Some people get really excited about the future of renewables. One example is a US think tank called Rethink X who are forecasting an era of super cheap and superabundant power (hence “superpower”) based on expected declines in the cost of solar, wind and batteries (“SWB” for short). Another is the Australian based “Science party” who briefly attracted attention at the last federal election with their call for an 800% (sic) renewable energy target.
What’s behind the hype? Not a lot we don’t already know. The SWB technologies are expected to dominate the future energy mix under a range of credible scenarios. This is not just driven by decarbonisation goals – although that helps, but because the impressive cost reductions these technologies have seen over the last decade are expected to continue on trend.
This is not simply wishful thinking – whilst not as robust as a law of physics, Wright’s law seems to be a pretty good rule of thumb for cost declines with volume increases of manufactured goods. This allows SWB to outcompete bespoke technologies like nuclear, pumped hydro or CCS (hence the interest in small modular reactors, or SMRs, which are seen as the way nuclear power could leverage off Wright’s law).
The next step in Rethink X’s logic is that this deployment of large volumes of SWB will enable large quantities of energy available at a marginal cost of close to zero (given there are no fuel costs with wind and solar). Drawing a parallel with developments in IT (computers, the internet) where giant new businesses were driven by a fall in the marginal cost of information, they believe that this low cost energy will drive a plethora of new business opportunities.
In turn this will push demand up which will allow for more SWB to be installed, which will be cheaper because of the higher volumes. Rinse and repeat. The call for an 800% renewable energy target is based on similar logic with the twist that while Rethink X’s scenario is a global one, the Science Party think that Australia can create major new export industries as we have the space to deploy far more SWB than our East Asian neighbours.
Now, it’s a little glib to assume a downward-sloping supply curve for scenarios where electricity systems are supersized to provide four, five or eight times the energy they supply today.
There is another slight issue: the weather doesn’t conform to our demand for electricity. This is what the B in SWB is for, of course. But we need to balance supply and demand over multiple timeframes. Over the course of 24 hours, batteries could do the job well enough, but we would be wise to explore demand flexibility opportunities as well. Some uses of power (especially under an “electrify everything” scenario), such as heating and cooling or EV charging are likely to be susceptible to load shifting a few hours here or there. The challenge with leveraging demand side opportunities may be less cost and more gaining customer acceptance. Flexible demand requires customers to think differently even if they subcontract the hard work to a third party.
But neither demand response nor batteries are likely to solve the seasonal storage issue that arises with a renewables-based system. Under most plausible scenarios, there will be periods where there is very little wind or solar. The Germans call it Dunkelflaute. Either storage or some flexible zero emissions generation (hydro, biogas, green hydrogen…) will be needed to fill the gap. But because it will only be needed rarely, it will be expensive, as its capital cost will need to be recovered over only a few MWh a year. This is why the supercheap power story is little more than a myth (it also conveniently ignores the cost of additional transmission and system security services, but that’s another story).
Both Rethink X and the Science party appear to believe that there is another way – that all the excess renewables will be soaked up by brand new industrial demand – eg for green hydrogen production. But this would require a new paradigm of industrial demand – one that was happy to only have power when there was some surplus available. Do you know of any resource or manufacturing businesses that operate on that business model? How do you recover your own capital costs if you can only run periodically? How do you meet your customers’ orders? Below is Rethink X’s estimated surplus “Superpower” for California. Are there any businesses (or combination of businesses) with this demand profile? Note the need to shut down for several days straight in November/December.
Figure 1: California “Superpower”
Perhaps there are some businesses that have seasonal spikes in demand that align with periods of surplus renewables. Seasonal industries such as tourism or agriculture spring to mind. Even then a lot of things have to align and some flexibility will be required to match demand to supply. Even in Australia, where both industries are significant contributors to the economy, they’d be hard pushed to grow enough to soak up 800 per cent renewables.
This is not to pour cold water on the idea of a future grid largely based on SWB, which is a very plausible outcome. But it’s best for all of us to be realistic about what it will look like and what it will cost us, rather than telling ourselves stories about superpowers about as realistic as those in comic books.