This post is in response to the report by WEF on the cost of renewable energy.
My analysis indicates that, generally, the true overall cost of PV produced electricity is higher (and will remain higher) than electricity from traditional sources for quite some time into the future. There are some markets with ample sunshine and expensive electricity where it may be possible for PV to be price competitive with fossil fuels (without subsidies), but not if storage costs are included. Certainly, when doing a comparison of the LCOE (levelized cost of electricity) of PV vs average US wholesale electricity prices, PV is more expensive. According to the WEF report, the average cost of PV is about $100/MWH (or $0.10/KWH), but present US wholesale electricity rates run closer to $20-$60/MWH.
Solar insolation varies widely during the day and has longer term variations due to seasonal and weather factors. As the percentage of energy being produced by solar increases, even into the 5-10% range, the costs of energy storage have to be included to find the true cost of a sustainable energy. Storage— whether with batteries, kinetic storage, pumped hydro, compressed gasses, synthesized fuels (hydrogen?) or possibly an ever increasing need for peak-demand fossil fuel-powered gas turbine power plants— will be required. Storage requirements and grid modifications necessary to fully utilize an ever larger percentage of renewable energy will result in renewable energy costs significantly higher than those often presented. Storage cannot be looked at as an afterthought— it is both necessary and more expensive than the panels themselves.
Levelized cost of electricity
According to the Brattle Group report, the levelized costs of electricity produced by utility and residential scale PV (Report table 2) is much higher than the wholesale cost of electricity. Though wholesale costs of electricity vary widely from place to place and throughout the year (from a low of below zero on a sunny windy day in Germany to $1000/MWH in California when Enron manipulated pricing) a useful average price is $40/MWH ($0.04/KWH). All of the levelized costs presented in Table 2 show a cost higher than average US wholesale prices for conventionally produced electricity (a.k.a. fossil fuel power plants). Every one of the scenarios in Table 2 also assume some ITC (Investment Tax Credit). An even more glaring omission (when looking forward to a time of when much more of our power is produced by intermittent renewables) is that the models all assume no cost for storage, i.e. the customers will utilize all of the electricity as it is produced.
Solar power in a fully renewable energy world
It is instructional to look at Germany for an example of what is likely to happen elsewhere as renewable energy production becomes an ever larger portion of total energy production. Total electricity from renewables in Germany are at about 38%, with 16% from wind, 10% biomass, 7.5% solar (but representing as much as 50% of electricity production on a sunny weekend) and about 4% hydro. When all renewables are added into the mix, Germany has reached 100% of electricity produced by renewable sources on sunny days with favorable winds. This has led to times where fossil fuel and nuclear power plants in Germany have actually had to pay large industrial users to take their electricity, as these plants cannot be quickly shut down and restarted (less than zero wholesale cost for wholesale electricity).
So it looks as if the WEF Handbook shows that PV (whether utility scale or residential scale) is significantly more expensive than electricity from conventional sources, and this will only increase as the cost of storage and backup power is factored into the equation. Before you all start sending hate mail, accusing me of being a troll for Breitbart or Trump (pretty much the same thing now), I work as a solar design engineer and I am extremely bullish on solar. In fact, my own research and modeling indicates that solar should be the energy source of choice for the foreseeable future, completely replacing fossil fuels, nuclear and hydro for stationary applications (I don’t know if someone is about to announce the next gen magnet motor that will give us free energy for life for just 4 payments of $29.95… I am kidding!).
Political influence and vitriolic rhetoric in the energy industry can make it tempting to ignore legitimate technical challenges. It is tempting to believe that we have found the solution, picked the winner (PV), and the only thing left to do is invest more into implementing this solution, all the while hoping that the cost will come down enough and the storage problem will be solved. As we see with the situation in Germany, a major increase in cost will be necessary, even at relatively low PV use rates, due to the need for massive amounts of energy storage. The danger in seeking $1 trillion per year in further renewable energy infrastructure, as suggested by the WEF, is that we are putting most, if not all, of this money into technology that, though well proven, has little potential for a major cost breakthrough.
At Tenkiv we took a clean sheet approach, went back to basic thermodynamics, physics and materials and came up with the most cost-effective, scalable, sustainable power system possible. This approach is how you get real breakthrough change, and I hope you’ll take the time to look at what we’ve come up with.
☼ Written by Bill Juhasz, engineer & consultant at Tenkiv.
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