Wind and solar are getting cheaper and cheaper and financial institutions and countries are increasingly turning away from fossil fuels, but 100% renewable energy is a long way off. Protecting wild places and returning agricultural land to nature can prevent biodiversity loss and help tackle climate change.
While it’s useful to compare the current operating costs of generating one unit of electricity (a megawatt-hour – MWh) by existing coal, oil, gas, nuclear, wind, solar and hydro plants, it’s more useful to compare the ‘levelised cost of energy’. The levelised cost includes not only today’s operational costs but also the cost of building, servicing and decommissioning the plant throughout its entire expected life. The average global levelised costs of utility-scale solar, wind, coal and gas in US dollars in 2009 and 2020 are shown below.
The levelised cost of nuclear and coal have changed very little over the 11 years but the other three have become much cheaper, particularly solar which has gone from being the most expensive to the cheapest. In fact, the current operating cost of an existing coal plant is US$41, more expensive than the whole life cycle levelised cost of wind and solar. No wonder the smart money is fleeing fossil fuels.
Talking of which, 56 global banks, insurers, pension funds and asset managers have announced new or expanded coal exit policies in 2020, making 143 in total. Financial institutions fleeing coal is becoming ho-hum, or would be if the rate wasn’t increasing, but what is new is that they are also beginning to exit oil and gas. Over 50 global financial institutions have introduced restrictions on financing oil sands and/or drilling in the Arctic, 23 just this year. One of the largest lenders, the European Investment Bank, has announced that it will be out of all oil and gas by the end of 2021. Why wouldn’t you when you see that ExxonMobil has lost 50% of its shareholder value (US$150 billion) since the beginning of 2020? As Tim Buckley says, global capital is not acting this way simply for lofty social or environmental reasons, or as some ministers like to snipe for ‘virtue signalling’, but rather ‘… mainly because it is the economically sensible thing to do. Their fiduciary duty is to manage risk, and there is no bigger risk than the financial risks of climate change.’ It’s not just lenders and investors though, countries are also announcing plans to get out of fossil fuels: China, Japan, South Korea, the Philippines and Thailand all announced new or more stringent plans during October. Buckley was interviewed about this by Fran Kelly on RN Breakfast a couple of weeks ago.
The falling cost and growing attractiveness of renewable energy is well demonstrated by the graph below which demonstrates the four-fold increase in production of solar and wind energy in Millions of Tonnes of Oil Equivalent (Mtoe) between 2005 and 2018.
But I wouldn’t want you to get carried away by this escalating increase in the roll out of renewable energy. The source for the graph above is the graph below which is interactive on the website and allows you to display any combination of the fuel sources. As you can see from the data I have added to the right (from the same source), in 2018 wind and solar still provided only 2% of total global energy, while coal, oil and gas provided 82%. There’s a long way to go before the world is 100% renewable.
‘Tragically, in the past 50 years we’ve lost half of our natural land, destroying two-thirds of all living creatures on earth. We must reverse the damage and we can by creating the Global Safety Net, a network of land areas that are vital for nature and humanity.’ So begins a 3-minute video that briefly explains a plan to tackle the twin crises of climate change and biodiversity loss by protecting half of the world’s total land area. But not just any 50%. The plan identifies six distinct types of land (over a third of which is controlled by Indigenous populations) that need protection:
Areas already protected by governments 15% of total land area
Rare Species Sites 2%
High Biodiversity Areas 6%
Large Mammal Landscapes 6%
Intact Wilderness Areas 16%
Climate Stabilisation Areas 5%
The Net’s vision is for a system where nature and humanity can co-exist and thrive together.
A different plan with much the same idea was recently published in Nature. This plan proposes to return a carefully chosen 30% of the world’s farmlands to nature to dramatically increase the absorption of atmospheric CO2 by vegetation and prevent over 70% of predicted animal and plant extinctions on land. Areas that were wetlands and forests are top of the list for restoration because of their biodiversity and potential to soak up CO2 but arid areas and grasslands are also valuable and cost less to buy. Remarkably, full ecosystem functioning can return to tropical forests in 70 years; it can be even quicker in grasslands and shrublands. All this while preserving food supplies by intensifying food production in remaining farmland in sustainable ways, and consuming less meat and dairy. Where will the money come from? We can start by redirecting the trillions of dollars paid out each year in subsidies to fossil fuels and unsustainable farming practices.
Gray wolves, common across the whole of North America before the arrival of Europeans, were hunted almost to extinction in the USA by the mid-20th century. After 45 years of protection they are no longer considered in danger. So, should they be taken off the national Protected Species List and let states and native American tribes be responsible for their control? Will hunters and ranchers run riot again? Wolf numbers may be looking better than they were but genetic diversity (very important for species survival in changing conditions) is low and they are nowhere near as widespread as they were. And it isn’t just the wolves themselves that need to be considered. As a top predator they have a big influence on the numbers and range of grazing animals and hence of vegetation type. If we found a small band of Tasmanian Tigers and let their numbers build up, would we allow them to be hunted again? (Rhetorical question!)
