Integrating Renewables: Have Policymakers Faced the Realities?
Author: | Economics, Emissions, Environment, Grid
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According to the National Academy of Sciences, electricity generation and distribution is the greatest engineering achievement to enhance the quality of life.[i] It is reasonable to assume that it will continue to play such a role—making public policy choices affecting the affordability and reliability of electricity paramount.
Wind and solar power[ii] have been added into the generation mix by a combination of special government subsidies and mandates. The main rationale has been that these technologies are emission-free and thus address the issue of climate change. Wind plants receive the greatest emphasis, because they can be implemented less expensively and in larger quantities and capacities. This article questions the industrial-scale commercialization of these energy sources, especially wind power, as an appropriate public policy and provides a more realistic and effective alternative.
The current push for government intervention in electricity generation rests on one or more of these policy objectives:
- Reduced reliance on fossil fuels
- Substantially reduced CO2 emissions
- Energy independence within a political jurisdiction
- Right policy mix for the short and long term
- Sustainable economic growth with 21st century industries
- Reliable and economic electricity supply
Can renewables help achieve these goals, especially in regard to environmental improvement? A close look at the realities suggest that they cannot, and that as a consequence, public policy support for these energy sources may be fleeting, because they:
- Stress the other electricity system elements, which results in increased fossil fuel consumption and CO2 emissions
- Have no capacity value, the most important measure of performance
- Force inappropriate grid upgrades
- Do not provide the needed 21st century economic development
- Reduce electricity system reliability
- Increase costs
Prudence, therefore, dictates a fundamental rethinking of current policy before new rounds of government subsidy are implemented to avoid financial and environmental risk, as well as to safeguard electricity capacity and reliability. Also, losses in the diversion of wealth, time, and misdirection of government attention will be avoided.
The financial “bubble” that this detour may create has been projected to be larger than the sub-prime mortgage debacle.[iii] Considering how close we may have come to financial system collapse last time, it is hard to foresee how we will withstand it should this happen.
Electricity systems require steady, reliable supply, with the ability to respond to fairly predictable changes in demand over the period of a day including, to a much lesser degree, random fluctuations minute-by-minute. Renewables are a disruptive factor in this and stress the balance of the electricity system, including both generation and distribution elements. Wind plants have been described as follows, ‘So far, we have seen how large wind carpets, composed of many small units, can act like a single, “out of control” power station.’[iv] Their effect on the grid is like negative demand providing a net load that is more random and has greater volatility than normal demand.[v,vi,vii]
As a result, renewables have to be firmed by other types of generation that have the ability to respond to the imposed frequent and random volatility. The best choices for this are fast-reacting, but less efficient open-cycle gas turbine generators (OCGT), and when available in sufficient quantity, hydro. Other generation means have less ability to do this and include more efficient combined cycle gas turbines (CCGT), coal, and possibly some Generation III nuclear plants.
Geographic dispersion and increased numbers of wind plant installations are claimed to reduce this volatility but this is not borne out in practice.[viii,ix]
Fossil Fuel and CO2 Emissions Savings
When acting in the wind firming role, fossil fuel plants consume more fuel and produce more CO2 emissions than in “normal” operations, which offset any gains at the point of renewable generation, and can easily increase the total amounts over having no wind plants at all.[x]
In the rare cases where sufficient hydro is available as firming capacity, there might be some circumstances that provide some small measure of fossil fuel and CO2 emissions saving.[xi]
Reports of savings based on macro analyses, for example, using aggregate production of renewable sources over a year or statistical averaging leads to erroneous conclusions with respect to displacing fossil-fuel production.[xii]
When assessing the performance of renewables, capacity factor is most often used, but is the least meaningful. This is the amount of production drawn from a power source over time, typically a year. Different sources are chosen to meet demand depending on their levelized costs and dispatchability, and this is what normally sets capacity factor. Uniquely for renewables, the main determinant of capacity factor is the random availability of fuel, wind and sun.
