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Thursday, January 26, 2017

Variability worries

The Australian government, ostensibly concerned about energy security, is running with a narrative that renewables are too variable for safety of the grid, and so we should have more coal.  Yes, really.

Some thoughts.

Australia has a RET (renewable energy target) of 23.5%.  Some politicians and commentators on the Right (misleadingly called "Liberals" in Australia) want to get rid of that.  Many of them are in the pocket with, or rather, fill their pockets with coal money.  They still believe that coal will save the world.  We know that is piffle: new coal is more expensive, in some places twice as expensive as renewables. But, we have to have some storage to cover the times "when the wind isn't blowing and the sun isn't shining."   How much?   The CSIRO estimates that we will need just half a day's storage to back up the grid if power sources are diversified (wind as well as solar)   Already utility-scale solar plus 10 hours of storage is cheaper than coal, according to Lazard.  Battery costs have plunged: halved just over the last year.  And they're likely to decline further (Tesla predicts "significant" price falls as the Gigafactory builds out) The technical solutions to renewables supply variability are at hand, right now, and will only get cheaper over time.

So let's look at an interesting segment of the supply and demand for electricity--the 25% of demand (and potentially supply) represented by households and small businesses.  Already the Tesla Powerwall 2 is close to providing one day's power for an average Ozzie house (13.5 kWh vs an average daily demand of 16kWh.  Over 10 years (and both battery and panels will last much longer than that), the cost of a Powerwall (A$10,500) plus 5 kW of panels ($4500) works out at about 30 cents/kWh, which is only a little above the cost to households of electricity from the grid. I pay, for example, 28 cents/kWh (including GST).  Another year and the battery/panels combo will be perhaps 30% cheaper, which takes the cost down to 21 cents/kWh.  And households will start to switch.

Will they remain on grid?  According to ConEd, 32% of generating assets are used for just 6% of the time.  This is costly: an extra 50% capacity just for a few occasions.  And it's even more expensive for an individual household or establishment to go off grid, because the grid is averaged out, which reduces the extremes.  So it would be tempting for utilities to say, nah, they'll never do it,   But that would be to underestimate our anger at the steady rise in electricity prices.   On the other hand, utilities would be wise to offer households with storage a good deal, because such prosumers could help mitigate extreme demand.  For example, the utilities could offer lower rates if they can reduce power to houses with batteries when demand spikes.  This would be substantially cheaper than the vast extra capacity needed for 1% or 2% or 5% events.

Widespread behind-the-meter batteries at households and small businesses will stabilise the grid, if the utilities are sensible (and less greedy). And that's before we even start talking about the power stored in electric cars--a week's worth. Within 10 or 15 years, 100% of car and lorry and bus sales will be electric.  Asking them to fill their batteries when demand is low and not to fill them when demand is high, for an appropriate fee reduction, would make the grid much more stable.  And, of course, it goes without saying that there will be utility scale batteries too.

Truly, there is no need to worry about the variability of renewables. By the time we get from 23% to 100% in 20 years time, the battery infrastructure will be in place. We don't need coal for energy security, whatever the Government says.

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