Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. But I can't by law give you advice, and I do make mistakes. Remember: the unexpected sometimes happens. Oddly enough, the expected does too, but all too often it takes longer than you thought it would, or on the other hand happens more quickly than you expected. The Goddess of Markets punishes (eventually) greed, folly, laziness and arrogance. No matter how many years you've served Her. Take care. Be humble. And don't blame me.

BTW, clicking on most charts will produce the original-sized, i.e., bigger version.

Wednesday, May 24, 2017

Energy Payback

One of the classic techniques of soft denialists is to assert that the construction and installation of solar panels or wind turbines uses more energy than they produce over their useful lifetimes.  I call them soft denialists because they don't come right out and say that there is no such thing as global warming and so we can continue to use fossil fuels.  What they say instead is that renewables won't work, and so we have to use fossil fuels.  They don't then add that this will inevitably mean that CO2 emissions will go on rising, the level of CO2 in the atmosphere will go on rising. and so global temperatures will go on rising.  Even if they were right about the energy payback ratios of renewables, the fact is that we have no choice.  We have to cut CO2 emissions to near zero to prevent catastrophic global warming.  Fortunately, the soft denialists are completely wrong.

So what are the facts?

Solar: According to NREL, current PV systems take 3.5 years before the energy they generate exceeds the energy used up in their creation and installation.  Now, solar panels lose about 2% of their capacity in their first year of use, but thereafter capacity declines by 0.5% per year.   This means that over 40 years, PV panels will lose a cumulative  mere 20% of nominal capacity.  Clearly, that's a positive energy balance.  As a corollary, note that costings of solar power assume that project life is 25 years Even with low interest rates, the increase in the present value of the investment after 25 years is small, so that makes sense.  But what that means is that after 25 years, the electricity generated is (virtually) free.


Wind:   On-shore wind turbines produce 34 times the energy it "costs" to make them.  As my source points out, though, this doesn't include the energy cost of batteries or backup.  What is truly fascinating is that the energy payback ratio for coal is much less: between 2.5 and 5.1; and for CCGT (combined cycle gas turbine) is about the same (between 2.5 and 5).  CCS (Carbon capture and storage) is even less efficient.: it reduces the coal payback ratio to between 1.6 and 3.1.  These data mean that even if you include backup for wind for half the time, it still (obviously!) has a far better energy payback ratio than coal or gas on their own.

Source  (Click to enlarge)

Conclusion:  Renewables pay back the energy used to create them many times over.  The soft denialist claim is just wrong.

Thursday, May 18, 2017

How much storage—II


The CSIRO and Energy Networks Australia have done some detailed modelling to estimate just how much storage will be needed as the percentage of renewables in the grid increases.  Although the analysis is specific to Australia, the general conclusions are applicable everywhere.

The paper analyses requirements by state, because although there are interconnectors between states, the separate state grids are not well integrated into a national grid.  For example, there’s only one interconnector between Queensland and New South Wales, one between NSW and Victoria, and two (one low capacity) between Victoria and South Australia.

Some conclusions:

  • Solar is much more predictable than wind, but wind is handy for night generation, so the estimates are predicated on a mixture of wind and solar.  But in the southern states, the swing between winter and summer means that solar has a greater seasonal variation than in northern states, which means more storage is needed, especially at high penetration of renewables. 
  • At low levels of renewables penetration, very little storage is required.  This is because there is already redundancy in the grid to cater for swings in demand as well as potential failures in existing baseload supply.
  • At 50%, something like 2-3 hours of storage is needed.  By 70% it’s something like 5 hours.  
  • The big surge in how much storage is needed is when we exceed 90% renewables generation.  In the northern states, we will need 5-7 hours of storage.  But in South Australia (where 95% of the demand is in the south, even though the geographical area of the state stretches quite far north), and in Victoria, we will need more than 24 hours’ worth.  (Tasmania has lots of hydro, so it needs little additional storage.)
  • That’s with existing interconnectors.  If additional power lines connecting the southern states were built deficit areas would “borrow” power from surplus areas, and pay it back when their situations reversed.  The storage required in the southern states would drop to something much closer to what is needed in more northerly states.  It can be raining in Adelaide while it’s sunny in NSW, and vice versa, and windy in SA while it’s calm in Victoria.
  • Biomass or gas peaking will be more economical than storage if the low output from renewables lasts more than 8 hours.
  • Rooftop solar and behind-the-meter storage will be important in the mix.   By 2030 in Queensland for example, there will be more rooftop solar capacity than there is currently coal capacity.  And it is likely that by then everybody with rooftop solar will also have a battery.  My rough and ready calcs suggest that behind-the-meter batteries will provide at least 3 hours’ worth of storage.
  • They briefly mention concentrated solar power, but don't include it in their forecasts or analysis.  However, it seems almost certain that there will be at least one CSP plant in SA in the north of the state in the next couple of years, and if that's a success, there'll be others in other states.  CSP is relatively cheap and provides dispatchable power which fits perfectly with a high percentage of renewables.
[Read more here and here]

I've made most of these points before, but it's nice to see the experts make them too.