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Future Energy Visions, Part 1: Renewables and Nuclear

Schalk Cloete's picture
Research Scientist Independent

My work on the Energy Collective is focused on the great 21st century sustainability challenge: quadrupling the size of the global economy, while reducing CO2 emissions to zero. I seek to...

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This two-part article discusses three distinctly different future energy visions, which generally cause fiery debates when pitted against each other. The chances that either of the two long-term visions outlined below is fully realized within our lifetimes is low, but they remain very important as influences on future policy direction. Properly defining the pros, cons and uncertainties related to these visions therefore becomes an important topic for research and discussion. I hope this article provides a good starting point.

Vision 1: Renewable paradise

This is currently the most popular future energy vision. Its proponents generally lobby for renewable energy subsidies and mandates, and their efforts have certainly been very successful (as shown below), aided by the obvious ideological attractiveness of this vision. What’s not to like about an endless supply of clean energy from the sun and wind?

WEO 2015 renewable subsities

In the renewable paradise, most energy comes from solar panels and wind turbines in the form of electricity with hydro and solar thermal power playing smaller roles. Biomass is often excluded due to its environmental effects and limited availability.

The main attractions of this future energy vision are no direct emissions, energy security benefits, a large technical potential and falling technology costs. On the negative side, we have the intermittent and non-dispatchable nature of wind and solar, the great spatial variation in wind and solar resource quality, and the fact that everything now has to run on electricity.

In addition, as discussed in a recent article, renewable energy is not quite as limitless as proponents would like to believe. Regions like South and East Asia and Sub-Saharan Africa, which may well be home to three-quarters of the world population towards the end of this century, will have serious problems achieving reasonable material standards (about 100 GJ/person/year) primarily on diffuse wind and solar power. It would have helped a lot if the world population could be more evenly distributed, but, as shown below, this is unfortunately not the case.

Half of population in small circle

The intermittent and non-dispatchable nature of wind and solar power has been the focus of a great deal of study and debate in recent years. There are many ways to address this challenge, but all bring significant costs and complexities. In general, wind and solar power fall in value with increasing market share, resulting in an optimum beyond which increasing market share of intermittent renewables will become an ever-increasing economic burden.

The biggest threat posed by this dynamic is the possibility that decarbonization via wind and solar will arrive at a point halfway down the decarbonization pathway where further decarbonization becomes impossibly complex and/or expensive. As an example, the welfare optimized market share of intermittent renewables in Europe actually decreases beyond a CO2 price of around €30/ton (below) as nuclear and CCS become more cost-effective than wind and solar with hydrocarbon backup.

Optimal wind solar share as function of co2 price

If nuclear and CCS are banned in a future carbon-constrained economy, the optimal share of intermittent renewables increases greatly, but so does the average electricity price (15-35% higher) and emissions (100-200% higher). The graph below illustrates the welfare optimized market share of intermittent renewables at a CO2 price of €100/ton for different technology restrictions.

Optimal wind solar share under differnt technology options

Lastly, the issue of all primary energy being electricity is also an important discussion point. Currently, electricity accounts for only 20% of global final energy consumption. This can and should be substantially increased over coming years, but many practical and economic challenges will be encountered along the way. Most importantly, vital sectors such as high-temperature industry, long-distance transport and heavy (non-rail) freight simply cannot be electrified. This is a major problem because these industries are central to the massive infrastructure buildouts required to grant roughly 6 billion (and counting) developing world citizens a reasonable standard of living.

It is therefore clear that, even though wind and solar power will undoubtedly become important contributors to the global energy mix (maybe 20% of final energy), building a true renewable paradise will pose many serious problems. This brings us to the next future energy vision.

Vision 2: Limitless nuclear

As shown below, this vision has been in terminal decline for a long time, but may be recovering due to a new interest from the developing world.

Wind solar and nuclear fraction of electricity

Since nuclear reactors generally have quite long build times, we have to look at the numbers for reactors under construction and in the planning phase to get a glimpse into the future. These numbers are shown below. Even though the number of reactors in operation stayed roughly constant over the last decade, the number of units in the construction and planning stages have increased strongly. The Fukushima incident halted this rapid growth in reactor starts though.

Nuclear operating construction planned

Currently, reactors equivalent to 17% of the currently operating nuclear capacity are under construction, suggesting that the recent uptick in operating reactors will probably be sustained. Gradual completion of these reactors over the next 5 years will allow nuclear to gain about 0.35% of the global electricity market per year. For perspective, wind and solar (combined) have shown an almost perfectly linear gain of 0.55%/year in the global electricity market over the past 5 years.

In the hope of accelerating nuclear’s revival, proponents generally lobby for reduced policy uncertainty and increased public acceptance. This focus is well justified as history has repeatedly demonstrated that political factors can easily double or triple the cost of nuclear power. The historical cost of nuclear reactors from several countries is shown below. It is clear that reactor costs vary over a massive range, but that modern reactors can be built for a competitive cost of $2000/kW.

