The Overall Cost of Renewable Energies Gerd H. Wolf Zagreb, - - PowerPoint PPT Presentation

The Overall Cost of Renewable Energies

Gerd H. Wolf Zagreb, November 14th, 2014

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Also orally presented at the Council of EU Energy Ministers Dublin April 2013

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

EUROPEAN ECONOMIC AREA CONSULTATIVE COMMITTEE

• Ref. 1130862

8 May 2014 Oslo RESOLUTION AND REPORT

• n

renewable energies and economic competitiveness Rapporteurs: Mr Gerhard WOLF (European Economic and Social Committee, Group III Various Interests – Germany) Mr Per ANKER‐NILSSEN (EFTA Consultative Committee, Employers – Norway)

Rise of the CO2‐Conzentration now already exceeding 400 ppm

Can this rise be drastically converted within the next 36 years?

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Presently, Germany contributes with about 2,5%, the EU as a whole with about 11% to these global emissions.

Climate Change – Energy‐Transition – the Political Goal:

a fast and significant reduction of the global CO2‐emissions, primarily by an increased use of renewable energies.

Coal, oil and gas (finite resources!) will become increasingly scarce and expensive.

• Renewables will become increasingly cheaper (learning‐curve).
• Developing and installing renewable technologies will result in a leading

position on the global market ‐ the EU becomes avant‐garde, technologically and morally!

• Nuclear energy, by including „external costs“ and because of growing

investments in safety, will become more expansive.

• Consumption of energy can be reduced and consumers can be educated
• The costs of the energy‐transition are lower than the costs caused by climate

change (Stern‐Report)

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Implicit claim:

The fight against climate change and the need for affordable energy can be reconciled.

Energy‐Transition – the assumptions:

• Coal, oil and gas (finite resources!) will become increasingly scarce

and expensive.

• Renewables will become increasingly cheaper (learning‐curve).
• Developing and installing renewable technologies will result in a

leading position on the global market ‐ the EU becomes avant‐ garde, technologically and morally!

• Nuclear energy, by including „external costs“ and because of growing

investments in safety, will become more expansive.

• Consumption of energy can be reduced and consumers can be

educated

• The costs of the energy‐transition are lower than the costs caused by

climate change (Stern‐Report)

Gerd H. Wolf ‐ ZAGREB ‐ 14. November 2014

7

Basis of scenarios 80% domestic GHG reduction in 2050

Efficient pathway:

• 25% in 2020
• 40% in 2030
• 60% in 2040

Low‐Carbon Economy Roadmap 2050 of the European Commission (March 2011)

0% 20% 40% 60% 80% 100% 1990 2000 2010 2020 2030 2040 2050 0% 20% 40% 60% 80% 100% Current policy Power Sector Residential & Tertiary Non CO2 Other Sectors Industry Transport Non CO2 Agriculture

Policy before 2011

Roadmap 2050

Electricity Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

This resulted in aims such as e.g. the 20 – 20 – 20 targets

These targets, known as the "20‐20‐20" targets, set three key

• bjectives for 2020:
• A 20% reduction in EU greenhouse gas emissions from

1990 levels; (new: a 40% reduction in 2030)

• Raising the share of EU energy consumption produced from

renewable sources to 20%; (new: to 27% in 2030)

• A 20% improvement in the EU's energy efficiency.

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Europe reports that 14% of its primary energy came from renewable sources in 2012. However, two thirds of this amount came from hydropower (most viable locations have already been harnessed) and the burning of wood. Another 13% came from biofuels (which are associated with nutrient leaching, soil erosion and increased CO2 issues). Only 22% of its renewable energy, or 3% of total primary energy, came from solar and wind.

