Near term emissions reductions in the power sector –
the case of Wind and Solar
Steve Sawyer
Secretary General
Global Wind Energy Council
Electricity generation is responsible for ~40% of energy-related CO2 emissions, or about 25% of
total greenhouse gas emissions – the largest single contributor by sector. Action in the power
sector is a critical focus for short term action to reduce emissions because of the size of the
sector, because of the increasing availability of alternatives at low or no additional lifetime cost,
and because investment decisions now will have a major impact on future emissions trajectories,
as power plants have a lifetime of 30-60 years or more.
In the past decade, enormous technology improvements and cost reductions have spurred major
growth in both wind and solar power technologies, to the point where they are economically
competitive with new- build conventional power plants in an increasing number of markets and
applications around the globe, in most of which there is no carbon price. With a carbon price,
that competitiveness would turn into a clear cost advantage in most markets.
Status of Renewable Electricity Generation
REN 21 Chart from GSR 20141 – 22.1% RE generation at the end of 2013, up from ~18% in 2010.
1
http://www.ren21.net/REN21Activities/GlobalStatusReport.aspx
Hydro-power will continue to be the dominant renewable electricity supply technology through
the end of this decade, although its growth potential, while substantial, is relatively small in
percentage terms. Bio-power will continue to grow, but probably not at huge rates, as the
competition for biomass resources for other purposes will continue to intensify. Geothermal is a
mature technology with substantial upside potential, but its geographic distribution is limited.
CSP and ocean power have tremendous potential, but are still in the early stages of technology
development and ‘take-off’ is not expected before the end of this decade; hence the focus on
wind and solar.
Scenarios:
The recent IPCC Special Report on Renewable Energy and Climate Change2 (SRREN) showed
us that:
-
For wind and solar, the available resource does not constitute any meaningful
restraint.
Renewable energy penetration tends to increase significantly in scenarios with strong
GHG targets, i.e., low GHG stabilization scenarios lead on average to higher RE
deployment.
It is increasingly the case that because of the enormous growth as well as the cost reductions in
wind and solar technologies, that renewables dominate future power supply in an increasing
number of mainstream scenarios, not only squeezing out conventional fossil fuel power plants,
but increasingly nuclear and CCS technologies. This is primarily because of the cost
competitiveness of these technologies, but also due to their relative speed of deployment. While
not a factor in the scenarios, governments are also interested in the economic development,
employment and energy security benefits associated with renewables, and general although not
universal popular support.
However, it is useful to note that even the SRREN was using what are now 5 year old scenarios
with 6-8 year old (or older) data, and the recent cost reductions and reliability and efficiency
improvements in wind and solar technologies has not been incorporated. For instance, the lower
end of the four scenarios assessed in detail had RE electricity penetration at lower rates in 2030
than it is in fact today.
The range in the four main scenarios assessed in the SRREN had renewable electricity
penetration rates of 20-61% by 2030, and 24-95% by 2050.
2
http://srren.ipcc-wg3.de/report
In each case, the renewable power sector was dominated by hydro, wind and solar, with the vast
majority of the growth coming from the latter two technologies.
Even the historically conservative IEA sees a future electricity supply dominated by renewables,
with the 2013 edition of the World Energy Outlook3 showing penetration rates of 32% by 2035
in the current policies scenario and 46% in the 450 scenario.
IRENA’S REMAP4 scenario shows renewable electricity penetration rates of up to 44% by 2030.
However, it is useful to bear in mind that none of these scenarios:
a) Take fully into account the cost reductions and technology improvements of wind and
solar over the past few years;
b) Assume a major effort at GHG emissions reductions for the balance of this decade, or
beyond.
3
http://www.worldenergyoutlook.org/publications/weo-2013/
4
http://irena.org/remap/
Costs
Decreasing wind and solar costs, reducing air pollution, enhanced energy security, local
industrial development and employment are the main drivers for renewable installations in many
countries today, with wind providing the cheapest option to add new power to the grid in an
increasing number of markets. Solar costs are decreasing very rapidly, and when embedded in
the distribution system is quite competitive in many places already; and in some locations the
same can be said for stand-alone solar installations. And the price is stable, i.e., no hedge against
fossil fuel price fluctuations is needed. An effective carbon price could dramatically increase this
effect, as the chart from Bloomberg New Energy Finance (below) shows.
5
OECD/non-OECD
For three of the last four years wind installations outside the OECD have outstripped
installations in traditional markets in Europe and North America, and during the course of
5
https://www.iea.org/media/workshops/2014/solarelectricity/BNEF2LCOEofPV.pdf
2014 Asia will eclipse Europe as the region with the largest installed capacity. With China
emerging as the largest market for solar PV in the last year, this phenomenon has begun to
show in the solar markets as well.
This move outside the OECD is primarily because electricity demand growth has slowed or
stalled in the OECD, while outside it is still growing fast, and where both wind and solar’s
cost competitiveness and speed of installation are a significant benefit.
