Where is RE + storage already cheaper than coal?
Alexander Hogeveen Rutter
Manager, Research and Diligence and Electricity Sector Lead, Third Derivative. Development Finance, Climate Tech, Angel Investing
There is an emerging recognition that Renewable Energy (RE) is cheaper than coal in many countries. IRENA, for example,?estimates?that emerging economies alone could save $156 Billion by switching from coal to RE.
However, supporters of the status quo (rightly) point out that solar/wind are intermittent and therefore the grid cannot run entirely on RE. However, the falling cost of storage means that RE + storage is increasingly competitive with coal generation. This analysis shows how the cost of RE + storage compares to the cost of coal for the 10 largest coal consuming countries, representing 86% (~5/6th) of all coal consumed worldwide.
As seen in the above chart, RE + storage is already competitive in many countries . In particular:
4 Countries Where RE + Storage is already cheaper than Coal
3 Countries Where RE + Storage is already cheaper than Coal, w/Carbon at $30/ton
3 Countries Where RE + Storage is not yet cheaper than coal
The most obvious conclusion is that India, United States, Poland and Australia should stop building new coal and look at ways to retire existing coal early in favour of RE + storage, for purely economic reasons. China, Germany and South Africa should explore how carbon pricing can help phase out coal (though RE + storage will likely be economic within the decade as storage costs continue to fall). For countries in the third category, I will leave it to the reader to think if they should bite the bullet and go with RE + storage for the good of the planet anyway, invest in nuclear, invest in RE + storage abroad, invest in CCUS, etc.
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For those who like their data in chart rather than graph form:
Methodology and Notes
My primary source of data was the?IEA, and various research papers (especially?this one) for countries where IEA data was unavailable (Russia, South Africa, Germany and Poland). Note the coal figures include capital costs, so the comparison would be for new build RE + storage vs. new build of coal. However, I broke out the fuel vs. capex for Poland and solar is still competitive with existing coal.
I have not considered the hundreds of billions of dollars in?health?and?productivity?costs due to local air pollution from coal. I have not also considered the impact on transmission or local employment. Many large countries such as India, Russia, China and United States would have significant regional variation.
For storage, I have taken a conservative figure of $240/kWh, which is much higher than the $100/kWh often cited by?Bloomberg New Energy Finance?, but I think better captures the entire cost of storage including balance of plant, operational costs, etc. I have assumed a round-trip efficiency of 85% and assumed the losses are at the same cost of generation (though in reality, the losses would come disproportionately from “free” surplus DC:AC generation). I have assumed a lifetime of 10 years and a discount rate of 7%.
I have?discussed previously?how many analyses of energy storage often overbuild the storage to achieve “24 hours” of coverage. I have assumed 4 hours of storage, which is enough to cover the peak in a given country. To get to 70-80% RE, 4 hours of storage should be sufficient in most countries, given natural diversity of RE generation and load (especially in countries with both wind and solar), regional variation, hydropower/ geothermal/ biomass, etc.
Longer-term duration storage would be required to get to fully 100% RE, but let’s start with not building new coal and retiring the worst plants we have today. There are a number of emerging and existing technologies (eg. iron-air batteries, Hydrogen, molten salts, vanadium redox flow, pumped storage) that are likely to have a much lower cost per kWh cost by the time we get to 100% RE.
In short, I have tried to be conservative in my assumptions and believe, if anything, this analysis actually undersells the benefits of switching from coal to RE + storage.
Original Article: https://energywithalex.wordpress.com/2021/08/19/where-is-re-storage-already-cheaper-than-coal/
NPX | ISB | Kinectrics NSS | Atomic Energy of Canada Limited | Sterlite Power
3 年Nice top level perspective. I'm reading some of the LUT published articles/papers as well, especially those on switching to 100%RE worldwide by 2050.
Manager, Research and Diligence and Electricity Sector Lead, Third Derivative. Development Finance, Climate Tech, Angel Investing
3 年The Indian Statistical Institute, has come up with a similar conclusion re: no new coal plants and goes further in that if social costs are included, the operating cost alone of more than 50% of existing coal plants is higher than the costs from renewables. https://econpapers.repec.org/paper/aloisipdp/21-04.htm
GE | Renewable Hybrids | Firm, Dispatchable, RTC | BESS | Hybrid Controls | C&I PPAs
3 年Great piece! I think its not even a debate any more. Grid level ‘shared’ storage used for multiple use cases (stacking) will make the economics even more in favour of RE+Storage. For India I think its only a matter of the first few RE + Storage projects coming on ground and ending the debate
Director - Centre for Energy Finance at Council on Energy, Environment and Water
3 年Great point on coal retirement. Here's a recent piece that sets out in a concise manner what issues need to be considered when determining national level decommissioning pathways https://www.weforum.org/agenda/2021/08/4-key-steps-decommissioning-coal-fired-power-plants/
Energy Sector and Business Excellence expert.
3 年Good article.. however in country like India we already have surplus coal / thermal capacity with FGD and environment compliance. End consumer is already paying fixed capacity charges. Putting RE need to be done judiciously here as already capacity idling and fluctuation in thermal load capacity is taxing heavily to consumers. Developing country need to move cautiously with minimum load on consumers..