From J.P. Morgan 2014 – The Arc of History – An Eye on the Market

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Germany 2013: Total energy Consumption Fraction of renewables: ~ 12%. Of these contributed:

• Photovoltaics

~ 7% ( 1%)

• Wind

~ 12% ( 1.5%)

• Hydro

~ 5% ( 0.6%)

• Biomass and waste

~ 75% ( 9%)

(from BMWi data)

2020:

• Raising the share of EU energy consumption

produced from renewable sources to 20%;

Biom Biomass ass (m (main ainly wood)

• od) contributes

butes rela lativ tively ly mo most st but but wha what ar are the the pr problem

• blems?
• Monoculture
• Competition with food production
• Endangering species diversity
• Low power density !

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

While biomass can be stored and used on demand, the overarching problem

• f its use for electricity generation is that a piece of land, covered by PV

panels produces a factor of >100 more electricity than the alternative use via biomass could provide.

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Germany 2013: Total energy Consumption Fraction of renewables: ~ 12%. Of these contributed:

• Photovoltaics

~ 7% ( 1%)

• Wind

~ 12% ( 1.5%)

• Hydro

~ 5% ( 0.6%)

• Biomass and waste

~ 75% ( 9%)

(from BMWi data)

2020:

• Raising the share of EU energy consumption

produced from renewable sources to 20%;

massively upgrading solar and wind!

Mouchot´s Sun‐Engine

Herald of Desertec!

used in Algiers

French Patent 1860

MOUCHOT, Augustin.

La Chaleur solaire et ses Applications industrielles. The first book explicitly devoted to solar energy. Its publication coincided with the unveiling

• f

Mouchot’s largest solar steam engine, the so‐ called ‘Sun Engine’, in 1869

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Not only Wind but also Solar Energy have been used since long

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Introducing instruments of a planned economy: the German Feed‐in Law

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Übergabe des EFI‐Jahresgutachtens 2014 am 26. Februar

GERMANY Expert‐Commission Research and Innovation GUTACHTEN ZU FORSCHUNG, INNOVATION UND TECHNOLOGISCHER LEISTUNGSFÄHIGKEIT DEUTSCHLANDS 2014

The commission concludes that the feed‐in‐law is neither a cost‐ efficient instrument to prevent climate change nor is it a measurable driver of innovations. These two arguments show that there is no justifiable reason for continuing with this law.

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

OPINION EESC April 2013:

Feed‐in rules for RES are therefore to be carefully (re)de fined, in order to provide for security of supply at all times and ensure that renewable electricity production can meet demand.

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Present developments of RES costs

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Übergabe des EFI‐Jahresgutachtens 2014 am 26. Februar

Expert‐Commission Research and Innovation GUTACHTEN ZU FORSCHUNG, INNOVATION UND TECHNOLOGISCHER LEISTUNGSFÄHIGKEIT DEUTSCHLANDS 2014

Auszug zum EEG: Die Expertenkommission kommt zu dem Schluss, dass das EEG weder ein kosteneffizientes Instrument für Klimaschutz ist noch eine messbare Innovationswirkung zu entfalten scheint. Aus diesen beiden Gründen ergibt sich deshalb keine Rechtfertigung für eine Fortführung des EEG.

The German Feed‐in law made each kWhel (from any source!) more expensive (2014) for normal consumers by 6,4 cent. Last year normal consumers paid in average a factor 5 more for renewable electricity than for fossil or nuclear. This year the subsidies paid by consumers will add up to 24 Bio €.

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

In Germany :

the consumers supports RES by additional 6.24 cent for each KWhel from any source ! 2014 in total 22.4 Bio €

Falling installation costs Growing costs for RES wind solar

From US Department of Energy 2014

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Data courtesy of the National Renewable Energy Laboratory. Chart by Daniel Wood.

coal

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Development of the average electricity price in Germany for households

From: Electricity generation by intermittent sources

• F. Wagner

Max‐Planck‐Institut für Plasmaphysik, Greifswald, Germany Presentation at the Joint EPS‐SIF International School on Energy 2014 Varenna

EPS‐European Physical society SIF‐Italian Physical Society

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Matthew Karnitschnig:

Germany's Expensive Gamble on Renewable Energy

• Aug. 26, 2014

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

While this rise of energy ‐ costs – caused by an increased installation of RES – may perhaps saturate indeed, however, these costs show only the tip of the iceberg. Because those costs are not yet included, which are caused by the intermittent character of wind and sunshine and which affect the energy system as a whole.