Nuclear costs against date of construction start

As the data above suggests, the politics surrounding nuclear are very complex and volatile. Proponents highlight the clean and concentrated nature of nuclear energy. Detractors point to nuclear proliferation risk, nuclear waste and nuclear accidents. Science agrees, however, that nuclear is one of the safest available energy technologies in terms of deaths per unit electricity delivered.

Questions have also been raised about nuclear scalability. Global proven uranium reserves below $260/kg amount to about 4.6 million tons, which is enough for about 166000 TWh of electricity – only 7 years of the current total global electricity consumption rate. However, uranium at $260/kg contributes only $7.2/MWh to the cost of electricity. Nuclear will therefore remain competitive at higher uranium prices. Particularly, prices above $1000/kg could make uranium extraction from the ocean viable, unlocking 100-1000 times the current reserves. Uranium at this price level would contribute about $28/MWh to the cost of electricity, which is still viable.

Even though the technical potential of nuclear energy is sufficient at uranium prices above $1000/kg, the political headwinds will only become stronger as nuclear energy grows. Given that a true nuclear-powered world will require a 100 times increase from current levels, this may well be a showstopper.

GenIVRoadmap-en.svg

However, there are fourth generation nuclear technologies on the medium-term horizon that could change this outlook (above). Most importantly, large improvements in the areas of waste and safety appear to be on the cards. Another advantage is that the high process temperatures of Gen IV reactors are sufficient for several important industrial processes – an important edge over wind and solar. However, some doubt remains about the proliferation issue because such reactors could be modified to produce weapons-grade nuclear material.

Gen IV breeder reactors (below) appear especially promising. These reactors use about 100 times less fuel than today’s reactors, making the technical potential of this technology truly limitless.

fast breeder reactor schematic

Limitless energy certainly is an enticing prospect. It can allow us to directly address pressing environmental issues like clean water (through desalination) and climate change (through direct air capture of CO2). Perhaps more importantly, it opens the possibility to truly eliminate all forms of material lack and propel the human race to the next level of societal evolution.

These seemingly sci-fi visions are dependent on economically viable and safe deployment of breeder reactors. Reliable cost estimates of this technology are hard to come by though. A recent joint IEA and NEA publication on levelized costs of electricity gives a fairly broad range of $75-175/MWh by 2030 at which time they estimate that 6 GW of these reactors should be operational.

Concluding remarks

When looking out to the 22nd century, the limitless nuclear vision appears to be more likely than the renewable paradise. Generation IV nuclear reactors work in principle, and the related promise of truly infinite clean energy which can be deployed and dispatched anywhere on demand is highly attractive.

If Gen IV nuclear fails to deliver the goods, however, society may have to adopt a much lower energy lifestyle with a great deal of expensive and disruptive migration towards regions of high per-capita renewable energy potential. We will need to see some truly remarkable cultural shifts for this to happen peacefully.

Shortening our time horizon to the middle of this century, I agree with almost all official energy projections that new wind and solar will see much more investment than new nuclear (below). Today’s commercial reactors do not fundamentally address the major political headwinds, so it is difficult to see nuclear truly taking off before Gen IV reactors take over.

Investment by fuel in new policies scenario

Given nuclear’s history, I would be very (pleasantly) surprised if the 6 GW of breeder reactors mentioned earlier are actually operational by 2030. Projected costs are also not competitive without substantial subsidies, implying that growth will be slow.

So, after all of these words, the most likely scenario appears to be a push towards the renewable paradise until mid-century, by which time there will be a gradual switch to the limitless nuclear vision. Part 2 of this article will present a third “hydrocarbon bridge” vision by which we can arrive at this transition point in the best possible shape.

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Rick Engebretson's picture
Rick Engebretson on Aug 29, 2016

Schalk, if you ask a stupid question you will be able to provide a stupid answer. And you certainly know how to use color crayon graphs. You might instead ask, “What are the array of innovations in energy production and consumption that will allow a future prosperity?”

Having just returned from meeting with a wonderful group of Indian scientists, the issue came up. One idea was to figure out a better “fiberglass” (or optical fiber) roofing material. Using photon capture and optical circuits from a billion rooftops might help cooling, while also feeding expensive solar energy technology systems on the ground. Since that is not under consideration in your color crayon analysis, why delve into solar fuels and low voltage generators?

The real question is “Who really needs gigawatts flying around for thousands of miles at 50 feet over head?” Inherently, not many!! We can fool ourselves with stupidity until we learn the world is full of smart people.

Jesper Antonsson's picture
Jesper Antonsson on Aug 29, 2016

Good analysis, Schalk.

I’d like to add that nuclear could sneak up on you. Whereas wind and solar installations won’t likely go beyond 30 years on average, new nuclear could easily go for 80-100 years. That means a pretty low and unimpressive nuclear build rate can add up to a major penetration rate in the end.

