Too cheap to meter

I think you’ve a typo in there:

“On average, the cost of capital has almost halved, implying a near doubling of the time a project needs to pay a full return to investors.”

Halving rather than doubling.

A change in the cost of capital also applies to any high upfront and low operating cost method of energy generation.

” the promise made decades ago by the promoters of nuclear power: that they will deliver electricity “too cheap to meter.” (Even with access to cheap capital, nuclear power never delivered on that promise.)”

True, but now capital is even cheaper the numbers still change. And, oddly, so do the economics of fossil fuel extraction. Of at least some methods, it’s the establishment of the infrastructure to exploit that costs much of the money, not the operating costs. Lowering the cost of capital reduces the costs of all capital uses, no?

This might be going just a little far:

“But in the world of zero real interest rates that now appears to be upon us, such concepts are no longer relevant. Governments can, and should, invest in projects whenever the total benefits exceed the costs, regardless of how those benefits are spread over time.”

As Stern chews through even at a zero financial interest rate there’s still a societal or social one.

” the promise made decades ago by the promoters of nuclear power: that they will deliver electricity “too cheap to meter.” ”

I thought that claim was made in regard to the UK Zeta project – MHD – magnetohydrodynamics, getting energy from seawater. Or moonbeams or cucumbers, I dunno.
My old Prof was a junior on the project.

We need a good explanation for why the interest rate is zero. (It must not be an alternate description of the fact that the interest rate is zero, of which there are plenty.)

‘Aluminium smelting is the process of extracting aluminium from its oxide, alumina, generally by the Hall-Héroult process. Alumina is extracted from the ore bauxite by means of the Bayer process at an alumina refinery.

This is an electrolytic process, so an aluminium smelter uses huge amounts of electricity; smelters tend to be located close to large power stations, often hydro-electric ones, in order to reduce the overall carbon footprint. This is an important consideration, because large amount of carbon is also used in this process, resulting in significant amounts of greenhouse gas emissions.’

https://en.wikipedia.org/wiki/Aluminium_smelting

71% of Iceland’s electricity goes towards aluminium smelting.

It’s easy to find out how much Carbon Dioxide Iceland ‘consumes’ so to speak: not nearly so easy to find out how much it produces.

Once again, JQ delivers an interesting analysis of renewable energy. I would say it also represents a fascinating decoupling between the energy/resource and financial return on investment. It will be interesting to see if this can lead to improvements at the recycling side too (although financial incentives may lean the other way, perhaps a bult in recycling cost at sale or a mandatory regulation might help tip the scale back – thoughts on this would be welcome).

Tm, not to threadjack, but I just wanted to offer a quick response (just in case you don´t have already to hand). This is all a bit handwavy (and I am not an expert in the macro, only in storage!) so take this with copious quantities of salt:

How is solar power capacity developing in Australia?

Renewables in Australia, including solar, are generally developing pretty rapidly – if I recall correctly, somewhere around 24% of Australia’s total generation (as of 2019, and up 2.7% from 2018)[1]. In terms of % of total generation, it seems it is Wind (8.5%), Hydro (6.2%), Solar (7.6%, but I think this includes both PV and solar thermal). Of course, we have to be a bit cautious – generation =/= consumption, and off-grid vs. on-grid is a key point (though total renewable grid electrification would facilitate off-grid renewables).

Interestingly, there are a few bits that stand out to me in terms of Australia:

1) Hydro is no longer the biggest renewable sector (as it has been with other countries at the 100%-ish mark).

2) Sydney looks to be proving an interesting test-case. Supposedly it will be 100% renewables, via a deal with Flow Power, and IIRC mostly (ca. ¾ production) off of wind (Saphire, Inverell) with the remainder (ca. ¼) solar (Bomen, Wagga Wagga; Shoalhaven, Nowra).

When will you reach 100% renewable?

Prognostication is difficult, and of course the political and social climates could change things dramatically. Currently (assuming development continues at its current pace, which is a big assumption) Australia is set to hit 50% by 2030 and 100% by 2050, with some suggesting an investment of ca. 22 billion per year (not small potatoes!) to meet these targets (without which the other main way of meeting these would be through slight-of-hand via carryover credits) [2].

