Contributed by Ken Gregory © 2019
Europe provides an example of what happens to electricity prices with increasing levels of wind and solar installed capacity per person. The plot below shows the average 2017 residential price of electrical power against the average 2017 installed capacity of solar and wind power per capita in each country. Germany, with 1144 W/capita of installed solar plus wind capacity in 2017, generated only 25.8% of its electricity from solar and wind. The best-fit line implies that the effective average solar and wind electricity price in Europe are 9.2 times that of electricity from other sources, mainly fossil fuels.
The solar and wind electrical power is highly variable, intermittent and unreliable. These sources of electricity requires near 100% backup from other sources of electricity that are able to immediately ramp up and down power generation to offset the variability of solar and wind power. This enormously increases the cost of the backup power compared to base load power and causes increased CO2 emissions per unit of electricity produced. In this article, “other sources of electricity” means sources of electricity other than from solar and wind power, and is mostly from fossil fuels but also includes electrical power from nuclear, biomass and geothermal sources. The cost of other sources of electricity that is not used for solar and wind backup is much less expensive than the electricity used for backup of solar and wind power. Backup power is usually provided by natural gas fired power plants. Combined cycle natural gas power plants can operate at about 55% efficiency when running near continuously. New “H class” gas turbines with a triple pressure heat recovery steam generators can run at 60% efficiency. However, if these plants are forced to provide backup power and are cycled off and on, the changing temperatures of the power equipment cause significantly increased maintenance costs. Instead, simple cycle (also called open cycle) natural gas plants are commonly used as backup, but their efficiency is only around 35% (a range of 32% to 38%). A 35% efficient single cycle gas plant uses 57% more fuel (and emits 57% more CO2) than a 55% efficient combined cycle gas plant producing the same electrical output, calculated as 55%/35% -1.
The increased cost of electricity generated by fossil fuel powered plant used as backup for wind and solar power exists only due to existence of the variable wind and solar power, so all of this additional cost most by allocated to the cost of wind and solar power generation. The effective cost of solar and wind electricity includes the increased cost of other sources of electricity used as backup for solar and wind power.
The vertical axis intercept of the above graph is the best estimate of what the electricity price would be with zero solar and wind capacity, which is 10.2 Euro cents per KWh. The price at the top end of the best fit line is at 31.8 Euro cents per KWh where Germany’s wind + solar capacity is 1144 W/capita. Germany’s fraction of electricity from wind and solar in 2017 was 25.8%. The average residential electricity price at the top end point of the line is the weighted average of the effective solar plus wind power costs and the electrical power price from other sources that would exist without wind and solar power.
This average residential electricity price is:
= effective solar+wind electricity price X fraction of solar+wind electricity generated + other sources of electricity price (without solar & wind) X fraction of other sources of electricity generated.
= €0.937/kWh X 25.8% + €0.102/kWh X (100%-25.8%) = €0.318/kWh.
So the effective solar+wind electricity price is 93.7 Euro cents per kWh, being 9.2 times the electricity price which would exist with no solar+wind capacity.
The solar plus wind electrical power capacity for 2017 is assumed to be the average of the reported capacities at the beginning and end of 2017 for each country. The populations for each country is also calculated as the average of the populations at the beginning and end of 2017 for each country.
The resulting high electricity costs in countries with high installed solar and wind capacity is severely harming the economies of those countries. Industries that require large amounts of electric power are moving to less efficient countries which reduces wealth and increases global CO2 emissions.”
Dr. Gordon Hughes, a professor of economics at the University of Edinburgh, U.K., wrote an excellent paper titled “Why Is Wind Power so Expensive?”, which compares two scenarios of providing incremental electricity for the United Kingdom. He found that the UK renewable energy targets for 2020 will require wind turbines, transmission lines and gas-fired back-up at a cost of £120 billion. The same demand could be met from gas-fired plants alone at a cost of £13 billion. The cost of the wind turbines with backup is 9.2 times the cost of gas-fired plants alone (120/13 = 9.2), which is exactly the same as found in the above analysis.
Electricity prices in Europe in 2017 is from EuroStat2018 as reported by Strom-Report shown below.
FinAdvice “Lessons Learned”