Currently, nuclear primary energy needs to be scaled a factor of 19 to replace all fossil fuels. However, the first aim is to replace coal and to do that, a factor of 7 will suffice and some 2000 reactors in total. If we weren’t in any rush, that could be accomplished by a mere 20-25 reactors per year, lower than the best historical build rate. To get to 20-25 reactors per year is certainly not a big thing. Already, some 60 reactors are under construction which is perhaps 7 per year. Triple that, and we’re there. Even at a high $6/W (we should aim for $3 or below in series production), it’d be some $180 billion per year. Wind and solar together ate $270 billion last year, so that’s not too much.

I think fuel availability for LWRs will not be a problem in this scenario. Laser enrichment could increase uranium utilization 25%, higher burnup will yield some improvement, reprocessing as well. On top of that, just find more uranium at marginally higher prices, just as you say. I think the benefit of a novel design such as the MSR would likely be political in nature, rather than giving economically important benefits in fuel availability or waste handling. (It’ll be a game changer to be able to make a break from the tarnished safety image of the ordinary reactor.)

Ed Dodge's picture
Ed Dodge on Aug 29, 2016

Schalk, I’ll offer a third alternative, the Golden Age of Gas. Natural gas is not a bridge but the destination and the place to soak up carbon emissions is in the soil. Natural gas is simply methane which is wildly abundant in nature, readily renewable, non-toxic, and versatile enough to fuel all energy sectors.

By focusing carbon remediation on soil and land management we will improve agricultural vitality, limit polluting water run-off and help restore aquifers, restore habitat for wildlife and generally improve biodiversity and the health of Mother Earth.

Completely eliminating fossil fuels is a fool’s errand since we don’t have functional replacements for them in broad swathes of industrial processes. Fortunately, we can move from dirty fuels (coal and crude oil distillates) to clean fuels (nat gas and synfuels), and we won’t run out because methane is effectively a boundless resource (particularly in the hydrate formations).

Schalk Cloete's picture
Schalk Cloete on Aug 29, 2016

Yes, renewable synfuels will most probably remain an important part of the energy system. But if these synfuels come from renewables or nuclear, I see them as part of the renewables or nuclear visions described in this article.

However, I have my doubts about the long-term potential for very large-scale fossil fuel extraction (e.g. hydrates). What do you think is the maximum amount of CO2 equivalents that can be naturally sequestered per year while keeping atmospheric greenhouse gas concentrations at sustainable levels? If global primary energy demand doubles over the course of this century and half of this comes from fossil methane, we will still be releasing 30 Gt of CO2 per year into the atmosphere (more if fugitive emissions are counted). I doubt that such a quantity of CO2 can be sustainably sequestered even with best practices in soil and land management.

I also agree that it will take a few centuries to completely eliminate fossil fuels. Even with very high CO2 prices, fossil fuels will remain competitive for several applications. However, as outlined in part 2 of this article, I feel that the need for fossil fuels as the dominant component in the global energy system will evaporate as soon as the world has successfully industrialized. By that time, the practicality, simplicity and rapid energy payback of fossil fuels will fade in importance and industry will focus on recycling rather than extraction (e.g. electric arc furnaces replacing blast furnaces).

Schalk Cloete's picture
Schalk Cloete on Aug 29, 2016

Yes, I agree that the unlimited nuclear vision is technically and economically feasible. The showstopper is political though. Nuclear really needs that gamechanger in terms of public perception on issues such as safety, waste and proliferation. Hopefully Gen IV reactors can deliver that.

Nathan Wilson's picture
Nathan Wilson on Aug 30, 2016

IIUC, the deciding factor for renewables will be domestic fossil gas production. Given that variable renewables only work (economically) well when used along-side gas fired generation, and fossil gas is only embraced by Greens when diluted with renewables, their futures are intertwined.

If (western) Europeans cannot grow their fossil gas production adequately (i.e. if the public continues to reject frac’ing), then the security implications of gas imports from Russia and Iran could lead to dissatisfaction with the (partially) renewable vision.

Similarly, China seems unlikely to accept a significant dependence on imported gas, and appears to be unable to meet their clean air goals with a mix of coal and renewables.

On the other hand, the nuclear vision requires an early adopter to drive down the cost (via economies of volume) the way that Germany has driven down the cost of PV. The immense profits of the US oil and gas industry is keeping the US from embracing nuclear, and nuclear-phobia is paralyzing the Japanese and European nuclear industries. But there is another major nuclear player: China.

By 2030, China will be the world’s largest producer of nuclear energy. Their Hualong One reactor will likely be the world’s most popular and economical design. With the militaries of the US and its allies continuing to be needed to keep the oil flowing from the Middle East, the developing nations of the world will likely follow the Chinese nuclear industry as the path of least resistance. (Not to mention the peculiar Chinese savings discipline means that nation will continue to have investment capital looking for a home overseas).

