Mixing Questions

Flexible solutions for clean electricity

Okay, if you’re here you probably already know the name of the game.

To achieve net zero, we need to electrify (almost) everything, and make sure the electricity is generated by lo/no carbon sources: clean electricity is at the core of transforming our energy mix.

Let’s talk some numbers.

According to the International Renewable Energy Agency (IRENA), achieving 1.5 centigrade requires renewables account for three quarters of the primary energy supply (see Chart) by 2050 - a massive 61 percentage points increase.

source: IRENA

Meanwhile, electricity generation currently accounts for more than one third (36%) of global carbon dioxide emissions.¹

Hello sunshine?

That’s going to be a major challenge, not least because of the tension between having electricity available on demand, and the rather prosaic fact that the sun doesn’t always shine, and the wind doesn't always blow (“intermittency”).²

By the way: it’s interesting that people’s views on renewable energy and in particular the intermittency problem seem so polarized.

Some tend to ignore it. Once we have built our renewables capacity, the story goes, energy costs will be zero – after all, sun and wind are free!

Then there are others who somehow seem to consider intermittency to be fatal. “Don’t you understand that renewables can’t provide power 24/7? There goes your green transition! So let’s keep drilling for fossil fuels.”

I think both views are dangerous in their own way.

The first because it tends to ignore the very real costs of achieving net zero. When voters find out, there is a backlash which can endanger support for the transition. The second because such attitudes put us straight on a path to a climate catastrophe.

Instead, I’m going to argue that:

• intermittency is neither a trivial technical problem nor of negligible economic importance,

• yet it can be feasibly addressed over the relevant time horizon (the next two to three decades), mostly with technologies that are already available and/or become cost competitive as they mature and are deployed at scale;

• this can be done at a cost that is reasonable, especially relative to the cost we are likely to face if we allow a climate disaster to unfold.

Here’s my game plan.

In today’s post, I will take a quick peek at the technical solutions that (will) enable a large share of renewables in energy generation. I’ll keep the economics to a minimum for now - but you’re not off the hook: I will take a proper look at costs in a follow-up post!

Science class

Let’s start at the very beginning.

The key to understanding the fossil fuel based energy system we have, and why it is neither easy nor cheap to transition out of, are the physical properties of fossil fuels and electricity, respectively.

On the one side, fossil fuels have high energy density.

Our planet worked hard for millions of years to squeeze a great deal of energy into very little volume - that’s your hydrocarbons.

This has implications for when and where electricity is produced.

• When. Thanks to high energy density, fossil fuels are easy to store, including over long time periods. This makes bridging demand and supply for energy across time very easy. Quite simply, you store hydrocarbons and generate electricity anytime - when and as needed.

• Where. High energy density is also why fossil fuels can be transported relatively cheaply, and why power plants could be built near the cities or factories that needed the electricity.

In short: fossil fuels can produce electricity wherever and whenever it is economically attractive.

As an aside, because of fossil fuels’ high energy density, you don’t need much space to generate electricity from them - they also have high power density (how much power can be generated on a given amount of space).

While I will not discuss this further here, it’s worth bearing in mind that space can be a constraint for renewables expansion in some places.

Source: Bill Gates (2021), How to Avoid a Climate Disaster, Alfred A. Knopf

On the other side are the peculiarities of electricity as a technology.

Storing electrons is costly and subject to losses; transmitting electrons is costly and subject to losses; and electricity supply and demand need to be balanced at all times to guarantee the stability of the grid.

It’s these peculiarities that make intermittency such a challenge for decarbonization. When renewables generate too much electricity, the surplus needs to be stored, used, or transmitted elsewhere. When they generate too little, we need other generation technologies.

The implications of intermittency are far-reaching: for how we generate electricity, how we distribute electricity generation across space and time, what kind of generating capacity we build, and how we structure energy markets.

And of course, all of this will have implications for the cost of energy (spoiler: it won’t be zero).

But it doesn’t mean that a high share of renewables in electricity generation is unfeasible, nor that the cost would be prohibitive. That’s because of the technological solutions that are, or becoming, available.

Yes, we can

Since renewable energy sources sometimes produce too little (or not at all), and sometimes - when installed capacity is high - too much, the rest of the system must be able to buffer the variability of renewables.

We need to build the rest of the system around a core of renewables so that our electricity is both clean, and available on demand.

In the jargon, it’s about the integration of intermittent renewables. Here, flexibility is the name of the game.

• Demand-side management (DSM) is already being applied successfully. The spread of smart grids (among other technologies) is allowing both better matching of electricity demand with wind/solar output (“load shifting”), as well as more energy efficiency and conservation. Think automatic scheduling of water heating and home appliances, smart charging of EVs or real-time information on tariffs allowing customers to save more energy.

• Combined heat and power (CHP). Conventional electricity generation is very inefficient because much of the energy input is wasted as heat. CHP not only increases system efficiency by using this heat. It also helps integrate renewables as it can flexibly ramp up and down production according to their availability. Denmark, which is very successful at integrating high shares of wind power, has relied heavily on CHP.

• Trade electricity with other regions or countries. (Needless to say, this requires removing grid bottlenecks – e.g. better connecting Scotland’s offshore wind capacities to England’s demand - making grids a major cost item for the transition.)

• Grid-scale storage. The cost of lithium-ion batteries, a mature technology, has fallen more than 90 per cent over the past decade, helping their deployment on a scale sufficient to power a city. A similar principle is to use energy when available to heat up some suitable material, which then releases this (thermal) energy slowly.

• Long term storage through low-carbon fuels. Batteries seem likely to remain technically limited to dealing with short term variation, so the hunt is on for other technological solutions to deal with seasonal variation. We’re back to fuels and their high energy density! Low-carbon fuels like hydrogen or ammonia are technically already available,³ if still expensive when looking at the entire value chain (production-shipping-use). However, the economics of low-carbon fuels improves a lot when considering that producing electricity from them can be done with the existing capital stock that currently uses fossil fuels (suitably adapted), reducing the stranded assets problem.

• System optimization. In the long run, the structure of the system can be optimized around renewables, reducing overall costs. This means shifting capacity towards technologies with a lower share of fixed costs (e.g. capex to build the plant), as these don’t need to produce as many units of electricity to be economical.

This list is by no means exhaustive. Of course, none of this is a “silver bullet”. But there’s no reason why a combination can’t do the trick.

And it’s not pie-in-the-sky. Investors are all over these things.

Many technologies are already commercially available, some are close to, and costs are going only one way (unless we enact counterproductive policies). It’s very reasonable to expect further solutions to come online, provided we set the right incentives (have I mentioned carbon pricing?) - that’s the beauty of capitalism.

But it will take time. Even with the right incentives, the timescale is decades - not least because we need to minimize the cost of the transition. It couldn’t be any other way when the status quo is centuries old.

And it won’t be for free, of course - but it’s still affordable, and in any case cheaper than the alternative of unchecked climate change.

But I’ll be back with more on the cost side of the equation, stay tuned!

Photo by Jean-Lui Piston on Unsplash

1. International Energy Agency, 2021.

2. Without meaning any disrespect to other renewable energy sources, I am focusing here on wind and solar.

3. As hydrogen does not naturally occur on its own, it need to be generated from water by separating it from oxygen through electrolysis, which requires energy. If this energy is obtained from low carbon sources, we obtain a low-carbon fuel (e.g. “green” hydrogen from renewables).