What are the underlying problems

• f intermittent renewables (RES)?

2013

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Annual Annual ener energy gy yield yield from ins nstalle lled capacit apacity (po power) r) in in Ger German any

Year 2011 2012 Wind ~19.8 % ~19.2% Solar ~10.3% ~10.4%

Pe Performance of

• f RE

RES (G (Germ ermany)

see also later „firm capacities“

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

What are the consequences ?

Leading Leading to excess ess dem emand and

• RES can only make a very limited contribution to "firm

capacity“: i.e. to secure coverage of peak annual consumption (example Germany):

• 5% ‐10% for wind energy
• 1% for solar energy (better 0% ‐ nights!)
• in comparison: 92% for lignite‐fuelled power stations
• Backup power stations are needed to compensate for

insufficient RES output and provide reliable capacity and security of supply. Storage systems – if available ‐ are some kind of backup power stations

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Leading Leading to to excess cess capacities pacities

To replace the energy yield of base‐load power stations by wind or solar, production capacities will have to be increased by a significant factor, well in excess of the annual peak load

The level of excess capacity will depend on:

• Regional weather conditions
• The availability and efficiency of long‐term storage and reuse
• The demand management potential
• The compensation possibilities between solar and wind and the long‐

distance compensation possibilities (depending on grid extent and capacity)

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Leading Leading to to excess cess capacities pacities

To replace the energy yield of base‐load power stations by wind or solar, production capacities will have to be increased by a significant factor, well in excess of the annual peak load

The level of excess capacity will depend on:

• Regional weather conditions
• The availability and efficiency of long‐term storage and reuse
• The demand management potential
• The compensation possibilities between solar and wind and the long‐

distance compensation possibilities (depending on grid extent and capacity)

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

A detailed study based on previous weather statistics (Germany) concludes that excess capacities by a factor 3 – 4.5 may be needed.

• Eur. Phys. J. Plus (2014) 129:20

Electricity by intermittent sources: An analysis based on the German situation 2012; by Friedrich Wagner

(however, storage and long distance losses NOT yet included!)

Leading Leading to excess ess supply upply ‐ 1

Whenever electricity generated from wind or solar power exceeds grid capacity and demand from consumers, three things can happen:

• production partially shuts down (with potential energy output

being unused)

• grids become overloaded, security of supply is endangered and

the spot price breaks down (negative prices!)

• surplus electrical energy could be stored and subsequently

supplied to consumers when wind or solar output becomes insufficient, in case large‐scale storage capacity is available

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Leading Leading to excess ess supply upply ‐ 2

• The presently installed capacities are far from what is needed for

the goal of the 2050 Roadmap

• However, lacking the required storage capacity, already now

excess supply endangers the grid systems, the energy market and the whole energy economy

• Risk of significantly exceeding tolerance and seriously

endangering the security of supply

Energy produced from German wind and/or solar power stations from time to time already now

• verloads existing transmission grids in neighbouring countries (especially Poland, the Czech

Republic, Slovakia and Hungary), a source of irritation entailing a threat to grid operation and also additional costs due to the need to invest into protective systems (such as phase‐shifting transformers).

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Copi Coping ng wi with th excess cess suppl supply and nd dem demand nd

Need for a complete RES system to have the following elements:

• Considerable installed overcapacities (factor 4 – 6!)
• Backup power stations
• Sufficient (energy‐efficient) storage capacities
• Massive grid extensions
• Promoting flexible and demand‐response use

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

From: Christoph Buchal Author of the book ENERGY

Coping Coping wi with ex excess dem demand nd and and supply supply

Consequences Consequences

>>> (1) severalfold increase in electricity prices >>> (2) need for innovative solutions (storage!)

If the backup power stations use fossil fuels (as opposed to hydrogen and derivatives generated by electricity from CO2‐free energy sources), they will make it even impossible to achieve the Energy Roadmap 2050 target.