At the same time, the money the fossil fuel industry has invested in teaching us to fear nuclear waste also creates opportunities. Australia recently completed a study identifying the huge profit potential of the nuclear waste disposal industry; their strong coal industry won’t let them enter the international market, but Russia and China might. Both of these nations have fast reactor programs, and China could conceivably deploy a fast reactor fleet large enough to continually consume all of the world’s LWR plutonium (this gets easier when thorium is blended with LEU to make LWR fuel; it slashes Pu production by a factor of 5 or so).

Darius Bentvels's picture
Darius Bentvels on Aug 30, 2016

Despite the liability and other subsidies for nuclear, the price difference between renewable and new nuclear becomes so high, that new nuclear will faint away.*)

Even old nuclear has trouble to compete, which trouble will become worse as wind, solar and storage (P2G and batteries) are widely predicted to continue their price decrease trajectory of ~8%/a during next decades, while operating costs of NPP’s increase.**)
So e.g. China’s nuclear plans decrease gradually***)

Note that Germany is solving the seasonal wind+solar dip by developing improved (higher efficiency) & cheaper unmanned flexible P2G installations (housed in a sea-container, etc).

As there are clear signs that:
– new nuclear designs (e.g. MSR, SMR, fast breeders) imply higher cost prices;
– renewable continue the cost decrease path towards 2-3cnt/KWh in ~2045;
I don’t understand how you can estimate a nuclear revival???

____
*) Offshore wind is ~ the most expensive method electricity generation.
The recent tender for the 700MW Borssele wind farm (~25km off the coast, 30m deep sea, operational in 2020) was won by Danish Dong who offers to install, operate and decommission for a PPA of 7.3cnt/KWh during 15years (no inflation correction, no subsidies). Thereafter they sell at whole sale prices.
Tennet asks 1.4cnt/KWh to connect the wind farm to the grid.
Dong will install more than 700MW which then has to be curtailed sometimes but results in a >50% Capacity Factor and apparently a better P&L picture for Dong (adding wind turbines in a set of ~86 cost relative little).
The offshore tenders next years are widely expected to deliver bids at ~6cnt/KWh.

The planned UK NPP; Hinkley C will deliver for a >3 times higher price!

**) The financial status of all nuclear operating utilities operating in free markets is degrading: EDF, Engie (France), E.ON, RWE (Germany), Vattenfall (Sweden), TVO (Finland), CEZ (Czech Republic) have all been downgraded by the credit rating agencies. In the Netherlands, Delta which operate our only NPP (Borssele), asked central government for more support as the NPP faces increasing losses in next years and its decommission & waste funds are not sufficient.

***) China targeted 70GW nuclear in 2020, which was degraded towards 58GW. Considering construction progress they will reach <51GW in 2020.
While wind and solar surpass their targets, which were increased in recent years. Wind alone surpassed nuclear already, solar will follow. Same in India.

Jarmo Mikkonen's picture
Jarmo Mikkonen on Aug 30, 2016

So, after all of these words, the most likely scenario appears to be a push towards the renewable paradise until mid-century, by which time there will be a gradual switch to the limitless nuclear vision.

I agree. Germany is the bellwether to watch and assess how renewable paradise vision will succeed. Germany is large enough and rich enough, it has sufficient renewable resources and it will get rid of nuclear completely in 2022.

Helmut Frik's picture
Helmut Frik on Aug 30, 2016

Yes the busines case for nuclear in a grid full of renewables with extremely low installation costs and practcally no variable costs will become very interesting. Any nuclear power wich is not “too cheap to meter” will already be too expensive.
It seems difficult to understand that when prices for renewables sink they sink permaently, not temporary like fossile fuel costs. And grids which balance intermittency are there to stay a century and more.
So when grids and reneable generation are installed, nuclear does not make the slightest sense any more.

Torrey Beek's picture
Torrey Beek on Aug 30, 2016

I do not see a productive reason to label the question or the analysis provided as “stupid”; you’ve added little to the conversation by opining in that fashion. The subject of 100% RE, 100% nuclear, etc, is quite topical.

Moreover, I find it ironic that someone highlighting a tactic which requires retrofitting “a billion rooftops” doesn’t acknowledge how challenging, or some might call “stupid”, that goal would be to effectuate.

Jarmo Mikkonen's picture
Jarmo Mikkonen on Aug 30, 2016

Well, Germany has no business case as far as the Energiewende is concerned. Or climate case, either.

The annual EEG payments paid to subsidize renewables – the difference between wholesale market price and price paid to renewable generators – already exceed the market value of all electricity generated in Germany. This is the situation when wind and solar generate 20% of electricity….

Hard coal and lignite still generate twice as much electricity as wind and solar do. German government does not plan to phase them out.

I am just interested to see whether Germany can make renewables work on a large scale – never mind the cost. Like I said, they have enough wind, solar, biomass and money to make it happen. However, 79% of German primary energy is produced with fossil fuels today. Therein lies the rub.

