rss
9

IEA blows away Abbott myths about solar and wind energy

Print Friendly

One of the most depressing discussions I have ever had as editor of RenewEconomy was with a policy advisor for a state Coalition government. He started off by giving me a lecture about how his minister only acted on “evidence based information”, and then proceeded to quote some of the more outrageous nonsense published in the Murdoch media and some extremely marginal web-sites.

Perhaps, then, this person and all the other advisors who direct (or distort) energy policy at state and federal level with the conservative administrations should sit down and absorb the latest report by the International Energy Agency on the integration of wind and solar energy. It might reduce the ignorance and misinformation that is having a profound impact on renewable policy in Australia.

The IEA is a useful reference point. It is a highly conservative organization that was created after the 1970s gas crisis to ensure the continuation of energy supply. Energy security is its fundamental raison d’etre. And although some people, as we reported yesterday, criticise it for being way too conservative on solar PV costs, for instance, its research into renewables and systems integration debunks a lot of myths seemingly invented by Abbott’s acolytes and perpetuated by the politicians themselves.

wind farmThe first myth, of course, is around the cost of renewables. As any number of studies have shown, Australia’s renewable energy target has added just 3 per cent to electricity bills, and has probably helped reduce them by that amount by helping push wholesale electricity prices down to record lows. And as the IEA notes, the levellised cost of electricity of wind power and solar PV is “close to even below the LCOE of fossil or nuclear options.

But that is not what the latest IEA report is about. It’s about the integration of solar and wind – what it calls variable renewable energy, or VRE – into new and existing grids. And it serves to completely debunk some of the other nonsense about renewables needing “back-up” fossil fuels, and adding huge costs to infrastructure.

The IEA could not be any clearer: “No additional dispatchable capacity ever needs to be built because VRE is in the system. On the contrary, to the extent of the capacity credit of VRE, its addition to the system reduces the need for other capacity.”

As the IEA also notes, since the early days of electrification in the late 19th century, variability and uncertainty have been steady companions of power systems. Indeed, the largest source of uncertainty comes from the failure of plants or other system components, which can cause abrupt and unexpected variations in supply. As  Australia’s Energy Market Operator found out in the latest heatwaves, when large coal and gas fired generators suddenly stopped generating.

And, the IEA further notes, there are very few grid-related costs to absorb even high shares of wind and solar.

It points to a European Wind Integration Study, that found wind penetration levels of 10 per cent would require less than $1/MWh to grid costs, and penetration levels of 13 per cent would require around $5.40/MWh. A study in Ireland, an isolated grid, suggested that the grid costs of wind power penetrations ranging from 16 per cent to 59 per cent ranged from just $2.20/MWh to $9.70/MWh.

Solar panel photo from Shutterstock

Solar panel photo from Shutterstock

The PV Parity Project recently assessed grid costs associated with integrating 480 gigawatts (yes, gigawatts, or 480,000MW) of solar PV by 2030 into the European grid, found modest transmission grid costs of up to $4.00/MWh by 2030. Reinforcing distribution networks to accommodate solar PV would cost about $13/MWh by 2030.

The additional costs for accommodating small‐scale solar photovoltaic (PV) generation on the distribution level are as low as $1/MWh for a PV system size featuring 2.5 kilowatt per household – if the grid is planned properly from the onset.

More importantly, there are system benefits that might outweight the cost of generation of wind and solar and so lower the overall cost of the grid. This is borne out in reduced need for peak generation – as Australia found out in its recent heatwaves – and by lowering the overall wholesale electricity cost – as all Australian generators have found out in recent years.

As we mentioned in our first report on the IEA study, wind and solar can carry the bulk of the required decarbonisation of the world’s electricity systems, but the system costs of having 45 per cent wind and solar in the energy mix need only add $11/MWh if the integration is done thoughtfully.

The IEA actually says the system transformation costs would be zero if the LCOE of wind and solar dropped by 30-40 per cent from an average of $90/MWh to a range from $63/MWh to $55/MWh. Given the market forecasts of where the cost of solar is heading, this appears inevitable given the time it would take to bring the share of wind and solar up to 45 per cent.

Part of the problem, the IEA suggests, comes from the fact that many incumbent utilities view renewables as an “addition” to the grid, and therefore a complication, rather than as a path to transformation of the whole system.

As IEA secretary general Maria van der Hoeven says: “The classic view sees (wind and solar) integration as an addition to what is already there, assuming that the rest of the system does not adapt.