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

However, there exist studies claiming the contrary!

Effects of significant cost increase

• damage to the competitiveness of European industry;

exception rules.

• greater burden on socially disadvantaged groups (energy

poverty!)

• manufacturing located outside EU countries where energy is

cheaper carbon leakage (e.g. USA shale gas, Brazil oil, Australia coal)

Personal opinion Wolf: Which fraction of GNP for providing energy is tolerable? ‐ In a closed economic system, perhaps Europe could shoulder these costs ‐ However, we are not in a closed system – need for global solutions!

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

So far, solely electrical energy has been considered.

This, however, covers only about 21% (in Germany) of the final energy consumtion!

What about the residual 79% ???

• Transport (fuel)
• Industry (power, processes….)
• Heating (heat insulation of buildings)

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

STORAGE! Electrical power to liquid (e.g. methanol) or gas (hydrogen)

electrolytic thermochemical photo‐catalytic

Fuel e.g. for transport Reconversion into electrical power, e.g. fuel cells

Materials, catalyzers, losses/efficiencies, costs……

From: G.H. Wolf ‐ R&D and Innovation in the Energy Sector –Aberdeen, June 27th, 2014

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Rise of the CO2‐Conzentration

Can this rise be drastically converted within the next 36 years?

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Presently, Germany contributes with about 2,5%, the EU as a whole with about 11% to these global emissions.

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

We have a serious problem. Thank you for your attention

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Appendices

Basis of scenarios 80% domestic GHG reduction in 2050

Efficient pathway:

• 25% in 2020
• 40% in 2030
• 60% in 2040

The The re recent nt pr proposal

• posal by

by the the Eur European pean Commi mmission fo for the the goal goals un unti til 2030 2030

Fo For co comp mparison: Low Low‐Car Carbon

• n Ec

Economy Ro Roadmap 2050 2050 (M (Mar arch 2011) 2011) of

• f the

the Eur European pean Com Commission ission

0% 20% 40% 60% 80% 100% 1990 2000 2010 2020 2030 2040 2050 0% 20% 40% 60% 80% 100% Current policy Power Sector Residential & Tertiary Non CO2 Other Sectors Industry Transport Non CO2 Agriculture

previous policy 2050 roadmap Electricity

necessity? illusion ? wrong track?

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

This goal is still valid! The only modification: share of renewables >= 27%

Germany now

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Dieter HELM – Energy Futures Network Paper – 22nd May 2014

The German position in this respect is extraordinary, in view of its repeated claims to be taking a climate change lead and to be “green”. Germany has switched from nuclear to coal, and from gas to coal, so that coal now compromises 45% of Germany’s electricity generation. Worse, Germany has been expanding its lignite production—the dirtiest of all coals—and new coal power stations are coming onto its system. “Green” Germany has been dashing for coal,…. Unsurprisingly, its carbon emissions even on a production basis are now rising.

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

IEA World Energy Investment Outlook 2014

The investment path that we trace in this report falls well short of reaching climate stabilization goals, as today’s policies and market signals are not strong enough to switch investment to low‐carbon sources and energy efficiency at the necessary scale and speed

IEA 450 Scenario: A scenario presented in the World Energy Outlook that sets out an energy pathway consistent with the goal of limiting the global increase in

temperature to 2°C by limiting concentration of greenhouse gases in the atmosphere to around 450 parts per million of CO2. Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

What could be done?

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

What could be done?

• Avoid bureaucratic inflexibility, risk aversion and market

distortions, i.e. any kind of barrier to innovation.

• Keep all options open.
• Develop innovative energy technologies.
• Use the scarce R&D resources under Horizon 2020 such

that they act as leverage and incentive for Member States and the private sector to increased investment in R&D.

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

• Acquire further sources of financing, i.e. EU Structural

Funds, the European Investment Fund.

• Pass back any revenues from the energy sector (e.g.

from EU Emissions Trading System or taxes) into energy developments/investments.

