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danieldwilliamI was recently asked (and flattered to be asked) for my thoughts on energy by someone who was engaged in a post-grad in energy studies. This is what I sent them.
I should flag up at the outset that I'm generally pretty optimistic about the future of energy in that I think it will become cheaper, cleaner, more abundent, easier to access, contribute less to climate change and drive more prosperity and sustainability over the next 50 years. Doesn't mean I think everything is going to be alright for everyone or that I think people who are not optimistic about this are fools - but that's where my head is at the moment.
I tend to focus on electricity but with side orders of gas, transport and heat. I find one can't unpick them but it's also a huge field.
The things I have found useful to get my head around are
Changing timescales of technology deployment
The levelised cost of generation
The cost trajectories of renewables
Developing nations ability to leapfrog developed nations
Decoupling of GDP / Energy / CO2
Saudi oil policy (or the lack of it)
Fracking and the medium term cost of energy
Mechanisms for technological support
Where infrastructure is and where it needs to be.
Peace and security and energy supply
Demand management
Market mechanics
Changing time scales
The time scales over which energy is produced and used are changing rapidly.
In the past energy was about large, capital intensive plants with pretty stable technology, long periods to consent and build and long lifespans. You build a power station, it took ten years to build, you ran it for 40-50 years and then replaced it with a slightly better version of itself for more or less the same cost.
What I observe currently is that the pace of technological change and the change in cost for some technologies is moving much more quickly than the planning horizon for other technologies. For example, by the time the UK has built the new Hinkley Point nuclear reactor it's likely that solar PV will have become cheaper than Hinkley Point could ever hope to be and have deployed as much capacity as Hinkley Point ever will.
People can stick up wind turbines and solar PV panels quicker than planners can plan grid capacity or consent or cancel large power stations.
Levelised Cost of Generation
Linked to the planning horizon point above. Energy producers are trying to build kit and infrastructure for the demand and price / cost of the future - when the future is several years or even decades away. Not only when they are building the plant but also operating it over decades. So there is a lot of effort put in to trying to work out how much MWh of electricity will cost over the entire lifespan of a new plant and to guessing how this will change over the next decade or so.
Different generation technologies have different exposures to fuel, capital equipment, asset retirement obligation, financing and operation and maintenance (O&M) costs. Worth getting comfortable with the methods used and what the current range of costs are. I'm out of date here.
(As a side note - most of these guesses have so far been too pessimistic about the ability of solar PV to lower its cost of generation.)
The cost trajectories of renewables
Linked to the levelised cost of generation is understanding where the levelised cost of generation for renewables is going to be over the coming two decades. Both solar PV and (to a lesser extant) onshore wind have seen significant falls in cost over the last ten years. Causes of this include learning curve effects, economies of scale, de-risking of technology leading to lower financing charges and dumping by Chinese manufacturers of materials and kit.
Renewables tend to be relatively capital intensive i.e. a large percentage of the total levelised cost is made up of the cost of the machinery and the financing costs compared to the fuel or O&M costs. This presents cash flow and / or capital rationing issues.
The current wisdom is that industrial scale solar PV and onshore wind will hit cost parity with the wholesale cost of electricity and domestic scale solar PV reach parity with retail prices soon. Sometime around 2020 or just after, if they haven't already. This is largely based on the assumption that they continue to enjoy the same rapid fall in costs that they have enjoyed over the last decade or two. Probably the key factor here are learning curve effects e.g. the steady accumulation of knowledge and skill around a standard process that progressively lowers the cost of doing it. The best estimate I've seen is that both solar PV and onshore wind enjoy a learning curve effect of about 16% for each doubling of installed capacity. From memory solar PV currently supplies about 1% of world electricity and will probably double this over the next 18-36 months implying a 16% fall in costs and so on.
Swanson's Law
https://en.wikipedia.org/wiki/Swanson's_law
Of course, it may be the case that this is entirely the result of the Chinese getting ahead of themselves, over producing and having to dump excess supply on the market.
