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Researchers Have Been Underestimating the Cost of Wind and Solar

Gail Tverberg's picture

My background is as an actuary, making financial forecasts for the insurance industry. In 2015, I began investigating how the limits of a finite world might affect the financial system, oil...

  • Member since 2016
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  • Jul 24, 2017

How should electricity from wind turbines and solar panels be evaluated? Should it be evaluated as if these devices are stand-alone devices? Or do these devices provide electricity that is of such low quality, because of its intermittency and other factors, that we should recognize the need for supporting services associated with actually putting the electricity on the grid? This question comes up in many types of evaluations, including Levelized Cost of Energy (LCOE), Energy Return on Energy Invested (EROI), Life Cycle Analysis (LCA), and Energy Payback Period (EPP).

I recently gave a talk called The Problem of Properly Evaluating Intermittent Renewable Resources (PDF) at a BioPhysical Economics Conference in Montana. As many of you know, this is the group that is concerned about Energy Returned on Energy Invested (EROI). As you might guess, my conclusion is that the current methodology is quite misleading. Wind and solar are not really stand-alone devices when it comes to providing the kind of electricity that is needed by the grid. Grid operators, utilities, and backup electricity providers must provide hidden subsidies to make the system really work.

This problem is currently not being recognized by any of the groups evaluating wind and solar, using techniques such as LCOE, EROI, LCA, and EPP. As a result, published results suggest that wind and solar are much more beneficial than they really are. The distortion affects both pricing and the amount of supposed CO2 savings.

One of the questions that came up at the conference was, “Is this distortion actually important when only a small amount of intermittent electricity is added to the grid?” For that reason, I have included discussion of this issue as well. My conclusion is that the problem of intermittency and the pricing distortions it causes is important, even at low grid penetrations. There may be some cases where intermittent renewables are helpful additions without buffering (especially when the current fuel is oil, and wind or solar can help reduce fuel usage), but there are likely to be many other instances where the costs involved greatly exceed the benefits gained. We need to be doing much more thoughtful analyses of costs and benefits in particular situations to understand exactly where intermittent resources might be helpful.

A big part of our problem is that we are dealing with variables that are “not independent.” If we add subsidized wind and solar, that act, by itself, changes the needed pricing for all of the other types of electricity. The price per kWh of supporting types of electricity needs to rise, because their EROIs fall as they are used in a less efficient manner. This same problem affects all of the other pricing approaches as well, including LCOE. Thus, our current pricing approaches make intermittent wind and solar look much more beneficial than they really are.

A clear workaround for this non-independence problem is to look primarily at the cost (in terms of EROI or LCOE) in which wind and solar are part of overall “packages” that produce grid-quality electricity, at the locations where they are needed. If we can find solutions on this basis, there would seem to be much more of a chance that wind and solar could be ramped up to a significant share of total electricity. The “problem” is that there is a lower bound on an acceptable EROI (probably 10:1, but possibly as low as 3:1 based on the work of Charles Hall). This is somewhat equivalent to an upper bound on the affordable cost of electricity using LCOE.

This means that if we really expect to scale wind and solar, we probably need to be creating packages of grid-quality electricity (wind or solar, supplemented by various devices to create grid quality electricity) at an acceptably high EROI. This is very similar to a requirement that wind or solar energy, including all of the necessary adjustments to bring them to grid quality, be available at a suitably low dollar cost–probably not too different from today’s wholesale cost of electricity. EROI theory would strongly suggest that energy costs for an economy cannot rise dramatically, without a huge problem for the economy. Hiding rising energy costs with government subsidies cannot fix this problem.

Distortions Become Material Very Early

If we look at recently published information about how much intermittent electricity is being added to the electric grid, the amounts are surprisingly small. Overall, worldwide, the amount of electricity generated by a combination of wind and solar (nearly all of it intermittent) was 5.2% in 2016. On an area by area basis, the percentages of wind and solar are as shown in Figure 1.

Figure 1. Wind and solar as a share of 2016 electricity generation, based on BP Statistical Review of World Energy 2017. World total is not shown, but is very close to the percentage shown for China.

There are two reasons why these percentages are lower than a person might expect. One reason is that the figures usually quoted are the amounts of “generating capacity” added by wind and solar, and these are nearly always higher than the amount of actual electricity supply added, because wind and solar “capacity” tend to be lightly used.

The other reason that the percentages on Figure 1 are lower than we might expect is because the places that have unusually high concentrations of wind and solar generation (examples: Germany, Denmark, and California) tend to depend on a combination of (a) generous subsidy programs, (b) the availability of inexpensive balancing power from elsewhere and (c) the generosity of neighbors in taking unwanted electricity and adding it to their electric grids at low prices.

As greater amounts of intermittent electricity are added, the availability of inexpensive balancing capacity (for example, from hydroelectric from Norway and Sweden) quickly gets exhausted, and neighbors become more and more unhappy with the amounts of unwanted excess generation being dumped on their grids. Denmark has found that the dollar amount of subsidies needs to rise, year after year, if it is to continue its intermittent renewables program.

One of the major issues with adding intermittent renewables to the electric grid is that doing so distorts wholesale electricity pricing. Solar energy tends to cut mid-day peaks in electricity price, making it less economic for “peaking plants” (natural gas electricity plants that provide electricity only when prices are very high) to stay open. At times, prices may turn negative, if the total amount of wind and solar produced at a given time is greater than the overall amount of electricity required by customers. This happens because intermittent electricity is generally given priority on the grid, whether price signals indicate that it is needed or not. A combination of these problems tends to make backup generation unprofitable unless subsidies are provided. If peaking plants and other backup are still required, but need to operate fewer hours, subsidies must be provided so that the plants can afford to hire year-around staff, and pay their ongoing fixed expenses.

