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Impact of Energy Storage on Solar PV Grid Parity

Proponents of intermittent renewable energy such as solar PV and wind often claim that these energy sources will reach parity with standard grid power in the near future. As discussed in a previous article, however, this is a highly misleading claim, primarily because intermittent and non-dispatchable renewable energy is worth much less per kWh than steady and dispatchable baseline power. 

In order to illustrate the implications of this distinction, the aforementioned article valued intermittent PV similarly to unrefined coal. The central assumption underlying this way of thinking is that the costs associated with energy storage (which is required to make PV useful to society at higher penetration levels) are comparable to the costs associated with thermal power plants (which are required to make coal and gas useful to society at higher penetration levels). Under this assumption, solar PV turned out to still be about one order of magnitude more expensive than coal power. 

Naturally, this is a fairly crude assumption and accurate calculation of the real grid parity target for solar PV will be much more complex. This article will discuss the most important complexity: the fact that the costs associated with energy storage of intermittent renewables will be a strong function of the level of penetration into the local electricity grid.  

The cost of storage

Under the assumption that the costs associated with storage are similar to the costs associated with thermal power generation, storage would increase costs roughly by a factor of 4 (as is the case for coal at $100/ton and coal-fired electricity at $0.06/kWh). However, this cost increase will be a substantial over-estimate at low penetration levels where almost no storage is necessary and a substantial under-estimate at high penetration levels where most renewable energy generated will have to be cycled through some form of storage.

The graph below illustrates the price at which solar PV reaches parity with coal for five different storage cost scenarios assuming a coal price of $100/ton, a 30 year panel lifetime and a 5% discount rate on gradually released PV electricity.

The most important comment to be made about this graph is that we will move downwards with increased PV penetration. I am fairly confident that, for most locations, we will reach the light blue line at the bottom long before intermittent renewables come close to supplying 100% of our electricity. The exact penetrations at which each of the lines on the graph will be crossed is much more uncertain though. I will give some rough estimates in this article, but would welcome any corrections by experts on this site.

Negligible storage costs (<1% penetration)

Initially, when solar contributes less than about 1% of electricity, the intermittency will be essentially negligible. As the blue line shows, current utility-scale installed PV prices (~$2/Wp) are already close to parity with coal in the most ideal locations (highest PV capacity factors) under this assumption. However, this first percent of solar PV penetration is the only region where the standard grid parity mantra of renewable energy advocates is relevant. 

Storage costs half of power plant costs (10-20% penetration)

As we move up to a 10-20% penetration of intermittent renewables, we also move down to the red line in the graph. Under this scenario, solar PV (and wind) starts to rely significantly on the energy storage implicit in fossil fuels. Standard power plants then have to be operated at lower capacity factors and at lower efficiencies due to more ramping and more spinning reserve.

One recent study for wind power calculated that costs of keeping backup fossil plants operating at lower capacity factors and efficiency (together with some added transmission costs) would increase the real cost of wind to triple the price of new gas and 1.5 times the price of new coal in the US. This represents a doubling of the standard costs calculated when the intermittent and non-dispatchable nature of wind energy is simply ignored. 

Storage costs equal to power plant costs (20-40% penetration in selected regions)

As we move beyond a 20% penetration of intermittent renewables, specialized energy storage becomes necessary. According to EIA estimates, the most feasible option; pumped hydro storage, will cost about twice as much as a coal plant per watt. It will, however, lose only about half the energy lost by the coal plant in the energy conversion process. It can therefore be estimated that pumped hydro storage will inflate solar PV prices roughly by the same factor as a thermal power plant inflates the price of coal. 

Even though the installed PV price of roughly $0.3/Wp required by this scenario seems highly unlikely ever to materialize, it should be noted that regions with abundant natural hydro capacity could potentially achieve these penetration levels of intermittent renewables at much more affordable prices. Denmark’s wind backed up by hydro from Sweden and Norway is one such example. Very few regions on earth are suited for this kind of arrangement though.

Storage costs double power plant costs (20-40% penetration in most regions)

Pumped hydro is only available in certain (relatively rare) topographies. Thus, for most cases, a day or two of battery storage will be most practical. Despite lots of noise from battery optimists, the 150-year old lead-acid battery is still the cheapest option we have for this purpose, but suffers from drawbacks such as short lifetimes (especially at deeper discharge rates) and relatively low efficiencies (about 20% of energy cycled through the battery is lost).

Lithium-ion batteries reduce these problems, but are also more expensive. One case study found that a lead acid battery and a lithium-ion battery could store energy for about $0.34 and $0.40 per KWh over their respective lifetimes. This cost (which must be added to the cost of renewables) is much greater than fossil fuel power even by itself. To better link this to the graph above, consider that most suppliers will sell you about $4 of batteries per watt of solar PV for protection against blackouts (example) where the battery warranty period is only about half that of the panels. 

It should also be mentioned that, in the hypothetical scenario of very cheap solar PV and relatively expensive storage, it could be more economical to simply build a large overcapacity of intermittent renewables and spill a large portion of the power produced. In the graph above, this will reduce the capacity factor of the installation, but could create a transfer from the purple to the green line. 