• Prepare the economy for the effects of climate change!
• Unlock

the investment potential

• f

the market economy and its industries and gear it to addressing this huge challenge.

What could be done?

How to unlock the investment potential of industry and gear it to addressing this huge challenge?

• Get

rid

• f

the confusion

• f

nationally‐oriented anti‐ competitive market interventions.

• Create valid and reliable Europe‐wide rules, in order to give

investors planning certainty and the necessary incentives.

• Introduce an efficient and exclusive market incentive for

reducing CO2 emissions.

• Develop a common European energy policy and complete the

internal energy market.

• Care for a level playing field for global competition.

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

A level playing field for global competition!

• Countries in other parts of the world must

urgently make similar efforts and agree on realistic joint targets, to ensure fair and comparable conditions for competition at global level.

• Despite the disappointments to date, continued

efforts by the EU are needed to achieve this goal.

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

However, if these efforts continue to fail:

How long can the EU afford to continue going it alone and working towards such radical targets ? How can the EU avoid undermining its own economic strength, thus depriving itself of the very resources it needs to prepare for climate change? Since in that case climate change will probably be inevitable – together with all its economic and political repercussions.

Europe going it alone ?

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Example: Kohlewende in Australien: Deutschland als abschreckendes Beispiel (Spiegel online 17.

• 2. 2014)

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Can the need for affordable energy and the fight against climate change become reconciled on a global level ?

What about energy transition?

• There is no way out – energy transition is necessary and

will come.

• But at which time‐scale?
• It will not prevent, but perhaps mitigate climate change.
• This requires energy and economic power.
• This requires a weighing up of risks and a cost‐benefit

analysis.

• This requires pragmatism without illusions, ideologies and

emotions.

• Europe has to find its role. Claiming “Avant‐garde” can be

hubris. Summary: Opinion Gerd Wolf (1)

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

• Energy‐transition is an evolutionary and long‐term process

with unknowns and errors.

• Decisive are global efforts and actions.
• Energy‐transition needs market economy plus technical and

economic expertise (including the media!)

• Energy‐transition will last for 100 or more years.
• All options are urgently needed, none will be too late.
• As yet, a consistent solution is not on the Horizon; there is no

master plan. Summary: Opinion Gerd Wolf (2)

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

• Fig. 9. Reference global primary energy consumption

across EMF 22 scenarios. Note that nuclear and non- biomass renewable energy sources are expressed in fossil-equivalent primary energy consumption based

• n a conversion factor of 0.4.

From: Leon Clarke , Jae Edmonds , Volker Krey , Richard Richels, Steven Rose , Massimo Tavoni

Energy Economics 31 (2009) S64–S81

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

At present: The consumption of primary energy – averaged – is:

• of a German citizen:

5.5 KW

• of a World citizen:

2.6 KW

Derived (and slightly extrapolated) from “Energiedaten 2013” of the German Federal Ministry for Economy.

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Energiedaten des Bundeswirtschaftsministeriums (Seite 20) 2012: Anteil der Erneuerbaren Energien am Primärenergieverbrauch 11,6% Anteil von Holz, Stroh und feste Rohstoffe 4,0% Anteil von Sonne und Wind 1,9%

Jülicher Zeitung 25. Februar 2014

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

The main problem are the costs When the share of intermittent renewables will exceed about 30% ‐ 50%, the costs will even raise disproportionally

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Renewables lead also to a conflict of aims among environmentalists and neighbouring residents

• Wind (mainly), solar, and transmission grids:

huge surface area and damage to landscape, danger for flying animals

• Biomass: monocultures and competing with

production of food

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Entering planned economy leads to a vicious circle of ever more unjustified rules, exceptions, legal difficulties and inefficiencies : an economic and legal mud.

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

• When promoting “renewables”, often the creation of

new jobs is used as argument; meaning more jobs than needed so far for energy supply.

• If more jobs than before are needed for the same

product, this product will become more expensive.

More Jobs?

Gerd H. Wolf ‐ Zagreb ‐ November 14th, 2014

Planned economy meets reality