If we think of the new electricity demand as being “normal” demand, adjusted by the actual, fairly random, wind and solar generation, the new demand pattern ends up having many anomalies. One of the anomalies is that required prices become negative at times when wind and solar generation are high, but the grid has no need for them. This tends to happen first on weekends in the spring and fall, when electricity demand is low. As the share of intermittent electricity grows, the problem with negative prices becomes greater and greater.

The other major anomaly is the need for a lot of quick “ramp up” and “ramp down” capacity. One time this typically happens is at sunset, when demand is high (people cooking their dinners) but a large amount of solar electricity disappears because of the setting of the sun. For wind, rapid ramp ups and downs seem to be related to thunderstorms and other storm conditions. California and Australia are both adding big battery systems, built by Tesla, to help deal with rapid ramp-up and ramp-down problems.

There is a lot of work on “smart grids” being done, but this work does not address the particular problems brought on by adding wind and solar. In particular, smart grids do not move demand from summer and winter (when demand is normally high) to spring and fall (when demand is normally low). Smart grids and time of day pricing aren’t very good at fixing the rapid ramping problem, either, especially when these problems are weather related.

The one place where time of day pricing can perhaps be somewhat helpful is in lessening the rapid ramping problem of solar at sunset. One fix that is currently being tried is offering the highest wholesale electricity prices in the evening (6:00 pm to 9:00 pm), rather than earlier in the day. This approach encourages those adding new solar energy generation to add their panels facing west, rather than south, so as to better match demand. Doing this is less efficient from the point of view of the total electricity generated by the panels (and thus lowers EROIs of the solar panels), but helps prevent some of the rapid ramping problem at sunset. It also gets some of the generation moved from the middle of day to the evening, when it better matches “demand.”

In theory, the high prices from 6:00 pm to 9:00 pm might encourage consumers to move some of their electricity usage (cooking dinner, watching television, running air conditioning) until after 9:00 pm. But, as a practical matter, it is difficult to move very much of residential demand to the desired time slots based on price. In theory, demand could also be moved from summer and winter to spring and fall based on electricity price, but it is hard to think of changes that families could easily make that would allow this change to happen.

With the strange demand pattern that occurs when intermittent renewables are added, standard pricing approaches (based on marginal costs) tend to produce wholesale electricity prices that are too low for electricity produced by natural gas, coal, and nuclear providers. In fact, wholesale electricity rates for supporting providers tend to diverge further and further from what is needed, as more and more intermittent electricity is added. The dotted line on Figure 2 illustrates the falling wholesale electricity prices that have been occurring in Europe, even as retail residential electricity prices are rising.

Figure 2. European residential electricity prices have risen, even as wholesale electricity prices (dotted line) have fallen. Chart by Paul-Frederik Bach.

The marginal pricing scheme gives little guidance as to how much backup generation is really needed. It is therefore left up to governments and local electricity oversight groups to figure out how to compensate for the known pricing problem. Some provide subsidies to non-intermittent producers; others do not.

To complicate matters further, electricity consumption has been falling rapidly in countries whose economies are depressed. Adding wind and solar further reduces needed natural gas, coal, and nuclear generation. Some countries may let these producers collapse; others may subsidize them, as a jobs-creation program, whether this backup generation is needed or not.

Of course, if a single payer is responsible for both intermittent and other electricity programs, a combined rate can be set that is high enough for the costs of both intermittent electricity and backup generation, eliminating the pricing problem, from the point of view of electricity providers. The question then becomes, “Will the new higher electricity prices be affordable by consumers?”

The recently published IEA World Energy Investment Report 2017 provides information on a number of developing problems:

“Network investment remains robust for now, but worries have emerged in several regions about the prospect of a “utility death spiral” as the long-term economic viability of grid investments diminishes. The still widespread regulatory practice of remunerating fixed network assets on the basis of a variable per kWh charge is poorly suited for a power system with a large amount of decentralised solar PV and storage capacity.”

The IEA investment report notes that in China, 10% of solar PV and 17% of wind generation were curtailed in 2016, even though previous problems with lack of transmission had been fixed. Figure 1 shows China’s electricity from wind and solar amounts to only 5.0% of its total electricity consumption in 2016.

Regarding India, the IEA report says, “More flexible conventional capacity, including gas-fired plants, better connections with hydro resources and investment in battery storage will be needed to support continued growth in solar power.” India’s intermittent electricity amounted to only 4.1% of total electricity supply in 2016.

In Europe, a spike in electricity prices to a 10-year high took place in January 2017, when both wind and solar output were low, and the temperature was unusually cold. And as previously mentioned, California and South Australia have found it necessary to add Tesla batteries to handle rapid ramp-ups and ramp-downs. Australia is also adding large amounts of transmission that would not have been needed, if coal generating plants had continued to provide services in South Australia.

None of the costs related to intermittency workarounds are currently being included in EROI analyses. They are generally not being included in analyses of other kinds, either, such as LCOE. In my opinion, the time has already arrived when analyses need to be performed on a much broader basis than in the past, so as to better capture the true cost of adding intermittent electricity.

Slide 1

Slide 2

Slide 3

Slide 4

Of course, as we saw in the introduction, worldwide electricity supply is only about 5% wind and solar. The only parts of the world that were much above 5% in 2016 were Europe, which was at 11.3% in 2016 and the United States, which was at 6.6%.

There has been a lot of talk about electrical systems being operated entirely by renewables (such as hydroelectric, wind, solar, and burned biomass), but these do not exist in practice, as far as I know. Trying to replace total energy consumption, including oil and natural gas usage, would be an even bigger problem.

Slide 5

The amount of electricity required by consumers varies considerably over the course of a year. Electricity demand tends to be higher on weekdays than on weekends, when factories and schools are often closed. There is usually a “peak” in demand in winter, when it is unusually cold, and second peak in summer, when it is unusually hot. During the 24-hour day, demand tends to be lowest at night. During the year, the lowest demand typically comes on weekends in the spring and fall.