Storage costs quadruple power plant costs (>40% penetration)

Finally, the light blue line right at the bottom comes into play when one starts thinking about longer term energy storage to compensate for longer cloudy (or wind-still) periods or even for slow seasonal variations. This line (which really is a matter of complete impossibility for intermittent renewables) is especially applicable to regions with long cloudy spells and seasonal mismatches (e.g. solar PV in Germany). On the flipside, however, it is also much less applicable to regions with very reliable renewable energy resources that are well aligned with seasonal demand (e.g. solar PV or solar thermal in desert areas).

Chemical storage is probably the only viable option for such longer-term storage requirements with hydrogen normally being the first option that comes to mind. A Spanish study found that hydrogen from combined wind and solar projects would cost about €25/kg which translates to about $0.90/kWh of hydrogen internal energy. Converting this stored energy back to electricity at a later time will inflate the price by another factor of 3 (similar to natural gas power plants), bringing the total cost up to $2.70/kWh – about 50 times more expensive than conventional power. Other forms of chemical storage might be more economical, but it will be very difficult to rise above that light blue line.

Conclusion

The previous article stated that current solar PV technology is still about one order of magnitude more expensive than coal. Based on the above analysis, it can be stated that this will be the case at roughly 20-40% penetration of solar and wind into our electricity networks (about 8-16% of total energy), beyond which the prospects for PV (and wind) will rapidly deteriorate. This is a good example of the law of receding horizons discussed earlier.

 

Schalk Cloete's picture

Thank Schalk for the Post!

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John Miller's picture
John Miller on August 3, 2013

Schalk, very interesting post.  As you point out, the impact of variable, non-dispatchable renewable power can create local power grid stability issues depending on where the wind/solar PV connect into T&D systems and where the hydropower pumped storage is located to replace lost power supplies when the sun does not shine and wind does not blow (or blows too hard).

A very alarming trend has been developing in recent years.  EIA data indicates that U.S. hydropower pumped storage has declined by almost 50% since its peak in 2001 (which is equivalent to about 85% of the total power currently generated from solar PV).  Over the past 12 months alone (May 2012 thru Apr. 2013) pumped storage has declined by about 15% from the previous 12 month period.  Total pumped storage is also declining as a percentage of total hydropower net generation capacity.  Since 2001 pumped storage has declined from 2.7% of total hydropower net power generation to 1.8% today.  This 1/3rd reduction trend does not help with the wind/solar PV penetration issue as you have covered in your post.

Reasons for the decline in the only currently available industrial scale power storage are unclear.  Unlike other non-hydro renewable power supplies, the Federal Government has shown minimal interest and support for this largest source of renewable power generation within the U.S. (and world) currently and over the past decade.  What has occurred in recent years is growing opposition to reservoir and hydropower plant (efficient) operations.  Many recent constraints have been placed on hydropower plant operations to possibly reduced downstream environment impacts.  These new operating constraints may have significantly contributed to lower net power generation over the years.

Schalk Cloete's picture
Schalk Cloete on August 4, 2013

Thanks John. To be honest, I was not even aware of the significant decline in US pumped hydro throughput. But I assume that the infrastructure is still there, it is just being used less often (i.e. the capacity factor is dropping). The legislative constraints you mentioned may very well explain this. 

One cannot help but wonder about the level of technical understanding posessed by those who pass these legislations. It appears as if people are still under the illusion that it is possible to generate enormous amounts of power with no environmental impact whatsoever. This is of course a fool’s notion. It is quite possible that, if US wind and solar power ever gets to a level 10 times it is today (roughly the level of coal), we will see just as many complaints about the environmental and social impacts of wind turbines, solar panels and the wide range of associated storage solutions than we currently see with coal. 

Randy Voges's picture
Randy Voges on August 4, 2013

“…intermittent and non-dispatchable renewable energy is worth much less per kWh than steady and dispatchable baseline power.”

About time somebody finally pointed this out.  Expect the Energiewende hopium addicts to come out in force.

Clifford Goudey's picture
Clifford Goudey on August 4, 2013

Schalk, your last comment, “we will see just as many complaints about the environmental and social impacts of wind turbines, solar panels and the wide range of associated storage solutions than we currently see with coal.” is revealing – not about wind or coal, but about your perspactives.

How long do you think coal (or all fossil energy sources, for that matter) will be allowed to externalize its greatest costs onto society?  I preduict not long, though the US, with its legislative branch bought and paid for by fossil and status-quo advocates, may be the last industrialized nation to implement a carbon tax.

You wrote, “at high penetration levels … most renewable energy generated will have to be cycled through some form of storage.”  In your dreams.  If conventioinal power plants are having trouble coping with non-polluting renewable sources, I am sympathetic to them.  My hope is the geniuses who pulled us into this unsustainable mess will be able to figure out how to design plants that are both efficient and responsive.  If they fail, then it may come to pass that most fossil and nuclear energy generated will have to be cycled through some form of storage so so they are available to cover any mismatch between renewable sources and demand.

I know, you will say, “Nonsense, that’s not the way things work.”  Be patient.

Stephen Nielsen's picture
Stephen Nielsen on August 4, 2013

It amazes me when writers link to “studies” by political think tanks and no one takes the time to check the sources that the writer is using.  When Mr. Cloete points to “One recent study for wind power”, he points to a “study” funded by the American Tradition Institute (ATI), the same think tank that In 2011, sued the University of Virginia to get access to the emails of climatologist Michael Mann. 

