I’ve been to several conferences in recent weeks tracking the rollout of renewable energy regionally and nationally. The interview above was recorded a few weeks ago in Traverse City, Michigan, and documents another small piece of the huge story that is the renewable energy revolution in the heartland. Below, a leading conservative, establishment, financial firm, Lazard, publishes its most recent assessment.
NEW YORK–(BUSINESS WIRE)–Lazard Ltd (NYSE:LAZ) has released its Levelized Cost of Energy Analysis – Version 8.0, an in-depth study comparing the cost of generating energy from conventional and alternative technologies. Lazard’s Global Power, Energy & Infrastructure Group has been publishing the study since 2008.
The study shows the acceleration of an ongoing trend: Utility-scale solar and wind power are increasingly cost-competitive with traditional energy sources such as coal and nuclear, even without subsidies. The study also highlights the ongoing need for diverse power generation technologies, especially in regions with limited renewables resources.
“The economics of alternative energy have changed dramatically in the last decade,” said George Bilicic, Vice Chairman and Global Head of Lazard’s Power, Energy & Infrastructure Group. “Utilities still require conventional technologies to meet the energy needs of a developed economy, but they are using alternative technologies to create diversified portfolios of power generation resources.”
The study offers a variety of insights, including the following selected highlights:
- The costs of generating electricity from all forms of utility-scale solar photovoltaic (PV) technology continue to decline dramatically. The study estimates that the levelized cost of energy (LCOE) of leading PV technologies has fallen by nearly 20% in the past year, and nearly 80% in the last five years.
- In many parts of the world, utility-scale solar PV continues to increase its cost advantage over conventional generation as a source of peak energy, without any subsidies (appreciating the important qualitative differences related to dispatch characteristics and other factors).
- Without subsidies, residential-scale solar PV (rooftop solar panels) remains considerably more expensive than utility-scale solar PV, raising the question of whether subsidies are distorting the long-term energy planning process.
- Land-based wind-generation costs also continue to decline dramatically. The study estimates that the LCOE of leading technologies has fallen by more than 15% in the past year, and nearly 60% in the last five years. However, offshore wind generation is currently at least twice as expensive as land-based, and therefore not cost-competitive without subsidies.
- Battery storage technologies, a potential complement to intermittent energy resources such as wind or solar, continue to be very expensive and not cost-competitive without subsidies. However, the LCOE of “next generation” battery storage technologies could decline by as much as 40% by 2017, given expected reductions in capital costs, operation and maintenance costs, and improvements in efficiency.
- Large-scale conventional generation projects (such as IGCC or nuclear) continue to face a number of challenges, including: high absolute costs; significant cost contingencies; competition from natural gas in many parts of the world; and policy uncertainty. Notwithstanding these issues, alternative energy sources will not be capable of meeting the baseload generation needs of an advanced economy for the foreseeable future.
Takeaway, renewables continue to surprise. What is no surprise, is that leading edge technology is not going to take over the major portion of power generation immediately.
That said, as I’ve noted this week, Big Energy has woken up to the existential threat posed by distributed, renewable energy – but even Lazard’s very conservative observations indicate it may be too late for them.
This has been mentioned last year on Crocks, but there are 15 independent studies that show that wind cuts the costs of electricity:
Page 4 of this report has links to the studies:
http://awea.files.cms-plus.com/AWEA%20White%20Paper-Consumer%20Benefits%20final.pdf
The levelized cost of energy (LCE) which accounts for everything… subsidies, capital investment, decomission/cleanup, operation, etc.) puts wind as not reaching energy parity yet (being a workable alternative in terms of cost). It has to clear 10 cents for KW*hour.
More importantly it is an “intermittent” power source. That means it cannot be counted on to provide power 24/7 to 80% capacity.
As a student physics researcher who keeps up with the Earth and Ocean science subject matter I cannot stand climate change denial… but neither can I stand denial of renewable non-viability. Hydro has limited deployment. Proponents of solar have endless conflicting studies and quoted numbers on growth but it provides 3/1000 (0.3 percent) of the world’s electricity and to date has yet to take a serious percentage of any medium sized economy’s energy (even in Spain where tons of money was dumped into it). It is intermittent as well so even in an ideal situation it could (combined with all other intermittent power sources) take only 1/3 of the total energy load… if that.
Claiming something is viable when it is not is every bit as useless as claiming climate change is not happening when it is.
