Potential, cost and scale for deep decarbonisation of Kuwait's grid
#Kuwait is a major supplier of #oil in and a member of the OPEC . Kuwait holds approximately 7% of global oil reserves and aims to scale up its oil production capacity to 4 million barrels per day by 2040, up from 2.43 million barrels per day presently. Some reports suggest the country is in the process of drawing up a strategy that is aimed at fast-tracking #energytransition.
Currently, oil accounts for?nearly half of the country’s GDP, ~95% of exports, and 90% of government export revenue. The International Monetary Fund estimates that the country's external breakeven price of oil output to be at USD 44 per barrel. This figure represents the required oil price for the country's current account to be zero and corresponds to some USD 7/MMBTu in terms of energy in gas or oil products.
Like many countries in the region, its #powergrid is highly dependent on #naturalgas and #fueloil. In 2020, some 700 PJ of #fossilfuels were consumed in the production of electricity to power the local #grid and the many #desalination plants which meet the country's water needs. Some 60% that was gas (~400 Bcf), and the remainder oil and oil products. No meaningful amount of #renewableelectricity from #pvsolar or #onshorewind projects was sourced into the local #grid.
In terms of electricity load profile, a total of ~75 TWh were generated in 2020, and instant peak hourly demand events as high as ~15 GW had to be fully met. These occur mostly during the very hot summer of the region. The system's minimum instant demand sits at ~4.7GW.?The electricity load reported includes power generated as required for desalinating seawater to meet the country's demand of some 2.1 million cubic meters per day (~460 MIGD). Most of the desalination plants in the country currently use multi stage flash (MSF) evaporation method, which is based on steam processes and uses huge amounts of energy.
Working from public domain information disclosed by the Kuwait's Ministry of Electricity and Water , and IMF's external breakeven oil price measure as basis for the opportunity cost of the fossil fuels consumed to power the grid, it is possible to estimate at ~USD$103/MWh the overall power generation system cost of producing all that electricity. The resulting grid carbon intensity is estimated at 545 kgCO2e/MWh, a relatively high figure and mostly driven by the high share of oil products and oil in the grid's fuel input.
Kuwait has set a goal to generate 15% of its electricity from renewables by 2030, as part of the goals set in its New Vision 2035. To meet that goal, both onshore wind and #photovoltaic solar generation infrastructure could be installed and run at good enough capacity factors. If half of the country's area were to be allocated for that, over 400 GW of solar and 20 GW of wind farms could be installed at current capacity density parameters and non co-located basis. With co-location, both figures could almost double.
By How much can the carbon intensity be reduced at no extra cost to the system?
If a “no-regret” decarbonization strategy is pursued, then the question that needs answer is:
By how much could the local grid`s carbon intensity be reduced by installing onshore wind and PV solar capacity firmed up by energy storage systems?and at no extra cost to the system ?
Two scenarios are possible:?
Under scenario 1, some 9.5 GW of PV solar farms and 7.5 GW of wind farms could be coupled with 30.5 Gwh of 4-hour deep lithium-type storage, and enable a 60% decarbonized power grid (~220 kgCO2e per MWh) at a levelized cost of USD 103 per MWh
Under scenario 2, some 10.5 GW of PV solar farms and 9.9 GW of wind farms could be coupled with 82 GWh of?7.5h-deep storage and enable a 70% decarbonized power grid (~170 kgCO2e per MWh) at a levelized cost of USD 103 per MWh
The potential reduction in fuel offtake would be 410-480 PJs per year, an amount equivalent to 390-455 Bcf of natural gas. At an opportunity cost of USD 7/MMBtu that translates to USD 2.8-3.3 billion per year in fuel savings, which effectively cross-fund the renewable and storage portfolios outlined above. The payback period in terms of fuel savings to upfront renewable power and storage capital costs is estimated at 10-11 years, which is reasonably aligned with typical integrated planning economic investment horizon timeframes.
What would it take to reduce Kuwait's grid carbon intensity by 90%?
This then leads to the question: What would take to reduce the local grid`s #carbonintensity by 90% with #renewableelectricity, from onshore #wind and #pvsolar farms firmed up by #energystoragesystems ?
As in previous analyses, it all depends on the roundtrip #efficiency and build cost of the #storagesolution you pick.