Or it may be that the Chinese are more worried about smog and coal mining killing them and will pay what ever it costs to make solar PV cheaper than coal.
http://monetaryrealism.com/china-asks-how-much-will-it-cost-us-to-make-solar-cheaper-than-coal/
Onshore wind is benefiting from the abilty to better site much larger turnbines on taller towers. Larger turbines produce more energy for a given $ of investment and taller towers mean you can hoist them in to more constant and stronger wind. Which means more electricity for less capital. It also means more constant predictable revenues which work to de-risk the project and drive down financing costs and improve the access to capital.
Another effect that is worth getting your head round is the longevity of solar PV and wind plant. It looks like solar PV and wind turbines are lasting longer than expected. Which is important because for existing kit the financing will be paid off over 15 years and the kit turns out to last 25 years, meaning ten years of free electricity. For new kit it means they can be financed more easily and over 25 years meaning cheaper financing costs. This sits along side another financing effect - which is that as more solar PV and wind is installed and people become better at it the project risk premium falls and interest rates fall.
A notable expection to this good news is offshore wind which appears to have gotten more expensive.
Other renewable technologies such as hydro and biomass thermal aren't seeing so much of a fall as they are very mature technologies.
For me, the key take away from looking at the cost trajectory of renewables is that they inevitably reach cost parity with fossil fuels soon. In energy market terms almost immediately. There are probably thermal projects in the planning stage that will be overtaken by cheaper PV if solar PV costs fall at the quicker end of expectations.
And then the price keeps falling.
Which is a pretty big change for the world in terms of the long term cost of energy, climate change and the politics of energy.
Developing Nations Ability to Leapfrog
One of the things I don't know much about but I think is important is how able are countries like China and India or Tanzania or Kenya able to get hold of and apply the best 21st century energy technology straight away without going through a similar build out process to the developed nations. I think on this question turns the ability of developing nations to quickly produce the same material standard of living that developed nations enjoy.
Decoupling GDP from Energy and Energy from CO2
Another question which I think is important but which I don't know enough about is how able are developed and developing countries able to have GDP growth without using more energy and how able are they to have energy growth without producing more CO2. (Which gets in to thorny questions of global justice and a fair opportunity to develop.)
If developing nations can go straight from where they are to using mostly renewable and nuclear energy, brand new efficient manufacturing plant and having a large service sector - then perhaps they don't need to be able to produce lots of CO2 whilst they become prosperous.
Saudi oil policy (or the lack of it)
It's worth spending a bit of time reading some opinion on what the Saudis are up to with their oil policy. The question most people ask is "Who are the Saudis after?" Answers include
Iran
ISIS
US Fracking
Renewables
Russia at the behest of the USA
Saudi religious extremists
Their own indolent population who will have to get a proper job soon and had better get used to it in plenty of time or else there are going to riots when the oil money runs out, the guest workers go home and no one knows how to do anything.
Secondary questions are whether their policy is actually working to do the thing they hope it will do and how long they are prepared to take the pain.
This of course assumes that the Saudis have a policy and aren't just trying to cover up the fact that they have lost control of world oil prices. Which is what I think is going on but that's really just a guess on my part. Nobody knows, probably up to and including the Saudi oil ministry.
Fracking and the medium term cost of energy
I think the medium term cost of energy is largely driven by shale gas, tight oil and all the other products of fracking. So the lowest price that large amounts of fracking is economic at become the floor at which energy sells. As supply drifts up and prices down fracking will cut back production. As supply comes off the market and prices drift up fracking will start up again.
Fracking has some interesting qualities as a swing producer - the production units are fairly small (you need to move the well every 6-18 months), costs are up-front but modular - so once you had a well operating you could live with low oil prices until you had to move the well, and then you reduced production by closing the well and not opening another one. So, it ought to be pretty responsive to prices below the cost of production.
Conventional wisdom had it that fracking was uneconomic at below $80 a barrel. It's been a while since I looked but fracking seems to be better than expected with oil at $40 a barrel. If this is the case and remains so for 5-10 years then whatever the Saudis are up to they are going to have to stick to for a decade.
The two items above have a couple of impacts. Firstly and most obviously on the world economy where low energy prices ought to mean faster growth and more consumption. Secondly, on conventional energy infrastructure building. Low energy prices suggest new building will be delayed and existing plants run a little longer. It also changes the balance between capital costs and fuel costs in the levelised cost of generation. Thirdly it will have an impact on the adoption of rewewables. With cheap-ish energy there is less incentive to adopt renewables as the cost of renewable energy has to fall further before it is cost competitive with thermal generation.
