Renewables have similar LCOEs as conventional generation sources. Yet ramping renewables to c50% of a developed world power grid can inflate total system costs by at least 50%. This is because renewables require back-ups, additional T&D and power electronics. This 16-page report aims to quantify the total system costs of renewable-heavy grids, and the implications.
Most LCOE analysis is flawed, as it only looks at individual generation sources, and does not consider the total system costs of the overall grid, which must achieve round-the-clock reliability, and high power quality.
Hence, this report draws on economic models, which we have been diligently constructing over the past 6-years, across power generation, transmission, distribution, batteries and power electronics.
Being as objective as possible, what are the total system costs of a renewable-heavy grid, compared with a grid that does not contain renewables? Recent reasons for asking this question are on pages 2-3.
The total system costs of a conventional grid are built-up from first principles, as our baseline, on pages 4-5.
The total system costs of a renewable-heavy grid, with 50% of the electricity provided by solar and wind, are built-up from first principles on page 6.
The largest reason renewables are inflationary is that back-up sources of generation are still needed; just as much conventional generation capacity is needed, in fact, as a grid that does not have any renewables at all?! Evidence for this perspective is on pages 7-8.
Additional T&D is also needed to move renewables from the point of generation to the point of consumption, as quantified on pages 9-10.
Batteries and power electronics must then be added, in order to ensure system reliability, during times of heavy renewable generation: including synthetic sources of inertia, reactive power compensation, FFR, smart metering and HVDCs, per pages 11-14.
What does it all mean, if integrating wind and solar is more inflationary than we had previously assumed? Honestly, we are still trying to figure that part out, but some initial perspectives are on pages 15-16.