However, one of the big handicaps seems to be the lack of planning and assurances – though some states have plans for total decarbonisation, a central strategy and firm commitment is still (as far as I can tell) lacking. On the other hand, recent events like the tragedy of the terrible fires may well provide a bit of public pressure and impetus to push this stuff more rapidly.

As far as I am aware, the generation is relatively well understood (though there needs to be more forethought in terms of recycling), and it is the storage which will be the trickier issue to solve (though not necessarily insurmountable, as I noted on a previous thread [3]).

While the tech still needs to keep advancing, I think one of the main limiting factors is the lack of investment needed for actual wide-spread adoption (though that does come back to an extent, as infrastructure spending often does, the combination of powerful fossil fuel lobbying and ideological presuppositions of many are pretty big handicaps to overcome). Perhaps the zero interest rates may help!

Anyway, as I say exercise a lot of caution with this post (I am offering my current understanding, but as I am not an expert I offer this with substantially lower than usual confidence), but there are my 0.02$ for what it is worth…

[1] https://assets.cleanenergycouncil.org.au/documents/resources/reports/clean-energy-australia/clean-energy-australia-report-2020.pdf

[2] https://www.uts.edu.au/sites/default/files/article/downloads/ISF_100%25_Australian_Renewable_Energy_Report.pdf

[3] https://crookedtimber.org/2020/08/25/every-day-coal-is-killing-us/

When electricity is generated, its cost is zero. But what about when it’s not generated?

I heard somewhere recently (don’t know it’s true) that in order to satisfy the demand regardless of weather conditions, solar power stations have to employ some very advanced gas turbines. Turbines have to be advanced to be able to ramp it up from zero to max output in a matter of seconds, when clouds cover the sun. And for the same reason the operation of these turbines can’t be, naturally, too fuel-efficient. Like if you go pedal to the metal from 0 to 60 in 5 seconds, then hit the brakes and stop, and keep repeating it. Imagine the gas mileage.

Is any of this true? And if so, is it included into the cost calculation?

Hidari @ 6

I am off to sleep soon, so I don’t have time to fully address your points with the depth it warrents (my apologies). However, just to hit a few rather quickly:

1) Electrification of transportation (cars, lorries, etc.) is more-or-less a technologically resolved issue. Yes, there is still substantial room for improvement (not least in recycling and sourcing raw materials), but with a 100% renewables grid it is certainly feasible to have a zero emission (or near zero emission) road and rail transportation.

2) I am not sure why you keep demanding electrification of air transport, when what we care about is “green” air transport. AFAICT the best technology for this is hydrogen power as 1) the gravimetric densities make sense and 2) there is technology transfer from the gas turbine systems. I have already talked several times about the value of hydrogen for air, and while I won’t claim to be an expert I was gratified to recently see Airbus appear to be taking this route for much the same reasons I propose it as an aviation solution. While advances in this area should be sped up (and there are substantial challanges to adress), it seems to be less a technological issue and more a “we-are-looking-for-risk-free-profit” issue (so investment and incentives in this area would help a lot). In short, this seems to be more a fiscal/political issue than a technological problem.

3) Aluminium production from bauxite is (as far as I can tell) polluting for two main reasons – a) the use of fossil fuels to power it and b) the current electrolysis process uses a carbon counter electrode, which oxidises during the process. The bulk of CO2 emissions comes from “b) fossil fuel electricity”, accounting for ca. 70% of the CO2 emissions for this process [1]. Indeed, estimates put the reduction (going from fossil fuel to hydroelectric, like that in Iceland) of tCO2 / t Al from 11.5 to ca. 2-4. That is, I hope you would agree, a reduction worth having. It is possible to extend this still further by using carbon-free, inert anodes (which would also help eliminate other harmful gasses produced), and while this raises the overall energy required if we have zero-emission energy production it won’t raise emissions overall.

And while I always urge caution regarding industrial claims, it appear Rio Tinto are pushing to introduce this technology by 2024 (Project Elysis, started 2018).

Summary

In short, again, it is true that renewable energies in and of themselves won’t solve all the issues – but it will go a long way. When combined with other technological developments, there seems to be little reason not to dramatically cut emissions in the short to medium term, and target zero emissions in the longer term (from a technological POV).

