The ‘Clean’ Energy Debate -How good is green?

Unlike some, I am not a climate change sceptic. I come from a part of India that has been seeing erratic weather for years now and the climate isn’t the same that I remember as a kid. For older generations, the change is more drastic. Hence I am a firm believer that we as a nation need to make a significant change in the way we obtain and consume energy. And this action needs to be coordinated on a global scale to truly make a difference. And the good news is that the changes are happening around us. The world is slowly transitioning from conventional energy systems to cleaner and more environment friendly systems. The progress is slow still but it is a positive start. The Paris COP21 got the participants to agree to stick to their pledges of carbon emission reduction. Yet as per estimates by the IEA, a combined total of $20tn will be needed for investment in the energy systems up to 2030. Wind and solar is going to account for a significant portion of this investment with the rest going towards grid upgradation, efficiency enhancement and demand-side management system (smart grids).

Coal and gas is dead and wind and solar is the answer seems to be the global trend. And admittedly, they’ve helped reduce our dependency on fossil fuels. Safety issues and massive investments have made nuclear very unattractive. China, India, S. Korea coupled with some Middle-Eastern nations might be the only lifeline for them. However, once the celebrations end, the question needs to be asked that

“How good are the non-conventional energy systems and what do they actually cost for the economy?”

One might think that this is a futile question to ask since the systems are functioning just fine. However, the problems if any cannot be identified unless the system is adopted at scale which is exactly what’s happening now.

How good are non-conventional energy systems and how do they compare to the conventional ones?

Well as the name suggests, energy systems that do not utilize the conventional energy sources based on fossil fuels like coal, oil and gas are non-conventional energy sources. They are essentially zero-emission systems (not assuming life-cycle emissions based on construction). They have abundant fuel that will never run out and thus have no need for supply linkage networks. On the other hand, they are intermittent and inconsistent at supplying a stable supply of energy.

Let us take an example of an energy system that will be required to supply 200 MWs of electricity. It can be done through two ways – a conventional coal-based system or a wind turbine. For the first case, a power plant needs to be constructed with proper road and rail linkages to haul in coal. This coal needs a treatment plant to be prepared into the pulverized powder that can then be burnt in the furnace to produce steam to run the steam turbines that are mated to an electric generator. The generated electricity is then synchronized to the grid and fed into through a sub-station. There’s a lot of equipment that will require a significant investment. However, decades of research and development has been able to reduce costs to a moderate limit and increase efficiencies. And a single 200 MW plant will be necessary. On the other hand, a wind turbine is straightforward. The turbine needs to be installed on a piece of land with a grid connection, the power can be supplied to the grid. But as wind turbines aren’t usually of such higher capacities, several turbines will be necessary. This increases the capital cost significantly. Again, while coal is necessary to produce power for the first plant, wind is free. So, the marginal cost of generation is considerably higher for the conventional system than the wind-based system. So, considering a tendering process, while the conventional system will be initially cheaper, the wind farm will be cheaper and cleaner in the long run. Thus, the introduction of significant wind (or solar) based capacity will mean that the average power price will fall. Add significant amounts of wind and solar based power and soon the average price drops to such a low that it is impossible for conventional energy systems to compete anymore. An example of this effect can be seen in Germany where the conventional producers are losing money and where recently the price of power dropped to negative.

And that’s good, right? I mean what could be better than seeing these enormous corporations lose money rather than rip us off! Turns out that destroying Evil Corp., is rather unsustainable in real-life. A proper energy system needs both base and peaking load capacities to fulfill the daily and seasonal variations in energy demand. Wind and solar fall under the base load generation category, albeit a rather unstable one. Even with modern satellite based imagery and constant updates on climate, weather can be quite unpredictable. Hence, it is difficult to correctly gauge the level of power to be available on a particular day. And this is a major disadvantage for wind and solar systems. They are unpredictable and inconsistent requiring balancing mechanisms for their proper functioning.

And this isn’t the only worry. Low marginal cost renewables are pushing coal and gas systems out of the market by underpricing them. And we need gas for peak load times to supply additional capacity. And since these plants run for very small periods of time, they need appropriate incentives to function. Low average energy prices coupled with carbon taxes have pushed them to their operational limits. It makes no sense for a private investor to invest money in a power station that might not be able to make a profit. Hence, investments and construction in the number of peaking power stations are falling and financial mechanisms like UK’s Capacity Market had to be created to coax them to remain in the system. Several countries around the world are now considering the creation of similar capacity auctions. A capacity auction essentially reserves a capacity for a period (usually a year) for which a producer is paid a specific amount just to be in the system in case of an emergency. The producers are chosen based on a capacity auction. I’ll be providing the details to the market, its workings and the auction process in a separate post.

