Our Renewable Future part 1: clearing “myth”conceptions

With Obama talking the talk on climate action in his State of the Union address yesterday, now seems a good time to start compiling a planned set of blog entries about renewable energy. Many many others have done so online already (as evidenced by the fact I’m linking to them!) but I’d like to communicate my cautiously nascent optimism in my own words.

I’m growingly confident that I’ll live to see renewables dominate global electricity production, as dominantly as oil dominates global transport today, with immense and commensurate environmental benefits.

That moment won’t come a moment too soon, either, given the calamities that we’ve “locked in” for our children — the last time CO2 levels were this high (about 396 ppm in Jan 2013), sea levels were 25 metres higher than they are today.  The only reason sea levels remain near pre-industrial levels is that the earth’s systems haven’t had time to equilibrate, yet.  To use a baseball analogy, we’re still in the first inning of seeing the effects of our emissions.

Now, when I talk about renewables, I mainly mean wind and solar, which tower over their cleantech cousins like redwoods over a meadow.  (While hydroelectric is renewable and dwarfs these two for now, it doesn’t get the sexy “cleantech” label, being a mature technology.)

But before explaining my new-found confidence — certainty, even — in “Our Renewable Future”, I wanted to address a few major myths, objections and misconceptions about renewable energy — the blogging equivalent of clearing the underbrush, I suppose.  :)

I’ll do so using a Q & A format based on the way John Cook at Skeptical Science addresses common myths about climate change.

Q1: Since renewables are intermittent, don’t we need to build more natural gas “peaker” plants?

A1.  The deficiencies of today’s grid mean we already have a large fleet of peaker plants.  Indeed, German utilities are expected to shut down some of their peaker units, in the coming years.

Long answer:

All power generators are intermittent; even coal and nuclear plants need maintenance and repairs.  Some coal and nuclear plants are even run as peakers!  Utilities measure intermittency in terms of a “capacity factor”, which is equal to the amount of energy produced in a year, divided by the amount of energy which would have been produced if the generator was running 24/7/365. Typical capacity factors include:
– solar: 10-20%
– wind: 20-40%
– coal in the US: 65%       (coal in the UK: 40%)
– nuclear in the US: up to 90%    (nuclear in the UK: 65%)

This Bloomberg article explains that German utilities may shut down 25% of their natural gas peaker capacity by 2015: equivalent to 6.4 GW of power.  (German electricity consumption over a year works out to an average continuous consumption of about 70 GW — somewhat higher during the day, and somewhat lower at night.)  Some new natural gas plants are planned — most likely newer, more-efficient units to replace older less-efficient ones — but these only come to 4 GW.

While there may be other contributing factors, in the coming years Germany will be ramping up their renewable energy production and simultaneously cutting back on natural gas peaker plants.  (It’s also true that Germany has 10 GW of coal under construction.  These were likely planned and permitted before anyone realized how quickly renewables would scale up.)

Two quotations from the Bloomberg article stand out:

“As much as 6,400 megawatts, or 25 percent of the nation’s gas-plant capacity, will shut in the five years through 2015, according to Deutsche Bank AG.”

“About 4,400 megawatts of new gas-fired capacity may start in Germany by 2015, leaving a net closure of 2,000 megawatts, according to Deutsche Bank’s Lewis.”

Q2.  Don’t renewables make electricity more expensive?

A2.   While residential electricity rates are regulated, renewables have reduced the open market price of electricity wherever they’ve been introduced.  In Germany, they are even making some natural gas peakers uneconomic.

Long answer:

The feed-in tariffs for renewables cost Germans 4-5 cents/kWh, or roughly 5 Euros a month.  [Chris Turner, The Leap, p 139, quotes 3 Euros per month.  To be on the safe side, since the book is a couple years old, I rounded it up a bit.]

The tariffs none the less remain popular; a recent poll showed a majority of Germans thought the transition to renewables was proceeding… too slowly.  In addition to the sector creating 300,000 jobs, it’s made tens of thousands of Germans owner-operators of “micro-utilities” — half of Germany’s renewable energy is locally owned.  Now may be a good time to remind everyone of the study showing that money cures “wind turbine syndrome” — people who benefit financially from nearby wind turbines, don’t report negative symptoms…!  Funny how that works.  ;)

Back to electricity costs, it’s important to distinguish two markets: the regulated residential electricity market, and the wholesale electricity market.

