Renewables and storage are now the most economic alternative for new capacity and can perform any critical role in the energy system

If you want to understand the revolution going on in the energy system, you need to get familiar with the three fundamental roles that different energy supply technologies play on the mix.

Existing technologies need to supply ‘bulk generation’ or baseload to power the energy grids of countries on a constant basis. But increasingly more important - because the energy consumption curve is not constant over the course of the day, which features peak periods of higher consumption and valley periods of lower demand - is the supply of ‘dispatchable generation,’ and the provision of ‘flexibility’.

Renewables are getting more and more competitive than building new traditional thermal technologies (coal and gas) to supply bulk generation. A new BNEF study reports that solar and photovoltaics are continuing to reduce their LCOE (levelized cost of energy) due to sustained drop in costs for building and operating these technologies. The research firm indicates that during the last 9 years LCOE for solar dropped by 77% and onshore wind by 38%.

As for dispatchable generation - or the ability modulate electricity output in order to follow grid requests to increase or decrease the electricity provided any time of day - renewables have proved they can overcome variability of natural resources. The fact that the sun doesn’t always shine or that the wind stops blowing used to be a caveat for renewables in playing this role. Now however the coupling of solar or wind with batteries is dramatically changing the scenario. 

But perhaps the most interesting part of the puzzle is now in flexibility or the ability to quickly (or even immediately) activate or deactivate energy output in response to grid electricity shortfalls and surpluses over periods of hours. It's like having a utility scale switch that you can turn on or off at any given time. This is a terrain for new services such as demand response or demand management. In flexibility, BNEF reports, stand-alone batteries are increasingly cost-effective and are starting to compete on price with open-cycle gas plants, and with other options such as pumped hydro.

So renewables and chemical storage are proving they can simply outperform fossil technologies or be environmentally and cost competitive with other existing technologies in performing all of the critical roles in the energy system. The new energy paradigm is finally here!