Rick Engebretson's picture
Rick Engebretson on Aug 30, 2016

In every one of Schalk’s posts he does the same thing; he applies constraints. It’s either “this” or “that.” And what I meant as stupid, and I explained why. In all likelihood it is neither “this” nor “that” energy technology which will dominate 50 years from now. And if you think a rapidly growing population described in the article doesn’t need a new roof in 50 years, we have little to discuss.

A solar photon is energy. Developing conversion technologies in the next 50 years will re-define the global economy. You want to chew the old fat, go ahead.

Helmut Frik's picture
Helmut Frik on Aug 30, 2016

Which is a frequent, but nonsense argument.
The EEG payments reflect historic payments for wind and solar, not the payments for new installations. The only “problem” is, that it is so transparent,while historic subsidys for nuclear development usually came from taxes and similar sources and are now payed with the other state deps with the taxes you pay today, and are not explicitely labeled as “payment for nuclear development”.

Relevant is the price for wind and solar in relation to _new_ conventional generation capacity. This causes that in more and more countries, especially those where not half of the plant + infrastructure of new conventionlal plant can be taken from the previous conventional plants, wind and solar are simply installed due to lower prices.

Relevant to some degree are those countries – like germany – where for electric generation no new plants are neccesary, and so the wanted instalation of wind and solar needs to push existing plants out of thae market based on fuel price. Here some subidising is neccesary to get a certain relativiely constant transtition from conventional generation to renewable generation. Leaving this to market forces only would result serious tubulences on the power markets in the longer run.

Sopping renewable generation in germany would lead inevitable to slowly rising wholesale power prices, since overaged conventional plants would step by step retire, to thepoint where buildong new plants would be economical again. This point would be reached first for renewable generation. but it would be too late to reach the wanted share of renewables fast enough.

Typical example today is MArokko where wind power was so cheap in auctions that the minister for energy (who in paralel tendered coal power as well) stated that wind power is so cheap that coal would not even be competitive with free coal supply.

You can see it as well from the fact that nobody plans any new conventional capacity neither for short nor for far future, and that more and more planned conventional capacity worldwide gets cancelled.

You could say Wind and solar are at the moment in most places in a “in between” state – more expensive than existing plants, cheaper than new plants.
For 2050 the question for nuclear would be: can nuclear be cheaper than exisitng renewable capacity? without substantial subsidys this would mean competing against existing renewable capacity based on variable (fuel) costs. Like you expect it from wind and solar today against existing conventional capacity.

Jarmo Mikkonen's picture
Jarmo Mikkonen on Aug 30, 2016

Relevant is the price for wind and solar in relation to _new_ conventional generation capacity.

In Germany, rooftop solar gets 12 eurocents/kWh right now – for the next 20 years. Offshore wind gets 15-19 c/kWh for the first 12 or 8 years and 4 cents until 20 years, onshore wind 8-9 c/kWh.

Nobody in their right mind is building new fossil fuel plants in Germany when they get only 2.5c/kWh. But Poland is adding 4 GW of coal plants by 2020 and their wholesale price is around 4 c/kWh.

Torrey Beek's picture
Torrey Beek on Aug 30, 2016

Rick, I still don’t see where you explained why you believe his posts are “stupid”. Why not point out your criticisms in a constructive fashion? It seems like a direct outreach to the author with that specific critique would be more productive.

You are right about infrastructure needs in the developing world and retrofits in the developed world. I was trying to point out that the differences in scale between developing a low/zero carbon energy system and the future demands for infrastructure is, in my opinion, not large enough to suggest Schalk’s topic is “stupid.”

And you’re right about conversion technologies: I look forward to working on them for the next 50 years!

Roger Arnold's picture
Roger Arnold on Aug 30, 2016

Largely agree with the points you’ve made here, Nathan. However, I’ll quibble about “variable renewables only work (economically) well when used along-side gas fired generation.”

That parenthetical “economically” may make you right — depending on how stringently one defines “economical”. But it’s worth noting that the new coal-fired plants that have been build in Germany are specifically touted as being “flexible” and working well with variable renewables. They have high ramp rates, and wide efficiency bands compared to older coal-fired plants. Of course they’re also expensive, particularly when used at low average capacity factors.

Better storage technologies could also do the trick. If one simply takes the experience curve for li-ion batteries over the last five years and projects it forward for ten to fifteen years, one arrives at a point where diurnal storage, at least, is economically feasible. That might or might not happen. I wouldn’t want to bet, one war or the other.

Seasonal variation and extended periods of adverse weather (cloudy for solar, calm for wind) would still be problematic. The only solutions for those are very expensive low CF long distance transmission capacity, very low CF dispatchable fossil-fueled or stockpiled biomass-fueled generation, and/or rather aggressive load management. Production of electrolytic hydrogen is often suggested, for the latter. However, the capital cost of electrolysis equipment is substantial. The cost of electrolytic hydrogen from equipment used for only half the year will be nearly double that hydrogen from equipment used full time.