A second measure, capacity credit is sometimes used. This is the statistical expectation of availability over time, which is useful for capacity planning. Most types of generation have capacity credits approaching 100%, offset only by scheduled and unscheduled maintenance. For wind in excess of about 1-2 percent penetration into the generation of an electricity system, it is less than 10%,[xiii,xiv] and approaches zero as wind approaches 100 percent of total system capacity. This is the result of its stochastic production, and explains why conventional generating capacities approaching that of the undependable capacity have to be in place to ensure electricity system reliability.
In electricity generation and use, which is a real-time matter, one of the most important, yet most overlooked, factors is capacity value. This represents the ability of electricity generation means to be dispatchable, that is capacity available on a real time basis, as opposed to a statistical expectation over time. For most plant types this approaches 100 percent and must be so. Values for hydro and solar, especially thermal solar, are complicated and not assessed here. Wind power has zero capacity value because of the extensive, uncontrollable, stochastic nature of the fuel supply.
The key measure of performance of all types of generation is the capacity value. However, capacity factor is almost exclusively used in evaluations of renewables, and this leads to error in assessing their contribution to electricity costs, reliability, impact on fossil fuel consumption and CO2 emissions, transmission needs and the operation of an electricity system.
This statistical expectation over time approach is also used to represent claims, for example, in wind forecasting accuracy and impact on electricity system reserves. Again this fails to properly reflect the real world and is not a useful measure.
Table 1 contains DOE levelized costs for selected plants entering service in 2016. As indicated by the added capacity value information, this does not represent a necessarily useful overall comparison of renewables with conventional sources. The costs are a reflection of the underlying capacity factor and make no value statement about the important capacity component. Except as noted, no attempt has been made to evaluate these further, especially the transmission investment component, which is questionable. However, the costs as shown do indicate the uneconomic nature of renewables.
The capacity factors for wind, 34 per cent and 39 per cent for onshore and offshore respectively, are very questionable and actual experience is much lower.[xvi,xvii] For wind and solar, this view ignores the total costs including the necessary backup capacity and other considerations.[xviii] Any introduction of carbon tax, or cap-and-trade schemes should attribute the backup portion to wind and solar.
The higher costs of renewables will inevitably lead to unnecessarily higher electricity costs for consumers, especially residential. In Denmark residential rates are among the highest in Europe at about three times that in North America. In Germany they are about twice.[xix] The question is: are the costs worth it in terms of delivering savings in fossil fuel consumption and CO2 emissions?
A frequent claim by proponents of renewables is that increases in grid capacity to deliver their production, typically from areas remote from demand centers, contributes to needed grid development. This coupled with smart meters and other demand management practices will be required to allow the integration of renewables. However, demand management may become a very problematic and unnecessary policy.[xx]
Given the questionable value of renewables, such grid capacity upgrades are unnecessary. Further, they have to provide for instances of full capacity production from these sources, which are relatively infrequent, and this represents a significant overbuild of more than 200%. An alternative is curtailment of production.
Grid improvements are needed (1) to support appropriate distributed generation, (2) provide reliability and technology improvements, and (3) for “normal” capacity upgrades. Such developments will likely be based on a grid topology involving micro-grids at the base level, within increasingly larger networks until major backbones are reached. The deployment will be an evolutionary process that will take decades to realize.
There should be no emphasis, especially in the short term, to upgrade grid capacities or to rely on smart grid related demand management policies to support implementation of industrial-scale renewables. Short of widely available and sufficiently large storage capabilities, which are not available for the foreseeable future, there is no role for them in determining grid development strategies.
As a further undesirable consideration, if sufficient, reliable generation capacity is not provided, the smart grid could become a means to “ration” electricity.
Is conservation another alternative? It can be, but culture and ingrained practices limit the practicality of conservation and demand management programs. The danger is that necessarily high conservation targets may not be met, and there must be a contingency plan to meet the resulting higher demand. There are some claimed conservation successes and potential, for example California[xxi] and Vermont.[xxii] At the same time there are other observations suggesting that the successes with conservation are perhaps less than advertised and the consequences not understood.[xxiii,xxiv,xxv]
A major break-through is possible, but conservation remains a long odds approach, albeit with a large pay-off, if successful.