“This “traditional” view risks missing the point. The challenges and opportunities of (wind and solar integration lie not only with VRE technologies themselves, but also with other system components. Consequently, a system-wide approach to integration is required. In short, integration of VRE is not simply about adding VRE to “business as usual”, but transforming the system as a whole.”

For that reason, she says, a power system featuring a share of 45 per cent of (wind and solar) may come at little additional long-term cost over a system with no variable renewables at all. Australia has a long way to go to even approach that level. It’s got a lot of learning to do as well. The message from the IEA is clear, the government needs to start planning for the future, not deploying some ideological claptrap that locks it into the past.

 

RenewEconomy Free Daily Newsletter

Share this:

  • Liz

    Thanks Giles for keeping us informed.
    Maybe in time some of the information will trickle through to Abbott et al’s advisers.

  • Farmer Dave

    Thanks, Giles – please keep up the good work of shining the light of evidence and reason into corners where ideologues and vested interests prefer the dark.

    For those wanting more information, the executive summary of the IEA report is at http://www.iea.org/Textbase/npsum/GIVAR2014sum.pdf The full copy must be purchased from the IEA’s online shop.

  • Ursula Theinert

    Thank you Giles you have really hit the nail on the head! If only truth through evidence not invective spin on renewables on their joint role in the power system would filter out through the MSM . Australians should not be treated like mushrooms! P.S. Portrait is coming along!

  • Chris Fraser

    Ah yes, the Policy Advisor gauntlet ! Giles probably had to suffer this person to get access to Minister for Vague and Donations-Not-Quite-Above-Board.
    Though i was pleased to learn that the cost of integrating rooftop PV was 0.1c/kWh. We could subtract that from the king’s ransom being paid to rooftop PV being 8c/kWh and see if anyone notices.
    Better still, the rooftop PV could be paid at market rates and then subtract the 0.1c/kWh. Either way it would be the end of the argument about free-riding.

  • David Ashton

    Facts such as these do not matter to Abbott and co. They are not interested in what is true or what is right, nor the effect their policies have. They are completely oriented around business and will use whatever tactics and misinformation they can to achieve their goals.

    Abbott and co are the equivalent of Holocaust deniers when it comes to the climate, the economy, human rights and anything else that contradicts their narrow view of the world.

  • JohnRD

    I think the key point is : “The classic view sees (wind and solar) integration as an addition to what is already there, assuming that the rest of the system does not adapt.” is the key point. The advantages and disadvantages of fossil power and VRE’s are different. (And also different for the different types of VRE.) In the fossil era the lowest power costs went to large consumers with steady demand. Under VRE’s the lowest power costs will go to customers who can accept variation in power supply and take advantage of the negligible cost of excess VRE power.
    We also should be hammering the idea that we would be paying a lot less for our power now if we had used targeted installation of small scale solar instead of wasting money on grid and generator upgrades. (Targeted means installing in locations where grid capacity is limiting peak power capacity.)

  • Albert Sjoberg

    This government has proved completely impervious to the will of the people concerning renewables, NBN, asylum seekers to name but a few.

    Is there any hope that this information will change the stated course of this Abbot government?

  • logeshs

    Oil, gas and fuel produce conventional electricity that have to transported across the country and the transportation may take extra cost. But the current generated in solar doesn’t requires transportation.

    http://www.efficaenergy.com/solar-madurai.html

  • Ross_UAE

    As a consumer of Irish electricity I pay for Ireland’s policy of ‘wind power at any cost’. A universal lack of honesty on the effect of wind power on the bills paid by the consumer is to be found throughout the wind lobby. The claim that “wind reduces the wholesale price” is trumpeted while the costs wind adds to the retail price paid by consumers is ignored. The wholesale cost of electricity is reduced by not having to generate using the older, less efficient and more expensive power plants as the highest cost plant on the system during any given 1/2 hour determines the price paid to all power plants during that period.
    This is sometimes achieved by wind, but much more often by imports of up to 750MW of low cost electricity generated in British coal and nuclear plants. A large, modern Irish power plant allowed to operate freely outside the wholesale market as wind is, would also achieve the desired drop in wholesale price at considerably less cost than the €72/MWh paid to wind farms. Ireland’s 2020 target of 37% electricity from wind will result in grid stabilisation costs of €1 million per day, at least the same in capacity payments to power plants held in reserve, while the repayments on the money borrowed to build fully imported wind turbines and replace them after 20-year will be equally huge and never-ending