Integration/Transformation
Integration of very large penetrations of variable renewables6 (wind and solar), once thought to
be difficult and expensive, have been shown to be much more a question of planning and
management, alongside forward-looking investment. Beyond relatively low shares of variable
renewable penetration however, it becomes more a question of transformation of the power
system – away from something resembling a 19th century telephone system into something much
more resembling the internet.
6
NOT ‘intermittent’. Wind and solar power are variable – and predictable, with increasing accuracy. A nuclear
plant is ‘intermittent’, i.e., it will go from full power to zero almost instantly when it SCRAMS, and electricity
systems must be designed to cope with this where nuclear is deployed, and the same is true (although generally
less dramatically) for all large thermal power stations.
The IEA’s “The Power of Transformation: Wind, Sun and The Economics of Flexible Power
Systems” gives many insights into the current thinking and practice in areas where high
penetration levels of wind and solar have already been achieved, or are being contemplated:
“An assessment of case study regions…showed that annual VRE shares of 25% to 40% can be achieved
from a technical perspective, assuming current levels of system flexibility. The analysis assumes that
sufficient grid capacity is available inside the power system. According to the same analysis, this share can be
increased further (reaching levels above 50% in very flexible systems), if a small amount of VRE curtailment
is accepted to limit extreme variability events…
In the long term, high shares of VRE may come at zero additional costs. In the modelling analysis,
all cost assumptions are kept constant. However, future VRE generation costs are likely to be lower
and the cost of CO2 emissions higher. This means that high shares of VRE may be achieved without
increased total system costs compared to a system with 0% VRE. Costs may even be lower than in
the absence of VRE deployment. However, achieving this requires a successful transformation of the
system as a whole.”
When transforming electricity systems to accommodate large quantities of variable renewables,
as is happening in Denmark right now, one major feature of that effort is a shift of the
conventional ‘borders’ between the electricity, heating and cooling, and transport sectors – with
electricity playing a much larger role in the overall system – thereby greatly decreasing total
primary energy demand, among other things.
Energinet.dk
Emissions reductions potential
Calculating the specific emissions reductions from the introduction of any generation technology
requires a substantial number of assumptions, as there are complex system effects, and it depends
very much on what technology is being replaced. A wind farm in northern China or India will
displace fossil fuel generation which would have emitted >1000-1200g/Kwh of CO2, while in
Norway the amount would be negligible. However, for the purpose of this exercise, we have
used an average rate of 600g/Kwh, which is slightly higher than the OECD average but much
lower than China which dominates both solar and wind markets for new installations.
On the basis of current policies, and with moderate growth for the balance of the decade along
the lines of the IEA mid-term market report on renewables, wind and solar will account for
approximately 1.4 billion tons of emissions reductions annually in 2020, up from about 580
million tonnes in 2013. However, on the basis of the more positive ‘up-side’ industry
projections, this number could easily be increased by an additional 1 billion tonnes by 2020, and
with a concerted global effort could go substantially higher. In the period beyond 2020 the
climate benefits would continue to grow exponentially, as per the scenarios outlined above.
The actual emissions reductions achieved will of course depend greatly on where the
installations take place, both in terms of the resource available on site and the existing generation
mix in the country in question7.
Co-benefits
As well as reducing CO2 emission, reducing air pollution, enhancing energy security and
creating local industrial development and jobs, wind and solar power have other benefits.
Water consumption – unlike thermal technologies, wind and solar do not consume water (or very
small quantities of it) during their working life. This is of particular interest in water-stressed
regions of the world, which are unfortunately growing in both number and extent due to the early
impacts of climate change.
Rural economic development – many countries, both inside and outside the OECD, are facing a
demographic crisis in terms of depopulation of rural areas. In China, Brazil, South Africa and the
American mid-West, the booming wind industry is helping to keep people on the land, providing
good quality jobs where there have been few or none, in some cases for generation. The same is
true although to a lesser extent for large ground-mounted solar installations.
7
For a similar analysis see: Kornelis Blok, Niklas Höhne, Kees van der Leun and Nicholas
Harrison, ”Bridging the greenhouse gas emissions gap” - Nature Climate Change 2, 471–474
(2012) doi:10.1038/nclimate1602, 17 June 2012.
http://www.nature.com/nclimate/journal/v2/n7/full/nclimate1602.html
Subsidies
Although one reads a good deal about subsidies for wind and solar in the newspapers, current
support for these technologies globally is about 10% of the lower bound of estimates for production and
consumption subsidies for fossil fuels. According to the IEA, we are currently subsidizing CO2 emissions
to the tune of approximately $US 110/tonne. If this situation were changed, and/or there was an
effective price on carbon, the economics of the power generation sector would change from one where
wind and solar are now able to compete in many markets with conventional generation, to where there
would be a near-universal cost advantage for these technologies.