Utilities can run their power plants to generate their own power, or buy it on the open market.  At peak usage times, the price of electricity rises.  If it’s high enough, utilities will turn on their spare peaker plants to sell electricity to other utilities who need it.

Solar panels make wholesale electricity cheaper because they generate electricity during peak-usage hours.  The dramatic effect can be seen from these two images of wholesale electricity prices — one from March 2008, and one four years later — from this aptly-named article from the Australian site RENew Economy.  This discussion on HistoryFutureNow makes for bonus reading.

Screen-Shot-2012-03-26-at-12.10.50-PM Screen-Shot-2012-03-26-at-12.09.46-PM

Five years ago, a German utility could have run a natural gas plant about twelve hours a day, selling it to another utility for about 57 Euros/MWh (roughly 8 cents/kWh).  Last March, on a sunny day they would have only averaged 45 Euros/MWh (about 6 cents/kWh).

At these new, lower prices, more utilities find it cheaper to buy the extra electricity they need, than to run their peaker plants.  Since staffing and maintaining peaker plants costs money, if peaker plants don’t run enough of the time… it’s cheaper to shut them down.

Wind has a similar effect, epitomized by the Figure below, which I’ve drawn from here.  (The author, “Jerome a Paris”, maintains an extensive set of wind energy articles.)


Putting one’s economist hat on, it makes sense that intermittent renewables would make electricity cheaper: they sometimes increase electricity supply, at times of high demand.  And increased supply leads to lower prices.  (Germany — the world’s leading exporter — has taken commendable measures to improve their energy efficiency and trim demand.)  And this is exactly what has been happening!

Q3.  Doesn’t Germany pay people to use electricity a few times a year, when the wind blows too much at night?

A3.  Yes.  But bear in mind that coal and nuclear plants already pay hydroelectric utilities to take their electricity, 365 nights a year.

Long answer:

The deficiencies of traditional power plants mean that every night, baseload coal and nuclear plants give money (or at the least, steep discounts) to hydroelectric utilities to take their power.  This benefits traditional power plants, which run smoothest when they operate at a constant, steady rate, 24/7.  It also benefits the hydroelectric utilities, who get to bank the cheque and save their resources.  The very next day, they can generate electricity from that saved water, and export it back to the coal/nuclear utility, at expensive peak-hour rates!

As such, paying people to use electricity simply means that the renewable grid has “caught up” to the inefficiencies of the traditional grid!  ;)  Tech entrepreneurs around the world are working on smart-grid and energy storage technologies, and several technologies are already competing for this lucrative market opportunity.  One or more of them will probably succeed — after all, it’s not as if the fossil fuel sector has a monopoly on innovation (e.g. shale gas extraction)!

In the meanwhile, it is both possible and probable that in the near future, micro-scale battery storage will become as semi-commonplace as rooftop solar panels, in some areas.  One could point to Toyota’s nascent efforts to reuse batteries from early Priuses now at end-of-life for their dealerships — but as with everything else cleantech, it looks like Germany is taking the lead, as it is considering subsidies for residential-scale energy storage.

Cynics might wonder how Germans actually expect to pay for all these subsidies, to which the reply is that, as per the answers above, they’ve proven more than happy to pay the extra few Euros a month.  (The utilities which are facing Schumpeteran “creative destruction” at the hands of new energy technologies, on the other hand, are naturally upset.)

Besides, solar power has already reached grid parity in sunnier southern Germany.  I’ll repeat that for effect: solar power has already reached grid parity in parts of Germany.

Q4.  Don’t renewables make the grid more unstable?

A4.  Not at present: Germany suffers fewer blackouts than France.  This could happen eventually — but only if smart-grid and energy storage innovation stops.  And that won’t happen.

Long answer:

In 2007, Germany’s grid suffered fewer “blackout” minutes than France (19 min vs. 62 minutes) — and in the intervening years, as renewables have ramped up, the grid has gotten more reliable.