There’s another energy storage technology that potentially could be cheap enough on a scale large enough to deal with long term and seasonal energy storage for variable renewables. Maybe I’ll write about that in the future.

Hops Gegangen's picture
Hops Gegangen on Aug 30, 2016

Yeah, any computation of “economical” needs to take into account the social cost of carbon.

Mark Heslep's picture
Mark Heslep on Aug 31, 2016

Nobody in their right mind is building new fossil fuel plants in Germany when they get only 2.5c/kWh.

Fraunhofer nonetheless indicates German hard coal capacity was 26.2 GW in 2014 and bumped up 2 GW to 28.3 GW in 2016. I suppose most of that came from the large new coal plant that opened in Moorburg in November 2015.

I don’t understand the finance stream for the coal plants either, but the data also show the combined 84 GW of German wind and solar dropping off to the trivial for moments (at least) on more days than not, so they need thermal plants and are finding a way to pay for them.

energy-charts.de/power_inst.htm
notalotofpeopleknowthat.wordpress.com/2015/11/20/germany-opens-another-new-coal-plant/

Nathan Wilson's picture
Nathan Wilson on Aug 31, 2016

The problem is that in developing countries, increasing energy supply is so valuable to human well-being, that the external costs of burning fossil fuel is low by comparison. In these cases, cheap renewables can only grow until penetration equals capacity factor, with fossil fuel supplying the rest. But even in these cases, it is not clear that renewables will cost less than the coal which is saved.

Jarmo Mikkonen's picture
Jarmo Mikkonen on Aug 31, 2016

Mark, if you look at the statistics it is obvious that Germany cannot shut down coal plants go if they stick with nuclear exit in 2022.

In 2015 nuclear generated 14%, lignite 24% and hard coal 18% of German electricity. Wind and solar generated 20%.

http://energytransition.de/2016/01/germany-is-20-years-away-from-100-per...

Wind and solar capacity is 80 GW. In order to produce as much electricity as nuclear does today, the capacity needs to be bumped up by 70 % to 140GW. However, if they increase offshore capacity a lot they might manage with 110-120GW.

As you observed, solar and wind generation occasionally drops to trivial levels and you need backup. Remove 10 GW of nuclear from the equation (in 2015 nuclear produced a bit more electricity than offshore and onshore wind combined in Germany). The need for coal backup increases.

Small wonder the German government declined a climate tax for conventional power plants in 2015. Instead they set a capacity reserve for oldest and most polluting lignite plants, 2.7 GW, to phase them out in 4 years. A climate tax would have hurt all coal plants. The Germans want to keep coal online.

I guess capacity payments for coal plants will be the next step as their use dwindles and power prices go further south as renewables are ramped up.

Helmut Frik's picture
Helmut Frik on Aug 31, 2016

And new coal plants need 8-9ct/kWh in germny to pay back the investment – in Poland alike.
Moorburg for example, a very efficiant plant directly supplied by seagoing ships, so with lowest possible costs goes offline short below 2,5ct/kWh, because even with thel extremely low coal prices the recent time fuel then costs the power plant more than electricity earns. At 4ct/kWh just costs for personal and routine maintenance are covered, but no construction costs earned. The polnish coal power plants were startet at times when they expected much hicher wholesale prices, which do not exist now. So the new plants are already sunk costs when they open, – which causes difficulties to finance the build: http://www.platts.com/latest-news/coal/warsaw/coal-power-plant-financing...
In Hamm e.g. this caused the closure of a brand new coal power plant which just needed some repair due to a accident when starting the plant. Remaining value of the brand new block was lower than repair costs. (And this decision happened at higher wholesaleprices than today)

Utility scale solar is around 7ct/kWh in germany and falling, wind power payments will fall also into that region in the next two years, new wind power is deep within black numbers at 8-9ct/kWh whlile coal power is at a black or red zero in this region.

Helmut Frik's picture
Helmut Frik on Aug 31, 2016

Yes, Moorburgs development started many years ago, in the late 1990’s as far as I remember, and it went online in 2015, whiichcaused coal capacity to remain almost constant from 2000-2015, while utilisation of the capacity fell and keeps falling. Till 2018 about 5GW hard coal and lignite plants will go offline, others will follow the years after depending on market situation. Keeping coal capacity open with nearly no utilisation is too expensive, this works better with gas power stations, which did not run for many years in germany now in many cases.

Helmut Frik's picture
Helmut Frik on Aug 31, 2016

If there would be a serious need for backup capacity in the grid, wholesale proices would go up when wind and sun power production is low in germany, allowing gas powerd stations to kick in and deliver power, which happens above 6-10ct/kWh. Obviously this is not the case.
Which causes several un and underused coal power plants to be shut down the comming years. Some will be kept in reserve for some time, but they are not expected to be used at all during that time. But people here responsible for grids like to wear suspenders and belts, and fix the trousers with buttons at the shirt for safety reasons
“Problem” in the german power market is, that power producers play Mikado – everybody waits for other companies to close down their capacity first, so the raising wholesale prices would allow the remaining produces to earn a little money again with their old plants.