Peter Sainsbury is a retired public health worker with a long interest in social policy, particularly social justice, and now focusing on climate change and environmental sustainability. He is extremely pessimistic about the world avoiding catastrophic global warming.
Comments
4 responses to “Sunday environmental round up, 8 November 2020”
Thanks for the numbers Peter; I will think them over. Some quick impressions…assumptions make a big difference in this game and they can vary greatly. Let me know where/when I can get a $20,000 EV equivalent to a typical ICV today, and what its real lifetime cost will be when the batteries have to be replaced maybe at 10 year intervals. The big transport problem is long distance trucking, where hydrogen is much preferable to batteries, and from what I read unlikely to be much good given that the weight of hydrogen plus tanks that would have to be carried, infrastructure difficulties, and high energy losses…PV to wheels efficiency via hydrogen or ammonia around 10%? Even bigger problems for aircraft and shipping.
Most of that $100b cost you estimate would go into only replacing FF power plant plus infrastructure but not including storage I would think, meaning that the bill for that needed to replace the 80% of demand that is not electrical would probably be much higher. Yes much such as steel can presently be provided via electricity, but that would be being done now on large scale if it was cost competitive.
You foresee only an 18 GW storage task; that’s not very meaningful as what matters is how long it would have to plug gaps, i.e., what GWh capacity would be needed. That depends on the size of the infrequent big gaps. In these the percentage of annual use to come from storage is not the important measure; it might be very low while a one week cold, cloudy and calm event (lasting weeks in Europe) might need a lot of GWh storage capacity to cover. Lenzen et al estimated that for a 100% renewable power supply the worst week in 2010 would have needed a storage over 1000 GWh. (Again much depends on assumptions and strategies; they relied mostly on solar thermal.)
Unfortunately we still have very few simulation studies capable of taking detailed annual weather data and deriving conclusions re what pattern of renewables located where with what capacity of what kind of storage might be sufficient to meed demand all through the year, with what transmission and grid strengthening… at what total cost.
Ted
1. All the numbers are additions to what you would pay for replacing conventional gas/petrol with electric. i.e. you have to invest say $60,000 in a car instead of $40,000, $4,000 in a heat-pump hot water system instead of $1,200 in a new gas system etc. However the additional upfront investment earns $6-7,000 per year far more than the interest and depreciation, and remember for the family this is after tax income at their marginal rate. It is worth almost the same as a 7-10% pay rise for the average family. Lower energy costs for their suppliers will also lower other bills.
Re the grid, when examining a renewable system it is helpful to consider it as an energy system rather than a power system. The $100 bn includes storage because it is based on excess energy capacity reducing the storage needs. . Lenzen et al has been superseded
a) because they ignored changes in demand profiles due to warming climate, and energy efficiency particularly in industry
b) they forgot that all reliable energy systems have always had significant overcapacity. For example in the NEM in 2010 if all coal gas and hydro had run at optimum economic capacity we would have generated 300-330 TWh but we only needed 210 TWh. As both the standing costs and operating costs of renewable capacity is lower than that of thermal plants, building even more excess renewable capacity is still economical.
c) they underestimated the improvements in capacity factor of both solar and wind. For example in 2010 26.3 GW of German wind produced 38.5 TWh the average capacity factor being 16.7%. It has already reached about 24% this year and as old 15% CF turbines are replaced with new 40%+ machines onshore and 60% machines offshore (Halliade X) it will reach about 40-45% fleet wide by 2030. This has four benefits,
a) less capacity is needed, reducing costs,
b) fewer turbines and transmission lines are needed reducing environmental disturbance
c) these low wind turbines can be sited in many more locations close to the load and be economical. In the German case wind in the south becomes cheaper than high performance wind in the north after accounting for transmission charges and losses.
. but the most important and least obvious is
d) To achieve higher capacity factors turbines must generate for many more hours per year in fact 2-3 times as many. The London Array is providing some power 95% of the time and those turbines are already two generations old. This means the depths and duration of the dips are significantly reduced.
e) Similar but not as substantial improvements are happening with solar capacity factors due to bifacial panels, selective coatings to capture diffuse radiation and of course tracking or fixed East west systems. But the big change in solar is reduced cost, so now a 100 MW large scale solar system might have 130 MW and in a few years, 150 MW of panels because the expensive bit is the substation and grid connection. At noon on a perfect day the station still only produces 100 MW but on a hazy or partially cloudy day or in Europe with bifacial panels and snow on the ground or in Australia an hour before sunset it is still producing 70-80 MW vs the old fixed tilt 100 MW plant producing 15-30 MW in those circumstances.