The centralized nature of France’s grid works to its disadvantage, because an unplanned shutdown of any of its 59 behemoth nuclear reactors would cause a sudden, large change in the supply-demand balance of its grid.  (This is a slight simplification, as European power grids are interconnected.)

Conversely, the decentralized nature of Germany’s grid works to its advantage — the quasi-random fluctuations of renewables in any location, are smoothed out by the quasi-random fluctuations at thousands of other facilities, spread across the country.  In the earlier link, author Chris Nelder likened it to a chair with 50,000 legs — inherently stable, because so many legs would have to simultaneously break, for it to tip over.  (Again, this is a simplification because Germany of course has centralized power plants.)

That said, it’s true that the German grid is strained — but this has been a timing issue, not a tech issue.  Renewables have expanded so quickly that construction of power lines hasn’t kept pace.  Once this catches up, many of the current issues will likely go away.


Next up: rationales for sunny optimism.  :)

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  • Bruce  On February 13, 2013 at 6:47 pm

    Very interesting! It seems strange to close down 6400 MW and simultaneously add 4400MW in new natural gas capacity. I thought it was because the new plants are more efficient, but the Bloomberg article says it’s because they’re from pre-agreed, committed construction projects for coal and gas plants

    Europe’s natural gas market is very weird. The Bloomberg article describes the natural gas plant shutdowns as being due to “The rising cost of gas linked to oil prices” (March 2012) and it’s because European contracts are priced this way, especially contracts with Russia. So to me this is a story about Europeans being screwed by financial contract problems, even as American natural gas prices have plummeted. Also – significantly – Europe refuses to frack.

    Here in America, the story is 180 degrees opposite – we have tons more natural gas plants because of the plummeting cost of natural gas. We added about 8700MW in 2012. Less than wind, but still growing.

    There’s got to be a great opportunity for LNG terminals and shipping to Europe …

    • EclecticLip  On February 13, 2013 at 9:52 pm

      Hey Bruce,
      Re: natural gas plants, it’s true they’re committed builds; my comment about efficiency mainly reflected that a 2010’s natural gas thermal plant is almost certainly more efficient than the plants likely to be chosen for shut-down (which will be older).
      Re: natural gas prices, I suspect a Europe refuses to frack because, well, apart from the various safety and environmental considerations, there aren’t many out-of-the-way places where you can shove “externalities” like fracking issues, the way you can in the US. For example, North Dakota is bigger than Bangladesh… but has 0.5% as many people.

      Fracking in the US got a huge boost thanks to the “Halliburton Loophole” which exempted fracking from EPA oversight, and the Safe Water Drinking Act. For some strange, strange reason, other countries have been less willing to follow the Americans’ lead!
      Re: natural gas prices being super-low in the US, I’m not sure if that’ll last long enough to make LNG terminals a good investment. Current prices are in the $3/mmBTU range, but new wells need about $9/mmBTU to break-even, so it’s hard to imagine prices getting lower. It also costs something on the order of $10/mmBTU to liquefy and transport the stuff, so I’d imagine the economics of LNG terminals rely on the cost differential staying very big for a very long time… and in the energy markets, that’s a lot to ask for…! :)

  • Lawrence Poole  On September 6, 2013 at 5:57 am

    Dear Eclecticlip,
    Thanks for the info, I will be graduating in the Spring of 2013 with an Associates in Applied Science after changing my major from Radiology to Environmental Science/Renewable & Sustainable Energy. My first intent with this degree was to obtain my bachelors. I contacted a few Universities around the country and each made it clear that the gap between a technical renewable degree is quite different from the more engineer-geared bachelors programs. My future has pretty much vanished. Advice? Thanks.
    Keep up the posts!


  • […] far in four years.  I’ll delve into further detail when I continue my series on our renewable destiny. […]

  • By Electron democracy | Eclectic Lip on July 26, 2013 at 10:36 am

    […] Though on that note, I think fossil-fuel burning utilities are already a risky investment now, because renewables are already eroding their business model in some countries… and since renewables will get dramatically cheaper going forward as production scales up, the phenomenon will inevitably repeat itself around the world.  (Speaking of uploading delays, clearly I’ll have to get to part 2 of this series…) […]

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