Mark Heslep's picture
Mark Heslep on Aug 31, 2016

” Keeping coal capacity open with nearly no utilisation is too expensive”

Yes, expensive and unavoidable. With a large fleet of intermittent power (87 GW solar + wind, Germany, 2016) a similarly large fleet of thermal power is necessary regardless of price.

Germany, hard + brown coal capacity:
2002: 48.6 GW
2016: 49.4 GW
from Fraunhofer ISE Energy Charts

Mark Heslep's picture
Mark Heslep on Aug 31, 2016

“…if you look at the statistics it is obvious that Germany cannot shut down coal plants go if they stick with nuclear exit in 2022.”

Agreed.

“I guess capacity payments for coal plants will be the next step as their use dwindles and power prices go further south as renewables are ramped up.”

I’m curious if something like capacity payments have already been used for the like of the 1.6 GW Moorburg coal plant brought online 10 months ago. The fossil plants are, as you say, unavoidable in the Energiewende environment, so regardless of the market conditions somewhere there must exist a finance stream.

Mark Heslep's picture
Mark Heslep on Aug 31, 2016

“The showstopper is political though. “

Not where nuclear is needed the most to reduce emissions, i.e. in China, etc.

Schalk Cloete's picture
Schalk Cloete on Aug 31, 2016

Yes, it would be interesting to know the correct breakdown of the forces limiting the scaling of nuclear in places like China. I wrote an article two years ago about the scaling rate of nuclear in China. The last graph shows just how tiny the projected nuclear scaling rate is compared to the rate at which China scaled coal back when its economy was less than half as productive as it is now. That outlook has not changed.

It is probably some combination of complexity, higher up-front costs, the typical nuclear socio-political issues and competition from renewables. The order of these factors is not clear to me though.

Mark Heslep's picture
Mark Heslep on Aug 31, 2016

“The last graph shows just how tiny the projected nuclear scaling rate is compared to the rate at which China scaled coal back when its economy was less than half as productive as it is now. That outlook has not changed.”

Yes, your graph from two years ago showed the global rate of development, but there are localized examples of where the reverse is true between nuclear and coal. See France, which started with nuclear at 80 TWh in 1980 and took it to ~340 TWh in 14 years, or 90% of the thermal load, while fossil development went negative.

Nuclear’s state of the art does appear to have some technical capability thresholds, though new generation nuclear might lower those a bit. China seems to have already crossed the threshold, and they may help others across as well.

Jarmo Mikkonen's picture
Jarmo Mikkonen on Aug 31, 2016

I think that Moorburg is owned by Vattenfall. Anyway, until recently, lignite power plants in Germany were very profitable. Vattenfall had lignite turnover of 2.3 billion euros in 2014 and made a profit of over 600 million euros.

Now Vattenfall is divesting its lignite assets. Whoever buys them will want some sort of guarantees from the German government.

Edit: Looks like Vattenfall has found a buyer, Czech EPH, which has a German subsidiary Mirbag. EON and RWE have also unloaded their coal assets into separate companies.

If the profitability of the plants does not improve, RWE, EON and EPH let these companies go bankcrupt. Apparently they believe that the German government has to intervene, either directly or indirectly, to keep a substantial portion of the coal plants online or on reserve.

This is a political decision and the intervention can only happen after the next German election in 2017. Current government has declared a stiff “nein” to capacity mechanisms.

Interestingly, in 2015 in Sweden Vattenfall declared that it will shut down nuclear plants earlier than planned because they were becoming unprofitable because of nuclear tax. After initial celebration by the Greens and the left, the government backpedalled, removed the nuclear tax and also allowed for new plants to be built at existing power stations.

So, in 2017 we will see how big a role coal and lignite will play in the Energiewende.

Nathan Wilson's picture
Nathan Wilson on Sep 1, 2016

The problem with solar PV and wind is that once they reach moderate penetration, any additional installations will mostly generate power when there is already too much. So the nuclear, which can generate power at night and in low-wind conditions will become more economical, not less. Of course, governments which desire to hide this truth can easily do so, by paying a fixed tariff or auction price for renewable energy, regardless of instantaneous need.

No, power-to-gas doesn’t fix the economics of generating power when it’s not needed. They can use the otherwise wasted energy, but they’ll buy it at a very deep discount, leaving the dismal economic case for high penetration PV and wind untouched.

And I agree that nations that invest heavily in renewables won’t install much new nuclear. They will instead stick mostly with fossil fuels; that has always been the hidden purpose (and most likely outcome) of the renewables and anti-nuclear movements.

