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Can Renewable Energy Solve the Climate Problem?. Geoffrey Heal Columbia Business School October 2010. Two steps to stabilizing climate. End deforestation Decarbonize world’s electric power supplies - PowerPoint PPT Presentation

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  • Can Renewable Energy Solve the Climate Problem?Geoffrey HealColumbia Business SchoolOctober 2010*

  • Two steps to stabilizing climateEnd deforestationDecarbonize worlds electric power suppliesDeforestation causes 15-20% of GHG emissions and can be stopped tomorrow with no new technologies, no massive investmentsReally is the low-hanging fruit

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  • Two steps to a stable climate56% of CO2 comes from fossil fuel use of which electricity generation produces about 38% in totalBut with clean electricity we can replace most other fossil fuels e.g. electric cars, heating, cooling, process heatSo: if we can fix forests and electricity we can fix the problem*

  • Carbon-free powerTechnologies available WindSolarPV ThermalNuclearGeothermalWaveFuel cellsCCSBiofuels

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  • **Levelized Cost of Electricity lcoeConstant price p per kWh at which the operation would just break even over its lifetime (assumed 40 years) where r is discount rate

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  • **Levelized Cost of Electricity Want the p at which PV of revenues = PV of costs: so lcoe is

    Sensitive to discount rate and to assumed lifeA long-run marginal cost *

  • *Base Load vs Load-FollowingBase load is the level below which demand never falls level at night in the season (usually winter) when demand is lowestLoad-following energy (dispatchable energy) is provided to follow the demand up and down during the dayBase load typically coal or nuclear big plants never turned offLoad-following is gas or diesel or renewable

  • ***Figures from NREL. Much capacity is only used in summer.Some of that is only used for a few hours each day.Plants only used for a few hours daily in summer have highLCOE. NYC summer peak power may cost $2kWhTexas load curves summer and winter Base load

  • Cost StructuresFossil fuels (ff) have capital costs and fuel and operating costs Coal capital $1750/kW and then $40-$60/ton coal2000 MW coal plant might cost $3.5b capital costs and 10,000 tons coal daily 25,000 tons CO2 daily - $0.5m coal daily = $182.5m annually or $7.3b over the life of the plantCO2 costs > = coal costs*

  • Cost StructuresFor electricity generation main fossil fuels are coal and gas. Prices fluctuate Driven by business cycleGas prices driven down by new discoveries of tight gasSome scope for green paradox here but effect reduced by renewable mandates such as US RPS*

  • Cost StructuresWind - $2,000kW and no operating or fuel costs1gW wind farm costs $2bWhy is wind not cheaper than coal?Capacity factor a 3MW turbine only produces 3MW when the wind blows > 20kphGenerally turbines produce 0.3-0.4 of their max rated power the capacity factor*

  • Cost StructuresCapacity factor is critical as it determines how many units of output we can spread the fixed costs over and operating life too Economics of solar PV is similar but more expensive higher capital costs and lower capacity factorSolar thermal is different heats fluid to make steam and drive a turbineCan store heat & operate at night by storing hot fluid*

  • Cost Structures - NuclearCurrently unclear what is cost of new nukeCapital cost estimates range from $2,500kW to $10,500kW Fuel costs are lowAt low end this is competitive but not at the top endNuclear has social costs (melt down risk, proliferation, waste) > renewables*

  • *NuclearCoalCCSGeo -ThermalWindSolar PVSolar Thermal Natural GasSolar Thermal W/STRG

    ENERGYLCOEsTECHNOLOGY ASSUMPTIONSFEDERALINCENTIVESSTATE INCENTIVES+ CO2 Tax>8.4/kWhVarious Reactors(MIT 2003,CEEPR 2009)Loan Guarantees, Price Anderson, Prod. Tax CreditsSome Tax Incentives, Some Plant constr. cost recovery.6.2/kWhAir-blown PC Gener. Tech (MIT 2007, 2009)Incentives Only For Clean Coal Tech.None$25/tCO2: 8.3kWhPlus 3-4/kWh To Coal CostCoal Plant With CCS Tech(McKinsey & Co. 2008/Heal)Government Funds Future-Gen ProjectRPS/RECs, Prod., Invest. Tax Incentives3.6/kWh-8.3/kWhCommerciallyMature (MIT 2006)Electricity Prod., invest. Tax Credits, Loan Guarantees, etc. RPS/RECs, Prod. Invest., & Sales Tax Incentives, Others4/kWh-7/kWhUtility Scale Turbines (California Energy Comm. 05)Wind energy tax credit (Federal)RPS/RECs, Prod., Invest. & Sales Tax Incentives, Others7/kWh-15/kWhUtility-Scale Silicon PV(Solar Advisor Model NREL) Loan Guarantees, Energy Grants, Invest. Tax Credits.RPS/SRECs, Prod., Invest. & Sales Tax Incentives, Others12/kWh-14/kWhCSP W/out Storage (DOE 2007)Loan Guarantees, Energy Grants, Invest. Tax Credits.RPS/SRECs, Invest., Prod. & Sales Tax Incentives, Others15/kWh- 19/kWhUtility-Scale Parabolic-Trough (Solar Advisor Model NREL)Loan Guarantees, Energy Grants, Invest. Tax Credits.RPS/SRECs, Invest., Prod. & Sales Tax Incentives, Others6.5/kWhGas Powered Plant(MIT CEEPR May 2009)None None $25/tCO2: 7.4kWh

  • Bottom LineWind, geothermal are cost competitive indeed their social costs are lower than FFSolar PV is close to competitive and solar thermal is expected to be < $0.10 shortlyBoth types of solar have lower social costs than FFSo can we expect the replacement of FF by wind, solar?

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  • Are Renewables Competitive?Incremental capacity in US is now almost all wind or gas (gas has 50% of GHGs of coal)Some existing power plants will be refired by gasAnd some gas used as baseloadBut large-scale implementation of wind, solar faces problem of intermittency*

  • ***Wind power fluctuates widely .From D Mackay, Sustainable Energy without the hot airwww.withouthotair.com

  • ***Figures from NREL for Texas. In Spring solar will cut in tobaseload, which is much less expensive and alsocostly to turn up an down. So some solar will bewasted leading to a lower capacity factor. Even whenthe sun shines it may not be possible to sell solar powerSolar output fluctuates too National Renewable Energy Lab

  • IntermittencyNeed backup or storageCurrently gas used as backup in US, hydro in EUStorage from pumped hydro, compressed air energy storage, both geology-specificSome grid-scale batteries 32MWh in S Cal emerging technologyStorage, backup adds to cost about $0.01kWhCant provide baseload supply except solar thermal, geothermal*

  • ***Pumped water storage

  • ***Compressed air energy storage (CAES)

  • AvailabilityNote that wind, solar require large land areas EU could not meet its electric power needs in its own territory, though US canArea size of California can generate enough from solar PV to power entire US EU could import from N Africa DesertEc project or use nuclear*

  • ConclusionsElectricity could be generated from renewables & gas, greatly reducing CO2, at no extra costWithin a decade it may be possible to deploy storage units, reducing use of gas as backupNuclear is CO2-free but expensive and cannot follow fluctuations in wind output*

  • ConclusionsDecarbonizing will require vast investments US electric capacity is 1 Terrawatt= 1,000,000,000kW @ $2000/kW@40% cap factor= $5T for generation capacity, plus storage and grid improvements @ $3m/mileAbout 40% of US GDP over 2-3 decadesUS could go fully renewable (assuming storage) but EU could not but could decarbonize with nuclear or renewable imports*