Setting the Record Straight on Solar and Wind Futures

Comments on recent post raises some factual and methodological issues requiring clarification

2 min read

A recent blog post reported on an NREL study that asked what would happen to U.S. electricity generation if the country actually reduces its greenhouse gas emissions system 80 percent by 2050: the answer was little impact on electricity prices, lots more wind, a significant about of concentrating solar system, but very little photovoltaics. Though I would prefer for the study and its author to speak for themselves, readers have raised a number of issues that deserve at least preliminary clarification.

(1) Two readers expressed disbelief that even with a carbon price of $80-100, electricity prices would rise by only a cent or two. One of them called this conclusion "laughable." Well, that is what the study found. Relying on reasonable assumptions about energy resources and costs, based largely on the Energy Department's Annual Energy Outlook (2009) and expert consensus about how prices will evolve over decades, the study found that electricity prices will go up only a cent and a half.

(2) Reacting to skepticism about NREL’s optimistic wind forecast, a reader opined that the study assumed "amortization of an installed base of wind power, economies of scale, and some learning curve." As I understand it, that's about right, and it goes not just for wind but for all the major generation sources surveyed.

The exception is for photovoltaics, where NREL injected estimates for building-integrated PV from a Union of Concerned Scientists report. NREL considered the whole future of central PV generation too uncertain to include at all.

So, what's called "Distributed PV" in the various NREL tables includes only building-integrated PV and no photovoltaic powerplant generation. That certainly flies in the face of general opinion that central PV will achieve "grid parity"—that is, it will be able to compete economically with other basic fuels in selling electricity into the grid--well before 2050. (The current expert consensus is that grid parity may be achievable in exceptionally favorable regions like southern Europe and the American Southwest by about 2015.)

(3) A reader complained that a DOE report projecting 20 percent wind by 2030 only supports a "foregone conclusion." Given the experience of countries like Germany and Denmark with wind, and the huge U.S. wind resource, that skepticism does not seem justified to me. The NREL report's pessimistic conclusion about PV, however, is indeed open to the criticism that it only confirms a built-in assumption. Solar PV is predicted to experience lesser growth than wind because NREL decided that prospects for central PV generation are so uncertain at present, nothing reasonable can be said about them. (But if that's so, why include PV in the report's model at all?)

(4) A reader complains that the costs of substituting renewable energy for existing generation are underestimates because "fixed costs have to be recovered over a reduced amount of production." Actually, many large coal and nuclear plants are fully paid for, so new renewable generation will be competing only against their operating costs, which can be quite low. (This is why Entergy and Exelon have been able to make a very profitable business out of buying up and refurbishing nuclear power plants.)

(5) The same reader's complaint about net metering is I believe better justified. Requiring utilities to buy electricity from customers at retail rates does indeed impost costs on all other customers. This is one reason why British regulatory authorities, for example, have been very hostile to net metering.






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