While there are public concerns with respect to nuclear safety and the unresolved waste disposal issue, nuclear plants remain the only technological choice for large-scale, inexpensive, low greenhouse gas emissions electricity supply. The results can be dramatic, as reported for Australia, which relies extensively on coal, projecting 80% reductions in CO2 emissions with the implementation of nuclear plants to replace coal.[xxvi] At the same time, there are cautionary considerations with respect to the reasonable expectations.[xxvii]
All considered nuclear has a major role to play for the foreseeable future.
Fossil Fuel Supply and Use
It is hard to see how we can easily and quickly realistically get away from these. The DOE projects substantial use of coal for electricity generation in the U.S. through to 2030.[xxviii] Many countries notably China, India, and Germany find themselves in similar circumstances. There is simply too much coal dependency and availability[xxix] and opportunity for improved efficiencies.[xxx] Recent increases in shale gas reserves appear to establish this fuel as having an extensive role as a fuel for electricity generation, but not to the extent of displacing coal.
Coal and gas are the least cost fuel options and this further ensures their place.
Create 21st Century Industrial Development/Jobs
Germany and Denmark have saturated their domestic markets for wind turbines, and are dependent upon international markets to sustain their manufacturing industries. Emerging giants with large domestic markets, such as the U.S., China and India may have an opportunity for some period of growth assuming the continued public policy direction that supports these industries. It is reasonable to say that this growth is not sustainable in light of the real estate required for their deployment and the inevitable realization of their ineffectiveness.
A recent study conducted in Spain shows that this is very questionable industrial development in terms of net losses in jobs, higher electricity costs and its impact on industrial development in general, creation of a serious “bubble” potential, a jeopardized energy future, and diversion of resources into non-productive areas.[xxxi]
Evaluation of Alternatives
Alternative 1 – Emphasizing Renewables
This is the current popular policy choice of many jurisdictions in response to conventional wisdom, with all its inadequacies. It is characterized by premium FIT, RPS and ETS programs and carbon tax schemes to support the rapid implementation of renewables.
This does not meet any of the goals set out in the introduction: reduce fossil fuel use or CO2 emissions; contribute to energy independence; provide for short term needs or longer term goals; will not provide a significant opportunity for sustained industrial development; do not provide reliable and economic electricity supply and in this connection are not consistent with the type of grid development needed.
Clear risks are involved that are not in the best interests of present or future generations. As the matter of indirect emissions associated with renewables and other externalities involved in their deployment become more widely recognized, the risks of dependence on them will be realized.
Alternative 2 – Reliance on Existing Technologies
This relies on existing generation means to bridge to future technologies that have a better mix of the desired characteristics, combined with aggressive research and development programs for these future technologies. Future technology deployment can be viewed nominally as intermediate (10-30+ years) and longer term (30-50+ years). Examples of intermediate technologies are advanced fossil fuel, advanced nuclear, carbon capture and storage, nuclear waste management and solar, and examples of longer term are nuclear fusion, again solar, and hydrogen/fuel cell technologies.
One of the drawbacks is the continued reliance on fossil fuels. However, coal and gas have sufficient reserves to sustain their use as a bridge to fossil-fuel free alternatives. A reasonable degree of energy independence will be more realizable with them as well.
Concerns exist surrounding continued and even increased use of nuclear plants, but these have to be set against the other environmental and economic benefits of this technology. The same is true for new hydro plants.
This alternative best meets the following requirements: energy independence; short and long term policy balance; most effective industrial development; and the least possible cost. Further, the diversion of the extensive funding required to support the deployment of renewables would be better employed in improving existing generation means and research and development for new technologies.
Introducing large amounts of renewable sources into the electricity system does not contribute to society’s environmental goals. The only argument for the current renewables push is political expediency driven by the prevailing conventional wisdom. The diversion of scarce resources into technologies that fail the important tests discussed herein should be reconsidered for environmental, not only economic, reasons.