If intermittent electricity from W&S is given first priority on the electric grid, the resulting “net” demand is far more variable than the original demand pattern based on customer usage. This increasingly variable demand tends to become more and more difficult to handle, as the percentage of intermittent electricity added to the grid rises.

Slide 6

EROI is nearly always calculated at the level of the solar panel or wind turbine, together with a regular inverter and whatever equipment is used to hold the device in place. This calculation does not consider all of the costs in getting electricity to the right location, and up to grid quality. If we move clockwise around the diagram, we see some of the problems as the percentage of W&S increases.

One invention is smart inverters, which are used to bring the quality of the electrical output up closer to grid quality, apart from the intermittency problems. Germany has retrofitted solar PV with these, because of problems it encountered using only “regular” inverters. Upgrading to smart inverters would be a cost not generally included in EROI or LCOE calculations.

The next problem illustrated in Slide 6 is the fact that the pricing system does not work for any fuel, if wind and solar are given priority on the electric grid. The marginal cost approach that is usually used gives too low a wholesale price for every producer subject to this pricing scheme. The result is a pricing system that gives misleadingly low price signals. Regulators are generally aware of this issue, but don’t have a good way of fixing it. Capacity payments are used in some places as an attempted workaround, but it is not clear that such payments really solve the problem.

It is less obvious that in addition to giving too low pricing indications for electricity, the current marginal cost pricing approach indirectly gives artificially low price indications regarding the required prices for natural gas and coal as fuels. As a result of this and other forces acting in the same directions, we end up with a rather bizarre situation:  (a) Natural gas and and coal prices tend to fall below their cost of production. (b) At the same time, nuclear electricity generating plants are being forced to close, because they cannot afford to compete with the artificially low price of electricity produced by the very low-priced natural gas and coal. The whole system tends to be pushed toward collapse by misleadingly low wholesale electricity prices.

Slide 6 also shows some of the problems that seem to start arising as more intermittent electricity is added. Once new long distance transmission lines are added, it changes the nature of the whole “game.” It becomes easier to rely on generation added by a neighbor; any generation that a country might add becomes more attractive to a neighbor. As long as there is plenty of electricity to go around, everything goes well. When there are shortages, then arguments begin to arise. Arguments such as these may destabilize the Eurozone.

One thing I did not mention in this chart is the increasing need to pay intermittent grid providers not to produce electricity when there is an oversupply of electricity. In the UK, the amount of these payments was over 1 million pounds a week in 2015.  I mentioned previously that in China, 17% of wind generation and 10% of solar PV generation were being curtailed in 2016. EROI calculations do not consider this possibility; they assume that 100% of the electricity that is generated can, in fact, be used by the system.

Slide 7

The pricing system no longer works because W&S are added whenever they become available, in preference to other generation. In many ways, the pricing system is like our appetite for food. Usually, we eat when we are hungry, and the food we eat reduces our appetite. W&S are added to the system with total disregard for whether the system needs it or not, leaving the other electricity producers to try to fix up the mess, using the false pricing signals they get. The IEA’s 2017 Investment Report recommends that countries develop new pricing schemes that correct the problems, but it is not clear that this is actually possible without correcting the hidden subsidies.

Slide 8

Why add more electricity supply, if there is a chance that you can use the new supply added by your neighbor?

Slide 9

South Australia had two recent major outages–both partly related to adding large amounts of wind and solar to the electric grid, and the loss of its last two coal-fired electricity generation plants. The first big outage came during a weather event. The second big outage occurred when temperatures were very high during summer, and because of this, electricity demand was very high.

One planned workaround for supply shortages was natural gas. Unfortunately, South Australia doesn’t actually have a very good natural gas supply to operate its units generating electricity from natural gas. Thus, the available natural gas generators could not really respond as hoped, except at very high prices. Some changes are now being made, including a planned Tesla battery system. With the changes being made, there are reports of electricity rate increases of up to 120% for businesses in South Australia.

The irony of the situation is that Australia is a major natural gas exporter. Businesses expected that they could make more money selling the natural gas abroad as LNG than they could by providing natural gas to the citizens of South Australia. These exports are now being curbed, to try to help fix the South Australia natural gas problem.

These issues point out how interconnected all of the different types of electricity generation are, and how quickly a situation can become a local crisis, if regulators simply assume “market forces will provide a solution.”

Slide 10

An expert panel in Australia has recommended an approach similar to this. It simply becomes too difficult to operate a system with built-in subsidies.

Slide 11

Slide 12

Timing makes a difference. The payments that are made for interest need to be made, directly or indirectly, with future goods and services that can only be made using energy products. Thus, they also require the use of energy products.

Slide 13

Slide 14

There is a real difference between (a) looking at the actual operating experiences of an existing oil and gas or coal company, and (b) guessing what the future operating experience of a system operated by wind panels and solar panels might be. The tendency is to guess low, when it comes to envisioning what future problems may arise.

It is not just the wind turbines and solar panels that will need to be replaced over time; it is all of the supporting devices that need to be kept in good repair and replaced over time. Furthermore, the electric grid is dependent on oil for its upkeep. If oil becomes a problem, there is a real danger that the electric grid will become unusable, and with it, electricity that is generally distributed by the grid, including wind and solar.

Slide 15

Slide 16

Economies and humans are both self-organized systems that depend on energy consumption for their existence. They have many other characteristics in common as well.

Slide 17

We know that with humans, we really need to examine how a new medicine or a change in diet works in practice. For one thing, medicines and diets aren’t necessarily used as planned. Unexpected long-term changes occur that we could not anticipate.

Slide 18

The same kinds of problems occur when wind and solar are added to a grid system. We really have to look at what is happening to see the full picture.