ATI sprung from a 501(c)(4) group called the Western Tradition Partnership (WTP), a political advocacy group first registered as a Colorado nonprofit [501(c)(4)] in 2008 by Scott Shires, a Republican operative who pleaded guilty that same year to fraudulently obtaining federal grants to develop alternative fuels.

It seems Mr Cloete has acquired the scent of climate denialists and everybody’s favorite oil industrialists, the Koch brothers.

Schalk Cloete's picture
Schalk Cloete on August 4, 2013

Well, as the old saying goes: the grass is always greener on the other side. This is especially applicable to something as ideologically attractive as renewable energy. My point is just that, if we ever get to the “other side”, good old fossil fuels will suddenly look pretty good again. The second-last section in a previous article elaborates more on this point. 

I would just like to clarify that I am fully in favour of a revenue-neutral carbon tax in order to rectify the price signals sent to the free market. I think this is essential in order to abate CO2 in the most cost effective way. However, continued government subsidies of the single most expensive way to abate CO2 (current renewable energy technology) is a very dangerous road. It abates minimal amounts of CO2 while the high costs and practical difficulties seriously reduce the ability of our economies to deploy more serious abatement options. 

Regarding your skeptisism about the need for storage, allow me to illustrate this with a simple example. Last year, the renewable energy community was all abuzz because Germany generated half of its electricity through solar PV around noon for a few days during summer. In total, however, Germany only got 5% of its electricity from solar in 2012. Now just imagine if Germany ever gets 50% of its total electricity (20% of its total energy) from solar PV. In this case, there will be regular instances where solar panels supply 5 times as much electricity as the country needs. If no storage facilities exist, at least 80% of solar energy will have to be wasted during these peak times. Do you really think we will ever be able to afford spilling such large amounts of our expensive solar power? 

Schalk Cloete's picture
Schalk Cloete on August 4, 2013

Well, I can assure you that I am no climate change denier. In fact, my concerns about climate change are one of the primary motivations behind my articles pointing out the challenges facing renewable energy. As mentioned in a comment below, I believe that continuation of the heavily subsidized deployment of expensive and intermittent currently available renewable energy technology will abate very little CO2 and seriously hamper the ability of our economies to achieve serious CO2 cuts in the future. 

About the referenced study, I critically evaluated it’s assumptions and calculations and found them very reasonable. If you want to point out any of the 6 hidden costs that are obviously unreasonably inflated, please detail your concerns so that we can discuss in more detail. It could be interesting. 

Clifford Goudey's picture
Clifford Goudey on August 4, 2013

Schalk, thank you for another equally revealing comment.

By “revenue-neutral carbon tax” what do you mean.  Is it that it’s an economic wash to those affected by means of other tax breaks or do you mean the tax does indeed cover the sum total of externalized costs that fossil energy presently transfers to society?

How do you see incentives to “current renewable energy technology” as “government subsidies of the single most expensive way to abate CO2?”  You do understand that every kW generated by renewables is a kW that does not result in CO2 being dumped directly into the atmosphere.  Please don’t blame renewables (intermittent or otherwise) for the poor responsiveness and low efficiency of conventional power plants.  What would you prefer instead, government subsidies to promote carbon sequestration or some other pie-in-the-sky scheme like “clean coal?”

I don’t follow your math regarding PV and Germany.  Peak PV generation coincides nicely with peak demand.  What’s the problem there.  What motivates you to concoct such a dilema? 

I am an ardent supporter of storage technologies.  I am confident that in some circumstances it will make renewable power more valuable, but in general all electrons look alike and if instantaneous generated electricty exceeds instantaneous electricty demand then storage is needed.  I believe storage will play a huge role in keeping fossil and nuclear plants economical by allowing them to either operate at peak efficiency or shut down.  It will eliminate a lot of the whining within the traditional energy sector over spinning reserves. 

The point is, Schalk, we have a long way to go before wind and solar variability rival demand variability or the ever-present need facing grid operators of being ready for when their biggest generating asset (nuclear or coal) drops off line.  I get pretty tired of the proliferation of imaginary problems associated with renewables in attempt to mask the real problems associated with our conventional fleet of dinosaurs.

John Miller's picture
John Miller on August 4, 2013

As variable, non-dispatchable wind/solar continues to increase and regulatory pressure to reduce the Power Sector’s carbon emissions also increases, the need for industrial scale power storage will also increase and be critical to future power grids’ reliabilities.  If alternatives to hydropower pumped storage do not become a technologically feasible and cost effective reality, pumped storage will continue to be the only real option.  As Schalk points out, nearly all solutions to reduced carbon emissions involve trade-offs.  At some point in the future the need to restore and significantly increase hydropower pumped storage capacity could become a required part if any regulatory strategy to further reducing the Power Sector’s carbon footprint.

Schalk Cloete's picture
Schalk Cloete on August 5, 2013

A revenue-neutral carbon tax is a consumption tax levied on carbon intensive products in such a way that government revenues do not increase. In other words, the money taken in through carbon taxes is given back directly to the consumer through cuts in other taxes. 

