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Is the ‘problem’ with renewables really a lack of R&D?

The views expressed are those of the author and are not necessarily those of Scientific American.

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Wind turbines and transmission lines along the roadside near Caen, France. Photo by David Wogan

In an article for Slate, Bjørn Lomborg calls for fewer subsidies and more R&D funding for renewable energy. Here is the crux of his article, “Green energy needs to be cheaper, so let’s invest in R&D instead of subsidies”:

The solution is to innovate the price of renewables downward. We need a dramatic increase in funding for research and development to make the next generations of wind, solar, and biomass energy cheaper and more effective.

Our own Ashutosh Jogalekar, aka The Curious Wavefunction, chimes in with “Renewables: Fewer subsidies and more R&D please”. Please read the whole piece, but in the meantime here is an important section (emphasis mine):

Heavily pushing renewables right now is like trying to push a flawed model of a new computer into the market. It might feel good at the beginning but it’s only going to be hugely inefficient, expensive and pointless for the future. Better to slow down the expansion and fire up the innovation.

While well intentioned, I think this view of renewables misses some of the biggest challenges. This is a complex and nuanced issue and the reality is that there are more factors at play than just R&D funding and a need for technological innovations.

Lomborg quotes International Energy Agency (IEA) data to make the point that the pace of renewable energy adoption has been pitifully slow despite incentives and that the outlook is not improving:

13.12 percent of the world’s energy came from renewables in 1971, the first year that the IEA reported global statistics. In 2011, renewables’ share was lower, at 12.99 percent. Yet a new survey shows that Americans believe that the share of renewables in 2035 will be 30.2 percent. In reality, it will likely be 14.5 percent.

But this ignores many things, and by looking at the global picture we lose the success stories in individual countries and regions, of which there are many, that illustrate that policy frameworks and infrastructure decisions have as much or greater influence on the success of renewables than the state of technology.

To Lomborg’s proposal to “innovate the price of renewables downward”, I would point to Texas as an example where renewables compete handily with natural gas and coal-fired generation today. Back in June of this year, I wrote about a report detailing the relationship between natural gas and renewables. In the short-run, renewables are cost competitive with thermal generation, due in large part to the conditions Texas has set up: an ISO (ERCOT) where generators bid electricity on the lowest variable cost, which almost always means wind generation (even with low natural gas prices) and transmission lines connecting the renewable energy zones in the western part of the state with markets in the east. All of this buoyed by forward thinking policy decisions by then-Texan Governor George W. Bush.

So there is clearly not a technical limitation with current renewable energy technologies. If you calculate the Levelised Cost of Electricity (LCOE) for wind and natural gas, you will see that wind already beats out natural gas (again even with low fuel prices). In the long-run, it is not out of the question to expect that the LCOE will improve for renewables (wind), and the story gets better as you factor in water and carbon constraints.

As for solar, the prices have been dropping like crazy in recent years. The Economist charted the price of solar PV over time from 1977 through 2013 and the drop in price is staggering:

Here’s the explanation from The Economist:

Swanson’s law, named after Richard Swanson, the founder of SunPower, a big American solar-cell manufacturer, suggests that the cost of the photovoltaic cells needed to generate solar power falls by 20% with each doubling of global manufacturing capacity. The upshot is that the modules used to make solar-power plants now cost less than a dollar per watt of capacity. This means that in sunny regions such as California, photovoltaic power could already compete without subsidy with the more expensive parts of the traditional power market. Moreover, technological developments that have been proved in the laboratory but have not yet moved into the factory mean Swanson’s law still has many years to run.

You’ll notice a difference of over $1 for the price per watt of a unit – and that’s because the installation price includes other soft costs such as permitting that increase the price. There is a solid overview at The Atlantic that goes into much detail than I will here, so go read that if you’re interested. If you’re looking for innovation, some less technical areas like permitting need some attention.

As a local example, the price of residential solar PV in Austin, Tex. hovers around $2/W installed. The price has dropped so much that the local municipal utility Austin Energy is reducing incentives for residential PV systems. So if anything, incentives as a policy mechanism to bring about wider adoption and thus lower per unit prices of renewable technologies is working. In general, I would agree that redirecting funds from subsidies to R&D would make sense in cases where subsidies are no longer needed.

Earlier this summer, the IEA released its Medium-term Renewable Energy Market Report that finds existing renewable projects are cost competitive in many countries:

In addition to the well-established competitiveness of hydropower, geothermal, and bioenergy, more renewables are becoming cost competitive versus fossil fuels in a wider set of circumstances. For example, wind competes well with new fossil fuel power plants in several markets, from Brazil to Turkey to New Zealand. Solar is attractive in markets with high electricity peak prices, for instance if these are set by oil-fired generation. Finally, generation costs of decentralized PV have become lower than retail electricity prices in a number of countries including Italy, Spain, Australia, but also Denmark and (southern) Germany.

Put all of this together and you see that policy mechanisms have as much if not more to do with the price and competitiveness of renewables today than just needing more R&D.

Now there is definitely a place for continued and increased R&D. Energy storage is an obvious area of study because that would address some of the intermittency issues with wind and solar, although as detailed in the the Texas example renewables will increasingly become baseload. If anything, natural gas can act as a “battery” right now. Nanomanufacturing holds promise to revolutionize how batteries store energy and could transform both the electricity and transportation sectors. New communication protocols and smart devices will change how we interact with the electric grid and consume energy. For more on energy R&D, I recommend reading Robert Fares posts here and here.

But to push off gains today in favor of innovation tomorrow ignores the non-technical challenges renewables face – we can craft smart policies that support wider adoption of renewables today while searching for the Next Big Thing.

