Renewable Energy: Enabled by, Not Competitive With, Nuclear and Fossil Fuels
Overstating renewable energy’s potential and real contribution toward meeting the dual challenges of reducing global carbon emissions and providing reliable energy for developing economies over the next 35 years cannot mask the reality that zero-carbon power generation shares are decreasing globally or that solar and wind are not cost-competitive with nuclear and fossils.
Renewables Inflation and Zero-Carbon Deflation
The news coming out of the “only-renewable-energy-is-clean-energy” movement, would like for the general public to believe that solar and wind powered generation has overtaken the world’s power sector by storm with a tsunami of electricity. Headlines such as: “Record growth in renewable energy”, “Global renewables surge”, “Record new global renewable capacity installed in 2015”, “Record Amount is Invested in Clean Energy Sources”, “Chile Has So Much Solar Energy It’s Giving It Away for Free”, “Germany Just Got Almost All of Its Power From Renewable Energy” and “This Country Generated So Much Renewable Energy It Paid People To Use It” all paint the picture of a renewables miracle.
It’s not surprising that renewable energy technologies are surging and setting new records for installed capacity. In the initial stages of deployment, promising technologies generally experience record growth in the first few years. It may be short-lived in some cases, but there’s generally an initial surge as the technology populates society and is learned and proven over time. In the case of renewables for power generation, growth in capacity is good news as long as actual generation follows. However, the headlines oftentimes reflect a cloud of promotion to the exclusion of transparency. That is, we regularly hear that installed capacity is surging and growing exponentially, but the proof of concept isn’t installed capacity alone—it includes generation, reliability and, in the case of renewables, impact on carbon reductions. In that regard, solar and wind have experienced growth in generation (Figure 1), which, again, isn’t altogether surprising given its early stage of deployment combined with subsidies and incentives to facilitate penetration. Taken alone, this growth is encouraging, but its impact should be considered in the broader context of overall global power generation and zero-carbon emissions.
Fossil fuels continue to dominate total power generation globally, with their share of total generation increasing by 4.3% since 1995 (Figures 2 and 3). While the share of solar and wind in total global power generation has increased by 3.7% since 1995, the overall share of zero-carbon generation has decreased by 4.3% in large part due to the 6.7% decrease in nuclear’s share. In spite of the exponential growth, solar and wind have not been able to offset the combined growth of fossil fuels and the decrease in nuclear. With respect to carbon reduction, the objective is carbon-free energy, including nuclear, not just solar and wind. So, in the context of reality, this is not the time and these are not the conditions for inflating solar and wind as game changers for reducing carbon emissions.
Over the past year, the headlines have turned toward promoting the cost competitiveness of solar and wind with fossil fuels and nuclear. Some claim that the cost of generating power from renewable resources has reached grid parity or dropped below the cost of fossil fuels for many technologies in many parts of the world while others report that renewables are competing more directly with fossil fuels. IRENA reported that in light of falling costs there are no more excuses for not switching to renewables:
“We already know the world’s renewable energy resources are abundant, eternal and have the potential to fully meet global energy needs while reducing emissions and mitigating climate change. What many do not yet realize however, is that renewable energy technologies are increasingly beating fossil fuels and nuclear energy on costs. While some renewable energy sources—hydropower, geothermal and some forms of biomass—have been broadly competitive with fossil fuels and nuclear energy for some time, solar photovoltaics (PV) and onshore wind energy have also now emerged as cost-competitive options.”
In the opinion of some, renewable energy is not only competing with fossil fuels and nuclear, it’s beating them. And, once again, it’s stated here as fact that we have the potential to fully meet global energy needs with renewables alone. However, the characterization here of renewables as both abundant and eternal seems to be an awkward mixture of science and faith, which may be appropriate for those who believe in 100% renewables.
Tilting the Scales or Leveling the Field?
Often, the counter-argument to renewables being cost-competitive with traditional resources is that subsidies, incentives, tax credits, etc. tilt the scales in favor of renewables. Renewables-only advocates often say this is necessary in order to spawn growth in a much-needed zero-carbon resource. They also contend that it is leveling the field since traditional fuels have benefited from subsidies as well. But setting aside the issue of subsidy dependence, there’s a more fundamental conflict with promoting solar and wind as being cost-competitive with fossils and nuclear.
Various approaches for calculating the price of generating electricity using different energy resources have been developed in an effort to normalize prices for a fair comparison. The standard levelized cost of electricity (LCOE) approach, which takes into account capital costs, fuel costs, fixed and variable operations and maintenance costs, finance costs, utilization rates and return on investment, has been appropriate for traditional fuels such as coal, natural gas and nuclear. When applied to renewables, LCOE generally yields higher costs due to the level of technology maturity, high initial capital costs on a per kW basis, low capacity factors and challenges associated with penetrating current portfolios. Proponents argue that the true value of renewables isn’t captured in standard LCOE calculations claiming that the full value of solar and wind should include such attributes as avoided energy cost, avoided capacity, avoided transmission, and avoided emissions, among others. These methods, however, are dependent on input assumptions and benefit/cost categories, and therefore have their own potential for variability. Deutsch Welle reported last year that renewables are becoming globally more competitive with an increasing number of studies showing they have an economic edge, especially if environmental and health costs are taken into account. In the article a host of potential negatives associated with fossils and nuclear are accounted for, including “other effects from using conventional energies including costly consequences—for example, environmental and climate damage.” For nuclear, it even included the damages after a possible nuclear accident. Just this month, June 2016, Deutsch Welle again reported that “renewable energy is commercially competitive—that in many countries, it can compete with the price of fossil-fueled energy.”