In the longer term, perhaps new generations of these technologies will overcome the problems that this essay has documented. More likely the future solutions will be very different from what government policy is banking on today. These reasons suggest a greater role for consumer-driven, market reliance than the political process picking losers.
Kent Hawkins has a BScEE and is retired.
[Author’s note: I would like to recognize the efforts of Robert Bradley Jr., Jon Boone, John Droz Jr., Tom Stacy and Tom Tanton whose participation in the review of drafts was invaluable.]
[i] National Academy of Sciences. “Top 20 Engineering Achievements of the 20th Century.” http://composite.about.com/od/inthenews/l/blnae1.htm
[ii] In the rest of this document, renewables refer to wind and solar.
[iii] Janzen, E. (2008). “The next bubble: Priming the markets for tomorrow’s big crash.” Harper’s February 2008. http://www.harpers.org/archive/2008/02/0081908
[iv] Sharman, H. (2005). “Planning for Intermittency: The Importance of Evidence from Germany and Denmark” (emphasis is Sharman’s). UK ERC Workshop – Imperial College. http://www.ukerc.ac.uk/Downloads/PDF/05/050705TPASharmanpres.pdf
[v] Holttinen, Hannele (~2002). “The impacts of hourly variations of large scale wind power production in the Nordic countries on the system regulation needs.” VTT Technical Research Centre of Finland. http://lipas.uwasa.fi/itt/teti/sahko/NEPF/vasa_nordiskvind.ppt
[vi] University of Victoria (BC), Department of Economics (2005). Utility-scale Wind Power: Impacts of Increased Penetration. //docs.wind-watch.org/DTI3_20Robin_20Oakley_20ATL_1_.pdf
[vii] General Electric (2008). Executive Summary: Analysis of Wind Generation Impact on ERCOT Ancillary Services Requirements. http://www.uwig.org/AttchA-ERCOT_A-S_Study_Exec_Sum.pdf
[viii] Oswald, James et al, (2008). “Will British weather provide reliable electricity?” Energy Policy 36: 3202-3215. //docs.wind-watch.org/oswald-energy-policy-2008.pdf
[ix] Adams, Tom and Cadieux François, (2009). “Wind Power in Ontario: Quantifying the Benefits of Geographic Diversity.” http://tomadamsenergy.com/wp-content/uploads/2009/05/windpowergeodiversitybenefits_adams_cadieux-colour-graphs-and-citation1.pdf
[x] Hawkins, K. (2010). Wind Integration: Incremental Emissions from Back-Up Generation Cycling (Part V: Calculator Update). http://www.masterresource.org/2010/02/wind-integration-incremental-emissions-from-back-up-generation-cycling-part-v-calculator-update/#more-7271
[xi] Hawkins K. and Hertzmark D. (2010). “Big Wind: How Many Households Served, What Emissions Reduction? (Part 2). http://www.masterresource.org/2010/01/how-many-households-can-a-large-wind-project-serve-lessons-from-texas-and-the-uk-part-2-of-2/
[xii] George, S., Bola H., and Nguyen S. (2010). “Effect of Wind Intermittency on the Electric Grid: Mitigating the Risk of Energy Deficits.” http://arxiv.org/abs/1002.2243
[xiii] German Energy Agency (dena – Deutsche Energie-Agentur) (2005). Planning of the Grid Integration of Wind Energy in Germany Onshore and Offshore up to the Year 2020 (dena Grid study). http://www.dena.de/fileadmin/user_upload/Download/Dokumente/Projekte/ESD/netzstudie1/dena-grid_study_summary.pdf
[xiv] Texas Public Policy Foundation (2008). Texas Wind Energy: Past, Present and Future. http://www.texaspolicy.com/pdf/2008-09-RR10-WindEnergy-dt-new.pdf
[xv] U. S. Energy Information Administration, Department of Energy (2010). 2016 Levelized Cost of New Generation Resources from the Annual Energy Outlook 2010. http://www.eia.doe.gov/oiaf/aeo/electricity_generation.html
[xvi] Boccard, N. (2008). “Capacity Factor of Wind Power: Realized Values vs. Estimates”. Energy Policy 2009, vol. 37, issue 7: 2679-2688.