David Wogan About the Author: An engineer and policy researcher who writes about energy, technology, and policy - and everything in between. Based in Austin, Texas. Comments? Follow on Twitter @davidwogan.

The views expressed are those of the author and are not necessarily those of Scientific American.

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  1. 1. sethdayal 2:22 pm 09/3/2013

    I always get a kick out of wind/solar used car salesmen. Same tactics different product.

    His complaints about permitting costs are a joke. We should let these deadly firetraps be installed without normal NEC approved inspection standards?. Why bother inspecting new home construction either.

    The usual prevarications coming from this type with the cost of Austin residential solar actually at $5.83 not his absurd $2 claim.

    Works out to over 40 cents a kwh and close to 80 cents all in with peak dumping costs, 5 times sized transmission and gas backup included.

    The actual cost of wind power is 15 cents a kwh based on the last large wind build at Shepherds flat in a market set by massive Chinese dumping. To that we need to 8 cents a kwh for the cost of 5 times sized wind transmission plant (per New England ISO) and 10 cents for gas backup and 8 cents for the cost of dumping wind power as it is seldom around when needed (Ontario Auditor Generals report). Add a buck a kwh for storage if we want to replace gas.

    So wind 40 cents a kwh.

    Keep in mind that wind/solar power must be backed up to 100% nameplate by inefficient fossil fuel plant run inefficiently. Less GHG’s less gas installing efficient gas plant in the first place. With massive investments in wind and solar Germany’s GHG production has increased two years in a row not including 100 times a potent as CO2 methane leaks from all that imported Russian gas.

    Even the cheapest projected costs of long term storage has that at a buck a kwh.

    The world’s foremost climate scientist James Hansen tell us that nuclear is the only in time solution to the fast approaching potentially civilization ending warming precipice – that believing in wind/solar is like believing in the “fairy godmother and the tooth fairy.

    Link to this
  2. 2. M Tucker 4:51 pm 09/3/2013

    I am not opposed the nuclear but the “in time” claim does not hold water. The problems with nuclear are the enormous expense to construct and they take a long time from approval to actual power generation. Those who champion nuclear claim that newer generation nuclear can be cheaper and faster but none have been demonstrated or tested. Bringing new generation nuclear to the table will also take time. So we need more nuclear R&D and the manufacturers need to foot the bill for demonstrating their safety and cost savings. China has fewer regulatory restrictions than the US and they will not get the majority of their electricity for nuclear either. They are mostly building coal plants. If they had access to natural gas they would probably switch to that, but they don’t.

    In the US we have solar and wind and natural gas. Most that planned to build nuclear are going with natural gas and the nuclear projects that are being built now are costing rate payers even before they generate any electricity. The customers in Georgia are not happy. The power company is blocking access to solar. The tea party in Georgia is not happy about that.

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  3. 3. sethdayal 6:07 pm 09/3/2013

    Actually the last ABWR’s built in Japan took 3 years, the last 7 Candu’s 4 and the new American first of kinds should take 5 years, given the learning process. Westinghouse forecasts 3 years after the first 20 or so are build as factory module plants get in gear.

    The last big wind build at Shepherd’s flat took 3 years. Not so different huh.

    Cost of the nukes was 7 cents a kwh while Shepherds Flat all in will be about 40 cents – cheapest form of power there is. The cost of gas at VCSummer was 8 cents a kwh.

    Actually Russia and India have Gen IV Fast reactors coming on line next year first of 5 to 2020 for India. China has their commercial HTGR under construction for 2017 service. Keep in mind that the Soviet Alfa sub fleet ran on Gen IV nukes over its entire service life.

    Solar costs 90 cents a kwh. No wonder they are blocking it.

    Today’s business interests would rather spend a small amount of capital on gas plant and collect a lucrative gratuity on future fuel sales paid for by the taxpayer, than a large amount of capital and no gratuities on nukes. They pay a lot of graft to our corrupt politicians and media to keep that scam going. If they had to guarantee their prices for the next sixty years like nukes in effect do, not a gas plant would ever be built.

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  4. 4. geojellyroll 8:59 pm 09/3/2013

    Nuclear will not be built in any meaningful numbers in the next 35 years in the USA. Solar and wind are peripheral sideshows.

    Coal, oil, natural gas and hydro will fuel the US economy for the next half century.

    Link to this
  5. 5. Carlyle 3:49 am 09/4/2013

    Give me the data please. Where in Australia is solar cheaper than conventional power?

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  6. 6. OgreMk5 9:38 am 09/4/2013

    I see all the arguments for and against renewables. I see all the arguments for and against nuclear.

    What I don’t see, and what’s the single biggest problem, is all the arguments against fossil fuels.

    Some solution now is much, much more important than the perfect solution after it’s too late (which seems to be coming closer faster than time would suggest). Instead of fighting about the “perfect” solution, let’s get something going right now and push it more and more.

    Renewables, regardless of what else anyone thinks of them, are available now and are being built in greater numbers.

    Nuclear, while powerful, is still stuck in a quagmire of politics and public perception which will take decades to extract itself.

    While we fight about the best solution, fossil fuels continue to pollute and destroy the environment in a myriad of ways.

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  7. 7. phalaris 11:00 am 09/4/2013

    OgreMk5 #6
    If only it were so simple…
    …but you can’t ignore the cost factor, which, with not even a ghost of a solution in sight for the storage problem with renewables (not to mention distribution) is paramount.
    What we do is irrelevant if other countries where the public is not in thrall to the sensationalist media and opportunistic political parties produce energy much more cheaply than us.
    They will wipe us off the board.

    Financial costs are to some extent related to environmental costs, and if renewables are so much more expensive, it’s an indication that they make too much demand on the resources of the earth for what they bring.

    Link to this

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