Bloomberg is now reporting that solar energy is cheaper than coal, and could become the lowest form of energy within a decade. Economies of scale are causing solar to drop from an average of $1.14 a watt all the way to .73 cents per watt by 2025. This should be great news for California’s overwhelming embrace of renewable energy.
Agencies such as the U.S. Department of Energy’s National Renewable Energy Lab to the International Energy Agency all confirm this decline in costs. Capacity for solar is doubling causing lower costs for bank loan premiums and manufacturing capacity in the solar energy space; and now with Tesla’s gigafactory opening, the cost of batteries is also expected to drop for electric vehicles and home battery systems.
China also plans to invest over $360 billion on renewable energy and fuels to help decrease their serious smog issues. Unsafe, coal-fired power plants are currently suffocating that country’s air supply. And California can feel the affects of China’s crippling smog depending on seasonal wind patterns.
California could be entering a new era in energy, and an era renewable investors and environmental advocates have been touting this century. Unfortunately they are overlooking glaring weaknesses, and for renewables to truly breakthrough into a low-cost, scalable energy along the lines of coal, oil and natural gas numerous obstacles such as costs, back-up generation power, storage and grid modernization will need to be solved.
Gov. Brown, the California Legislature and the California Air Resources Board need to understand the true costs and limitations at this time when using renewable energy.
Yes, costs are possibly going down for solar and wind, but is that truly the case? And while costs for manufacturing and kilowatts per hour are dropping that isn’t the final costs when it comes to renewables. The BP Statistical Review of Global Energy in 2015 showed renewables provided only 2.4 percent of total worldwide energy needs, hydroelectric power generated 6.8 percent and nuclear came in at 4.4 percent. California citizens and businesses need clean fuel, and at this time renewables can’t provide that for them.
Moreover, no matter how much renewables are touted as a replacement for fossil fuels, and even with positive economies of scale, they still will not overtake coal, oil and natural gas in the near future even with AB32 and SB32 in effect.
Weather is the biggest hindrance for both solar and wind, but not as much for biomass or hydroelectric – though hydroelectric, or the process of damning water for electric use, can run into serious environmental issues. But if the sun isn’t shining and the wind isn’t blowing then solar and wind become difficult to use without fossil fuels – particularly natural gas and coal-fired power plants – backing them up. Additionally, batteries have not caught up to enhanced storage for renewables, and they aren’t productive enough for entire California cities, counties and the state at-large.
When looking at the total cost of renewables versus fossil fuels there really isn’t a comparison in the near-term future because wind and solar can only generate intermittent electricity. Fossil fuels can run without backup supplies, and then factoring in levelized costs for renewables makes them under-productive and more expensive as a wide-scale energy source for California.
As much as California continues using renewables it still hasn’t been achieved without fossil fuels backing them up. The Energy Information Administration’s Annual Energy Outlook 2017 to 2050 (page 13) only has renewables at 18-26 percent penetration by 2050 in the United States. The equivalent of not understanding the facts about renewables are how electric vehicles currently only have 1 percent of the market and are projected to only have 6 percent by 2040, but are highly touted as being able to replace the combustible engine vehicle.
Energy storage and grid modernization are separate issues for California policymakers to understand, yet the two issues are linked together in many ways. How energy is stored from fluctuating renewable sources (wind and solar) are needed to accommodate, “multiple grid services, including spinning reserve and renewables integration.” To improve the problem of intermittent generation for resources such as wind and solar the EIA recommends:
“Examine the potential for transmission (grid) enhancements to mitigate regional effects of high levels of wind and solar generation while developing higher resolution time-of-day and seasonal value and operational impact of wind.”
Further, the EIA also perceives utility rate structure for different levels of photovoltaic solar generation being needed to control costs for consumers and industry when using renewable energy. What the EIA is saying is that renewables fluctuate in power generation based upon different weather patterns, which causes the grid to fluctuate. These upward grid spikes are then passed on in higher electricity costs to utility’s customers. It is one of the reasons California has some of the highest energy costs in the United States due to its heavy reliance on renewable energy.
The most important component in the entire process of renewables overtaking fossil fuels for a cleaner future is grid modernization. According to T. Boone Pickens, “The electrical grid of the future will have to be built,” for renewable energy to overcome the above-mentioned hurdles. With California’s exploding pension costs it is difficult to envision a brand new, multi-trillion dollar grid being built in the near future.
Renewable energy has incredible potential for California, but until power grids are modernized renewables will lag behind fossil fuels through rising costs and unstable energy delivery. California’s electric grids can’t handle millions of electric vehicles, varying, spiked energy from wind and solar and the ability to be flexible the way a natural gas power plant is at this time. The best power plants for energy efficiency and lowering carbon emissions while keeping costs reasonable are natural gas. A natural gas-fired power plant is the biggest reason coal is losing market share in the United States.
Majorities of Californians want renewables to be the number one source of energy in our state’s portfolio for cleaner air, water and a healthier environment. But instead, renewables like electric vehicles have taken on a fad-like quality without the technology having caught up to the hype. CARB needs to look at the facts, and not the emotions that currently lead the renewable energy debate. Let’s not pit renewables against fossil fuels, but look to incorporate the different energy sources into what’s best for California and the United States.
Todd Royal is a geopolitical risk and energy consultant based in Los Angeles.