Personally, I'm of the view that we've already passed the point where the cost-path of solar PV and onshore wind has a virtuous circle where they get below the cost of thermal generation at some point in the 2020's. (And therefore, if the Saudis were out to get renewables then they've missed.) But I could be wrong. There's a scenario where energy prices are low, this delays thermal generation investment a bit and then this gets swapped for renewables as they demonstrate they are cheaper in the long run. There's also a scenario where energy prices are low, new generation is delayed, renewables can't quite get cheap enough quickly enough, panic buying ensues and a whole load of gas and nuclear plant is built in a rush with life spans of 30-60 years.
Mechanisms for technological support
What are the ways in which financial support can be directed to new (usually renewable) technologies or cleaner technology and what works best?
By this I mean things like Feed-in Tarriffs (FIT) , tradeable Renewable Obligation Certificates (ROC), Carbon Cap and Trade scheme, carbon levies, tax breaks and subsidies as well as early stage public financing for research and proto-types and grants and soft loans for small schemes.
What behaviours do they drive when operating? Feed-in Tarriffs tend to be simple but clumsy and either undershoot or overshoot depending on whether the FIT is set too low or too high. ROC's and CO2 certificates are complex to operate.
Perhaps my most over-used phrase when talking about energy is "negative policy price". I think we're about to reach the point where the cost of renewables falls below the cost of thermal or nuclear generation and the then the price one has to pay for reducing CO2 becomes negative.
How these mechanism vary from the developed world to the developing world I don't know. Again, fascinated to hear your views on what works in places llike Pakistan.
Where infrastructure is and where it needs to be.
(this is linked to the leapfroging point above).
In the developed world a lot of our infrastructure is in the wrong place and doing the wrong job. It's also a bit old and rickety. The USA has a poor grid and it's largely in the North East and the South West . Which is a problem for them as they have superb and cheap solar and wind resources in the middle and south of their country. Similarly the UK - our grid was built to carry energy to the industrial north and London from power stations built in the industrial north and London. It's not designed or built to carry electricity from a post-industrial Scotland to London and it's worse for carrying wind-generated electricity from the Highlands.
And so on around the world.
Grids next to each other are not very well inter-connected. This is true in North America and Europe.
So in order to access new forms of energy and to accomodate it on the grid lots of investment in infrastructure is required. Vast sums of money and decades of time.
This might give developing nations an advantage as they can build their grids in the right place first time. Or it might not, if they can't, or don't or end up in a bidding war for copper with the USA and Europe and China.
Peace and security and energy supply
One of the nice things about renewables for me is that the US and the EU can become less dependent for energy supplies on places like Russia and Saudi Arabia and the problems that presents us with diplomacy and conflict. On the other hand - perhaps the easiest place for Europe to access solar PV electricity is from the Sahara - and we don't appear to be great at keeping places like Algeria, Tunisia and Morocco friendly, peaceful and willing and able to trade with us.
The threat of Russia turning off the gas to us is probably over stated. Milton Haven and Dragon can process huge amounts of LNG from around the world. I expect other parts of Europe have or are building similar landing stations and the European gas grid is fairly well connected. We'd have to deal with one cold winter before the US frackers turned up their pumps and LNG was being shipped in in plentiful supply. But we'd feel it in our pockets and other countries we care about are probably less able to ride out a Russian boycott.
Trust is a big issue here. In Scotland we've just closed Longgannet power station - which we can do because we trust England to buy our renewable power when we produce it and to sell us gas generated electricity when the wind is not blowing. The UK trusts France to keep their nukes on and the interconnecting running. The larger your circle of trust the cheaper and more reliable your energy supply.
Demand management and Storage
Energy policy tends to be about predicting demand and then working out the best and cheapest way of satisfying that demand as the time it falls due. There's not much work been done on trying to reduce overall demand or to shift demand to times when electricity prices are low.