Darius Bentvels's picture
Darius Bentvels on Sep 1, 2016

The economics is clear, which is the reason of so much investment in further development.
P2G plant efficiency is now near ~70% (catalysts, etc). G2P at ~60%.
So the “P2G-storage-G2P” process ~33%.

The P2G plant starts operating at <2cnt/KWh (overproduction by e.g. wind). So the plant buys at average of ~1cent/KWh. Hence to become profitable the plant has to sell at 3+1= 4cent/KWh (1cent for the investment and operating costs).

Even the very low EPEX prices show that the investor has enough opportunities to sell at that price.
The investor may even sell at 5.5cnt/KWh, which implies an excellent profit.

But no longer at 6cent/KWh or higher as those price spikes vanished despite (or due to) the 33% renewable share in Germany.

Bob Meinetz's picture
Bob Meinetz on Sep 1, 2016

Roger, we could build the Rube-Goldbergian apparatus you describe at a cost of $trillions. Or, we could build dispatchable nuke plants at a cost three orders of magnitude less, with more reliability, far fewer emissions, and $trillions left over for the psychological counseling of those with irrational concerns.

Somehow, long ago, humans got over their fear of fire. So I know it’s possible.

Bob Meinetz's picture
Bob Meinetz on Sep 1, 2016

Bas Gresnigt, P2G plant efficiency is nowhere near 70%, because no such plant exists except in the diaphonous imaginations of solar/wind cultists.

What shows remarkable potential is a scam where CH4 is stored underground after being cheaply extracted from existing fossil wells. Then, with a token amount of P2G added for cover, its fossil provenance is relabeled as “sustainable” – permitting cultists to sleep soundly as they destroy the environment in ignorant bliss.

Engineer- Poet's picture
Engineer- Poet on Sep 1, 2016

German feed-in prices for solar are still in excess of €0.08/kWh.  Electric power at €0.08/kWh converted to H2 at 70% efficiency yields a gross energy cost of €31.7/GJ (amortization and O&M are extra).  This is on the order of double the world price of LNG.  Germany will go broke before it becomes Green.  More to the point, storing excess PV energy at €0.08/kWh with a round-trip efficiency of 40% yields an input energy cost of €0.20/kWh for what comes out again.  That makes the two EPRs under construction at Flamanville and Olkiluoto positively cheap by comparison.

Bob Meinetz's picture
Bob Meinetz on Sep 1, 2016

Edward, your characterization of methane as being “readily renewable” and non-toxic is not just wrong but irresponsible, as is the suggestion soil remediation is an answer on any significant scale – or ever will be. MIning ocean clathrates borders on insanity.

I realize your livelihood depends on selling your noxious fuel, but if you believe personal enrichment is worth sacrificing the environment for everyone who comes after you, we have nothing to argue about.

https://en.m.wikipedia.org/wiki/Clathrate_gun_hypothesis

Ed Dodge's picture
Ed Dodge on Sep 1, 2016

Bob, you fart methane, we all do. Methane is inside all of our bodies all the time and it is in fact non-toxic. Methane is produced in voluminous quantities by nature every minute of every day. What do you think is produced by an anaerobic digester?

I recognize that perhaps you lack a basic education in science, but perhaps you should brush up on the attributes and prevalence of the CH4 molecule throughout nature and our bodies.

https://en.wikipedia.org/wiki/Methane

At some point the environmental left will need to recognize that the debate between 100% renewables and nuclear power has completely failed to answer the question of how you fuel heavy duty transportation and high temperature industry. The world will continue to demand combustible fuels for these applications as far as we can see into the future. Fortunately, we can switch to burning clean, uncontaminated fuels instead of dirty fuels, just as we prefer to drink clean water rather than drinking mud.

As for soil, we have lost a foot of topsoil across North America since modern agriculture began, restoring that soil can soak up all the carbon and then some.

Russ Finley's picture
Russ Finley on Sep 2, 2016

Bas, why do you keep changing your moniker?

Russ Finley's picture
Russ Finley on Sep 2, 2016

$28/kWh?

Darius Bentvels's picture
Darius Bentvels on Sep 2, 2016

Germany will go broke before it becomes Green.
Many predicted that since 2000…
It’s not the state who is investing money but ‘private’ investors.*)

How come you estimate that those private investors became crazy (as they are throwing their money away according to you)?

Study the prices and the futures at the EPEX (Leipzig) and you may understand a little why those estimate that they can earn money with P2G.
_____
*) Also Swiss investors, even car makers such as Audi and BMW.

Schalk Cloete's picture
Schalk Cloete on Sep 2, 2016

Oops, sorry that should be $28/MWh. Quite a big difference…

Mark Heslep's picture
Mark Heslep on Sep 2, 2016

which causes difficulties to finance the build

Not so difficult:

… energy companies continue to build new coal-fired generating plants at a rapid pace. Worldwide the equivalent of 1500 coal plants is under construction or in various stages of planning

http://energytransition.de/2016/04/global-coal-power-capacity-keeps-goin...

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