Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. These days I'm retired, and I can't by law give you advice. While I do make mistakes, I try hard to do my analysis thoroughly, and to make sure my data are correct (old habits die hard!) Also, don't ask me why I called it "Volewica". It's too late, now.

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Sunday, February 28, 2016

Yes we can

From this amusing article on flat-footed naysayers

Too often I see and hear idiotic comments asserting that the world can never switch to renewables because, take your pick .... it's too hard  .... renewables are too expensive .... we can't do it ... it's too  big a task ....  renewables are too variable .... what would we do in winter when the sun doesn't shine and the wind don't blow?   And so on and so on.

Many of these nay-sayers then declare that that nuclear is the solution, despite the extraordinary delays and cost overruns  of the Hinkley Point nuclear power station in England.  Even after massive subsidies (worth $120 per MWh!), Hinkley Point  will produce electricity at $150 per MWh (15 cents per kWh), which is more expensive than off-shore wind ($112 per MWh), which is the most expensive wind generation source.  And how do we deal with the toxic by-products of nuclear fission, including plutonium?  The nay-sayers just grumble and mumble and shake their heads.

So what really are their arguments against renewables?  The first is cost. The trouble with that line of argument is that costs of renewables are already cheaper than alternative sources of electricity, and those costs continue to decline inexorably.  The city of Palo Alto  is about to sign a contract for electricity from the Mt Wilsona Solar Project at a price of just $36.76 per MWh, which is just 3.7 cents per kWh.  That includes a 30% tax credit, which means the unsubsidised cost is 5.3 cents a kWh.  Don't forget that fossil fuels are subsidised globally every year to the tune of $450 billion  -- and that's without accounting for deaths and ill health from pollution, the cost of global warming, etc (which are estimated at another $500 billion in the US alone!)

In Chile, a recently signed contract to supply 415 GWh of electricity per annum at just $47.98 per GWh (4.8 cents per kWh) is unsubsidised, so is even cheaper than the Palo Alto contract.   In the link, it is casually mentioned that new contracts have also been signed for wind at 3.7 cents per kWh.  Wind costs have been dropping steadily, just like solar.  5 years ago wind contracts were being signed at 6 cents per kWh.   That's an annual cost decline of 10%.  And even then, that was 2 cents cheaper than coal and about the same as a combined cycle natural gas plant.  And they haven't got any cheaper since then.  So wind and solar are now cheaper than coal and gas and nuclear.  Much cheaper.

When you point this out to the anti-renewables die-hards they immediately counter-attack with the supposed variability of renewables supply, and smugly say "can't provide baseload power", as the ultimate anti-renewables putdown.

I've talked about this before, here and here and here.  It's nonsense, until you reach 70% of generation from renewables.  And no one is there yet, except where they use a lot of hydro (Canada, Uruguay)  Clearly we will need some storage, if only to prevent the lights going out on those rare occasions when the wind isn't blowing and the sun isn't shining and the dams are empty.  One sort of storage is batteries, and their cost too is plummeting, by 15 to 20% a year.  We're not quite there yet: the LCOE* of batteries is still high (21 cents per kWh.)  But there is another sort of storage, the kind used in concentrated solar power (CSP).  In that kind of solar power, mirrors reflect sunlight and also the sun's warmth (infra red -- unlike solar panels which just work off visible light) onto a central tower.  The heat is used to melt salt, which can then be stored (see full report):

Crescent Dunes technology is completely different. Molten salt circulates throughout an integrated energy storage system. The salt “cools” to 500 degrees F (hardly cool: this is twice the boiling point of water) before being circulated back through the receiver again to be solar heated to 1,050°F again. 
Storage in molten salt can stay hot for months, according to Smith. Normally, it isn’t left there, of course, but cycled daily as needed, tapped by night for generating electricity, and replenished by day by the sun. 
Due to its innovative molten salt solar heat storage, SolarReserve’s US-designed technology can generate dispatchable solar electricity 24 hours a day, or on demand when a utility requests it during peak demand periods. 

Note this:  "The molten salt can stay hot for months" and "can generate dispatchable electricity 24 hours a day or on demand".   What was that about "baseload power" again?

So what does CSP cost?  This is brand new technology.  The Crescent Dunes facility mentioned above is producing at $135 per MWh, subsidised.  Costs are falling fast, in a typical learning curve process.  The 100 MW Redstone plant in South Africa will produce power at $120 per MWh, unsubsidised.  In Chile, projections are for costs below $100 per MWh.  This is still above the costs for coal or gas, but with solar, wind and CSP combined, costs are lower.  Let's say we have 1/3 wind, 1/3 solar and 1/3 CSP, the combined cost is 6,2 cents per kWh.  Cheap.  And stable.  And not using fossil fuels.

Exhausted, the nay-sayers then retreat to the final argument.  It's too big a task, they moan, rocking backwards and forwards.  Well, yeah.  It is big,  But how about this:

  • Germany is already at 36% renewables.  The former East Germany is at 50%. (wind and rooftop solar)
  • Denmark is at 40% (wind)
  • South Australia is at 50%. (Wind and solar)
  • It took them just 15 years to get there.
  • We built the existing generators and grid back in the 50s and 60s and 70s and no one said it was too hard when we did it.  We just went out and did it.  Duh.
  • We will in any case have to replace power stations as they age.  In many developed countries, the average age of the generating fleet is 30 years plus (good examples: the US and Oz) with an expected maximum life of 45 to 50 years
  • No one says we have to switch to renewables overnight.  But if they cost less, and global warming is getting scarier by the month, why shouldn't we get a jizz on and do it?
We will have to change some things.  

We will need HVDC lines so CSP power plants in deserts for example  can provide power to cities in less sunny climatic zones.  CSP in say Spain and North Africa,  providing power to northern Europe when the wind stops.  CSP in Turkey and Syria (should peace ever come to that poor country) powering up Eastern Europe.  CSP in the Ozzie outback keeping lights on at night in Sydney and Melbourne.  I've mentioned CSP but it could also be wind farms in the "windy tunnel" in the US, delivering power via HVDC lines to the eastern seaboard.  

We will need a different regulatory environment because a lot of the solar will prolly come from rooftop installations, and at the moment is most likely overpaid in the US and underpaid here in Oz.  And batteries will still play a part in grid stabilisation and the electrification of transport.

But most of all we will need to relinquish old ways of thinking.  It can be done.  And it must be done, if we are to avoid catastrophic global warming.  The nay-sayers are simply wrong.

*LCOE=levelised cost of electricity.

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