Economic Study Shows Widespread Renewable Use Will Leave Gaps

(3BL Media/Justmeans) — Building on the questions raised at last week’s US Power & Renewables Summit, a new report just released by Bloomberg New Energy Finance, Eaton, and the Renewable Energy Association, describes similar challenges in Europe. Speaking of a “tipping point,” in which renewables account for over half of total generation, which could happen in the UK and Germany by the mid-2020’s, the report describes a number of concerns based on their analysis.

Among them is that as soon as 2030, as renewables continue to grow, there will be periods when there is more capacity available than needed, almost on a daily basis. Of far more concern however, is the author’s conclusion that by 2040, as the amount of power coming from renewables will continue to increase, there could be long stretches with inadequate sun and wind that could create gaps, which will require additional power sources to fill. The estimated backup capacity required in 2040, say the authors, will be much the same as it is today.

If this is true, this could challenge the economics of renewables in at least two ways. First, future investment in renewable projects is often predicated on the idea that conventional plants will no longer be needed and can be retired. This represents significant savings in terms of personnel, maintenance, etc., not the mention the fuel required to run them. If the plants are still needed, some will need to be replaced as they become obsolete. This could also lead to a situation where there is are large amounts of excess capacity, which could lead to negative pricing and all kinds of other economic anomalies, such as running baseload plants that are meant to be run continuously, in a less efficient manner.

The authors refer to these shortfalls as a “flexibility gaps.” They note that such gaps “cannot be filled with demand response and current energy storage technologies.” Indeed, experts at the US Power & Renewables Summit suggested that battery storage equivalent to 8% of generation capacity would be sufficient to manage 90% of the short-term fluctuations. These are the kinds of assumptions that are being planned for today, and that alone will be tremendously expensive, given the relative cost of batteries compared to solar panels. But that would only account for momentary fluctuations, not these kinds of gaps that could potentially last for hours, or possibly even days.

At the same time, the study shows that in the same 2040 time frame, there will be significant oversupply of renewables alone—as much as 3% in the UK and 16% in Germany. It seems clear that this oversupply can and should be stored in some inexpensive long-term manner. One approach would be to use the excess electricity to produce clean hydrogen through hydrolysis (splitting water) or other means, which could be then stored in tanks. The hydrogen could then either be burned in gas turbines or converted to electricity directly with fuel cells. A number of other types of relatively clean fuels can be made from excess energy, including solar fuels and various types of biofuels. These fuels can be accumulated and saved up for those times that the less steady forms of renewable power are not available.

Still, the point stands, that once we come to depend on intermittent renewables to the extent that there is no longer enough assured generation capacity to meet our entire demand, there will be an element of risk. Mathematical modeling and predictions can be done, but no one can predict what the weather is going to do more than a few days in advance. That means that some level of emergency backup generation must be available and needs to be planned for and budgeted for.

These challenges are real and will require innovation to solve. Tremendous efforts are already underway at universities and laboratories around the world. What it likely means in the near term is that a certain amount of fossil generation capacity will need to remain available, to be used when needed. However, from an emissions standpoint, it needs to be a steadily decreasing fraction of what it is today.