VIEWS, COMMENT AND OPINION
Alternative energy no
longer alternative
Information from EEnergy Informer
Declining costs of renewable power generation are poised to make these forms of generation more common. "Renewable" power will soon
start to be seen as normal.
Renewables have experienced
tremendous growth in the recent past,
86% for solar energy in 2012 alone. And
their performance is improving while costs
continue to fall with mass production
and economies of scale. But ask any
renewable energy advocate or their
lobbyists and they will tell you that the time
to cut subsidies and remove mandatory
targets may be around the corner but has
not quite arrived yet.
Earlier this year, Vestas, a wind turbine
manufacturer, publicly acknowledged
that the era of declining costs for wind
generated power is over. Wind technology
has steadily improved over time, and costs
have been declining with bigger and more
efficient turbines, but manufacturers are
now confronting the law of diminishing
marginal returns – future turbines may be
better, more durable, more reliable, and
enjoy higher capacity factors – but per unit
cost of electricity generated is not coming
down as it did for decades. Rising labour
and material costs and technological
barriers are cancelling any gains in larger
turbines, taller towers, and improved
design. Researchers at Lawrence Berkeley
National Laboratory (LBL) broadly concur.
Nevertheless, many renewable advocates
believe that wind has already reached or
is near grid parity. Solar power, whether
photovoltaics (PVs) or concentrated solar
power (CSP), have not reached those limits
yet, continuing to exhibit falling costs and
improved per formance. According to
Richard Swanson, the founder of SunPower,
a California-based solar PV manufacturer,
cost of solar cells falls by 20% for each
doubling of the global manufacturing
capacity. No one knows how long this
so-called Swanson-effect may last but
few would argue with the underlying
empirical evidence which shows the
continuous decline in price of PVs, from
roughly $77 per watt in 1977 to around
$0,74/W forecast for 2013. In case you are
not impressed, compare this price trend
with those of nuclear power, which have
increased over time – a bizarre outcome
which has doomed nuclear ’s commercial
prospects in countries where investors,
rather than governments, make decisions.
Where else can we look for evidence
that renewables are no longer niche or
marginal players? According to the Federal
Energy Regulator y Commission (FERC),
renewable energy sources – namely
biomass, geothermal, solar, water, wind –
accounted for 49% of all new generating
capacity installed in 2012 in the US, a
total of 12 956 MW. The corresponding
numbers for 2011 were 8571 MW, 39% of
new generation installed. Renewables now
account for 15,4% of US installed capacity
and 13% of generation.
Hard to believe: Wind beats coal, and gas
– in Australia!
“The perception that fossil fuels are cheap
and renewables are expensive is now out
of date,” according to Michael Liebreich,
Chief executive of Bloomberg New Energy
Finance (BNEF). According to a study
released in February 2013, unsubsidised
renewable energy is now cheaper than
electricity from new coal and gas-fired
power stations in Australia. The news is even
more surprisingly given that currently some
90% of power generated in Australia comes
from coal-fired plants and Australia is the
biggest coal exporter – to be overtaken
by Indonesia by 2017, according to the
International Energy Agency. BNEF, which
claims to have comprehensively modelled
the cost of generating electricity in
Fig. 1: Price of crystalline silicon photovoltaic cells, $ per watt.
Fig. 2: Estimated levelised cost of electricity (OCE) for wind energy,
1980 – 2009 for US and Europe in 2010 $/MWh.
Fig. 3: Cost of generating a MWHr of electricity from various
options, in AUS$ roughly at parity with US$.
energize - May 2013 - Page 18
VIEWS, COMMENT AND OPINION
night or in inclement weather. This means
that a lot more renewable capacity will be
needed to make a big dent in the overall
generation figures. Installed generating
capacity, as everyone knows, does not
equal actual generation. To underscore
this point, nuclear plants account for
9,24% of the US installed capacity yet
contribute roughly 20% to total generation.
Fig. 4: Annual electric generating capacity additons by fuel, 2006 – 2012 in GW.
Fig. 5: Installed global wind and PV capacity, in GW (right) and
renewables as % of global generation capacity (left).
Australia from different sources, concluded
that electricity can be supplied from a
new wind farm at a cost of AUS$80/MWh
(roughly US$83 at current exchange rate),
compared to $143/MWh from a new coal
plant or $116/MWh from a new base load
gas plant. These figures include the current
carbon tax under the Gillard government’s
carbon pricing scheme. But BNEF says that
even without the carbon tax, wind is 14%
cheaper than new coal and 18% cheaper
than new gas. Liebreich added, “The fact
that wind power is now cheaper than
coal and gas in a country with some of
the world’s best fossil fuel resources shows
that clean energy is a game changer
which promises to turn the economics of
power systems on its head.” BNEF predicts
that by 2020, large-scale solar PV will also
be cheaper than coal and gas, when
carbon taxes are factored in. By 2030,
dispatchable renewable generating
technologies such as biomass and solar
thermal could also be cost-competitive.
Dispatchable generation refers to sources
of electricity that can can be turned on
or off, or can adjust their power output
on demand. Wind, by far the largest
contributor in 2012, added 10 689 MW
followed by solar at 1476 MW and biomass
at 543 MW. By comparison, new US natural
gas additions totalled 8746 MW and
4510 MW for coal.
and most biomass plants, wind and solar
capacity suffers from low capacity factors
– intermittency of wind, lack of sunshine at
That is the good news. The not so good
news is that except for hydro, geothermal
energize - May 2013 - Page 19
The corresponding numbers for
renewables are 15,4% and 13% – and
that is mostly because of the contribution
of hydro and geothermal generation,
w h e r e h i g h c a p a c i t y f a c t o r s a p p l y,
otherwise the percentage for renewable
generation would be lower. The most
amazing feat of renewables is their
rapid growth over the past decade.
Global installed wind capacity exceeded
273 GW and 100 GW for solar, having
started from a small base in 2001. Solar
energy grew by an astonishing 139% and
wind by 17% in the US in 2012. Despite
the intermittency issue, investment in
renewables is projected to continue,
boosted by subsidies, feed-in-tariffs and
mandator y requirements when they
apply. Solar installed capacity, currently
far behind wind, could conceivably
catch up at some point, especially if the
Swanson effect continues.
Contact Fereidoon Sioshansi,
EEnergy, Informer,
[email protected] 