The Future of Renewable Energy

If news reports are to be believed, renewable energy is the future, alongside electric vehicles and carbon capture and storage. The government-mediated transition to this new economy (with the help of taxpayers’ money, of course) will provide energy security and create jobs in addition to meeting the primary objective of reducing carbon dioxide emissions and thereby keeping the rise in average global temperatures from pre-industrial levels to less than 2°C.

Well, sorry to rain on the parade, but there is a lot of wishful thinking associated with this view and, whether you are committed to or cynical about the whole exercise, some clarity is needed. So, for example, we hear about the rapid growth in sales of electric cars, without the broader picture.

The availability of more models from companies keen to show their green credentials while protecting their core market means more choice for early adopters who are prepared to pay the necessary premium. But we can’t project forward to future market dominance when most car buyers can’t afford them and the vast charging infrastructure needed to make them viable – a very different proposition from the token charging stations now available – is unplanned and uncosted.

As for carbon capture and storage (the magic wand that would enable us to continue burning coal and gas for the foreseeable future), the probability of an enormous network of costly, bespoke storage reservoirs being built over the next couple of decades is vanishingly small. And without either this or a guaranteed supply of low carbon electricity (wind, solar or nuclear), electric cars make no sense except as a way to improve urban air quality.

So, a report in the FT that Wind and solar expected to supply third of global power by 2040 needs to be looked at to see whether its promise of a smooth transition to green energy is realistic. The story is based on a report by Bloomberg New Energy Finance and, to quote, BNEF says that The plunging cost of wind and solar power mean they will be cheaper than coal-fired generation in many countries within five years, and will provide a third of the world’s electricity in about 25 years…” and “…unsubsidised solar power costs less than electricity from new coal-fired plants in the US, Germany and Australia, and by 2021 will reach that tipping point in other countries including China, India, Britain and Mexico.”

The report concludes that 34% of the world’s electricity will come from wind and solar by 2040 (up from just 5% today). Contrast this with the most recent forecast from ExxonMobil, which believes the total contribution of renewable energy by that date will be just 11%, with a hefty chunk of that coming from (mainly existing) hydro schemes. Some will say that oil companies have vested interests in talking up the contribution of fossil fuels, which is undeniable, but BNEF is also effectively a lobby group for an alternative view. What is interesting is that the International Energy Agency (a government-funded body that reflects its members’ commitments to emissions reduction) estimates a 21% contribution from renewables other than hydro, suggesting the Bloomberg report is over-optimistic.

The BNEF argument is that costs of solar and wind are falling to the extent that they will be cost-competitive without subsidy. At one level, this is correct, but what they ignore (or perhaps don’t understand) is that the acknowledged need for backup from coal- or gas-fired stations running on standby, plus additional transmission and integration costs, pushes the overall cost of electricity ever higher. This should be the focus of attention, rather than a market based on the marginal cost of delivering a unit of electricity when the wind is blowing. Perhaps making suppliers responsible for a guaranteed supply of electricity when needed, rather than simply buying it from them when it is available, could focus minds.

All this could be very different, of course, if there was no need for backup. Supporters of the idea of a European ‘supergrid’ evening out supply and demand across the continent are not often heard these days, perhaps indicating a recognition that even this would provide no guarantee of supply continuity. But the other option is energy storage: storing excess when it is being produced and supplying it when it is needed. In which case, we should perhaps all be heartened to read that Storage ‘not fundamentally needed’ for future power grid, scientists say.

The report, from the European Academies of Science Advisory Council, seems to suggest that, although small-scale photovoltaics, plug-in cars and domestic-scale batteries could provide much of the buffer needed to maintain supplies, demand-side management could make the need for storage redundant if there were enough competing suppliers of electricity. Based no doubt on modelling, this should be taken with a pinch of salt, but it is an indication that no-one can really predict what the future holds for our electricity supply systems.

But to take a step back, a further quote from the FT story is very pertinent and should make policymakers sit up: “BNEF points out that even if its projections are correct, the world’s carbon dioxide emissions from the power sector will be only about 4 per cent lower in 2040 than they are today. To hit the trajectories that might be needed to stand a good chance of keeping global warming to the internationally-agreed objective of ‘well below’ 2C, more radical action would be needed, said Mr Zindler.”

If quite fundamental changes to electricity generation are likely to have such a small impact, even with optimistic assumptions, then how feasible is the supposedly essential project to slash carbon dioxide emissions by mid-century likely to be? For example, to make significant progress, the thorny issue of domestic heating has to be addressed. Is it to be by electrification, in which case that electricity has to be low-carbon, or is to be by conversion to hydrogen (which presents enormous challenges), in which case the electricity needed for hydrogen production also has to be low-carbon?

The answer to this conundrum has to be research and development, rather than throwing more and more money at technologies that are not up to the task. In the meantime, more focus on flood, drought and heatwave resilience would not go amiss. There is no sign that the projected greater incidence of extreme weather is happening, but they will continue to happen unpredictably and we need to be prepared.

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