I see renewable energy subsidies as the most expensive way to cut carbon because, well, it is the most expensive way to cut carbon. In 2012, the EEG levy in Germany was €14.11 billion (jumping massively to €20.34 billion this year). Thanks to this €14.11 billion ($18.3 billion) paid by consumers, Germany got 78.8 billion kWh of electricity from solar and wind in 2012. This works out to a subsidy of $0.232/kWh – about 300% higher than wholesale electricity prices. If Germany did not start shutting down its nuclear plants and started deploying CCS with these billions of dollars, the country could now have 90% CO2 cuts instead of essentially 0% CO2 cuts.

The PV math is very simple. If PV sometimes supplies 50% of demand when the total yearly PV contribution is 5%, it will sometimes supply 500% of demand when total yearly PV contribution is 50%. Naturally, it is a big problem if you have 500% of demanded power and no storage. 

As stated in the article, the whole point is that the intermittency problem will become increasingly acute as the level of renewables penetration increases. This is important because most renewable energy advocates think technology will make renewable energy deployment progressively easier as time goes by while, in reality, factors such as the need for a wide range of storage solutions will make renewable energy deployment progressive harder as time goes by. More information on this can be found in a previous article

Schalk Cloete's picture
Schalk Cloete on August 5, 2013

Thanks for the comment, Bob. You raise some valid points. 

As stated in the article, the penetration levels at which the different classes of storage will be necessary is not well known. I agree with you that, if a specific region has both high quality wind and high quality solar resources, 20% penetration might be reachable without deploying dedicated storage facilities. However, most regions are more suited to one renewable energy source than the other. 

Our best example is once again Germany which has reasonable wind resources, but poor solar resources. Germany deploys both primarily because the seasonal variations in solar and wind cancel each other out nicely (slide 36 here). However, the poor solar resources in Germany makes solar power very expensive which is now really starting to hurt consumers. 

As stated under the 10-20% penetration heading though, the intermittency issue will still have costs even before any dedicated storage solutions are deployed. These costs will mostly be due to a reduction in the capacity factor and efficiency of fossil fuel plants and an increase in transmission costs. More information can be found in the linked study under than heading. 

In the most basic terms, before any dedicated storage facilities are built, no fossil fuel plants can be closed down as long as there are times when renewable energy generates essentially nothing (which will always be a possibility). This increases costs through decreased capacity factors. Also, renewable energy can rise and fall rapidly, thereby requiring equally rapid ramping of fossil plants. This increases costs through decreased efficiency. And finally, much more extensive transmission is necessary to gather up solar and wind power over the large areas over which it is generated and transport it to population centres (e.g. Germany with all its wind in the north and its solar in the south). This increases costs through transmission infrastructure and losses. 

Regarding the natural allignment of solar and demand, you can also study the daily power curves of Gemany in the data linked above around slide 170. The result of the sharp solar peak around noon is that fossil power stations must now peak twice (morning and afternoon) instead of only once (normally during the afternoon). This requires more and steeper ramping, thereby reducing efficiency. It is also clear from the graphs that this issue would be much more acute if Germany did not use (increasingly unwilling) trade with its neighbours to absorb unwanted renewable energy surges. 

 

Jean-Marc D's picture
Jean-Marc D on August 5, 2013

However at this stage, it sounds more likely to be able to bring down the cost of panel so that we can afford throwing away 4/5 of the energy, than to develop cheap enough storage.

There’s a large amount of magical thinking in the claim that since we need cheap energy storage, we’ll get it.

Alistair Newbould's picture
Alistair Newbould on August 5, 2013

Another factor which doesn’t seem to have been considered is the use to which solar concentrated energy is made. We are told that around 30% of a house’s energy useage is in water heating (New Zealand stats but probably broadly similar elsewhere??). So using solar energy to heat water is an excellent way of storing solar energy. This does reduce CO2 polluting sources of electricity since it is “baseload” – you tend to use the same amount of hot water day in day out, and your hot water cylinder stores the energy. This is also expandable to home heating. Why not use a separate hot water cylinder, supplied by solar concentrated heating, to store energy for home heating at night. Again, this comes right off the bottom of CO2 polluting sources of electricity or oil burning on site. It doesn’t have to replace all the heating, just any amount of it will reduce CO2 emissions. Provided of course that the reduction in baseload is “used” to close CO2 polluting generation.

 

So the article’s calculations may be correct for solar PV electricity, but perhaps not for solar energy in total. Locally gathered, locally used, locally stored for only short periods of time, with minimal conversions (which of course lose energy each time it is converted). And if the 30% referred to above is correct, and currently being covered by electricity, then the start point for storage moves up to 30% and higher if solar central heating works as I think it should.

 

Anyone see errors in these comments please point them out.

Clifford Goudey's picture
Clifford Goudey on August 5, 2013

OK Schalk, now I understand the problem. You are assuming that these investments are solely for the purpose of reducing CO2 emissions.  While that nicely props up your thesis, it is incorrect.

There are many reasons to reduce our dependence on fossil and nuclear power.  Obvious ones are health, safety, and energy security.  Germany’s phasing out of nuclear power was triggered by the Fukushima disaster and it is dishonest to attribute any associated costs to CO2 mitigation.  Reducing a country’s dependence on imported fossil energy is a strategic choice and has nothing to do with CO2 mitigation.  Reducing the burden of power plant emissions on respiratory health costs has nothing to do with CO2 mitigation.