Slide 19

Anyone who has followed the news knows about medicine’s long history of announcements followed by retractions.

Slide 20

A fairly similar situation can be expected to happen with proposed energy solutions.

Slide 21

There is a whole package of costs and a whole range of direct and indirect outcomes to consider.

Slide 22

As far as I know, none of the attempts at producing a system that operates on 100% renewable energy have been a success. There has been some reductions in fossil fuel usage, but at a high cost.

Slide 23

2013 Weissabach et al. EROI analysis examines a situation with partial buffering of wind and solar (approximately 10 days worth of buffering). It leaves out several other costs of bringing wind and solar up to grid quality electricity, such as extra long distance transmission costs, and more significant buffering to allow transferring electricity produced in spring and fall to be saved for summer or winter. These authors calculated a partially buffered EROI of 4:1 for wind, and a partially buffered EROI range of 1.5:1 to 2.3:1 for solar PV.

Of course, more investigation, including looking at the full package of needed devices to provide non-intermittent electricity of grid quality, is really needed for particular situations. Improvements in technology would tend to raise EROI indications; adding more supplemental devices to bring electricity to grid quality would tend to reduce EROI indications.

If the cutoff for being able to maintain a modern society is 10:1, as mentioned earlier, then wind and solar PV would both seem to fall far below the required EROI cutoff, if they are to be used in quantity.

If, as Hall believes, an EROI as low as 3:1 might be useful, then there is a possibility that some wind energy would be helpful, especially if a particular wind location has a very high capacity factor (can generate electricity a large share of the time), and if pricing problems can be handled adequately. The EROI of solar PV would probably still be too low in most applications. In any event, we need to be examining situations more closely, instead of simply assuming that hidden subsidies can be counted on indefinitely.

Original Post

Leo Klisch's picture
Leo Klisch on Jul 24, 2017

A lot of interesting points to consider.However here in Minnesota, Excel Energy is requesting the PUC to require a cost of carbon of up to $62.00/metric ton. They are planing to reduce CO2 emissions 60% by 2030 mostly thru wind and gas and some solar with existing nuclear, coal and gas likely being replaced by more nuclear in a few decades. Iowa is at 36% from wind, planning for 100% renewable for Iowa customers in the future. No doubt Iowa will import fossil and export wind at times but the transmission system will accommodate that.Other regional wholesale utilities don’t like the idea of carbon cost because they have existing coal plants that run on local coal. There are parts of the world that has much less wind and solar resources, and in this case I’m sure with a much higher cost of carbon nuclear will out compete wind and solar.

Helmut Frik's picture
Helmut Frik on Jul 25, 2017

Where to start with all these basic errors in the text?
– that competition in markets lowers prices is not a bug, but a feature of markets.
– that competitors with high emissions are forced out of the markets by low prices is also not a bug, bt a feature
– The ” simpe inverters” in germany were not wanted by solar branch, but required by the utilities, which did not want the “toys” wind and solar poer to “interfere” with “real” power generation when it comes to all kinds of grid services. So utilities had to learn the lesson the hard way, retrofit of inverters was required and payed by utilities, when they found out that “real” power generation could not do the job in facts.
– In south australia the coal power station itself caused several large scale blackouts in south australia due to internal failures, which did not happen with wind and solar. Sewere stroms causing a unique sequence of grid failures, and ignorance of regulators about grid services, along with inexistent frequency control and ignorance about n-1 criterias regarding grid connections led to the blackouts. keeping the basic 1×1 of operating grids in mind would have keept the lights on in SA, independent weather power comes from wind, solar, gas or coal. (respecting the 1×1 of operating grids would also have kept the lights on in the earlier blackouts caused by the northern power station, so violating basic rules has tradition in SA).
– El Hierro has no operational hydropower station, it is used as variable resistor only.
– Germany has Months with > 50% renewables in the grid now, without signficant changes in the import/export behavior of the grid. German grid is expanded, to accomodate >>50% renewables in the grid.
– there is not a slightest argument in numbers why EROI of solar should be reduced below 1 in the text. In reality, energy used to produce solar equipent is constantly decreasing while oputpt per m² of equipment is rising. At the moment, e.g. use of silicon is being reduced from 5,5g/W in 2015 to about 3,5g/W in 2020 (Market average) production methods are already heading to market to shrink the needed amout of silicon further to about 2g/W in 2025. In parallel the amount of energy which is needed to produce solar grade silicon and ingots is also constantly being reduced per kg of silicon.
Fact is the energy invested drops threw the floor for solar equipment like the priced do, too. Which has effect on energy payback times and EROI. Energy paybeack times in the very low singe digit muth areas allow to invest the mayor part in grid extensions instead of power production, woithout having higher costs than with conventional power production.
Keep in mind, that the last tenders in India came back with prices at or below the fel costs of the existing coal power stations. Which means it safes money to build a new solar power plant ad let the coal power staion sit fully manned idle next to it, instead of running the coal power staion all day.
Next step to safe money then is to shift demand to daytime (instead of shifting it to the night as today), and replace the idle coal powe rplant with something cheaper.
There is no possibility that a solar power plant undercuttting the fuel costs of the coal power plant has a lower EROI than the coal power plant.

Rick Engebretson's picture
Rick Engebretson on Jul 25, 2017

Have you ever encountered a Biophysical Chemist at your Biophysical Economics conferences?? I have looked hard in Minnesota and elsewhere for actual sustainable bio-technology science and get nowhere! The old political “we gotta do this” mantra never defines what “this” is!

My effort last week arose because the US West is full of fire, with Montana smoke in Minnesota, and our tropical July is growing biomass out of control, and a PBS station broadcast old pictures of Minnesota wildfires. I have no idea why wildfire of biomass isn’t a concern to either leftist climate political scientists or rightist climate deniers.

