The J.P. Morgan Annual Energy Paper for 2015 is an excellent short resource “A Brave New World: Deep De-Carbonization of Electricity Grids”. They have packed a lot of data and analysis into 28 pages. The focus is Energiewende and Caliwende (the California version of Germany’s Energiewende). The high quality of this report is due at least in part to guidance from Armond Cohen, Executive Director and co-founder of the Clean Air Task Force. And of course Vaclav Smil. Chief Investment Officer Michael Cembalest closes with this:
Deep de-carbonization of the electricity grid via renewable energy and without nuclear power can be done, but we should not underestimate the cost or speed of doing so in many parts of the world. At the minimum, the costs involved suggest that efforts to solve the nuclear cost-safety puzzle could yield large dividends in a post-carbon world. Such is the belief of the scientists, academics and environmentalists who still see a substantial role for nuclear power in the future (see Appendix V). See you next year.
The report gives enough detail that you can see why Germany’s nuclear ban leads to a shocking cost of avoidance of $300. I’ve circled in green the baseline Energiewende result estimated to cost $300/mt CO2. J.P. Morgan modeled a balanced deep decarbonization strategy, which using 35% nuclear, costs only $84/mt CO2.Note that the $300 is a bare-bones estimate – none of the cost of the additional transmission infrastructure required by high-renewables is included in the analysis. Even so the baseline Energiewende plan will double already second-highest in Europe current costs from $108 to $203/MWhr.
What about Caliwende? The cost to consumers is lower than for Energiewende but the CO2 avoidance cost of the baseline plan is $477/mt CO2 — even worse than Germany because California has already done more CO2 avoidance. Happily, if California implemented a balanced plan (35% nuclear) that drops the CO2 avoidance cost to $174/mt CO2. That is still unnecessarily expensive because of the high-renewables ideology.
Well, at least both plans have closed a lot of those nasty fossil plants, right? Actually not. Because of the intermittency, at least all of the current thermal generation is required to cover the demand gaps. These charts show just how big those gaps are. This is the largest single source of the high CO2 avoidance costs. All that mostly-idle thermal capacity is still required by the ideology of high-renewables. That means a very small capacity factor so the capital has to be amortized over too-few generation hours.
What does it all mean? Back to Michael Cembalest (his emphasis):
- Intermittency greatly reduces the importance of wind and solar levelized cost when assessing high- renewable grids. The cost of backup thermal capacity and storage is an inextricable part of any analysis of a high renewable system. Academic and industry research has reached similar conclusions. A 2015 paper from the Potsdam Institute for Climate Impact Research notes that integration costs in systems with high levels of renewable energy can be up to 50% of generation costs, and that the largest single factor is the additional cost of backup thermal power.
- Energy storage reduces CO2 emissions but its cost, utilization rate and energy loss must be accounted for. Even when assuming continued learning curves, storage adds to net system cost
- Even in California, there are uncertainties to this Brave New World: California’s Independent System Operator gave a presentation in 2014 highlighting how the impacts from increasing renewable energy on the grid are still not fully understood. They mentioned voltage fluctuation due to upward/ downward ramps, high voltage issues on distribution circuits, voltage/power regulation control issues, the greater number of operations and increased maintenance on voltage control, etc.
I appreciated the final paragraphs which concisely dispense with some of the common tooth-fairy stories. There are also appendices backing up these points:
We often hear people referring to other what-ifs regarding high-renewable grids. Many rely on highly uncertain assumptions and conjecture, while others neglect related costs.
- Could cross-border integration of high-renewable grids reduce the need for backup power and its corresponding cost? That’s the next wave of renewable energy research. It would cost money to build these interconnections, but in theory, if wind and solar patterns are more divergent the larger the geographic area covered, the problem of renewable intermittency could simply be diversified away. Unfortunately, new research on wind suggests that this theory has major limitations. This remains a premise best proven empirically rather than by assumption.