This transition out of the Fossil Fuel Age is inevitable.  Those nations that start the process soonest will be the ones best prepared and will be the ones who will ultimately profit from the laggards when they begrudgingly see the light.

Do you have any figures documenting the costs of CCS beyond wild projections from its proponents?  Have you considered the reliability, safety, and scalability of some of the more popular schemes?

Again, your PV/demand math is incorrect because PV peaks during peak demand.  Please try again.

You have several underlying misconceptions that are capsizing your thinking:

1) You assume renewable intermittency is already causing problems.  It is not, though status-quo apologists would like us to think so.  The fragile nature of the grid and the operational limitations of conventional power plants are causing the problem.  Renewables are doing exactly what is asked of them.

2) You assume that the primary role of storage is to mitigate renewable intermittency.  It is not.  There’s an array of justifications for our existing energy-storage capacity and a growing need for more.  None are related to renewables, rather they are needed to improve the efficiency and reliability of the grid.  As fuel costs increase these storage technologies become more valuable.

3) You apparently think that a grid-scale storage facility knows where an electron comes from.  It doesn’t, since they all look alike.  Excess generating power will be stored regardless of where it comes from.  Because of the high marginal cost of fossil derived power, one would hope that it’s unused power can be stored.  And as Jean-Mark says, there will come a day when PV and other renewable sources become so cheap that they can simply be taken off-line when they are not needed.  We are a long way from that situation, but we will get there.

The simple fact is, as time goes by renewable energy deployment will become progressively easier because grids will become less brittle, the technologies will become less expensive, and the entire system will become more reliable.  The intermittency of some sources will not change, but we will get over it and stop the Chicken Little mantra. 

Schalk Cloete's picture
Schalk Cloete on August 5, 2013

This analysis assumes that specialized storage only starts to be deployed with intermittent renewables between 20% and 40% penetration. Naturally, this number is just a rough estimate, but I think it should be reasonably accurate. Below this range, the assumption is that no specialized storage is deployed. 

Without specialized storage facilities, intermittent renewables will have to be accomodated through more expensive fossil fuel generation and more expensive distribution networks. Building a large high-voltage transmission grid capable of transporting mid-day peak solar power from the West Coast to the East Coast in order to cover the afternoon peak would be good, but transporting electricity over such a distance will lead to significant costs in transmission infrastructure and losses. On the other hand, if you want to avoid these added distribution costs, local power plants must use the energy storage implicit in fossil fuels to balance intermittent renewables leading to lower capacity factors and efficiency. 

This optimization excercise between storage costs and transmission costs will have to be completed for every region individually depending on many local factors. But one should be careful not to over-estimate the potential of distributed generation to smooth out renewables. When looking at Germany’s power curves from slide 150 onwards here, you can see that there are many instances where the countrywide combined wind and solar generation is essentially zero and other instances where the generation is more than half of electricity demand. 

Schalk Cloete's picture
Schalk Cloete on August 5, 2013

Thanks for the comment, Alistair. Yes, I agree completely about the merits of solar water heating. I actually installed a solar water heater and a PV system on my parents’ home in South Africa over Christmas (I live in Norway where solar energy makes no sense). The solar water heater cost 4 times less than the PV system and saves about the same amount of electricity. It also has the storage advantage you mentioned, but luckily South Africa still falls in the <1% intermittent renewables category, so the intermittency of my parents’ solar panels is of no consequence. 

However, the solar hot water heater is not completely immune to intermittency. On cloudy days, the water still has to be heated by electricity and, in winter time, the water often does not reach the temperatures needed for a nice hot shower. This was just our practical experience from sunny South Africa and will probably be more problematic in most other countries. 

Heat storage is also a very attractive option when looking at concentrated solar thermal technologies. These plants can only operate in very hot regions with lots of direct sunlight, but can include around 8 hours of fairly cheap energy storage. If you place such a plant in a hot place where the sun shines every day, it can deliver fairly reliable 24/7 baseload power. The Desertec initiative is an interesting project that aims to bring such power to Europe from North Africa, but it has experienced a number of big setbacks lately. 

Schalk Cloete's picture
Schalk Cloete on August 5, 2013

Thanks, this is becoming quite an interesting conversation. 

Well, the debate around climate change and energy security is ultimately one about priorities. Personally, I agree with organizations like the IEA and the EIA that we will be able to continue to expand fossil fuel extraction over the next three decades and beyond (see this TEC post for example), implying that energy security is not the top priority right now. The possible exception is oil, but it will be many decades before solar and wind start displacing meaningful quantities of oil. 

From my point of view, climate change is a much higher priority. The IEA’s “New Policies” scenario (assuming the implementation of a range of carbon reducing policies including a carbon tax of about $30/ton) results in long-term atmospheric CO2 concentrations of 660 ppm which gives a 6% chance of staying below the 2 deg C threshold. For people who think climate change is less of a concern, the very cost inefficient carbon cuts currently being implemented via the government incentivized deployment of renewable energy technology will be totally OK, but I don’t think we can afford it. 