There are two parts, reducing overall demand by, for example, designing and building houses to be very energy efficient and demand shifting by helping / paying people to consume electricity when it is cheap. Some papers below.
https://www.gov.uk/government/uploads/.../early_findings_revised.pdf
researchbriefings.files.parliament.uk/documents/...PN.../POST-PN-452.pdf
www.mckinsey.com/~/media/McKinsey/dotcom/.../MoSG_DSM_VF.ashx
The national grid do grid balancing in the UK but mostly by paying power stations to increase or reduce supply
http://www2.nationalgrid.com/uk/our-company/electricity/
http://www2.nationalgrid.com/UK/Our-company/Electricity/Balancing-the-network/
A lot is written about the potential of electric cars to soak up supply and shift demand but fridges might also work. I once met the guy behind this scheme at DECC. Nice guy. I can't find his original DECC briefing note. Sic transic gloria internet.
http://utilityweek.co.uk/news/Trials-to-begin-on-using-domestic-appliances-to-manage-electricity-demand/767322#.VwUrLXr3iJI
Part of this is about using smart technology to allow consumers to easily match their consumption with supply and incentivising them to do so. When I was working with some politicians on energy policy we used to joke that once Scottland was 100% wind powered the weather forecast would include a predicted electrity price.
And part of it is about the incentivisation itself.
Sitting along side this is the question of energy storage. Energy can be stored in a battery, or a pumped storage hydro scheme or as gas or coal that isn't burnt or as money to be used to buy energy when it's needed (although you need to trust the people you're doing business with).
The surprising good news is that it turns out that the Grid in Europe can handle a surprising amount of intermittent non-dispachable renewables. So schemes like the French battery didn't prove cost effective (as far as I can tell) and Germany seems to be able to produce huge amounts of solar PV and wind and export it.
http://www.renewableenergyfocus.com/view/38807/alstom-and-saft-to-provide-edf-concept-grid-with-energy-storage-battery-system/
http://energytransition.de/2015/07/renewables-covered-78percent-of-german-electricity/
Generally speaking my opinion is that if you can make battery storage pay at the moment then your grid is either broken or too small and you should probably fix the grid first. But this may not be the case outside of the developed world where grids are less well developed.
Market mechanics
I found getting my head around how the mechanics of the various energy markets work in the UK very helpful. It's not that they are particularly a model of long term effectiveness but I found once I understood how the UK markets worked (or didn't) I had a good model to understand how other energy markets worked.
https://www.ofgem.gov.uk/electricity/wholesale-market/gb-electricity-wholesale-market
Some source of information
The UK grid operators are full of lovely sources of information.
Such as the Gas Ten Year Statement
http://www2.nationalgrid.com/UK/Industry-information/Future-of-Energy/Gas-Ten-Year-Statement/
The electricity Ten Year Statement
http://www2.nationalgrid.com/UK/Industry-information/Future-of-Energy/Electricity-Ten-Year-Statement/
and the future of energy papers
http://www2.nationalgrid.com/uk/Industry-information/Future-of-Energy/
I think understanding the current and likely future levelised cost of generation is key to understanding the electricity sector
http://www.nrel.gov/analysis/tech_lcoe.html
http://instituteforenergyresearch.org/studies/levelized-cost-of-new-generating-technologies/
I'd check out Ramez Naam on rewewable energy for good thinking and handly links.
http://rameznaam.com/2015/08/10/how-cheap-can-solar-get-very-cheap-indeed/
Also Noel Maurer on fracking in the US
http://noelmaurer.typepad.com/aab/2016/02/saudi-arabia-will-not-win-its-war-on-fracking.html
http://noelmaurer.typepad.com/aab/energy/
That's my energy starter for ten.
I should flag up at the outset that I'm generally pretty optimistic about the future of energy in that I think it will become cheaper, cleaner, more abundent, easier to access, contribute less to climate change and drive more prosperity and sustainability over the next 50 years. Doesn't mean I think everything is going to be alright for everyone or that I think people who are not optimistic about this are fools - but that's where my head is at the moment.
I tend to focus on electricity but with side orders of gas, transport and heat. I find one can't unpick them but it's also a huge field.
The things I have found useful to get my head around are
Changing timescales of technology deployment
The levelised cost of generation
The cost trajectories of renewables
Developing nations ability to leapfrog developed nations
Decoupling of GDP / Energy / CO2
Saudi oil policy (or the lack of it)
Fracking and the medium term cost of energy
Mechanisms for technological support
Where infrastructure is and where it needs to be.
Peace and security and energy supply
Demand management
Market mechanics
Changing time scales
The time scales over which energy is produced and used are changing rapidly.
