By Dave Elliott
The London-based World Energy Council (WEC) and the Paris-based International Energy Agency (IEA) both regularly produce global energy scenarios. While they both still back nuclear and see fossil fuels as continuing to play a major role, these days they also increasingly identify renewables as a major player. However, the IEA tends to be more assertive in its promotion of renewables and efficiency, while WEC is usually more cautious.
The IEA’s latest study has renewables expanding globally by 42% by 2021, this actually being a 13% increase on its previous estimate. By contrast, while WEC’s report on Variable Renewables Integration does say that renewables ‘offer many benefits, such as CO2 emissions mitigation, fossil fuels import requirement reduction and new jobs creation, just to name a few’, it warns that ‘at the same time, the recent expansion of variable renewables-based generation also poses certain challenges, both technical and economic and they require short and long-term solutions’. And it looks at them in detail, with the main message being that ‘the complexity and the overall impact of variable renewables integration in national electricity systems are often underestimated both by the consumers and politicians’, and, in its most optimistic scenario, sees solar and wind only supplying 39% of global electricity by 2060 – much less than in many other scenarios.
WEC notes that ‘in the last 10 years, wind and solar PV have witnessed an explosive average annual growth in installed capacity of 23% and 51% respectively, although their combined contribution to the global electricity production is around 4%’. ‘Firm’ renewables like hydro make up most of the rest of the near 23% of the 2014 renewable electricity total. But, WEC notes, investment is increasingly focused on the variable sources, in part since prices are falling, with wind getting down to $28/MWh and PV to $30/MWh in some (desert) locations. WEC says these are exceptional: ‘wind and sun load factors…in continental Europe are up to 50% lower’ and there are’ high local costs’.
So most projects need subsidies, at least initially, and it reports that ‘as subsidies decreased, the EU’s share of global solar PV installed capacity dropped over the past four years from 75% to 41%, the share of wind from 41% to 33%’. For success it asserts that ‘location with high wind or solar load factors and low grid connection costs’ is vital, along, crucially, with measures to deal with variability. It offers a range of suggestions for a ‘holistic and long-term approach’ to market and system design, including clearly defined CO2 emissions regulations, and capacity to help ensure security of supply, ‘as energy-only based markets are often insufficient to guarantee supply in systems with a large share of variable renewables’.
It also suggests adjustments to existing market design e.g. larger balancing areas to share the impacts of variability and load forecast errors across a broader region to provide a natural reduction in the system balancing costs and aggregating the bids of different plants in the market to facilitate a reduction in the overall variability of electricity supply, and thus reduce the forecast errors and system balancing needs. It says ‘Responsibilities for system balancing have to be shared fairly among market participants, including variable renewables generators’. And it calls for hourly and sub-hourly scheduling for the more efficient use of transmission and generation capacity. It also says we should improve weather forecasts and optimise the management of operational reserve capacity and the flexibility of conventional generation, and expand demand response, i.e. the short-term adjustment of demand to address temporary shortage or excess power. In addition we should invest more in energy storage technologies and expand the transmission and distribution grids, including cross-border interconnector links. All pretty sensible stuff, with a lot of ideas emerging on specifics. See the WEC’s report on storage.
However, WEC is clearly worried that there may still be major problems ahead. In its variable renewables report it keeps hammering home the point that ‘the weather dependency of wind and solar PV, especially when they reach a significant share of the generation capacity and energy production, may raise barriers to their smooth integration in the electrical systems which were not originally designed for this type of generation’, with examples drawn from around the world, emphasizing the costs and dislocations that can result. A glass half empty!
It notes that ‘appreciable price increases have so far been witnessed in Germany, Italy, Japan, and Romania’, e.g. a rise of 6.24 Eurocent/kWh for consumers in Germany and a €13bn total extra cost to consumers in Italy. And although it admits that the use of renewables ‘leads to reduction of the wholesale price’ it says ‘this price drop is lower than the energy bill increase for the end user due to the incentives and additional costs to system’ for using variable sources. Not a portrayal of the situation everyone would agree with: for example, the IEA says that the costs of balancing are relatively low and will fall, with some flexible balancing systems actually cutting costs by reducing losses as supply and demand are better matched. And of course, enabling the wider use of renewables means that the large and growing economic and environmental costs of using fossil fuels will be avoided.
By contrast, WEC’s view is a little gloomy, perhaps unduly so. It’s new Grand Transition report put more flesh on the options it sees for the future. It outlines three global energy paths. Modern Jazz is based on a ‘digitally disrupted’, innovative and market-driven world. Unfinished Symphony is a world in which more ‘intelligent’ and sustainable economic growth models emerge as the world seeks a low-carbon future, with global co-operation. Hard Rock looks at the dire consequences of weaker and unsustainable economic growth with ‘inward-looking’ defensive policies.
In Unfinished Symphony, arguably the most congenial option, solar and wind supply 39% of global electricity by 2060, while nuclear supplies 17%. This solar and wind percentage seems a bit low, but WEC sees electricity demand doubling by 2060, though per capita primary energy use stabilises before 2030, due to improved technologies, efficient use of energy resources and stringent policies.
Some global scenarios from academics/NGOs talk of renewables supplying possibly 100% of electricity by 2050. That includes the existing large hydro input and also some other renewables, but even so, WEC’s 39% for wind and PV by 2060 may be pessimistic. With solar and wind prices falling rapidly, its projections may need revising, along with BP’s similarly quite low projections.
To put it in a UK context, where hydro is small, some studies are now looking to a 50% by 2030 renewable power contribution, e.g. see the National Grid/Barclays Research data for the UK, as relayed by The Telegraph.
However, it all depends on how the technology and local politics develop. The IEA has reviewed what it thinks can be done to meet the aims set out in the now activated Paris COP21 global agreement. In its ‘2 degrees’ scenario, the IEA says over 50% of global electricity capacity would be renewable by 2030 and 72% by 2050 and, although wind and solar would only supply 30% of global electricity by 2050 in this future, it says much more would be needed from all sources if we wanted to ensure we stayed ‘well below’ 2 degrees as proposed in the COP 21 agreement. It seems to think that’s just about possible, and that could take wind and solar well beyond the 39% by 2060 envisaged by WEC, with the IEA suggesting that ‘significantly more’ could be done in some countries.
That certainly seems to be the case. For example, the European Commission, in a new draft Renewables Directive, has just proposed a pan-EU 50% by 2030 renewable electricity target. That includes other renewables like hydro, but Bloomberg New Energy Finance is more optimistic, and says that intermittent renewables alone (chiefly solar and wind) will supply 53% of EU electricity by 2040. Take your pick of forecasts!