I don’t think much of the debate about any other externalities of fossil fuels. For example, if the Chinese thought that the negative externality of air pollution outweighed the positive externality of rapid economic growth, they would not have built a coal fleet consuming half the world’s supply. The climate change externality is different because it comes with a very long time-delay and needs to be corrected for long in advance via a proactive carbon tax. 

About the early adopters of renewable energy, I beg to differ. These nations (e.g. many European states) have committed themselves to paying decades of high feed-in tariffs for immature technology (unless of course they pass retroactive feed-in tariff cuts like Spain and Greece). They will also have to make all the costly mistakes that are inevitably made and learnt from in such a complex project. Late adopters will be able to implement mature technology and deploy this technology while avoiding all the mistakes made by the early adopters. 

For CCS, there are many papers documenting very competitive costs. For example, this review article about retrofits (which will be significantly more expensive than new plants) gives CO2 avoidance costs of $30/ton for solids looping technologies. The CO2 transport and storage aspects of CCS can use mature gas transport and gas well technologies, so safety is not much of a concern. However, CCS will not be deployed before a carbon tax makes it economical to do so. It does not have the ideological appeal or modular deployment nature necessary to make special feed-in tariffs politically feasible. 

About the PV peaks, it is a fact that solar PV contributed 50% of Germany’s power demand for a few instances in 2012 and it is a fact that solar PV contributed only 5% of total electricity in 2012. Hence, my argument stands. 

About my supposed misconceptions:

1) Most of the renewable energy dreams are technically feasible. I don’t dispute that. The problem is the economics. Take a look at the added tax component of German electricity here for example. 

2) You will have to explain this in more detail. So you think all of the renewable energy optimists proclaiming energy storage as the holy grail of renewable energy are wrong?

3) I never said anything about energy storage solutions caring where electrons come from. I simply say that large-scale storage will be expensive and increasingly so as the penetration of intermittent renewables increases. 

Clifford Goudey's picture
Clifford Goudey on August 5, 2013

It’s odd that while present and very expensive distribution network was built to connect fossil and nuclear power plants to customers we now hear complaints that new, non-polluting power sources might need additioinal distribution routes.  I sense some missing objectivity.  In reality, the East Coast demand peak coincides with the East Coast PV peak.  Helping out will be offshore wind that is close to population centers and offers much higher availability than onshore wind.

The energy storage capacity of fossil fuels remains an attractive option and will become even more so as storage allows fossil plants to operate at peak efficiency regardles of instantaneous demand.  Hopefully, these plants will also be improved to burn more efficiently at partial load.

Schalk Cloete's picture
Schalk Cloete on August 5, 2013

Traditional power networks spread power from a concentrated and dispatchable source to fixed population centres. Intermittent renewables require that power be collected over a wide area from wherever the sun is shining and the wind is blowing and then transmitted to the closest population centre within the limitations of available transmission capacity and transmission losses. It is a different (and more expensive) ballgame. 

Demand peaks typically occur in the afternoon / early evening. See this TEC post or this paper for some examples. 

If storage was cheaper than demand-following with fossil fuels, it would have been done long ago. Renewables cannot follow demand and therefore storage is being persued – not because we want to, but because we have to. 

Nathan Wilson's picture
Nathan Wilson on August 5, 2013

Schalk,

I’m afraid you have over-estimated the cost of coal, which makes solar look artificially attractive.

You’ve made the common mistake of comparing the levelized cost of fossil fuel power to the levelized cost of solar.  As Glenn Tamblyn says, you can’t look at these things in isolation.

In a real system, even with 6, 12, or 24 hours of energy storage, there will still be times when clouds persists longer than the storage can cover, or the winter demand peak when there simply aren’t enough sunny hours in the day.  The result will be some fossil fuel plants will be required during these times; ok, reallly “thermal” plants, which can run on fossil fuel, stored H2, or bio-fuel; the result is the same.

Because these thermal plants will always exist (their capital cost must be paid in either case), and nominally operate at low capacity factor (they could be easily dispatched to make more energy), the grid parity target that must be matched by solar is their “variable cost” of power (i.e. the fuel and operations cost).  The US DOE’s EIA report that the variable costs of coal and natural gas are $0.03/kWh and $0.045/kWh respectively (coal’s rises to $0.037 with CCS).

Schalk Cloete's picture
Schalk Cloete on August 6, 2013

Yes, the assumptions I have made in these calculations are skewed in favour of PV, but I just did that in order to avoid any accusations that I skewed the data towards coal in order to prove my point. 

The central message I am trying to send here is that money for new generating capacity will be much better spent on more cost effective low-carbon technologies (CCS & nuclear) than on currently available wind & solar technologies. Thus, I compare the levelized cost of coal-fired electricity to the levelized cost of PV because the capital investment of new coal plants must still be recovered (similar to that of new PV).

As long as wind/solar enjoy priority for selling electricity to the grid, the LCOE of coal plants will actually go up as the capacity factor goes down since the capital investment must be recovered with less electricity sold. While wind/solar enjoy mandated priority, it will therefore appear as if thermal power is getting more expensive. In an open market, however, intermittent solar/wind supply surges will push down the price, forcing these operators to sell most of their electricity at very low (sometimes even negative) prices. This will of course make solar/wind completely unprofitable unless low-cost energy storage becomes available. 