[xvii] Oswald, J. and Ashraff-Ball H. (2007). “Renewable Energy Data Technology Analyses: Wind 2006.” Renewable Energy Foundation. http://www.ref.org.uk/Files/wind.overview.2007.%28ii%29.pdf
[xviii] Schleede, G. (2010). “The True Cost of Electricity from Wind is always Underestimated and its Value is always Overestimated.” Science and Public Policy Institute. http://scienceandpublicpolicy.org/images/stories/papers/reprint/High_Cost_and_Low_Value_of_Electricity_from_Wind.pdf
[xix] Director-General for Energy and Transport, European Commission (2008). EU Energy in Figures 2007/2008. Section 2.5.6. http://ec.europa.eu/dgs/energy_transport/figures/pocketbook/doc/2007/2007_energy_en.pdf
[xx] Causey, W. (2010) “Call a spade a spade and the choices may be different”. IntelligentUtility Daily. Includes quotations from Merwin Brown PhD, Director Electric Transmission & Distribution Research, California Institute for Energy and Environment. http://www.intelligentutility.com/article/10/02/call-spade-spade-and-choices-may-be-different
[xxi] Roland-Holst, D. (2008). “Energy Efficiency, Innovation, and Job Creation in California.” Center for Energy, Resources, and Economic Sustainability (CERES). http://are.berkeley.edu/~dwrh/CERES_Web/Docs/UCB%20Energy%20Innovation%20and%20Job%20Creation%2010-20-08.pdf
[xxii] Vermont Department of Public Service (2007). Vermont Electric Energy Efficiency Potential Study – Final Report. Prepared by GDS Associates Inc. http://publicservice.vermont.gov/energy/vteefinalreportjan07v3andappendices.pdf
[xxiii] Bradley, R. L. Jr (1997). Renewable Energy: Not Cheap, Not “Green”. CATO Institute. https://www.cato.org/publications/policy-analysis/renewable-energy-not-cheap-not-green
[xxiv] Causey, W. (2010)
[xxv] Apt J. et al (2008). “Generating Electricity from Renewables: Crafting Policies that Achieve Society’s Goals.” Carnegie Mellon University. http://wpweb2.tepper.cmu.edu/ceic/pdfs_other/Generating_Electricity_from_Renewables.pdf
[xxvi] Lang, P. (2010). “Emissions cuts realities for electricity generation – costs and CO2 emissions.” Brave New Climate. http://bravenewclimate.com/2010/01/09/emission-cuts-realities/.
[xxvii] Rothwell, G. and Graber, R. (2009). “The Role of Nuclear Power in Climate Change Mitigation” USAEE Dialogue 7(13) http://dialogue.usaee.org/index.php?option=com_content&view=article&id=84&Itemid=75
[xxviii] U.S. Energy Information Administration, Department of Energy (2010). Annual Energy Outlook Early Release Overview. http://www.eia.doe.gov/oiaf/aeo/overview.html
[xxix] U.S. Energy Information Administration, Department of the Environment (2005). International Energy Statistics. Reserves – http://tonto.eia.doe.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=1&pid=7&aid=6 , and consumption – http://tonto.eia.doe.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=1&pid=1&aid=2
[xxx] Peltier, R. (2010). “Time to Repeal New Source Review? (Up to 30 GW of coal-plant upgrades hangs in the balance).” http://www.masterresource.org/2010/02/time-to-repeal-new-source-review/#comments
[xxxi] Alvarez, G. C. et al (2009). “Study of the effects on employment of public aid to renewable energy sources.” Universidad Rey Juan Carlos. http://www.juandemariana.org/pdf/090327-employment-public-aid-renewable.pdf
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