“Open-cycle (peak) gas plants are the most common asset used to backstop wind and solar intermittency. However, as the wind and solar capacity increases, the incentive for a private company to invest in such assets declines to the point where the operator of the electric system must provide a subsidy to the construction of gas plants capable of providing electricity on very short notice.”
A number of utilities are trying to become 100% carbon free in their production of electricity by relying on renewable sources of energy.
I am not at all certain what this means. Often the only sources of renewable electricity are wind turbines and solar photovoltaic (PV) panels, and, to a much lesser extent, geothermal. (Iceland is the only country relying on geothermal.)
Both wind and solar energy suffer from what is known as intermittency, because winds have a nasty habit of suddenly dying or springing up, while the sun will disappear behind clouds and provides no power at night. During these periods, sometimes only short bursts of several seconds, there may be too much, too little, or no electricity whatsoever entering the grid.
Three Backup Choices
During those times, it is necessary to have backup resources that are capable of responding almost instantaneously to changes in the availability of electricity from wind and/or solar assets.
There are only three practicable sources of such backup power. The first two are back-up energy-generating devices: open-cycle natural gas (or diesel) turbines and hydroelectric units (hydraulic power). These operate essentially like an automobile: by pushing the gas pedal down, the turbines provide more electricity; by releasing the pedal, less power enters the grid.
The third option is a back-up energy storage device, best thought of as a battery. (There are many other types of backup, such as flywheels and compressed gas, but these are either too small to be employed at a grid level or require special geological formations.)
Gas-fired Infrastructure at Risk
Open-cycle (peak) gas plants are the most common asset used to backstop wind and solar intermittency. However, as the wind and solar capacity increases, the incentive for a private company to invest in such assets declines to the point where the operator of the electric system must provide a subsidy to the construction of gas plants capable of providing electricity on very short notice.
This subsidy is a cost that should be—but usually isn’t—attributed to the intermittent renewable source. Certainly, the ratepayer will eventually have to cover this cost in the form of higher electricity prices.
Of course, it is easy to demonstrate that wind and solar power reduce the wholesale price since the cost of subsidizing backup capacity is a fixed cost that does not show up in price at that level. But it certainly does show up in the long run as capacity subsidies to peak gas need to be covered. Those subsidies are over and above the subsidies governments have paid to wind and solar, which also fall into the lap of ratepayers.
Where Coal is Still King
With the exception of biomass, renewable solar and wind energy are incapable of providing low-cost baseload power. The least costly baseload power comes from coal in important areas of the world, which is why China and India are aggressively expanding their coal-fired generating capacity.
Yes, these countries are leaders in the provision of wind and solar energy, much of which has been funded by western countries through Kyoto’s Clean Development Mechanism (whereby rich countries have been able to claim carbon offset credits for meeting Kyoto Protocol targets). But wind and solar are unreliable, while coal is not.
The biggest problems facing China, for example, are ensuring continued economic growth, which requires low-cost, reliable power, and environmental improvement, particularly in air quality. Such improvement comes from more efficient, cleaner-burning coal plants that have ‘scrubbers’ in their smokestacks that can remove almost all of the pollutants but two: water vapour and CO2, neither of which has a negative effect on air quality.
Given that a grid operator, whether in China or the U.S., must have a source of reliable, baseload power, it has to have one of the following in its system: coal, combined-cycle natural gas turbines (where heat lost through the stack in a peak gas plant is used to heat a boiler much as in a coal plant), large hydroelectric dams and reservoirs, or nuclear power.
Otherwise the operator must import electricity from another grid. Society now eschews all these sources of power: Coal and gas are out of favor because they emit CO2. Hydro reservoirs are opposed by environmentalists. And, of course, nuclear energy is the greatest taboo!
It would appear that biomass burning is the only environmentally friendly alternative to the traditional sources of power. It is considered carbon neutral, at least according to many countries’ legislation, but my graduate students and I have shown that biomass is worse than even coal. It simply takes too long to recover the CO2 debt that biomass creates relative to the fossil fuel.
If climate change is an urgent matter, environmentalists need to redo their math.
The Battery Option
Finally, there is the battery. Excess wind and solar energy can be stored in a battery to be used when required as a backstop to renewable intermittency.
Our research indicates that the size of battery required to function in this capacity has to be humongous. Tesla installed a battery to backstop wind energy in Australia. It has a rated capacity of 100 MW of power (what can be delivered at any given time) and 129 MW of energy (total energy stored).
That is, for a grid that might have a baseload of, say, 8000 MW, the Australian battery would be able to supply only 1.25 percent of the needed power, and for only about 78 minutes. This ‘huge’ battery (as it was described) would be incapable of preventing a blackout if the system had no fossil fuel generators, large hydro, or nuclear capacity that exceeded 8000 MW.
It is true that the cost of building wind and solar capacity has gone down and that it is competitive with that of coal and gas, and much more competitive than nuclear power is in the West. The cost of nuclear power in China, for example, is much lower because engineers there are taking advantage of learning economies of scale as more plants are built, and because costs are not inflated by environmental regulations based on unrealistic fears about safety.
As to low reported costs of renewables, these ignore the indirect cost that solar and wind impose upon other, more reliable assets in the system. One only needs to look at what has happened in Germany and other countries that rely on increasing amounts of solar and wind power (while abandoning nuclear energy and building new coal capacity) to determine the futility of trying to become 100% carbon neutral.
Studies find that the cost of electricity increases as the penetration of wind and solar into the system increase. And there is often little benefit in terms of reduced CO2 emissions. The latest data on the German grid indicate that total power produced by German power plants exceeds what is consumed domestically by what is approximately produced by solar and wind.
That difference often has to be exported at low prices, thereby further increasing the cost to the entire system. One can only conclude that electricity costs will rise as the electric system operator seeks to rely more on renewable energy from wind and solar.
G. Cornelis van Kooten, Ph.D., is Professor of Economics and Research Chair in Environmental Studies and Climate at the University of Victoria, BC, Canada, author of Climate Change, Climate Science and Economics: Prospects for an Alternative Energy Future, and a Senior Fellow of The Cornwall Alliance for the Stewardship of Creation and of the Fraser Institute.