A solar farm with battery storage in Gannawarra, Australia (click here for the article).
In my opinion, one of the most useful tools for understanding what it will take to make the necessary transition from carbon-intensive to non-emitting fuels is the annual report of the levelized cost of energy issued by the financial firm Lazard. I discussed the 2020 version of the report in a previous blog post, and now I’m going to talk about the report that was issued in October 2021. There weren’t any dramatic changes in cost this past year, which I suppose can be looked at as glass-half-full given all the supply chain issues caused by the pandemic. New utility scale solar ($28-41/MWh) and wind ($26-50/MWh, with a drop from $83 to $80/MWh for offshore) continue to be very cost competitive compared to new gas ($45-74/MWh) and especially to new coal ($65-152/MWh).
However, the very substantial drop in the cost of wind and solar over the last decade is leveling off (see the figure for “Levelized Cost of Enrgy Comparison — Historical Renewable Energy Declines”). In addition, the caveat of intermittency remains with both solar and wind. That is, they can’t produce a steady stream of energy over all times of the day. So in order to go to a fully renewable energy sector, some amount of storage in the form of batteries will be needed. And the cost of renewables plus battery storage still remains remains fairly high, ranging from $85-158/MWh for a solar farm that can generate 50 MW of power while storing 200 MWh. This is a lot higher than the cost of renewables without storage, but still cheaper in general than new nuclear ($131-204/MWh), the only source of power that is both non-emitting and non-intermittent. Nuclear can generate energy at a cost of only $29/MWh once the construction of the plant is paid off, though. This means that it makes good economic and environmental sense to keep the existing plants going if they are operating well and do not require major renovations. However, the nuclear industry still has to show that new plants can produce clean energy more cheaply than renewables even with storage taken into account if it wishes to remain relevant in the long term. Right now, the burden of proof is on them.
Some storage is necessary and inevitable, but barring a major breakthrough in battery costs, a modernized grid that readily transports electricity across the country or continent in order to minimize the total amount of needed storage would likely save a lot of money compared to more localized generation and storage. A system designed to never produce too little energy would sometimes produce more electricity than it can store, however. This raises the question of what to do with the excess energy. On a small scale, the island of Orkney to the north of Scotland uses excess renewable energy to electrolyze water into hydrogen, a clean fuel. That process shows considerable long-term promise, but hydrogen is an alternative fuel with many factors to consider. It deserves at least one blog post on its own, and hopefully I’ll get to that next.