The closest I found was a professor at the U of MN. chemical engineering doing numerical simulation of undefined model polymers; similar to “ideal gas” thermodynamics. The problem is cellulose is full of electrodynamic bonding forces, so his model will greatly underestimate the EROEI cellulosic biofuels. However, bad science seems to sell very well politically, as your article describes.

Years of accumulated biomass and years of no Biophysical Chemistry could become years of smoke.

Helmut Frik's picture
Helmut Frik on Jul 25, 2017

Hmm, just a stupid qestion – is there no retierd coal fire plant nearby which runs on fluidised bed combustion? As far as I have heared they can run on shredded wood with small adoptions. Here the residualwoods from cleaning up dead wood in the forrests where neccesary is often the base for district heating, and cold be a base for backup power using retired coal power plants. If noone wants to produce liquid fuels of surplus wood in the forrests.

Engineer- Poet's picture
Engineer- Poet on Jul 25, 2017

our tropical July is growing biomass out of control, and a PBS station broadcast old pictures of Minnesota wildfires. I have no idea why wildfire of biomass isn’t a concern to either leftist climate political scientists or rightist climate deniers.

I might just have a solution to that.  It converts biomass to liquid fuels.  It would require a massive increase in electric generation to carry to completion, but could work at reduced efficiency until the power is available.

The basic idea is to provide a sink for excess electric power which can operate as a dump load to absorb as much as we’re likely to have, and make productive use of it.  No idea of turndown ratio yet, that’s my next step.  I think I can get standby power demand all the way to zero, which is better than a wind turbine.

No details until things are filed, sorry.

Years of accumulated biomass and years of no Biophysical Chemistry could become years of smoke.

The problem all over is that thinning out undergrowth and dead matter without fire is an expensive job and nobody wants to do it.  Nobody wants fires either.  But if you can do it at a profit, there might be something there.

Engineer- Poet's picture
Engineer- Poet on Jul 25, 2017

An EROI of 10 means 7.5 times as much overhead expenditure as an EROI of 75.  That extra 8.7% isn’t just energy, it’s labor and materials as well.

Part of the problem we have is that a lot of our economy is coasting on high-EROI investments made long ago and a heap of debt.  If you lose either of those, the impact will be huge; lose both and we won’t recognize things.

Rick Engebretson's picture
Rick Engebretson on Jul 26, 2017

Helmut, I’m more confused than you by the complete breakdown of US common sense.

But I have a big favor to ask. I found some great talent and intent at the University of Minnesota Bioproducts, Biosystems Engineering Dept. I believe Prof. Shri Ramaswamy needs a German rescue before drowning in a sinking Titanic. Another prof., Bo Hu and physics student Taher Ghasimakbari are clearly dedicated to Biophysical Chemistry solutions. Shri called me, and it has been a very long time since I was so impressed with skills. I declined to call Bo Hu back or try Taher since being upstaged by India, China, and Iran science would only add confusion.

I’ll stick with treasuring German OpenSuse Linux. You grab these scientists and let Americans try figure out why forests burn.

Helmut Frik's picture
Helmut Frik on Jul 26, 2017

Wholesale prices are dropping in germany, as well as prices for large industrial consumers. Only prices for households are high representing only a quater of eectricity consumption, and these mainly due to high taxes on electricity. This is about to change, since higher shares of renewables in the grid lower CO2 emissions per kWh produced, which makes it reasonable to lower taxes which should limit use of electricity, and rais the taxes in the same amout on oil, gas etc where CO2 emissions today are comparitively higher since staying constant per kWh of energy for end use. This is likely to spoil your argument.
Prices for enduser electricity and renewables penetration do not correlate due to high costs of renewables, but they do correlate because they come from the same singe source, which is a politics considering CO2 emissions in the power sector.
Germany so far has problems with CO2 emissions outside power sector, in the traffic and building sector. The expected change of politics regarding oil, gas and electricity (for use in heat pumps) as mentioned above is likely to change this substantially for the bilding sector. Which leaves the traffic sector to be solved. If politics changes as expected.

Helmut Frik's picture
Helmut Frik on Jul 26, 2017

OK, then explain how solar can produce power below the fuel costs of coal, and how this should work out if less money, labour etc is spent on coal power than on solar power (your hypothesis)
Reason tells that the amount of money, work etc. of solar is significant lower for solar than for coal power wihen solar can sell power below fel costs of coal in several regions of the earth now. Same with the prices for nuclear. If solar sells power in India or the MENA region at a quater of the cost per kWh of nuclear in Hikley Point &Co this makes it reasonable that the amout of money, work etc. for solar is significantly lower than for nuclear.
sually it is more likely to lead to success when such differences between reality and theory exists to look where the errors and miscalculations are in the theroy, than to look for errors in the reality.