=The levelized cost of energy (LCE) which accounts for everything… subsidies, capital investment, decomission/cleanup, operation, etc.) puts wind as not reaching energy parity yet (being a workable alternative in terms of cost). It has to clear 10 cents for KW*hour.=
The US Energy Information Agency has wind at 8 cents/kwh
http://www.eia.gov/forecasts/aeo/electricity_generation.cfm
Lazard has wind at 1.4 to 6.7 cents/kwh subsidized and 3.7 to 8.1 cents/kwh unsubsidized.
http://www.lazard.com/PDF/Levelized%20Cost%20of%20Energy%20-%20Version%208.0.pdf
We’ve seen contracts with Austin Energy for solar at 5c./kwh with no subsidy and with Warren Buffet’s company for the selfsame cost with subsidy. To get the solar to line up with peak load in TX you have to place it about 500 miles west of where you want the energy. As far as wind goes, all you need is a good weatherman. The bids for production are placed a day ahead so the operator know how much reserve to plan for. It’s variable, but highly predictable.
I liked this:
“Without subsidies, residential-scale solar PV (rooftop solar panels) remains considerably more expensive than utility-scale solar PV, raising the question of whether subsidies are distorting the long-term energy planning process”
Since I keep saying that rooftop is the most expensive solar.
Nuclear comes out looking pretty good on the chart. Is that indicative of how a new nuclear plant would shake out, or is that result based on existing plants that were built a long time ago?
The Levelized Cost of Energy which in the US is compiled by the Department of Energy and includes absolutely everything, subsidies, up-front investment, operation, clean-up, etc.. It still puts Solar (both photovoltaic and thermal on an industrial scale, which would be at its cheapest) and wind as unworkable on the grid going at half again the cost of the current options (at best). Furthermore they are intermittent power sources… zero guarantees on 24/7 operation at capacity. That means the grid eggheads can only let it (combined with ALL other intermittent power sources) account for about 20% of the grid. Hydro is great but we starting running out of sites to build it for effective use a while back.
Nuclear power plants of 50 years ago will be less advanced and more expensive per watt to build, maintain and clean up than, for example, the French designs that they have built en masse. 30+ CPR900 reactors that were made in response to the oil embargo in the 70’s and 80’s with a great operational record. It is no wonder that China is building 20+ themselves based on the design called CPR1000 (that is, generating 1000 Mega-Watts from the original 900 Mega-Watts).
Right now we in the US are having to re-certify 50-year-old designs because no one will allow for new nuclear plants with modern designs and they also don’t want to build fossil fuel plants to replace them. I have great disdain for denial of climate change but equally so for denial of the realities of energy production.
“A major new analysis from global investment bank HSBC – Energy Storage, Power to the People – says the boom days for the fossil fuel generation are over. “There is no prospect of any return to anywhere near the level of profitability seen in the latter part of the last decade in generation,” it writes.”
“this is just the start, large-scale energy storage is on the horizon and conventional generation is at a disadvantage: the major utilities could lose out unless they leverage their client base and their level of integration by becoming full-service providers.”
http://reneweconomy.com.au/2014/energy-storage-generators-biggest-losers-50615
Red skylite – thanks for the link. iMO, storage is less needed now because solar takes a lot of the peak load away. Solar actually dampens need for storage and reserves. As renewable penetrations exceed 40%, as in Australia, Hawaii, and soon Germany, storage will become more viable. Solar costs are dropping rapidly. We will see how fast BOS costs fall now that they dominate and now that CA has passed permit streamlining laws.
People have been harping on solar power for decades and it provides a grand total of 0.3% of the world’s energy. As in 3/1000 and is nowhere close to a serious portion even of intermittent energy ceiling of 20% even in places like Spain where they dumped tremendous money to try and make it happen.
I am physics student researcher. I have looked at the math time and again and I am tired of listening to this claim that it is all a big conspiracy. If you are seriously about saving us from the possible consequences of climate change (the ones we really don’t want to find out the hard way) you need to get real, and start working with the options we currently have. Right now the best thing we have as an alternative is nuclear for the required 80% baseline 24/7 energy supply (hydro might cover a fourth of that but the population is growing and the number of viable hydro sites most certainly has not, since we starting running out a while ago).
There are plans for a Wyoming wind farm with compressed air storage in Utah to provide electricity to California. Wyoming wind is strongest in Winter , complementing other local renewables which peak in summer.
http://cleantechnica.com/2014/09/27/inside-8-billion-california-wind-energy-project/
=The energy storage capacity would be equivalent to 60,000 megawatt-hours=
60 hours of 1GW? or 120 hours of 0.5GW?
That sounds like a breakthrough.
Andrew – this company has been doing CAES for a while. They did it in Alabama. Not new. Just developing. The latest is to store and recover heat of compression to increase efficiency. Like a lot of things, no one was interested when FF were cheap. As they grow expensive, interest in alternatives increases, costs fall, while FF costs rise. A recipe for change.
