Dave Elliott: The cost of renewable energy is falling rapidly, with it being claimed that it is now competitive with conventional energy supply in some cases. That means that renewables are replacing coal in many situations and may do in more, with costs continuing to fall, for example down to €14.8/MWh for PV projects in Portugal, an all-time low. However, as the use of wind and solar expands, so will the cost of balancing their variable outputs. The technical costs of balancing variable renewables have been extensively studied. One UK estimate is that they might add 10-15% to generation costs at medium levels of penetration, depending on what balancing technology is used. Nevertheless, it’s usually argued that, if the share of renewables on the grid goes up further, so will the balancing costs, and dramatically so. That may be true, although it depends on how the system is developed: some of the balancing techniques will actually reduce costs. For example, a study by the UK National Infrastructure Commission claimed that an integrated flexible supply and demand management system, with smart grids, storage and also grid interconnector imports/exports, could save the UK £8 bn p.a. by 2030. A study by Imperial College London/OVO Energy claimed that just adding residential flexibility in domestic energy use (including for electric vehicle charging) could reduce whole system costs by up to £6.9bn p.a., or 21% of total electricity system costs. It was suggested that these savings could more than offset the cost of upgrading the power system. That does seem credible for some of the options. For example, introducing variable time-of-use energy tariff charges requires no capital outlay, but would lead to reduced peak energy use and user costs and also lower system costs. In all it has been suggested that improved system flexibility could save the UK up to £40 bn by 2050.
Renew Extra 25th Jan 2020 read more »