Helmut Frik's picture
Helmut Frik on Jul 26, 2017

About 1) negative prices in germany hapen when there is too much nuclear power in the market for the demand at the moment. A lot of old lignite pwoer stations online at the moment whoile gas and hard coal are almost abent from the market beside must run combined generation units increase the likelyhood of negative or zero prices. Renewables influence this only insofar that they cause flexible gas and coal power stations to leave the market. So your argumentation and reality in german power market leads to the result that nuclear pwoer generation is worthless, at least at some times. Is this what you want to tell?
About 2) if you do not understand what “real” in this context means, I can not help you. It has nothing to do with your therory. Read what I have written, and learn german and read the old documents, mostly on paper of that time to learn abot the attitude of german utilitys at that time. Context “Hybris”. Leading to false decisions which had to be corrected at signifivcant costs by the utilities later on.
About 3) first one would use the grid to transport power from areas o surplus to areas of lack of power generation, before storages are needed. At the moment in moths with 50% renewables in the grid, this transportation cross border is not yet needed. It will be needed when penetration is significant higher, maybe at 60 or 70% renewables in the grid per month. Storage might or might not be needed depending how grid expansions will be in costs compared to storage costs. This question is relevant above 80% renewables in the grid, and depends on the price development of all kinds of storages.
about 4) Still also to provide reliable power it is cheaper to let the coal power station sit idle during the day. The fuel to run it is simply too expensive to make it worth running it. Unless you want to say that it is impossible to adopt the output of a coal power station to (residual) demand – in this case it is also a kind of unreliable power source, which would need huge resistro banks where to waste unwanted power in times when demand is below maximum. Fortunately, in reality this is not the case, and it is no problem to ramp down the coal power plant in a hour, and ramp it p again in a hour as long as it is kept warm. With solar power prices in India it is cheaper to build a new solar power plant next to a coal power plant and keep the coal pwoer plant in warm standby during the day. Since there are a lot of cheaper options that a coal power plant staying in warm standby during day and runing more or less during the nicht, this is not a stable arrangement, even though it is cheaper than running the coal power staion day and night. Which means the coal power station will vanish completely relatively fast from this scenario, being replaced e.g. by a gas fired plant and similar systems. Most likely combined with grid expansions, resulting in a much lower nameplate capacity of the gas fired plant than the previous coal fired plant. And many other options.

Mark Heslep's picture
Mark Heslep on Jul 26, 2017

Utility solar per Lazard has cost at least 5 cents per kWh, and that cost must rise as solar share grows into curtailment. Coal as fuel is cheaper, growing cheaper still per kWh as the coal fleet modernizes into superctitical.

India as an example makes the case for coal, not solar, installing the 2nd most new coal power behind China in 2016, with much more under construction.

Mark Heslep's picture
Mark Heslep on Jul 26, 2017

Perhaps, and perhaps the price of coal will drop further as demand falls in some places. The price of solar will still *increase* as the grid share rises above capacity factor, forcing curtailment.

Helmut Frik's picture
Helmut Frik on Jul 27, 2017

a) Lazard Costs are historical costs, which do not show – by definition – actual market developments.
b)Lazards numbers fit at the moment to the tender results in germany. India has about twice irradiation and lower labor costs, resulting in a higher output of systems built at lower costs. The tender results in India follow this difference.
c) In the model example to build a solar power station with the same output as a neighbouring coal power plant (AC-side) any curtailment which hits the solar power plant wourl have hit the coal power plant in exactly the same amount at the same time, having zero effect on the fact that the solar power station remains below the fuel cost of the coal power station.
d) India canceles a lot of new coal power projects due to the recent developments in the solar power market. This naturally leaves a lot of projects which started planning or construction under totally different market conditions.

Bob Meinetz's picture
Bob Meinetz on Jul 27, 2017

Mark, curious why you’re quoting an investment bank (Lazard) as a reputable source for LCOE.

It’s the job of Lazard Asset Management, LLC bankers to deliver returns on the $194 billion in assets they manage for their clients. What would anyone doubt the purpose of Lazard “research”, from public distribution of which they earn nothing, is to gin up the value of their clients’ investments?

Engineer- Poet's picture
Engineer- Poet on Jul 27, 2017

the point he is making is that it’s cheaper to use renewables if the electricity they provide is cheaper than the fuel for dispatchable electricity. This is the case even with ZERO batteries or storage, and with ZERO subsidies.

If you need the dispatchables as spinning reserve for the unreliables, you are going to expend energy in the dispatchables regardless.

The only fair solution is to require the unreliables (so-called “renewables”) to give a tithe of power to the dispatchables to keep their systems hot in lieu of burning fossil fuels.  Anything else externalizes the cost of their unreliability.

the people who initially proposed a carbon tax know much more about the topic than you do.

Perhaps some of them do.  A great many of those are disingenuous (e.g. those “renewables” proponents who include the fires of a nuclear war in the carbon footprint of nuclear power), and a lot of the others are clueless ideologues.

Helmut Frik's picture
Helmut Frik on Jul 27, 2017

Well, with existing prices most coal mines financially stand with the back to the wall. With falling coal prices this will most likely lead to failing and closing mines and lower coal supply. Production will then concentrate on the cheapest ressources of coal, till the last mine closes. Coal power stations further away from low cost mines will die first, mines closer to low cost mines will die later.

Darius Bentvels's picture
Darius Bentvels on Jul 27, 2017

Sorry Gail, it will help when you learn about electricity (grids, markets, etc).
This 2015 overview PPT regarding integration costs may be a good start. Note that renewable prices are too high in that PPT. E.g. Offshore wind is now <6cnt/KWh in NW-continental Europe.

This TEC post (and the linked publications) about the German market, also helps.

You may then try the French ADEME simulations model:

And study some of the many earlier German simulation studies.

Mark Heslep's picture
Mark Heslep on Jul 27, 2017

The last mine closes? Global coal production is 5 or 6 billion tons/yr. Germany still condemns small towns into oblivion to begin new surface coal mines.

Mark Heslep's picture
Mark Heslep on Jul 27, 2017

Paper ‘cancellation’ metrics of vaguely planned cial plants are relevant only to press releases. The record of annual new plants brought online and under construction is relevant to emissions. India has strongly increased its coal generation year after year, with much more on the way.

Helmut Frik's picture
Helmut Frik on Jul 27, 2017

Things are changing fast in germany
And those are among the most competitive mines in the world, and still slowly preparing for closure.

Helmut Frik's picture
Helmut Frik on Jul 27, 2017

This depends if you only want to see development in India this year, of if you want to see how the trend develops in several years or decades.
When no new plannings of coal power stations happens one day in not tooo distant future you will find that all coal power stations are finished, and no further construction starts because no further planning in happening. Then only closures of coal powered plants is happening.
Almost finished new powr plants are those least likely to be closed (beside just opened power plants). So I would not expect changes to start with them. Plannings being canceled, and old power plants being closed a bit more early are the places where changes should be seen first.

