
Likewise a municipality putting in a solar farm is probably doing it because it's cheap and easy to maintain, easier to distribute across your city, and when compared to a big machinery based plant like a fossil fuel plant, both wind and solar take less educated skills from the municipality to install and maintain. Solar is essentially commoditized at this point, it's barrier for entry is for a municipality is just money. Wind is productized too, just more complex and difficult to install and maintain than solar.
IMHO solar is a proven source of energy that just needs more engineering to improve practicality. It kind of feel like we are getting there.
What I would like to see is nuclear power dedicated in producing solar energy hardware. After all, these things are not exotic and it's matter of putting energy into converting some abundant raw materials into solar cells.
You can see here (wind energy generation is the red one) how crazy it would be to think wind could replace gas/nuclear energy. And this is not a single wind tower but for the whole Ontario province.
There you go.
Efficiency also matters for costs. If we use inefficient methods of generating electricity, the electricity will cost more. This affects us as direct consumers of electricity, but also in consumer prices in general, since everything costs energy to make & transport.
The thing about solar energy is that the source is so powerful and abundant that the dominant factor for its economical viability is our ability to produce devices to capture it.
When nuclear is getting more expensive over the years(as the completely safe reactors prove to be not that safe and more safety is introduced), the devices used to capture the solar energy have been getting cheaper and cheaper. So it doesn't matter if solar is half the efficiency of something else if we can make the devices to capture the solar 10x cheaper.
Solar has already become very cheap, what we still need to do is to figure out the storage. So far the success is limited but because all life on earth is doing it already, I think it's a solvable problem.
The sun is literally a nuclear fusion reaction. Wind and hydro are an artefact of the sun + the motion of the planets. We could even stretch the argument that fossil fuels are also indirectly solar from photosynthesis.
Maybe it was a typo?
Your point stands though. I meant type of energy that's readily available on Earth - either Sun based (fossil, solar, wind, hydro - all directly depend on the Sun), or nuclear fission. We don't have any fusion available, yet - that would be a real change.
"Nuclear power has historically been one of the safest and cleanest energy sources."
Again the same bullshit.
Even hydropower is 43 more fatal than nuclear.
However, death rate is only one metric for safety. Fukushima may not have made (yet) lot of deaths, but it sure impacted a huge population, and will do so for many years to come.
One has to look at the impact of an incident. Once installed, solar or wind poses very little risk to you or your neighbors, even in case of natural disasters. And even in the case of the worst impact (deaths), this impact is limited in time/space. This is absolutely not the case of nuclear. Moreover, how do you evaluate the risk of nuclear waste?
I was in my hometown during the holidays, between heavy fog and clouds we didn't see the sun for two weeks straight, not even mentioning almost constant snow
Is that correct?
Have you considered asking an engineer to design a system optimal for German conditions?
BTW - we (Australia) have signed a large contract ($50 billion) with Germany recently to export Australian sunlight to Germany [1] as Ammonia ...
[1] https://reneweconomy.com.au/forrest-strikes-huge-green-hydro...
It's a very localised future, won't work for half of the year in half of the world, the half in which most people are living.
Could you explain again how this doesn't work in half the world?
Is there no wind in Europe, no ability to lay long power lines (like like gas lines lines, only towards the equator rather than Russia), no path upwards past 46% ?
On the face of it you don't seem to be putting much effort into finding a solution past fossil fuel usage .. is that because you don't accept climate change, you don't care what happens when they get increasingly scarce and more expensive, etc?
How many kwh was it when you bought it and how many kwh can it still store today? How old is it? How much did it cost you?
It not only 'works on my machine' - it's cheaper, cleaner and more reliable.
I'm sure we've got it better here, but that doesn't mean renewables can't continue to make up a growing slice of Europe's energy supply.
The answer is a mix of demand side management, sector coupling and power-to-x technologies.
Shared grids, small industrial estate sized battery farms, heated sand, hydrogen generation and recovery.
In the real world [1]:
> South Australia has been effectively powered by green energy for a week, with one expert predicting it could extend to a month by early next year.
> From December 12 to 19, National Energy Market data showed wind and solar contributed on average 103.5 per cent towards the state's energy demand.