A recent example of recognition of this reality is the AEMO Integrated System Plan. The initial version called for 20 GW of pumped hydro, the latest version 5 GW.
Another example is that In the last 12 months the worst VRE week in Germany was 25.5% of supply out of an average of 38.8% from VRE for the whole year, whereas in 2010 it was 4% vs 9.4% for the year, i.e, the worst week was 65% of the average VRE supply this year vs 48% in 2010.
Returning to the Australian case. we have peak hydro supply on the NEM of about 20% of peak demand, in Germany peak hydro + peak imports is a bit less than 20% of peak demand but we have 60% more sunlight, a 4,000 km long grid with highly variable weather conditions across it and much higher average wind power. We also benefit from being technology followers in that we aren’t stuck with about 50 GW of old inefficient wind and solar, we have lower land costs and far lower energy demand so we can cherry pick the best sites. Germany consumes about 10 times as much energy per square km as we do just within the area served by our electricity networks
I could give you a whole other lecture about how replacing most heat and transport with electricity, but rest assured energy use in those areas would be reduced by anywhere between 90% fuel refining and distribution – 80%, heat-pumps and delivery vehicles and 20%- cooking
Peter your comments on renewables seem to me to be correct but somewhat misleading. The field is quite unsettled, and commonly confused when people attend only to production cost per kWh while neglecting the full cost in a system with sufficient storage to cope with intermittency. At present it is easy to add renewable generating capacity without adding much if any storage provision but as penetration increases these and other costs escalate. The academic/technical literature is far from agreement or clear understanding of how costly in plant and dollars it would be to have highly reliable high penetration provision. Some of them find that to meet a 1 kW demand reliably over a year would require construction of enough plant to generate 3 to 10 kW.
The situation is not clear for electricity but it is much more problematic re the other 80% of energy demand in non-electrical form. Various published studies, including some of my attempts to estimate, conclude that this cannot be done at an affordable cost. As you note at present renewables provide only about 2% of world energy. It seems pretty clear to me that if renewables are to meet a high proportion of the energy demand in typical rich world energy-intensive societies the cost is going to be disruptively high.
As with all the big global problems there is fierce refusal to think about the only solution that makes sense, that is to recognise that resource consumption, affluence and GDP are far beyond sustainable levels and we must face up to dramatic degrowth to a stable, post-capitalist economy.
It is not at all clear that the cost will be disruptively high. to give a simple example.
The average Victorian household uses about 3.8 MWh of electricity and a similar amount of gas and slightly more in transport energy. Overall they spend about $4,000-$7,000 on energy per year.
When their gas space heater wears out they can spend an extra $3,000 to replace it with heat-pumps, the same with the stove and hot water service so the incremental investment in electrifying the house is say $10,000. Then they spend another $12,000 putting 10 kW of solar panels in an east west configuration on their roof and when their car wears out they spend an extra $20,000 replacing it with an equivalent EV. The solar system will generate more energy than they are using over the year so it is saving them about $5-6,000 per year including vehicle fuel. The EV will also save them about $1-2,000 per year in service and depreciation. Overall an $6-7,000 per year return on a $40,000 investment. At current interest rates an extra $40 k on the mortgage is $1,200 per year extra interest or even on a 15 year mortgage an extra $3,500 per year for a $7,000 saving.
This does not include the health benefits and elimination of price risk with the elimination of fossil fuels. If they wait 3-4 years the price premium on the EV may well be halved so the ROI will be even better.
On a broader scale at current costs to replace all our coal generators as they age out with associated mines, transport infrastructure etc costs about $100-110 bn. To generate the same amount of energy as well as half the energy supplied by gas power plants i.e on the NEM roughly 150 TWh per year would require 20 GW of additional wind 12 GW of utility solar and 30 GW of rooftop solar and about 18 GW of storage and flexible demand.
Most of the storage would be fairly short duration. Until storage reaches about 1/4 of the current cost, the existing gas capacity + perhaps even a bit more would be retained but would only average about 12% annual capacity and supply 2-5% of total demand. Total cost at today’s prices is a bit under $100 bn but operating costs are about 1/3rd of the coal system. Further while there is a need for a gradual increase in storage to aid grid stability, there is no need for long term storage until most of the coal plants have closed. Therefore the eventual storage investment is likely to be much less than $18 bn Thus the cost of power will fall as evidenced by SA which has crossed the 60% renewables threshold its real wholesale costs are the lowest they have ever been. Similar trends are seen across the NEM and in Germany and the UK