Yes, battery storage will not be able to counter slow seasonal or weather-related variations in output. That is why I also included the very-high-cost chemical storage option at wind/PV penetrations higher than 40%. I very much doubt that this will ever become economically feasible, but it must be mentioned for the sake of completeness. 

As I understand it, the logic of storage will be as follows:

  • No storage will be needed as long as intermittent wind/solar supply surges are not large enough that they need to be spilt (e.g. if Germany gets 10% of its total electricity from PV, there will be instances where PV supplies 100% of German electricity demand). 
  • Short-term storage (e.g. batteries) will be used when it becomes more economical to store these intermittent surges than it would be to spill them (probably between 20 and 40% penetration).
  • Long-term storage (e.g. hydrogen) will be used when the required battery capacity becomes so large that it becomes more economical to generate and store hydrogen from electricity to be converted back to electricity in a thermal plant at a later stage (probably somewhere above 40% penetration). 

Obviously, the central assumption behind this logic is that renewable energy deployment continues to enjoy mandated priority over fossil and nuclear power. Such mandates will probably bankrupt governments before we even get to the second point above, but it is useful to just think through these real-world requirements posed by the 100% renewables ideal. 

Clifford Goudey's picture
Clifford Goudey on August 6, 2013

Schalk, by energy security I was not referring to the timing of peak oil, I was referring to a country’s trade balance in energy and whether they are comfortable having their economies at the mercy of OPEC whims.

However, even if the IEA and the EIA are right about three more decades of expanding fossil fuel extraction, how does that change the ultimate outcome.  These desperate methods of wringing out reluctant reserves simply means that the far side of peak will be far more abrupt compared to if they had not been employed.  Given the energy that is going to be needed to deploy rebnewables, the delay you are suggesting is leading us to a very ugly situation.

While I agree with you on the significance of AGW as a global problem that must be confronted, I believe it is naive to think that those gradual impacts are going to drive energy policy in anything but the most progressive countries (e.g. Germany).  China is implementing a carbon tax (http://www.solarfeeds.com/china-implements-carbon-tax/) not because of CC concerns but because air and water pollution is causing social unrest.  It is the more immediuate external costs of fossil fuel combustioin that will trigger these policies.

While I agree that late adopters may see some advantage today, ultimately they will be buying their solutions from the early adopters – yet another hard-nosed economic reason to invest now. 

By risk in CCS I was not referring to near-term public safety, rather I was speaking of whether the methods work long term and if the energy consumed in the CCS process is worth the price compared to simply not burning the resource.  In order for it to work, the sequestration must be forever, so CCS could be yet another mess we leave for our progeny.

Your analysis of PV works only if PV generation and demand are constant.  They are far from it and you are woefully wrong.  I’m done on that one – you are on your own.

On the three points:

1) Renewable energy solutions are not dreams they are a reality and in many situations they have reached parity with new conventional power sources.  I do not see Germany as a relevant indicator of where things stand globally.

2) My point is there are numerous roles for storage in grid management.  The dominant technology (PSH) was developed in the 1890s, long before renewables became a sparkle in anyone’s eye and presently account for 99% of global storage capacity. 

3) You are correct, present large-scale storage technologies are expensive.  What has that to do with the increased penetration of renewables?  If anything, that growing market will allow economies of scale.  But the point is, conventional power will likely be making greater use of it.

Roy Wagner's picture
Roy Wagner on August 9, 2013

I have read and reread your posts Schalke,

I think you paint an unnescassrilly grim picture of renewable enrgy’s future and a far to optomistic one for FF generate electricity especially Coal.

You ignore improvements in the latest designs of NG power plants that can ramp up or down much more quickly or run at 20% of load more efficiently.

It seems very strange to me that your promoting Carbon Sequestration and Storage CSS which has a dubious likeyhood of ever being implimented.

You would get 0% of the energy used to store or capture CO2 back whilst having to continuously build more storage capacity.

If it is will likely be far more expensive to deploy on the scale needed than Electricity Storage options.

Which would cost a similar amount to deploy and can return 70% to 95% of the energy stored back when needed 1000’s of times.

Electricity Storage for which FERC has just announced A set of new rules requiring Utilities to put this in place and allow third Party operators to participate in the Voltage Conditioning and Distributed storage market.

In Germany Coal is replacing NG plants because of the high price of Gas, Whilst here in the US the opposite is true.

Similarly Solar is more economically viable in some locations Wind in others.

You make no mention of Hydro electricity’s role as renewable storage resource.

Concentrated Solar with heat storage ,Geothermal Tidal or Wave all of which have the ability to provide a much more consistent and predictable renewable energy supply.

When these sources are more fuuly developed and deployed in the future.

 

 

Schalk Cloete's picture
Schalk Cloete on August 10, 2013

Thanks for taking the time to read my posts, Roy.

My views on this topic come from a large amount of research into the different sources of clean energy being pursued today. As a young research scientist with a 40-year career ahead of him, I am keen to invest my efforts in the area which can contribute most effectively to solving the global energy & climate crisis. This viewpoint grants me complete objectivity and, thus far, I have not seen any arguments which have caused me to reconsider my focus on CCS.