If we work from the assumption that #wind and #solar hubs are developed at current costs as per International Renewable Energy Agency (IRENA) latest assessment, and coupled with a highly efficient storage solution like #lithiumionbatteries (LFP type) as per Pacific Northwest National Laboratory 's forecasts for 2030, that could be achieved by coupling 6GW of #windfarms with 28GW of #solarfarms and 106 GWh of 5.5 hours deep storage. Doing so would increase the overall opportunity of electricity to US$129/MWh, meaning that this deep decarbonisation pathway for the Kuwait grid would be feasible if those planning the integrated water and #powersytem were subject to a carbon penalty of ~US$54/tCO2e or more.
If we work from the assumption a similar onshore wind fleet is coupled with a less efficient but ultra #deepstorage solution like #hydrogenstorage systems based on hypothetically available #saltcarverns, the same could be achieved by coupling 18GW of #windfarms with 14GW of #solarfarms and 200 GWh of 10.5 hours deep storage. Doing so would increase the overall opportunity of electricity to US$121/MWh, meaning that this decarbonisation pathway for the grid would be feasible under a carbon penalty or #carbontax of ~US$37/tCO2e or more. The #H2 energy storage capacity is an estimate of net recoverable energy needs, and translates to some 363GWh / 9.2 ktH2 in closed loop raw gaseous storage.?
In both cases, it is likely that some ~9-10 TWh per year of surplus #renewablepower could be available for exports and bilateral swaps with neighboring countries, or use elsewhere. If this surplus were to be directed to a local #greenhydrogen industry, some 171-175 ktons of #hydrogen could be produced, which could be then converted to some 900-940 ktons of #greenammonia every year.
A third option, in which #nuclearpower generation capacity is used as the key lever for the reduced carbon intensity was also assessed. In that case, installing a #nuclear fleet with 12 GW of installed capacity and running it in complement to a 75% reduced oil/gas fleet would be required for a carbon intensity of 54 kgCO2e per MWh to be achieved. Doing so would increase the overall opportunity of electricity to US$178/MWh, meaning that this decarbonisation pathway for the grid would be feasible under a carbon penalty or #carbontax of ~US$153/tCO2e or more.
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The techno-economic assumptions for nuclear generation are aligned with what is found at Lazard 's latest Levelized Cost of Energy Report and are in summary: upfront cost of USD 10,300 per kW installed, fixed O&M costs of USD 130 per kW installed per year, variable O&M costs of USD13.1/MWh and achievable utilization factor of 90% (i.e. 10% is consumed or lost within the nuclear power station in auxiliary loads).
In this third case, it is likely that some ~13 TWh per year of surplus #nuclearpower could be available for exports and bilateral swaps with neighboring countries, or use elsewhere. If this surplus were to be directed to a local #greenhydrogen industry, some 310 ktons of zero carbon #pinkhydrogen could be produced, which could be then converted to some 1,658 ktons of #zerocarbon ammonia every year.
See this link for further detailed calculations.
What would be the required reductions in installed costs for deep decarbonization to be achieved at cost parity?
All decarbonization pathways indicate emissions abatement of level targeted in this analysis would only occur at additional costs to the system. This then leads to the question of what level of reductions in terms of installed and upfront costs of storage or nuclear generation would be required for a levelised system cost parity to the baseline?
In the case of a highly efficient storage solution like lithium-ion batteries (LFP type), parity to the carbon-intensive baseline in terms of levelised system cost of electricity would require a 65% reduction in upfront installed cost to ~USD 75 per kWh storage installed capacity.
In the case of a less efficient but ultra deep storage solution like hydrogen storage systems based on hypothetically available salt carverns or salt domes within the country's border, parity to the carbon-intensive baseline in terms of levelised system cost of electricity would require a 85% reduction in upfront installed cost to ~USD 14 per kWh storage installed capacity.
And, in the case of a decarbonisation pathway based on partial retirement of the gas fleet combined with installation of nuclear power stations within the country, parity to the carbon-intensive baseline in terms of levelised system cost of electricity would require a 53% reduction in upfront installed cost to of nuclear capacity to ~USD 4,840 per kW installed peak generation capacity.
Important notes
Note these results are based on a simplistic single supply-demand point system with a demand aligned with what was recored in 2020 and desktop-based co-optimisation using Microsoft #Excel's #Solver add-in (by FrontlineSolvers) and single samples for key demand and supply elements.
A more robust and complete analysis, like the one required for investment grade capacity planning and simulation, would require multi-sample stochastic methods like what Energy Exemplar 's #PLEXOS simulation software offers.