We often hear from renewable energy enthusiasts that even solar-generated electricity is becoming competitive with conventional sources. While this may be true at one level – costs of solar panels have been falling fast, for example – this is also a highly misleading statement. The defining characteristic of the primary sources of renewable energy available in most countries (wind and solar) is that they are intermittent, and therefore cannot provide a constant, reliable supply of electricity.
There are renewable energy sources which are more reliable (‘despatchable’ is the term used in the generating industry) but there is no universal solution. Biomass can be burnt as needed, but we simply cannot grow enough to supply the major part of our energy needs, and renewal times are relatively long, particularly for wood. Hydroelectricity is great in countries with the right geography (for example, Norway and New Zealand) but is rarely a guaranteed source of enough energy the year round. Geothermal energy is perhaps the best truly renewable resource, but few countries other than Iceland are lucky enough cover most of their energy needs from it.
So, the more important question is not how much a unit of electricity generated by a solar panel or wind turbine costs, but how much it costs to deliver a reliable supply to the end consumer. Given the complexities of supply and demand and the need to integrate all supplies into a national or regional grid system, the most useful way to assess the economics of renewable energy is to calculate the total system cost of the generating system and supply grid with various contributions from different energy sources.
Failing this, the accepted measure is the so-called levelised cost, which is an overall cost per unit of electricity generated, taking account of capital investment, running costs, system integration and distribution costs. Estimating total system costs is a highly complex undertaking, and even calculation of levelised costs is by no means a trivial task. But the results are clear: renewable electricity is considerably more expensive when all relevant costs are considered (see, for example, the paper on Levelised Cost Estimates written for the Institution of Engineers and Shipbuilders in Scotland from 2011).
What would undoubtedly transform the prospects for all forms of renewable energy would be an economic way of storing vast amounts of energy, to be fed back into the system on demand. Although full reliance on wind and solar energy would require both a huge number of PV arrays and wind farms and massive amount of energy storage, the prospect of effectively smoothing the output would make it much more practical to incorporate a large amount of renewable generating capacity into a network.
The best available very large scale storage is pumped storage hydroelectricity, but even this pales into insignificance when the scale of energy demand is taken into account. For example, the large Dinorwig power station in Wales can generate 1,700 megawatts of electricity, but only for about six hours. And there are not even any more promising technologies on the horizon, although flow batteries have the potential to be vastly upscaled if their cost can be reduced.
An alternative approach is to decentralise storage, by having large numbers of small-scale domestic or industrial storage sites, which could be managed to balance supply and demand. We should also note the theoretical potential to use excess electricity to produce hydrogen, which could then be used to generate electricity when needed. But there are major problems with this, including in particular the difficulty of storing hydrogen and the stubbornly high cost of fuel cells.
A somewhat more practical solution has also been promoted: the use of a large fleet of electric cars to provide the storage buffer, charging batteries at periods of low demand and using them to power the cars at other times. Somewhat more practical, but still fraught with difficulties.
For a start, electric cars would have to have become mainstream, which in itself would mean a significantly greater overall demand for electricity. So, even if most of the charging of car batteries could be done using renewable electricity at times of low demand, this would not be a real factor in managing existing supply and demand for households and commerce.
Also, since many people may want to use their cars also at periods of low overall electricity demand, the available storage reservoir would fluctuate significantly, and not necessarily in parallel with the output of renewable energy. And to factor in potential use of energy from car batteries for domestic use at times could lead to a nightmare scenario of cars being discharged when they are needed.
A step beyond this would be to put the storage batteries directly into houses, which is exactly what Elon Musk, the co-founder of PayPal, CEO of SpaceX and founder of Tesla Motors is now proposing. Tesla’s all-electric cars are undoubtedly things of beauty, have impressive performance and even a decent range. But they are expensive and still cannot replace conventional cars, which is why sales remain modest (Tesla posts wider loss, highlights energy demand).
Tesla has a large factory making lithium cells destined for its cars. It is planning to use excess capacity to produce Powerwall batteries, arrays of batteries to be charged from domestic solar panels and supply electricity when they are not generating (see Tesla Powerwall: what you need to know).
However, these packs have limited capacity and output and, although less expensive than people expected (about $3,000 for 7kwh capacity), costs of an inverter and installation would more than double that. Enthusiasm is not universal (Why Tesla’s Powerwall is just another toy for rich Green people).
If you do the calculations, it looks as though this could increase the contribution solar energy could make to a household to a modest extent, but would not be able to take it off-grid at any reasonable cost. Solar panels make financial sense now for those who can afford them, but purely on the basis of the public subsidy via the feed-in tariff. Elon Musk is not the first to enter the domestic storage market, and the Powerwall certainly would not change the economics (Can a £2,250 ‘solar box’ power your house at night?).
Overall, it looks unlikely that there will be any major breakthroughs in energy generation or storage which would transform the renewables market anytime soon. Solar energy remains a great idea in principle, but expensive and intermittent in practice. If anyone has a solution to those issues, they should make a fortune. On the other hand, the PowerWall system may just be a way for Mr Musk to reduce his losses.
Martin Livermore
The Scientific Alliance
St John’s Innovation Centre
Cowley Road
Cambridge CB4 0WS