My basic argument for CCS is that the world will almost certainly delay climate change action for as long as possible and CCS is the best possible retroactive CO2 abatement mechanism. As an example, the IEA found that all CO2 emissions necessary for passing 450 ppm will be locked in by 2017, implying that, even if we do not build a single piece of fossil fuelled infrastructure after 2017, we will still reach 450 ppm. Unfortunately, we will most probably still be building fossil fuel infrastructure by the end of this century, implying that we need a way to access these locked in emissions. CCS retrofits is the best way in which to do this. 

The most likely market mechanism for this is a much delayed and fairly desperate carbon tax starting a decade or two from now when climate change starts to have direct and clearly attributable effects on the lives of a substantial portion of the electorate of the major emitters. In this scenario, it will become much more economical to capture CO2 than to emit it and CCS will experience a rapid rollout. 

I don’t quite get your point about the storage returning energy while CCS does not. Cycling intermittent renewables through batteries will lose 10-20% of the energy (similar to second generation CCS), cycling through pumped hydro storage will lose about 25% of the energy and cycling through chemical storage will lose more than half the energy. 

I am well aware of the current merits of NG in the US, but, regardless of the flexibility of the dispatchable power supply, energy storage will still be needed when intermittent renewables exceed about 20% penetration and start to supply more than the entire demand during peak production. 

My focus on coal is centred on the developing world. 1200 GW of coal stations are currently being planned around the world – 76% of this in China and India. For perspective, 1200 GW of coal power at a capacity factor of 80% will generate 150 times the 55.7 TWh of solar power generated in 2011. 

I don’t dispute the fact that we will have to decarbonize most of the global economy during this century and that the future lies with renewables and fourth generation nuclear, but I think that CCS will have to play a major role in giving us the opportunity to actually make this long-term transition happen. 

Roy Wagner's picture
Roy Wagner on August 10, 2013

Dear Schalk,

                     The Point about storing CO2 I will endevor to explain again.

To Store CO2 one of the methods proposed is in underground Salt Domes Disused Mines or abandoned Oil and Gas Wells. These of course could develop leaks allowing the CO2 to escape.

Similar issues arise with using CO2 to force more Oil out of unproductive wells.

So they would have to be monitored and methods developed to re seal them as quickly as possible.

This kind of storage is exactly the same method used for CAES compressed air energy storage so for almost the same or similar infrastructure cost you can store CO2 once with no energy input ever returned.

Or Store surplus renewable energy as Compressed air Thousands of times over 30 years.

With efficiencies from 70% to 90%     Which makes more economic sense?

Other methods for CO2 Storage involve encapsulating it in rock or other solid medium which would then have to be transported and stored somewhere? at what cost and where? NIMBYS are everywhere

The scariest method I have heard of so far is injection in a liquid form deep in the Ocean below an inversion layer where it would remain unless disturbed by some Natural event.

What marvelous methods are you aware of that can economically provide CSS with no risk of it returning to the atmosphere at some time in the near future?

Of course you are aware your also sequestering Oxygen too which we need to survive.

Clayton Handleman's picture
Clayton Handleman on January 15, 2014

$600 / kwhr, for storage?  I don’t think we are going to build 100GW of solar next week.  You are using a reference for today’s Li-ion battery prices, a relatively immature technology with lots of room to run on its experience curve.  Realistically, for the ‘change the world’ / ‘solve climate change’ scenarios we are talking a decade if we listen to wildly optimistic folks and pessimists are suggesting that we will still be building coal plants at century’s end.  So lets look at a very aggressive 2 – 3 decade timeline. 

Two reputable analyst firms are saying ~$150 / kwhr within a decade for Li-ion.  And I have not heard anyone suggesting that there is some sort of fundamental limit in cost reduction there.  But for the sake of discussion lets start by assuming that it plateaus there.  Now if people are putting these in their cars, we are at 1/4 of the cost you suggested above.  And lets say we don’t do V2G.  But when the car’s range drops to about 70% it is time to replace the battery.  Rather than recycling it immediately, lets repurpose it for grid storage.  After all, the car needs high energy density but bulk grid storage doesn’t.  The battery still has lots of cycles left after it is not useful for transportation.  I am thinking that the car owner would be happy to lease their spent battery for $50 / kwhr or sell it, some sort of mutually agreable exchange is surely doable.  You started with $600 / kwhr, so now we are getting to that factor of 10 you were talking about with a pretty high probability scenario.  And that is in only one decade.  And that assumes that none of the other battery technologies, that are being aggressivly pursued, pan out.  So seems like $50 / kwhr is a pretty reasonable conservative assumption or floor for available storage by time we are looking at high penetration renewables.  Now look out another 10 years and how much better can we do.   

Using the emerging experience curves for Li-ion, assuming that the EV battery slope flattens out to that for the consumer Li-ion batteries as it approaches it, and using the Navigant and McKinsey numbers to tune things a bit, I come up with $100 / kwhr by 2029 and $50 / kwhr by 2034 for new EV batteries.  By time they are repurposed for stationary storage, cost goes really low.  Other assumptions, 30% CAGR for EVs and average battery size = 100 kwhr after a couple of additional cumulative doublings.  And, again, this all assumes that nothing better comes along. 

But it is hard to imagine that, with the immense growth in demand for batteries, that something else won’t come along and make storage even less expensive.   I think that using $600 in your assumptions for storage is at odds with your intention of objectivity.

 

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