- What about over-building renewable energy and storage so that the need for and cost of backup power is eliminated? The good news: it’s an emission-less system. The problem is that incremental solar, wind and energy storage costs would dwarf foregone costs of backup thermal power. Our models determined that a system in California with enough wind, solar and storage to eliminate backup power entirely would cost $280-$600 per MWh, which is 2.5x – 5.0x more expensive than Caliwende (depending on assumed storage system properties and costs). Bottom line: a renewable energy storage version of the Temple Granaries looks to be prohibitively expensive.
- Why not draw on electricity stored in electric car batteries (“car-to-grid”) to reduce storage costs? Another theoretical possibility that’s only worth discussing when we can determine the penetration rate of plug-in vehicles, the participation rate of drivers willing to share their battery with the grid and how much of it they would share, the cost of interconnections, and the cost of incentives required by drivers to have their expensive car batteries cycled more frequently. See Appendix VII.
- What about “demand management”? If demand could (somehow) be reconfigured to match up with variable renewable generation, unused surpluses and demand gaps would be smaller and system costs could decline. However, demand management is meant to deal with intraday supply-demand issues, not intermittency issues which span weeks and months. See Appendix VIII.
Cyril R. sums up German energy policy in a three sentence comment on John Morgan’s wonderful Catch-22 of Energy Storage:
Capacity factor of solar PV in Germany is 10%. Wind in Germany is around 16%.
Electricity demand in Germany peaks in winter, when the capacity factor of solar ranges from 0% to 3%.
These energy sources aren’t there most of the time, and certainly not when they’re needed most which is in the evening and winter.
Michael Liebreich, Chairman of the Advisory Board – Bloomberg New Energy Finance on the contradictory energy policy of Germany’s Energiewende. Following is a short excerpt from a long VIP comment on the global lack of progress on decarbonization:
While Japan’s nuclear woes result from the Fukushima natural disaster, Germany’s are wholly self-inflicted. In 2011 Angela Merkel reversed her former determination to prolong the life of Germany’s nuclear fleet, quickly shutting eight of the country’s 17 reactors and returning to the previous policy of full nuclear phase-out by 2022. This left fossil generation’s contribution to the German electricity system largely unchanged until at least 2020, and possibly 2025. Combined with the collapse of the EU-ETS carbon price and a flood of cheap coal being squeezed out of the US by the glut of shale gas, and the result is Germany burning more coal and generating higher emissions.
Anyone who promotes the Energiewende as Germany’s solution to climate change needs to understand that it is first being used to retire Germany’s zero-carbon nuclear fleet, and only when that has been completed will it start to squeeze fossil-based power off the grid. Germany has given nuclear retirement a higher priority than climate action, pure and simple.
To anyone not ideologically anti-nuclear power, this is a manifestly wrong-headed policy. The arguments about nuclear waste and proliferation hardly apply to existing nuclear power stations. The problems are real, but they are not worsened by continuing operation. Nor are they mitigated by early shut-down. They may be powerful arguments against building nuclear capacity in new countries, but are poor arguments in the case of Germany or Switzerland.
The fact is, as I showed in the statistics I presented in my BNEF Summit keynote in April 2012, nuclear power is far safer than coal-fired power generation. Deaths per TWh are around 15 times lower for nuclear power than for coal-fired power in the developed world, and 300 times safer than coal-fired power in China. And this is including the impact of Three Mile Island, Sellafield, Chernobyl and Fukushima, but before taking into account the appalling toll inflicted on the wider population by coal-driven air pollution and smog. The tsunami that hit Fukushima killed nearly 16,000 people; however, so far no one has been shown to have lost their life as a result of the nuclear disaster.
So much for those countries that have – illogically and to the detriment of the climate – decided to shut their nuclear fleet prematurely. What about the countries that are pushing ahead and replacing aging nuclear plants? (…snip…)
Graphic credit Bjorn Lomborg
The captioned title is from Bjorn Lomborg, who is one of the few energy policy thinkers who is paying close attention to the impacts of policy options on energy poverty – especially of the bottom 1.6 billion. But also of the developed-world poor who are being shoved into this miserable state by their misguided government policies. Germany is a standout for the failing Energiewende.