That provides a buffer of 3 hours of electricity for California (where the facility of batteries was built) for the bargain price of $8 billion dollars. I would emphasize this is NOT PRODUCTION of electricity it is STORAGE of electricity.
There is no getting around the fact that intermittent power sources (both solar and wind, along with others) can at no point provide more than 20% of the base load. The grid cannot depend on the state of the weather for the electricity that has to be on 24/7. 3 hours is nothing, especially at that cost because no one can make promises for the wind and clouds… the people who run the grid have to deal with these realities whether we accept them or not.
=That provides a buffer of 3 hours of electricity for California (where the facility of batteries was built) for the bargain price of $8 billion dollars.=
3 hours storage for all of CA for $8 Billion?? That definitely sounds like a breakthrough. The National Retail Federation (NRF) forecasts total Halloween spending—including candy, costumes, and decorations—to come in at $7.4 billion this year.
Why don’t you take a look at this study from the University of Delaware:
Highlights
► We modeled wind, solar, and storage to meet demand for 1/5 of the USA electric grid. ► 28 billion combinations of wind, solar and storage were run, seeking least-cost. ► Least-cost combinations have excess generation (3× load), thus require less storage. ► 99.9% of hours of load can be met by renewables with only 9–72 h of storage. ► At 2030 technology costs, 90% of load hours are met at electric costs below today’s.
Abstract
We model many combinations of renewable electricity sources (inland wind, offshore wind, and photovoltaics) with electrochemical storage (batteries and fuel cells), incorporated into a large grid system (72 GW). The purpose is twofold: 1) although a single renewable generator at one site produces intermittent power, we seek combinations of diverse renewables at diverse sites, with storage, that are not intermittent and satisfy need a given fraction of hours. And 2) we seek minimal cost, calculating true cost of electricity without subsidies and with inclusion of external costs. Our model evaluated over 28 billion combinations of renewables and storage, each tested over 35,040 h (four years) of load and weather data. We find that the least cost solutions yield seemingly-excessive generation capacity—at times, almost three times the electricity needed to meet electrical load. This is because diverse renewable generation and the excess capacity together meet electric load with less storage, lowering total system cost. At 2030 technology costs and with excess electricity displacing natural gas, we find that the electric system can be powered 90%–99.9% of hours entirely on renewable electricity, at costs comparable to today’s—but only if we optimize the mix of generation and storage technologies.
http://www.sciencedirect.com/science/article/pii/S0378775312014759
$8 billion? And that’s not with cost overruns and the cost of new transmission lines. Where’s E-pot? I’d bet he could build a nuclear plant right there in CA for less.
Can’t build a nuclear plant in CA until you can sue all the “environmentalist” organizations for tortious interference and use the discovery process to expose how the “charities” which finance them are getting their money and marching orders from fossil-fuel interests.
Also the money influence on pols, like Boxer and Schumlin. There may be enough there to prosecute for influence-peddling.
There’s an on-again, off-again CAES project in a limestone mine in NW Ohio that was off-again last time I checked. Meanwhile, there’s talk about a 1600 MW(e) ESBWR for the Fermi site in Monroe; it would become Fermi 3.
Fermi 3 would replace about half the net output from DTE’s coal-fired Monroe plant.
IMO, if the “environmentalist” organizations were serious about GHGs and not the romantic notion of being “green”, we’d already have Fermi 3 under construction and be planning Fermi 4 and 5 (or re-developing the other Monroe site as nuclear instead of coal).
Just wait for the renewable energy deniers… That’s right, just wait… 😉
I can wait. Can you? 🙂
In this case, I’m always happy to hear crickets instead 😉
Renewables are expanding and displacing coal and conventional baseload in Germany, US, and Australia. Renewables have exceeded conventional capacity additions in the first half of 2014. 7GW wind is under construction in Texas. Second half wind additions are expected much larger.
http://climatecrocks.com/2014/09/22/new-us-power-in-2014-more-than-half-renewable-so-far/
http://www.renewableenergyworld.com/rea/news/article/2014/07/renewables-provide-56-percent-of-new-us-electrical-generating-capacity-in-first-half-of-2014
It’s good that you linked us back to the Crock posts. And just as you failed to address any of the brightsidedness I pointed out there, you continue to tip-toe through the tulips with more Germany and Texas. To quote a small bit of the info you continue to ignore. (Do you think by ignoring the facts it will all just go away?). I said:
“Here we go again, bright-sidedly looking at ADDITIONS and comparative rates of change rather than the absolute numbers at the base. This is mostly encouraging news, but PLEASE try to understand that natural gas (over 25% share of capacity and climbing) is 429,000 MW, wind is 62,000 MW, and solar is 15,000 MW. That leaves out coal, which is higher than gas. The math is clear—we have a LONG way to go. Will we get there in time?”
