One of the biggest obstacles that renewable energy needs to overcome, in order to provide the lion’s share of the world’s electricity needs, is that it delivers power intermittently. Solar and wind do not generally provide maximum power at the times that power is needed most, nor can they be counted on to provide power steadily throughout the course of a full day. And yet the share of renewables in the energy market is growing, largely to this point for economic reasons. The most recent report on the levelized cost of energy by the investment banking firm Lazard has the price of new utility-scale solar ranging from $36-46 per megawatt-hour (MWh) of energy produced, while onshore wind varies from $26-56 per MWh. Compare this to the $41-74 per MWh for new natural gas plants, and especially the $60-$143 per MWh for new coal, and the appeal of renewables becomes obvious even before taking environmental factors into account. According to a recent report published by the Federal Energy Regulatory Commission, the combined capacity of renewables (including hydroelectric, biomass, and geothermal) eclipsed that of coal in this country for the first time in April 2019. Solar and wind do not yet control a big share of the energy market. But that will change, perhaps sooner than you think, if the cost of wind and utility-scale solar continue to trend downward. Plus, transitioning to a clean energy economy will need to be done with more urgency if the United States and the other nations of the world wish to meet their commitments to the Paris Agreement — assuming that those commitments are even sufficient to stop the effects of global warming from causing significant damage and upheaval on a global scale.
There are basically three ways to address the intermittency issue if the goal is to reduce carbon dioxide emissions in the power generation sector. One option is to maintain a significant supply of natural gas to run during times that solar and wind are not generating sufficient power. But even though natural gas is relatively cheap and emits about half as much carbon dioxide per energy released than coal does, it is not likely that the Paris goals can be reached if emissions in the electricity sector remain substantial. (Keep in mind that clean transportation presently appears to be a more distant objective that clean electrical power is.) Another possibility is the continued use of nuclear power, including the construction of new nuclear plants. Nuclear power does not produce greenhouse emissions, but it is beset by economic issues — according to Lazard, the cost of a new nuclear plants would range from $112-189 per MWh. Ironically, nuclear plants are actually the cheapest type of power plant to operate once the cost of construction has been fully accounted for (only $28 per MWh, compared to $36 per MWh for coal), which means the bulk of their cost comes from their construction. According to a recent report by the Union of Concerned Scientists, a lot of existing nuclear power plants struggle to achieve cost-competitiveness largely because the companies who operate them are still paying off the construction cost. The third option is to have renewables produce excess energy at the times of maximum power generation, and then store this excess in batteries. This option often gets downplayed because it's still fairly expensive; a Bloomberg report from this spring set the levelized cost of battery storage at $189 per MWh in the spring of 2019. But that price is 35% lower than it was in the spring of 2018, and there are markets right now where renewables with battery storage are cost-competitive, even without subsidies. Furthermore, a 2018 report from the World Economic Forum suggested that by 2028, the cost of renewables plus battery could be lower than the cost of gas “peakers” in the grid. And on July 1, Forbes magazine reported on a deal struck by Los Angeles Power and Water to create the largest and cheapest solar-plus-battery project in the world. The solar power will be delivered at roughly 2 cents per kilowatt-hour ($20 per MWh), with an additional cost of only 1.3 cents per kilowatt-hour ($13 per MWh) for the battery storage. This combination comes in below typical cost for both natural gas and nuclear power, and it sets the price bar for renewables plus storage that much lower. It's tough to guess how profitable this plant will be in the long run, but it indicates considerable optimism in the direction the price of renewables with battery storage is going.
In an ideal world, we would collectively aspire to reduce carbon dioxide emissions in electricity generation as quickly as possible. I’ve discussed a bunch of the reasons for that here on this blog, and continuing to debate what scientists have accepted for over forty years belies the urgency needed to tackle the problem. People do have a right to be concerned that aggressive reductions will create economic setbacks that will ultimately do more harm than good, but evidence for that being the outcome does not actually exist. Instead, the Fourth National Climate Assessment of the U. S. Global Change Research Program concluded that limiting global warming to 1.5ºC above pre-Industrial levels as opposed to 2.0ºC would save the American economy half a trillion dollars annually. And the Office of Management and Budget under the Obama administration estimated the economic damage due to global warming, simply in terms of lost federal revenue, could range from $340 billion to $690 billion annually if the status quo in the energy sector continues to hold and global temperatures rise to 4ºC above pre-Industrial levels.. But economics can certainly influence the direction that greening our energy sector takes. Nuclear power does not leave a carbon footprint, but the cost of constructing new plants remains prohibitive and is not likely to come down. The cost of battery storage is generally higher for now, but it is trending in the right direction, there is some justification for optimism long-term, and one present development suggests that the cost decline is occurring at a faster rate than projections from last fall and even this spring were suggesting. And in the meantime, new solar and wind farms are cheaper in most places than new coal and gas plants are; in fact, there are already places in this country where it would save money right now to replace an operational coal plant with renewables. This doesn’t mean that a major shift to renewables will be easy; in fact, a report out just this week suggests that investment in renewables is not rising but declining. Present economics does not justify this reticence, though, and environmental concerns clearly demand moving strongly forward.
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