Heavy investment in green technologies will help drive this, and if we can combine this with the powerful social and political reformations I believe are important for an equitable society, then the future is not so bleak.

Now how likely this is to happen from a social and political POV is another matter – but that is a thread for another day, as I suspect this is already veering a bit off topic (apologies to John Quiggin for the detour).

I hope you find this an interesting starting point for your consideration.

[1] http://dx.doi.org/10.3390/su10082881

Re de-carbonization, beyond all-renewable generation of electricity, the current idea is to “electrify everything”, so, as reviewed in the context of the alternative of “green hydrogen”: battery-electric cars, trucks, and short-haul aviation; electric heat pumps for heating water and buildings, and the heat needed for most industrial processes; maybe electrolytic methods for steel production instead of coke. In addition, “green hydrogen” produced by electrolysis could support long-haul aviation, shipping, chemical feedstock needs, seasonal energy storage, “bursty” industrial heat, steel production. Cement and aluminum production currently involve chemical reactions that involve CO2 as a product; apparently there’s alternatives for cement being researched. All of these are economically feasible, or even economically attractive, but require massive changes.

‘This gives you a mixed economy since private ownership is more efficient in a lot of cases’

What does the word ‘efficient’ mean in this sentence? How is efficiency measured (quantitatively)? By whom? For what purposes?

‘The sharpest case is where government businesses lose money while private enterprises are profitable.’

You have totally lost me (my fault, I’m sure). What does the phrase ‘sharpest case’ mean?

@Hidari

There is supposedly technology under development which should eliminate the direct CO2 production from aluminium smelting:

https://www.theguardian.com/environment/2018/may/10/new-technology-slash-aluminium-production-carbon-emissions

Of course, that would do do little if the electricity used is from burning coal, the people working in the plant drive to work each day in a petrol-powered car, and so on. On the other hand, cheap low-carbon aluminium would change the emissions budget calculations involved in things like electric cars and wind power.

It seems plausible there is a good equilibrium where we do everything, and a bad one where we do nothing, and not much meaningful in between. Which is what makes progress hard in a political system designed to produce compromises.

The public should not invest in enterprises that lose money while private enterprises do?John Quiggin supports closing down the US Postal Service. And supports private weapons manufacturing too. Good to know, if JQ actually meant to say this.

Not wholly and exactly so:

“‘They have been successful in attracting aluminum smelters with cheap electricity. It’s so cheap that it makes it economical to ship bauxite from Australia and the Caribbean for energy-intensive smelting. ‘”

You process the bauxite close to the mine site. It’s low value stuff. $50 a tonne as a reasonable rule of thumb. Transport costs are thus a thing to worry about. Bauxite is processed into alumina (aluminium oxide) via the Bayer Process – effectively, boiling the bauxite in lye or sodium hydrixide. Jamaica has four such plants, Iceland none.

Processing the alumina into aluminium takes that electricity. A slightly old rule of thumb being $900 of electricity per tonne of aluminium produced. The alumina might be between $200 and $600 a tonne. Which is why it is transported to where the electricity is cheap.

As an historical matter the location of an aluminium smelter usually was decided by “Where can we get cheap electricity?”. One on Anglesey because of a local nuclear plant. Varied in Siberia because big river where a dam could be built – much the same in Quebec and Pacific NW of US. The Al plant having a long contract to take the power being the financial underlay of the decision to build the pwer plant/dam.

Iceland’s just the latest iteration of the process.

Gorgonzola Petrovna @ 24

“On an industrial scale? Somehow I doubt that battery storage is, at this time, the common solution. Are you sure?”

Gorgonzola Petrovna, it would probably help the discourse if you more carefully read what I have written. I did not say “battery storage is the most common industrial scale solution”, because that is a statement so broad as to have no real meaning (it doesn´t define for which specific purpose – e.g. arbitrage, load smoothing, etc. – or what is “industrial scale”). Instead, what I wrote was [with respect to the short term intermittency issue you describe] “batteries are one of the more popular and common solutions”.