This is becoming common where economic benefits are added to solar and wind while costs are added to traditional fuels, and it generally favors solar and wind by design. However, even under the most extreme negatives for traditional fuels and the most extreme positives for solar and wind, solar and wind are not competitive with traditional fuels as all the economic valuation methodologies in the world won’t provide solar and wind with the one characteristic that puts it on a level, competitive field with traditional fuels—storage.
Competitive or Enabled?
Competition is formally defined as: “The effort of two or more parties acting independently to secure the business of a third party by offering the most favorable terms”. By definition then, competition means that the competing entities are independent of each other. Since the claim is that solar and wind are competitive with traditional fuels, I’ll use these categories—solar and wind vs. traditional fuels.
With respect to power generation, traditional fuels can generate electricity independent from, and in the absence of, solar and wind. While multiple fuels are required to provide baseload, follow a fluctuating load, and meet regulatory constraints, traditional fuels have no interdependent or co-dependent relationship with solar and wind. This has been the case for quite some time as the power grid has been predominantly comprised of traditional fuels only, externalities notwithstanding.
Can the same be said of solar and wind? Can solar and wind compete independently from, and in the absence of, traditional fuels while meeting demand reliably? The answer, of course, is ‘no’ because solar and wind currently are options only because of the supporting, backup generation provided by storable traditional fuels.
This makes for a distorted sort of competition as one group of resources (traditional fuels) is independent of the other (solar and wind), yet the reverse relationship is one of dependence, not independence. That is, solar and wind cannot provide a reliable, sustainable supply of electricity on their own, therefore all the benefits of solar and wind are enabled by traditional fuels providing baseload and reserve capacity. In other words, nuclear and fossils are providing solar and wind with the fundamentally necessary storage capacity they require during intermittent lapses in solar and wind resource availability. When couched in terms of competition, this is an anomaly in that solar and wind are trying to compete with the traditional fuels upon which they are dependent, and by definition that isn’t competition—it’s enablism.
The underlying reason for this is no great revelation as it’s stated over and over and over again by realists and pragmatists—dispatchability. More fundamentally, the reason is storage—on site storage—or lack thereof. For natural gas, which currently isn’t stored on site, pipeline capacity is critical and in the event of severe weather this capacity can be constrained or disrupted. Recently, Southern California experienced the consequences of being overly dependent on natural gas as the disruption of supply from the Aliso Canyon storage field created shortages in the midst of a heat wave resulting in warnings of potential blackouts. This highlights a disadvantage of being overly dependent on a flow resource (natural gas) that can’t be stored on site, leaving plants vulnerable to conditions beyond their control. Depending on a just-in-time flow resource to meet a just-in-time demand has inherent challenges and, under extreme circumstances, risks. In this regard, nuclear and coal have an advantage over natural gas, solar and wind in that they can be stored on site and an inventory maintained as a hedge against weather conditions or other offsite conditions that may otherwise disrupt flow resource supplies. Of the two, however, nuclear is emission-free.
For a fair cost comparison of solar and wind with traditional fuels, a few additional considerations:
- Demonstrate that solar and wind alone, without the storage safety net of nuclear and fossil fuels, can sustain power generation for a substantial economy indefinitely or at least over a substantial period of time;
- Demonstrate that solar and wind, with battery storage and without the storage safety net of nuclear and fossil fuels, can sustain power generation for a substantial economy indefinitely, or at least over a substantial period of time;
- Include the lack of storage and dispatchability for solar and wind as costs in cost calculations;
- Include storage and dispatchability as benefits for traditional fuels in cost calculations;
- Include nuclear’s zero-emission, zero-carbon characteristics in cost calculations.
By definition, solar and wind resources are not and cannot be competitive with nuclear and fossil fuel resources—rather, they’re enabled by them. More fundamentally, solar and wind are enabled by storage, particularly in baseload capacity. But this enablism or dependency need not be taken as a negative.
Global coal consumption continues to increase, despite claims that a renewables renaissance is upon us (Figure 4). And in the absence of economically scalable carbon capture and storage technology this projects as increased carbon emissions (Figure 5).
Since a reliable baseload constituted by storable, dispatchable resources enables penetration of renewables and the current contribution of unmanaged coal to that baseload is problematic, the optimal solution would be to incorporate a zero-emission, storable resource into the baseload to continue enabling the penetration of renewables. Currently, that optimal energy resource is nuclear. It has the emission-free characteristics of renewables, the on-site storage characteristics of coal and an unmatched nuclear-level energy density. Rather than waiting and hoping for battery storage technology to reach economic scale and assume the role of game-changer (something I personally do not believe will happen), we should utilize the already existing optimal stored energy solution that has a proven record of meeting the challenge—nuclear.
As economies develop and consume more and more energy in the process, all the grandstanding, hand waving, and marketing promotions conjured by the renewables-only movement cannot hide the fact that coal consumption is on the rise, carbon emissions are increasing and zero-carbon power generation is in decline. This is self-defeating. And in the absence of economically scalable carbon capture and storage technology, this is concerning. Instead of risking it all on an unproven 100% renewables belief or waiting and hoping that battery technology will rescue us, we should embrace the one resource that is all-the-above, all-the-time and is already abundantly available. We should be designing systems with as much nuclear baseload as possible in order to enable as much renewable penetration as possible, accompanied by natural gas and demand response to provide the necessary flexibility.
Until solar and wind can generate electricity independent from, and in the absence of, traditional fuels, it’s a mischaracterization and it’s misleading to say they are cost-competitive with traditional resources. Rather, solar and wind are enabled by these resources. But instead of focusing on this as a negative, we should focus on the positive and leverage the one resource that can serve as the foundation for meeting the dual challenges of reducing global carbon emissions and providing reliable energy for developing economies over the next 35 years.
Nuclear Energy: All-The-Above, All-The-Time, and Already Abundantly Available