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That's the hope. The reality is of course more complicated. You characterize the current situation quite well: "Unpredictable spikes in wind+solar power make i
by ohthehugemanate 9y ago
That's the hope. The reality is of course more complicated.
You characterize the current situation quite well: "Unpredictable spikes in wind+solar power make it less profitable to run base-load power plants." It's important to add that subsidies for renewables mean that the baseload providers have to compete with artificially cheap power, at the same time. This double whammy is important to bear in mind.
In Germany, the spikes are up to 25% of national energy production. So that side of the double whammy is pretty intense. On the other side, the renewables subsidy is also very painful. Power companies must, by law, buy consumer surplus renewable power at a fixed, much-higher-than-market price. So not only do they have to compete with cheaper-than-free, they have to pay for it, too! This is why German electricity prices are some of the highest in the world, and yet profit margins are some of the slimmest in the world.
It's hard to overstate the precariousness of the situation for energy producers in Germany. The largest one (Eon) has lost over 75% of their share value in the last 8 years. Since 2008, energy providers have been the worst performing sector in the Morgan Stanley index of share prices. This is not "less profitable", this is "almost impossible". As a result, most of them are getting out of the power generation business. Where that ends is anybody's guess. But what we see today is with only 22% of the energy infrastructure provided by variable renewables. What will happen if we hit the 35% target in 2020?
In order to survive, power production companies turn to the cheapest forms of power they can. Because of shale-gas boom in the US displaced coal use there, the cheapest option in Germany is brown coal. This is also happening at a time when Germany decided to decommission all it's zero-emission nuclear plants, so there's a lot of baseload support being built, which ends up as coal. End result: the more renewable power generation you have, the more baseload comes from dirty coal. Germany's CO2 emissions from energy production have actually gone UP since these policies came into effect, even though renewables make up an enormous percentage (almost 34%!) of our power generation.
You seem to think that gas power might be competitive here. I don't know the rest of the world market, but that is not the case in Germany. LCOE calculations I've seen are that "ideal case" lignite costs between 2,7 - 5 euro cents per kWh. Combined cycle gas costs between 4,1€ - 7 cents. Not much competition there. Solar is between 3,5 - 18 cents per kWh, so even though the price is lower than gas, the risk is much greater.
Currently/Soon: "Solar+battery costs fall below natural gas costs." I mean, that's nice. But when? And how? And who will do it? The variability of solar costs is a massive obstacle. In Germany, we subsidize combustion engines and diesel. Electric car adoption is actually on the decline in the last couple of years. So while I like the vision you lay out, it's far from a fait accompli.
Near future: I don't even know where to start on this. This phase is a pipe dream as far as I can tell. The infrastructure costs are outrageous. Are you aware of a country that is doing this?
Further future: "baseload is entirely wind+solar" is just not possible. Wind and solar have variability measured in multiples. Baseload is typically estimated at 35-40% of total power consumption. If 40% of our power is supplied by wind/PV, then you're talking about handling spikes of more than 40%, when demand is already at its peak! What infrastructure can you imagine, that can occupy 40% of a country's power production... and switch on and off periodically, and scale rapidly? For a sense of scale, in the US, you could manage this by heating up Lake Erie by 3 degrees celsius in an hour. That would burn about 40% of the total energy production of the country. Furthermore, what energy grid can handle that? And who will pay to upgrade it? The cost to upgrade the EU energy grid to a "smart grid" is estimated at just over $1 Trillion. No energy company can afford to pay that; especially after taking such brutal losses for the last decade.
So while this seems like a stage in an orderly progression, that's an illusion. The reality is much more chaotic, where our best-laid plans end up with counter-intuitive results (renewable subsidies RAISE CO2 emissions?!?), there are no silver bullets (PV and wind cannot provide baseload power), and there are no guarantees (the big power companies might just fold or move into other areas).