“Coal and natural gas still generate ~65% of our electricity, and although coal dropped by 2015 MW, natural gas went UP by 2319 MW for a net INCREASE of 304 MW from fossil fuel burning (even though CO2 may have declined). Since the shares of nuclear and hydro haven’t decreased much, where is all the new solar and wind and excess natural gas generation going? Growth, you say? The question remains—-will renewables overtake fossil fuels rapidly enough to save us from CAGW?”
PS Have you been watching the Ebola news? I wonder what will happen to the “energy picture” in Texas if the “one isolated case that we need not worry about” spreads?
Here is IEA on the subject of solar. Despite their bad forecasts and conservative nature they now predict solar will dominate by 2050. That’s a big shift. Solar is already reaching grid and socket parity. This will accelerate as renewables pass fossil fuels going up as renewables head lower in costs.
http://cleantechnica.com/2014/10/03/solar-power-costs-headed-toward-4ckwh/
http://cleantechnica.com/2014/10/03/solar-socket-parity-shifted-solar-forecasts-charts/
I’ve read several articles recently about the projections for solar in 2050, the ones you cite and others . Positive and even heartwarming, but buried in them are the caveats that 2050 is a long way off and projections are only that. Some of the bright-sided solar articles do (briefly) mention the projections for fossil fuel use in 2050, and that part of the picture is rather grim if one is able to conquer their cognitive dissonance and fear and look at it .
I wish you could explain your absolute fixation on far-into-the-futures projections based on a few years of solar growth data that may or may not continue depending on a myriad of factors. As opposed to looking at fossil fuel use projections from the IEA and EIA (many of which I’ve quoted on other Crock threads) and trying to balance the two sides to see where we are really likely to be in 36 years.
There’s a reason I keep bringing up COAL, and you need to grow up and stop ignoring what I have posted. I miss the Arcus of old, the one whose head was screwed on a bit more tightly.
Capacity factors over 50% percent?? Really??? In Michigan??
Which wind farms are those? I hope there’s no cheating going on, which would be bad for the industry. I’ve heard of plants in Europe burning gas to keep production up; not yet sure if that’s truth or just rumor.
Just in case anyone’s interested:
The price of gasoline has just dropped below $3 a gallon in northern VA (to $2.95). Electricity prices are stable and natural gas is getting cheaper.
Is that your idea of good news, or bad?
I’ve never been too fond of taxation but I don’t see how anything short of a carbon tax / fee & dividend is going to change the habits of 1/2 of America.
You DO read my comments on Crock, I presume? (I read yours). You should then be able to figure out that I think this is very bad news indeed. VA is behind the curve on renewables, and cheaper gasoline is only going to drive the sales of bigger SUV’s and unneeded-for-work “my truck is bigger than your truck” Rams and F-150’s with lots of chrome, fancy wheels, and low-profile tires. And lower utility prices will NOT drive efficiency or home solar sales.
It’s going to be BAU until the SHTF, and we are forced to take drastic action. A carbon tax is the only thing that will work in the short term, and don’t hold your breath waiting for that. It’s on the back burner while we work to reduce CO2 from coal plants by 30% by 2030, and drill and frack every last square inch of the country so that we can become “energy independent” and even export fossil fuels. (And create good-paying jobs in the fossil fuel industry for good ‘Muricans)
And I will say again that “changing the habits” of even ALL Americans (and Germans) is not going to get it done. (China-India-Coal)
I don’t know what to think about India but I suspect China is in a for a massive downturn within the next few years and I have no idea what the implications of that would be for them.
It probably won’t help the environmental situation at all.
On the upside, if all that infrastructure they built was done reasonably well, then at least they have something to show for all that money spent which is a lot more than most can say.
I personally think they made a huge mistake poisoning & polluting their country to get closer to where we are economically and I don’t think India will make the same mistake to the same degree.
“I don’t think India will make the same mistake to the same degree”
There is some evidence that they have learned from India’s mistakes, but they will likely not do it that much better—certainly not better enough to avoid adding to the global CO2 burden. Remember also that Australia has big plans to sell them all that coal and LNG.
We have friends who are in China right now, and the pictures and stories they have sent back about the pollution in the cities are shocking and discouraging. It is very difficult to get permission to buy a car there and you can only drive on certain days of the week when you do manage to buy one. The Chinese have been forced to take steps to deal with the mess, but it’s likely too little, too late. India will follow the same path—-it’s just human nature.