Comparison, renewables versus conventional

[Old Rocks]

Very interesting figures here. Looks as if wind and solar have both acheived parity with conventional sources.

http://www.lazard.com/PDF/Levelized Cost of Energy - Version 8.0.pdf

Summary Considerations
Lazard has conducted this study comparing the levelized cost of energy for various conventional and Alternative Energy
generation technologies in order to understand which Alternative Energy generation technologies may be cost-competitive with
conventional generation technologies, either now or in the future, and under various operating assumptions, as well as to
understand which technologies are best suited for various applications based on locational requirements, dispatch
characteristics and other factors. We find that Alternative Energy technologies are complementary to conventional generation
technologies, and believe that their use will be increasingly prevalent for a variety of reasons, including RPS requirements,
carbon regulations, continually improving economics as underlying technologies improve and production volumes increase,
and government subsidies in certain regions.
In this study, Lazard’s approach was to determine the levelized cost of energy, on a $/MWh basis, that would provide an aftertax
IRR to equity holders equal to an assumed cost of equity capital. Certain assumptions (e.g., required debt and equity
returns, capital structure, and economic life) were identical for all technologies, in order to isolate the effects of key
differentiated inputs such as investment costs, capacity factors, operating costs, fuel costs (where relevant) and U.S. federal tax
incentives on the levelized cost of energy. These inputs were developed with a leading consulting and engineering firm to the
Power & Energy Industry, augmented with Lazard’s commercial knowledge where relevant. This study (as well as previous
versions) has benefitted from additional input from a wide variety of industry participants.
Lazard has not manipulated capital costs or capital structure for various technologies, as the goal of the study was to compare
the current state of various generation technologies, rather than the benefits of financial engineering. The results contained in
this study would be altered by different assumptions regarding capital structure (e.g., increased use of leverage) or capital costs
(e.g., a willingness to accept lower returns than those assumed herein).
Key sensitivities examined included fuel costs and tax subsidies. Other factors would also have a potentially significant effect
on the results contained herein, but have not been examined in the scope of this current analysis. These additional factors,
among others, could include: capacity value vs. energy value; stranded costs related to distributed generation or otherwise;
network upgrade, transmission or congestion costs; integration costs; and costs of complying with various environmental
regulations (e.g., carbon emissions offsets, emissions control systems). The analysis also does not address potential social and
environmental externalities, including, for example, the social costs and rate consequences for those who cannot afford
distribution generation solutions, as well as the long-term residual and societal consequences of various conventional
generation technologies that are difficult to measure (e.g., nuclear waste disposal, environmental impacts, etc.).

 

[kflaux]

Very interesting figures here. Looks as if wind and solar have both acheived parity with conventional sources.

http://www.lazard.com/PDF/Levelized Cost of Energy - Version 8.0.pdf

Thanks for that. I have sent it to my Kindle for leisurely perusal.

The author doesn't mention intermittency very much, but this is a major issue. Without a baseline power supply, wind and solar in particular require some kind of energy storage solution, even if long-distance transmission is feasible.

One thing worth noting is that WRT wind power in particular, it's deja vu all over again. It's not generally known or appreciated, but in the American west in the early 20th C, you pretty much had to have a windmill of some kind if you wanted to farm a plot of land. You needed a means to draw water up from underground.

Thus people would piece together ersatz windmills from scrap materials, and some with money would buy high-performance products. IAC windmills of one kind or another were a standard part of homesteads in the west, as recounted here:

Powering the Dream The History and Promise of Green Technology - Kindle edition by Alexis Madrigal. Professional Technical Kindle eBooks Amazon.com.

 

[Dekster]

Is it really parity if they had to go through a lot of levelizing, adjusting for, including subsidies, etc, to create mathematical parity? I am all for alternative energy, but I consider it also dishonest to try to bury the realities of its limitations behind trickery.

 

[Old Rocks]

Of course, we have heard this kind of thing before. However, my next post explains why I think that we are on the verge of really seeing this happen. Reasonably priced grid scale batteries makes renewables 24/7, and changes the whole equation.

Alevo Unstealthed A New Gigawatt-Scale Grid Battery Contender Greentech Media

From out of nowhere, a startup named Alevo has emerged as a serious rival to Tesla in the race to achieve next-generation grid battery manufacturing at gigawatt scale.

On Monday, the North Carolina-based, European-backed company announced plans to invest $1 billion in turning an old Philip Morris cigarette factory into a battery factory eventually capable of churning out "several gigawatts" per year, CEO Jostein Eikeland told me in an interview. Utility customers in North America are soon to be announced, and the company has already booked about 200 megawatts of orders, enough to fill the factory’s planned production next year, he said.

Alevo says its lithium-iron-phosphate (LiFePO4) batteries are the first to use an inorganic electrolyte based on sulfur, which prevents the chemical reactions that lead to heating, expansion and eventual failure for lithium-ion batteries. Test cells have lasted more than 40,000 cycles in “hammer tests” that completely discharge and then overcharge them over and over again, without significant degradation of performance, he said.

 

[Old Rocks]

While my opinions do not count, these are people whose opinion on this does.

Oncor proposes giant leap for grid batteries Dallas Morning News

Oncor, which runs Texas’ largest power line network, is willing to bet battery technology is ready for wide-scale deployment across the grid.

In a move that stands to radically shift the dynamics of the industry, Oncor is set to announce Monday that it is prepared to invest more than $2 billion to store electricity in thousands of batteries across North and West Texas beginning in 2018.

Utility-scale batteries have been a holy grail within the energy sector for years. With enough storage space, surplus electricity can be generated at night, when plants usually sit idle, to be used the next day, when demand is highest. Power outages would become less frequent. Wind and solar power, susceptible to weather conditions, could be built on a larger scale. The only problem has been that the price of batteries has been too high to make economic sense. But if they’re purchased on a large enough scale, that won’t be the case for long, said Oncor CEO Bob Shapard.

“Everyone assumed the price point was five to six years out. We’re getting indications from everyone we’ve talked to they can get us to that price by 2018,” he said in an interview Wednesday.

The Dallas-based transmission company is proposing the installation of 5,000 megawatts of batteries not just in its service area but across Texas’ entire grid. That is the equivalent of four nuclear power plants on a grid with a capacity of about 81,000 megawatts.