To make the point more broadly, I have already noted that the solutions selected (and remember we are talking a “basket”, not a one-size-fits-all here) will depend on what the needs are, what already exists, and likely a wide variety of social and political influences which have nothing to do with the technology in question. Another very important consideration for the future is how you envision your networks being developed – are you targeting micro or macro grids? Different countries may well come to different conclusions (and what works well in Ireland may well be different to what works well in India). Etc. Etc. Etc.

Systems are also employed for a variety of reasons, which can include arbitrage, load smoothing, back up system storage, micro-macro grid transfer, etc. So, when considering the variability and intermittency issue, one also needs to consider the bigger picture – and what is the intended use (and what timescales you are planning, and what other sources you have available).

The situation you described in 11 was, essentially, an issue of shorter-term intermittency. Longer term storage issues require consideration of other timescales (and so the possible use of pumped hydro storage, exploiting global distribution, etc.) which will likely require consideration of other technologies. But, because this is blog comments rather than a series of voluminous books addressing every possible topic, I confine myself to the specific point raised to avoid irritating our generally forgiving blog-host.

To address your skepticism about the usage of batteries, within the deployment of renewables batteries are indeed one of the most popular energy storage solutions (for certain specific applications). For example, solar and wind farms typically employ lead-acid, li-ion, vanadium, and NaS technologies [1], with the following considerations:

Lead acid offers moderate specific energy, high reliability, mature technology, and is less costly, and is regularly employed in substations the world over;

Li-ion offers higher energy density and energy conversion, but is costly (and relies on Li, which is identified by the EU as an “at risk” resource). However, examples do exist (cf. Hornsdale, a 150MW/194MWh grid-connected energy storage system co-located with the Hornsdale Wind Farm used for energy arbitrage and as a continuous spinning reserve; the Vermont GMP 4MW facility used to backup power, for microgrid capabilities, and demand charge reductions);

Vanadium redox flow offers a high response time, good cyclability, and can flexibly alter the depth of discharge on the fly (cf. the Hokkaido 6-MV vanadium redox flow battery configured to the 30-MW wind farm for peak frequency regulation);

Sodium sulfur is a relatively mature technology, and offers a long, continuous discharge and high cycle time which helps shift energy in time and traces wind power schedule output (cf. Japan´s 34-MW sodium-sulphur battery coupled with a 51 MW wind farm, which has a 42 MW stabilisation operational voltage).

While redox flow batteries are less common, I believe the advances being made will prove very interesting – particularly in comparison to the longer-term storage systems (like pumped hydro). This is, however, speculative on my part, so feel free to treat as very tentative.

There are, of course, other technologies in the world and, depending on your planned application, some of these may well be more suitable than batteries (for example, I think hydrogen makes more sense for use within planes). There is, however, as far as I can see nothing intrinsic to GTs which makes their replacement impossible (from a technological perspective). If you are aware of any reason which would render it impossible for greener technologies (including, but not limited to, batteries) to replace, I would certainly be interested in seeing your data.

So, you are welcome to remain skeptical that batteries can be employed at the “industrial scale” (whatever you mean by that), but in order for us to have any further sensible discussion you would 1) have to give a clear response as to what you mean, 2) explain how this is relevant to my comment, and 3) actually read what I write.

[1] Grid-scale Energy Storage Systems and Applications,
DOI 10.1016/C2017-0-00957-6

@29,
You convinced me that battery storage can handle short-term intermittency, although I still have the impression it’s not commonly used yet. Now, I highly doubt that battery’s lifetime is even remotely comparable to that of a PV module. If the 100-dollar ups under my desk (2-year warranty, not 25 years) is any indication, they get warm, may need cooling. And then, the backup system (for the current, not imaginary future installations) is a completely different story, right? My only question is: is all that included into the cost calculation? Because the post only says “Once a solar module has been installed, a zero rate of interest means that the electricity it generates is virtually free.”

It is vitally important in these discussions to sharply differentiate between technologies which actually exist and which are, right now, being sold on the market (and delivered, and set up, and used, and which generate profit for actually existing companies), and technologies which are only in the prototype phase, or even which only exist ‘on the drawing board’.

I notice that on this thread there is a lot of creative use of language to blur this distinction and to discuss hypothetical technologies as if they actually exist and can be bought in ‘the real world’.