So how is it going over there in Germany? Poorly says Lomborg:
The German government recently said that 6.9 million households live in energy poverty, defined as spending more than 10 per cent of their income on energy. This is partly a result of Germany’s Energiewende, the country’s turn away from nuclear and towards renewable energies.
This year alone, German consumers are expected to subsidize green energy to the tune of a whopping €23.6 billion ($33 billion) on top of their normal electricity bills for the so-called “renewable energies reallocation charge.”
Since 2008, this charge has increasingly reallocated money from the poor to the rich, e.g. from poor tenants in the Ruhr area to wealthy homeowners in Bavaria who put solar panels on their roofs. The charge has skyrocketed from 1.15 ct/kWh in 2008 to 6.24 ct/kWh this year. Since then, another 1.4 million households slipped into energy poverty.
German consumers have already paid €109 billion for renewable energies since 2000, with greater costs looming on the horizon. Between 2000 and 2013, real German electricity prices for households have increased 80%. About one quarter of household electricity costs now stem directly from renewable energy.
That’s just a taste, please get over to Bjorn’s original page for a careful read. Next I recommend you allocate just a few minutes to the two splendid short videos Bjorn has produced. I discovered these on the recommendation of Bill Gates (no, not personal recommendations, just that I follow Bill’s blog). He hosts these Lomborg videos at The Gates Notes Two Videos That Illuminate Energy Poverty.
Image credit Bjorn Lomborg
The German energy industry association, BDEW, says that 43 per cent or 32 of the power plants planned for construction in Germany may never come to fruition, due to lack of economic viability.
The association’s managing director said: “Unless there is clarity very soon about the future structure of the market and a relevant capacity market model, the situation for power stations will result in a serious problem for as an industrial location.”
The association says a combination of a lack of clarity about the future structure of energy markets and the lack of profitability for coal- and gas-fired power stations because of competing energy supplies from subsidised renewable power had severely undermined investor confidence.
BDEW said that a year ago, it had only questioned the economic viability of 22 long-term projects and warned that the situation had regressed to the point that unless action was taken to encourage the construction of more power stations to ensure stable supply, energy security issues were inevitable.
The report from BDEW was issued on the first day of the Hanover Trade Fair, when the body traditionally prescribes its solutions for a more effective German energy policy.
It warned that if current plant closure plans were added up with cancellations of new construction, some 13,600 MW of so-called secure load, that runs 24 hours, would be shut by 2022.
Source Power Engineering 4 April 2014 by Diarmaid Williams.
Vaclav Smil on the fatally flawed Energiewende:
….Anybody aware of Germany’s technical prowess must ask: why has the nation that helped to pioneer the age of electricity (above all thanks to the engineering genius of Werner von Siemens and organizational achievements of Emil Rathenau) rushed into the difficulties that were easy to envision — into generating those highly fluctuating electricity flows? These flows create havoc with the grids in neighboring countries by suddenly overloading their transmission capacity, and they undermine economic viability of traditional utilities due to low returns realized on the repeatedly interrupted, but still necessary, fossil fuel-based generation.
And the impacts go far beyond the fate of large utilities. Germany now has the most expensive electricity in Europe. In September 2013, Der Spiegel, the country’s premier weekly, gave the headline “How electricity became a luxury good” to its report on Germany’s new energy poverty. The levelized cost of German photovoltaic electricity is easily four times that of coal-based generation, even as the subsidies for renewables continue to rise: they reached €16 billion in 2013. And due to the high cost of imported natural gas (about three times the U.S. price), German thermal power plants fill the demand with the cheapest alternatives, such as domestically produced lignite and, increasingly, imported inexpensive U.S. coal. So far, die Energiewende has not resulted in lower carbon dioxide emissions, one of its key goals.