BloombergBusiness‘ Tom Randall points out that renewables may now be unstoppable:
To appreciate what’s going on [in the USA], you need to understand the capacity factor. That’s the percentage of a power plant’s maximum potential that’s actually achieved over time.
Consider a solar project. The sun doesn’t shine at night and, even during the day, varies in brightness with the weather and the seasons. So a project that can crank out 100 megawatt hours of electricity during the sunniest part of the day might produce just 20 percent of that when averaged out over a year. That gives it a 20 percent capacity factor.
One of the major strengths of fossil fuel power plants is that they can command very high and predictable capacity factors. The average U.S. natural gas plant, for example, might produce about 70 percent of its potential (falling short of 100 percent because of seasonal demand and maintenance). But that’s what’s changing, and it’s a big deal.
For the first time, widespread adoption of renewables is effectively lowering the capacity factor for fossil fuels. That’s because once a solar or wind project is built, the marginal cost of the electricity it produces is pretty much zero—free electricity—while coal and gas plants require more fuel for every new watt produced. If you’re a power company with a choice, you choose the free stuff every time.
It’s a self-reinforcing cycle. As more renewables are installed, coal and natural gas plants are used less. As coal and gas are used less, the cost of using them to generate electricity goes up. As the cost of coal and gas power rises, more renewables will be installed.
The important business question?
Historically, a high capacity factor has been a fixed input in the cost calculation. But now anyone contemplating a billion-dollar power plant with an anticipated lifespan of decades must consider the possibility that as time goes on, the plant will be used less than when its doors first open.
This may be an important riposte to the argument from Michael LePage that the downtrend in fossil fuel usage was only a blip:
Coal is the key to all our futures. Rich countries have made some progress in cutting carbon dioxide emissions, largely by shifting away from coal to less-polluting fuels. But the result has been a glut of cheap coal, leading to a coal renaissance that could consign us to a world more than 4 °C warmer.
And the nation hosting the December 2015 UN summit on climate change, also in Paris, is helping fund this renaissance. It’s hardly surprising then that no one at last week’s conference thought the summit would deliver a deal to stop global temperatures rising more than 2 °C – generally considered to be the threshold above which catastrophic consequences are inevitable.
However, in those countries where energy is a nationalized industry, or the industry has a deep influence on the government, the retort may be less effective. Regardless, the price of fossil fuels, especially if we begin to see the producers of fossil fuels ramping production downwards, in comparison to renewables should even force the recalcitrants out of their castles of denial. We may actually be on our way.
In a related note, Michael Graham Richards @ TreeHugger.com, in reaction to the BloombergBusiness article, mentions this:
The next big argument is intermittency. This article isn’t about that, so I won’t go into detail, but let’s just say that there are many ways to mitigate the problem: Grid-scale storage is coming down in price (from the Tesla Energy batteries to grid-scale liquid metal batteries), someday we’ll have millions of electric cars with vehicle-to-grid (V2G) technology that act as a kind of giant distributed battery (people will get paid to rent out a few percents of their batteries to absorb grid variations), interconnected smart grids will be able to shift energy from regions where there’s a surplus of sun and wind to those where there’s a deficit, dynamic pricing will help demand stay closer to supply, etc
Right now I believe the national grids are not terribly well interconnected themselves, but it does seem to me that finding a way to interconnect them (which would be an interesting technical challenge) would obviate the sunlight/darkness argument against solar – because it’s always sunny somewhere. A completely integrated power grid would make that truism important.