Mark Heslep's picture
Mark Heslep on Jul 27, 2017

The coal plant capacity data has no dependencies, and the trend is apparent.
India coal capacity
2007 71 GW
2012 112 GW
2017 192 GW

After 17 yrs of no net coal closure in Germany, despite 40 GW of installed solar, a call to just wait some more for the ‘not to distant future’ appears like coal advocacy.

Daniel Duggan's picture
Daniel Duggan on Jul 28, 2017

The issue is simply this; what is the cost to the end consumer of providing a dependable 24/7/365 electrical supply when variable renewable generation is included in the generation mix, compared to the cost of the same service without any requirement to accommodate variable renewables. The financial benefit of variable renewable generation is the value of the reduced fuel consumption and variable maintenance cost at power plants which must be kept fully manned and available to plug the invariable gaps in variable renewable energy production, while the cost is the direct payments to the wind or solar energy generator plus the additional grid costs plus all renewable energy related indirect subsidies and tax breaks. As an example; a wind farm receives €80/MWh, wind related grid costs are €20/MWh, and other hidden costs €10/MWh, total cost of a MW of wind generated electricity is €110/MWh. On the benefit side of the equation there is a €19/MWh fuel cost saving and a €1/MWh saving in variable maintenance, total €20. In this case each MW of wind power sold to the grid adds €90 plus the electricity retailer’s margin and sales tax to the consumer’s utility bill. All further discussion aroundd this topic is based on opinions as to whether or not this is money well spent rather than facts.

Roger Arnold's picture
Roger Arnold on Jul 29, 2017

No, the grid requires dispatchable power.

Better to say it requires controllable power. Not quite the same thing. A lot of the balancing between supply and load happens automatically, as a consequence of feedback to the turbine and generator controls for voltage and frequency stability. Change in power output at that level aren’t considered “dispatch”. Dispatch comes into play when it’s necessary to command startup or shutdown of a generator in order to avoid pushing other generators beyond their safe or efficient throttling ranges.

.. For this reason, coal and nuclear plants by themselves are not sufficient for an electricity grid either, unless you want to use them as “spinning reserve” ..

Largely correct, as long as that “by themselves” is in there. But there’s a way to convert a nuclear power plant to a flexible generation facility that doesn’t require new reactor technology or even throttling back the core. I first saw it proposed by Dr. Charles Forsberg of MIT. When full output from the NPP isn’t needed, divert surplus portion of its high temperature steam to a large high temperature geothermal heat store. When demand exceeds full output, draw on the stored geothermal heat to produce additional power.

I don’t know if that scheme has ever been implemented, but it seems to me it would be an economical way to achieve flexible generation for load following and backing of renewables.

Engineer- Poet's picture
Engineer- Poet on Jul 29, 2017

When full output from the NPP isn’t needed, divert surplus portion of its high temperature steam to a large high temperature geothermal heat store.

Replace geothermal with molten salt, and you have Cal Abel’s concept.

Bruce McFarling's picture
Bruce McFarling on Jul 31, 2017

Note that not charging for the external costs of CO2 emissions IS a subsidy. Asking that grid costs be charged to variable renewables while refusing to charge external costs to carbon emitters is one free rider standing up and pointing to someone else, “check their ticket! check their ticket! they did not pay the correct fare!”

Bruce McFarling's picture
Bruce McFarling on Jul 31, 2017

“The only fair solution is to require the unreliables (so-called “renewables”) to give a tithe of power to the dispatchables to keep their systems hot in lieu of burning fossil fuels.”
But the dispatchables that net emitters should still be charged for their emissions. Failing to do so is a major market distortion.

Roger Arnold's picture
Roger Arnold on Aug 1, 2017

.. nor can we convert intermittent sources of power to reliable power sources at the scale necessary to power our society (batteries) without unacceptable costs.

Define “unacceptable”.
Batteries aren’t the only technology available for energy storage. They’re easy to use, and they’re benefitting from intensive development driven by the EV market potential. But not the only option, nor the best (IMO) when it comes to very large scale.

Better options for very large scale energy storage include:

hydrogen generated largely on demand from stored carbon-based fuels. preferably with CCS. Some amount of gaseous H2 buffering storage would be needed, and that storage could accommodate some level of electrolytic hydrogen, but electrolysis is too inefficient and capital intensive to be the main source of hydrogen.
various forms of gravity storage. Those include conventional pumped hydroelectric (where geography permits), pumped storage to deep tunnel reservoirs, gravity storage in weights hung from large stratospheric platforms (explained here), and gravity storage from large earth and rock plugs moving in deep shafts. The latter sounds wild, but is actually (IMO) very practical — once its proponents learn how to seal the moving plugs against the shaft walls.
various form of CAES and hybrid gravity storage with CAES. A little complex to explain here, but there are (again IMO) much better options than what Lightsail was pushing.
some wildcards that I haven’t heard much about recently, but that seemed promising from a technical viewpoint. They include Isentropic Energy in England, and the guys in Montana (I think it is / was) developing CO2 plume geothermal.

Probably only the first of these options is sufficiently scalable to deal with seasonal variation of solar. But the amount of storage needed for daily and weekly smoothing can be reduced a lot by implementing discretionary loads. The economic price tag will be high if one insists on 100% renewables (i.e., excluding nuclear), but substantially lower if baseload nuclear + discretionary loads are accepted.

Of course, one could argue that if nuclear is accepted at all, why not just go nuclear + discretionary loads for the whole system, and forget about renewables. That’s a different argument, however.

Roger Arnold's picture
Roger Arnold on Aug 1, 2017

I see that lists still don’t work. Makes my comment above a bit hard to read. Oh well.