And we need to come up with a solution fast. While we do need renewables in our system, we need to address their limitations. And design solutions around the problem. A very interesting solution has come up as methods of regulating consumer demand. Now, for obvious reasons it’s quite impossible to just cut power to a certain section of a country (ironically though this is what essentially a blackout or a brownout is). Consumer demand can thus be regulated by a simple principle of economics – the balance between supply and demand and their effect on prices. Simply, if the price of power increases, consumers will use less of it and vice-versa. A way of doing this is through demand-side management systems or rather smart meters. A smart meter is a two-way meter which records the amount of energy consumed and provides the users a readout of the current price of energy. As the user, can see the price of energy they’re consuming in real-time, they can make a more informed decision on the amount of energy-consuming activity that they’d like to do at the moment. For example, someone can choose to do the laundry when the energy price is low rather than at its highest. (This is of course the system at its simplest. More complex systems will be able to program usage pattern and be programmable to be able to automatically do the tasks assigned based on preset price indicators.)

Earlier last year, Elon Musk launched a battery pack for homes and as always, he’s aimed at keeping himself at the beginning of an innovation that can make a huge impact in the future. As wind and solar systems grow and starts to be adapted into households in a system of mini-grids, we need to be able to maximize our storage capabilities. Extra energy produced during the day through solar can be stored in the pack and be utilized during the night reducing grid dependencies. Similar large-scale storage systems can also store energy for a rainy day with low wind. Batteries aren’t the only methods of storage though. Pumped storage or hydroelectric pumped storage has been in use for decades. By this method, water is pumped during periods of excess generation or low demand to a storage location set at a height. This water is then passed through a turbine during periods of excess demand to produce energy for the grid.

This isnt a rant against the system. Rather this is us recognizing the fact that the system has its flaws and steps must be taken to correct it. The steps taken should be sustainable in the long run. And it turns out that dirty can be green as well, with a little help. If the carbon emitted from a coal-based power station can be captured, it essentially ceases to pollute. This is the theory behind carbon capture and storage systems which are essentially capture plants that can be fitted to existing coal and gas based plants to reduce emissions by up to 95%. The captured CO2 can then be transported by pipelines to onshore and offshore underground storage facilities for secure, long term storage. Statoil and Shell already uses this technology to enhance well pressure and aid in oil recovery so the technology has already been in use for decades. However, considerable work on policy and technical levels will be necessary to transform this into an economy-wide system. Not only does CCS aid in emission reduction, it provides a massive advantage as well in the introduction of other low-emission energy systems. Hydrogen is one such example. Often looked at as the replacement for fuel for cars, it can be produced through steam method reformation (SMR) or electrolysis. If CCS is applied to SMR, the resultant CO2 produced by the process is captured and the output is just pure hydrogen that can be stored and pumped as necessary. It can essentially use the installed natural gas infrastructure and be even used as a piped heating fuel for domestic and commercial applications. Bioenergy holds a different sort of advantage over all energy systems because of its ability to have net negative emissions. What this means is that over its life cycle a plant absorbs CO2 from the atmosphere. When this plant is later used as fuel in coal-biomass plants, it gives off CO2 which can then be captured through a linked carbon capture system (BECCS), essentially resulting in a net negative emissions for the energy system. And all these systems have the advantage of being considerable cleaner than their base systems that utilize fossil fuels or biomass while having negligible emissions and yet being able to maintain a stable energy supply.

Unless steps are taken quick we might move onto a point of no return. Massive investments in the energy generation has reduced renewable energy prices to an all-time low. Just in India this February, wind prices dropped to INR 3.46/unit while earlier in the same month (link), solar power crashed to INR 2.97/unit (link). Much lower than what was assumed. And this is not a positive trend. Competitive bidding and over dependence on government tax breaks have led to companies bidding historically low prices which may not be financially feasible over a longer course of time. A sudden loss in such enormous capacities could be disastrous to the energy sector and the economy. On the brighter side of things, we have indeed been able to reduce emissions and massive emitters like India and China are shifting to renewables on a huge scale. In April 2016, India unveiled a massive 648 MW solar power plant in Tamil Nadu (Southern India). Wind and solar is here to stay for good and with proper diversification of resources and power generation systems, clean power may just be the silver bullet we need.

–  Written by Sagnik Ghoshal


Further reading:

Sustainable Energy – Without the Hot Air by David MacKay (video)

https://www.youtube.com/watch?v=GFosQtEqzSE

The Carbon Crunch: How We’re Getting Climate Change Wrong – and How to Fix it by Dieter Helm

http://www.economist.com/news/books-and-arts/21564815-climate-change-needs-better-regulation-not-more-political-will

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s