Saturday, March 1, 2014

Beyond delays and prevarications

During the debate on shale gas fracking in the House of Commons last July,Tory MP Peter Lilley said  ‘The current cost of electricity produced from gas or coal is £50 per MWh. The current cost of producing it from windmills is £100/MWh. For offshore windmills, it is £150/MWh and for solar it is off the scale. If we think that we will get cheaper, lower energy bills by going to energy sources that are two, three or four times as expensive, we are living in la-la land [..] Unless and until we can find a pathway or a stabilisation level for CO2 that will produce greater benefits than its costs, we should not set about impoverishing this generation in the vague hope that we may make some generation in the future richer’.

A familiar approach, which has some incrementalist appeal. It always seems easier to wait until technologies get better/ cheaper- and stay with what we have.  But that way we never move down the learning curves.  At best we focus on ameliorative options like Carbon Capture and Storage, which may not offer much on a large scale, and just allow us to burn more fossil fuel, although BECCs buffs might hope that at some point it could help make biomass combustion carbon negative.  And at worst we get panic moves to nuclear, which few pretend will get cheaper fast..

Obviously the gas option is significant for the short term, but if we get too locked into that, it just delays the inevitable- a shift to renewables. Reducing energy waste is a fast and cheap option for the immediate future, and ought to be attractive since there is a lot of low hanging fruit. However, when we have achieved all the quick and easy energy savings it gets increasingly costly to save more - there are diminishing returns. Long term we need non-carbon supply and to get its cost down fast.

That is happening, with PV solar especially. It could be competitive with nuclear in the UK by 2020, and should continue to fall in price as the market builds and the technology improves. Onshore wind is already competitive with conventional sources in some locations, offshore wind could get down to £100/MWh or less by around 2020 and wave and tidal stream seem likely follow the same trend. How fast we can go is mostly politically determined- how much extra cost can/will consumer /taxpayers accept to accelerate down learning curves? And can we avoid diversions- sold to us as quick and cheap?  Can fossil and nuclear subsidies be redirected to cut the cost to consumers and taxpayers? Is Carbon Capture and Storage really worth exploring- given its likely high cost? A lot of uncertainties there, but if we are not deflected and if funding is targeted properly, by the mid 2020s, we might expect to see renewables challenging all comers.

La La land? Well, the US National Renewable Energy Lab says that wind and solar power generation will be cost competitive in parts of the USA with fossil fuels without recourse to federal subsidies by 2025. By then, even when transmission and integration costs are taken into account, solar and wind power could compete with new natural gas fired power plants on

The Executive Director of the International Energy Agency, Maria van der Hoeven, recently said “Renewable power sources are increasingly standing on their on their own merits versus new fossil-fuel generation. Many renewables no longer require high economic incentives.” She reiterated the IEA’s calls for an end fossil fuel subsidies, which in 2011 “globally were six times higher than renewables”.

Backup for this view came from a Prysma report ‘RE-COST’ for the IEA, which said says that in many OECD countries, renewables are becoming competitive with fossil fuels. Looking at Levelised Costs of Energy (i.e. with capital costs spread over plant lifetimes), including any new grid costs, it says, ‘the costs of RET generation are declining, and approaching the costs of thermal generation (gas- and coal-fired plants), especially if the hidden subsidies that thermal generation plants may receive are not factored in’.  It adds that ‘The rate of cost reduction is higher in large solar PV’ but notes that ‘On-shore wind generation is already competitive in the regions evaluated by RE-COST’.  By contrast it says ‘The cost of generation of new non-RET plants (including gas- and coal-fired plants) are increasing, and might exceed the costs of generation of new RET plants in the near future in the regions in the scope of this report’.

No one pretends that the transition to renewables will be easy or cheap: some of the technologies are still expensive, but as indicated above all are falling in price, and they all have to advantage of avoiding the use of  polluting and increasingly expensive fossil fuel or risky and expensive nuclear technology. And long term there is no alternative- fossil and fissile reserves are finite.   We can prevaricate and delay, but, quite apart from the urgent need to respond to climate change, eventually we have to make the transition. So why not start now, when we still have some conventional energy left to support the transition? 

There are of course debates about exactly with paths to take:  for example what role with natural gas, or green gas, play in proving backup for variable renewables. I will look at that in my next post. But looking backwards to continued reliance on fossil fuels, backed up by hopes that CCS will be available on a large scale, and making comparisons with fossil fuel costs, is no help now- their relatively low (unabated) costs disguised their huge environmental and social costs.  We have to move on- and surely, as fast as possible.

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