Helmut Frik's picture
Helmut Frik on Aug 1, 2017

Large industrial consumers in germany pay around 4,5-5ct/kWh. medium sized commecial users pay 15ct/kWh, houshoöds pay around 25 ct/kWh wherever I look here. Differences to the S are taxes , not production. Also a component for houshold is smaller consumption per house – less than half compared to the US, rising the fixed costs per connected house.

Helmut Frik's picture
Helmut Frik on Aug 1, 2017

There have been several GW of net closures of coal poer stations already in germany this year, and you know this.
As far as India is concerned, there is no use to look at old data for signs of a price trend which started this year.

Engineer- Poet's picture
Engineer- Poet on Aug 2, 2017

I see that lists still don’t work.

I’ve complained about this and told them to remove whatever filter rules are taking out the list tags, but apparently there is no one in the organization with the technical skill to do that.

Engineer- Poet's picture
Engineer- Poet on Aug 2, 2017

But the dispatchables that net emitters should still be charged for their emissions.

As Geo noted, you’re going to have to run the dispatchables anyway.  However, you can influence several things.

1.  Both a power tithe and a carbon tax favor nuclear power for base load.
2.  A carbon tax favors non-fossil fuels for the dispatchable plants.
3.  Batteries are far too costly for long-term backup power… but other things may not be.  For instance, consider plasma gasification of municipal solid waste.  We have lots of MSW and straight landfilling is prone to leaching of product liquids as well as escape of methane from decay.  Using excess power from wind, PV and nuclear to turn MSW into fuel gas and inert, non-leachable solids gets rid of both problems.  It’s doubtless that practically any fossil-fired power plant can burn this gas, either as-is or after modest modification.  The only issue is storing sufficient amounts of gas to serve as an energy buffer.  Geologic reservoirs will be required, and hydrogen in particular is an issue in reservoirs of some rock types.

Per the EPA, the vast bulk of MSW is carbonaceous matter suitable for gasification.  For that matter, a lot of hazmat probably is also.  Making hazmat which is hazardous because of complex molecules containing carbon (e.g. dioxin) into simple molecules with any hazardous properties easily neutralized would be a small contribution to energy, but a big contribution to environmental safety.

Mark Heslep's picture
Mark Heslep on Aug 2, 2017

References please.

Mark Heslep's picture
Mark Heslep on Aug 2, 2017

Fraunhoffer: 28.4+20.9 GW of German coal in 2016, same in 2017 current to last month. New coal plant at Dattln under way. Much more new gas power installed over last 15 years. More nuclear soon to close. And electric rates way up.

Good time to be in fossil power business in Germany, all political cover free of charge from Greens.

Darius Bentvels's picture
Darius Bentvels on Aug 2, 2017

I read that the stopped with the new Datteln plants even while it would be a CHP plant, because to the bad economic prospects?

Seems to me logical as the plant has to get coal from elsewhere (via the river, may also via rail). The extra transport, etc. costs are killing in the sharp competitive survival battle which is now going on in Germany.

Helmut Frik's picture
Helmut Frik on Aug 2, 2017

Google e.g. for Voerde (2,2 GW) and other blocks in germany. The Data sheet at Fraunhofer ahs not received a update for a long time. Newspapers are a bit more up to date about slosures.

Peter Lang's picture
Peter Lang on Aug 5, 2017


This is an excellent post, thank you.

Regarding your conclusions #1 and #2, you might be interested in this excellent post by Adjunct Professor, John Morgan:
The catch 22 of energy storage
Figure 1 compares the EROI of electricity technologies, with and without buffering, with the break-even EROI need to power modern society. Buffering includes all the back up, energy storage and electricity system technologies needed for each technolgy to meet system stability and reliability requirements.

Engineer- Poet's picture
Engineer- Poet on Aug 5, 2017

We need a carbon tax sufficient to make fossil-backed ruinables more expensive than nuclear.

Engineer- Poet's picture
Engineer- Poet on Aug 7, 2017

Maybe a bit more and a slightly elevated cost. 20%? maybe 30%?

When the generation share of any intermittent source gets close to its capacity factor, costs soar.  The capacity factor of Iowa wind is about 33%; the only reason Iowa has been able to hit a 40% wind share is by exporting surpluses.  This game ends when the neighbors all have surpluses at the same time as Iowa.  The only way around this is to store energy somehow.  Batteries cost 100x too much and pumped storage is too limited by geography.

Beyond that we likely need to seek something better. Advanced nuclear, improved hydro, geothermal. We can probably patch together a solution with geothermal/ hydro and wind solar getting us to 50%

Hydro is limited by rainfall and geography to something around 7%, most of it in the PNW.  Geothermal is never going to amount to much.  NREL’s projections are that less than 20 GW is feasible in the entire US.

Absent something like a volcanic intrusion, geothermal is a non-renewable resource.  Assuming you can get 33% efficiency, 1 GW(e) requires 3 GW(th).  Rock has a heat capacity around 1 J/g-K and typical rocks have densities around 3.5 g/cc.  This means a cubic kilometer of rock has on the order of 3.5e15 J/K of heat capacity; pulling heat out at 3 GW would reduce the temperature of that cubic kilometer at a rate of about 1 K every 2 weeks.  The input temperature of your powerplant, and thus its efficiency and output power, would start falling almost immediately.

You could re-heat geothermal reservoirs from surpluses of wind and solar, but at 3 W average input to get 1 W average output that’s going to be very costly… and 33% is optimistic.

another 30%nuclear, and 20% advanced natural gas

We know 80% nuclear works, because France has done it.  AAMOF, it’s the only proven way to decarbonize a fossil-based electric grid.  If this is a problem that needs solving, we need to go with the only proven solution and do it now.

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