> No coal was used during the period, but gas accounted for 5.9 per cent of electricity when renewable sources were not enough to power the state at points at night.
ie. For an entire Australian state total internal renewable production exceeded total usage for a full seven day period - spot excess was exported to neighbouring states, minimal baseline generation in a shortfall period was boosted by gas.
That's a dramatic change from nearly all coal generated power of some years ago.
[1] https://www.abc.net.au/news/2022-12-19/renewable-energy-prod...
It's "small", sure, but it's much bigger than a single house (which was the comment I responded to "sure, a house is easy, but does it scale?)).
It's also relatively isolated (although not a fully isolated independent grid like W.Australia) and so serves as an interesting test case with almost a circle about it.
[1] https://www.minister.defence.gov.au/media-releases/2021-11-2...
[2] https://www.nyrstar.com/operations/metals-processing/nyrstar...
> The Port Pirie plant is one of the world’s largest multi-metal smelters, producing lead, silver and by-products such as sulphuric acid.
Would it be a big problem for you if energy was essentially free 12 hours a day and 10 times more expansive than it is right now in the other 12 hours?
This is the only thing that we will need to change - granular, dynamic pricing to reflect the new constraints.
The rest will be solved by consumers adapting to that pricing. It might be by shifting the usage of non-essential devices (does it matter to you to have your laundry done at night?). It will likely include some batteries.
But for me the best option to me seems to be synthetic fuel production. Make hydrocarbons when there's too much solar and wind, and burn them again when there's not enough. The roundtrip efficiency is low (I think about 10% currently), but the capacity of such "battery" is effectively infinite and the investment is very cheap compared to regular batteries. The whole world already is adapted to burning hydrocarbons. So we wouldn't need to change much - just produce hydrocarbons in place instead of drilling for them in dictatorships all over the world.
BTW the implications on world politics are Earth-shattering. The difference in available renewable power per square meter in best vs worst countries is about 3 to 1 - maybe 4 to 1. Imagine if the least fortunate country on Earth had 25% of the oil that OPEC countries have.
I would find this extremely annoying, yes.
And if you need to, you pay for it. Otherwise you can use the cheap power.
You seem to think renewables will win because people are ecologically minded. That's not the case. It will win, because it scales better, it has very little paperwork or planning required, and it's very cheap.
Yes - in some cases it's less convenient than traditional powerplants. But early cars couldn't go everywhere horses could. Didn't stopped them from replacing horses for 99% of usecases.
During this time then more electricity is imported, a lot of gas is burned, and coal stations are put on standby.
To my knowledge, then no industry needs to shut down .
I also want to point out that this is already going on, not just theory crafting. Solar and wind isn't just a good possibility, it is happening and in use right now. Batteries for grid stabilization is also an existing technology that is in practical use.
If we have huge amounts of overproduction, hydrogen is a viable storage medium. But the conversion losses are too big for it to be viable unless the electricity is practically free.
For large scale storage pumped hydro seems to be the best option, albeit it requires compatible geography and isn't cheap to build.
On the other hand even a mid-priced electric car can run an American McMansion for a day, maybe even two. More if you actually pay attention to your energy consumption.
5-20kWh batteries aren't really that expensive and will pay themselves back if you're using market rate electricity instead of a flat rate. You can charge them up during the night with a few cents per kWh and use during the daily peaks - maybe even sell back to the grid if that's possible in your area.
You need energy storage first, which does not exists, because it is too expensive to build it. So therefore there is going to be no dominance of solar and wind clearly from practical reasons.
Yes it's true that 1:1 replacing the current power generation capacity with solar and wind is going to be really difficult.
BUT if we combine that with small-scale production (local solar/wind) and storage (small batteries in buildings) controlled by a smart grid, with the addition of automatically moving consumption to cheaper hours it's perfectly doable.
You don't NEED to run your dish/clothes washer and dryer the second you come home from work. You can fill them and time them to start so that they run during the night and are ready in the morning, for example. You get cheap electricity and the grid likes it when it gets use on quieter hours too.
The problem with this is that the majority of people live in appartement buildings, where a washing machine's sound can traverse walls. Dishwasher too in older buildings with poor sound insulation.