In the past energy was about large, capital intensive plants with pretty stable technology, long periods to consent and build and long lifespans. You build a power station, it took ten years to build, you ran it for 40-50 years and then replaced it with a slightly better version of itself for more or less the same cost.
What I observe currently is that the pace of technological change and the change in cost for some technologies is moving much more quickly than the planning horizon for other technologies. For example, by the time the UK has built the new Hinkley Point nuclear reactor it's likely that solar PV will have become cheaper than Hinkley Point could ever hope to be and have deployed as much capacity as Hinkley Point ever will.
People can stick up wind turbines and solar PV panels quicker than planners can plan grid capacity or consent or cancel large power stations.
Levelised Cost of Generation
Linked to the planning horizon point above. Energy producers are trying to build kit and infrastructure for the demand and price / cost of the future - when the future is several years or even decades away. Not only when they are building the plant but also operating it over decades. So there is a lot of effort put in to trying to work out how much MWh of electricity will cost over the entire lifespan of a new plant and to guessing how this will change over the next decade or so.
Different generation technologies have different exposures to fuel, capital equipment, asset retirement obligation, financing and operation and maintenance (O&M) costs. Worth getting comfortable with the methods used and what the current range of costs are. I'm out of date here.
(As a side note - most of these guesses have so far been too pessimistic about the ability of solar PV to lower its cost of generation.)
The cost trajectories of renewables
Linked to the levelised cost of generation is understanding where the levelised cost of generation for renewables is going to be over the coming two decades. Both solar PV and (to a lesser extant) onshore wind have seen significant falls in cost over the last ten years. Causes of this include learning curve effects, economies of scale, de-risking of technology leading to lower financing charges and dumping by Chinese manufacturers of materials and kit.
Renewables tend to be relatively capital intensive i.e. a large percentage of the total levelised cost is made up of the cost of the machinery and the financing costs compared to the fuel or O&M costs. This presents cash flow and / or capital rationing issues.
The current wisdom is that industrial scale solar PV and onshore wind will hit cost parity with the wholesale cost of electricity and domestic scale solar PV reach parity with retail prices soon. Sometime around 2020 or just after, if they haven't already. This is largely based on the assumption that they continue to enjoy the same rapid fall in costs that they have enjoyed over the last decade or two. Probably the key factor here are learning curve effects e.g. the steady accumulation of knowledge and skill around a standard process that progressively lowers the cost of doing it. The best estimate I've seen is that both solar PV and onshore wind enjoy a learning curve effect of about 16% for each doubling of installed capacity. From memory solar PV currently supplies about 1% of world electricity and will probably double this over the next 18-36 months implying a 16% fall in costs and so on.
Swanson's Law
https://en.wikipedia.org/wiki/Swanson's_law
Of course, it may be the case that this is entirely the result of the Chinese getting ahead of themselves, over producing and having to dump excess supply on the market.
Or it may be that the Chinese are more worried about smog and coal mining killing them and will pay what ever it costs to make solar PV cheaper than coal.
http://monetaryrealism.com/china-asks-how-much-will-it-cost-us-to-make-solar-cheaper-than-coal/
Onshore wind is benefiting from the abilty to better site much larger turnbines on taller towers. Larger turbines produce more energy for a given $ of investment and taller towers mean you can hoist them in to more constant and stronger wind. Which means more electricity for less capital. It also means more constant predictable revenues which work to de-risk the project and drive down financing costs and improve the access to capital.
Another effect that is worth getting your head round is the longevity of solar PV and wind plant. It looks like solar PV and wind turbines are lasting longer than expected. Which is important because for existing kit the financing will be paid off over 15 years and the kit turns out to last 25 years, meaning ten years of free electricity. For new kit it means they can be financed more easily and over 25 years meaning cheaper financing costs. This sits along side another financing effect - which is that as more solar PV and wind is installed and people become better at it the project risk premium falls and interest rates fall.
A notable expection to this good news is offshore wind which appears to have gotten more expensive.
Other renewable technologies such as hydro and biomass thermal aren't seeing so much of a fall as they are very mature technologies.
For me, the key take away from looking at the cost trajectory of renewables is that they inevitably reach cost parity with fossil fuels soon. In energy market terms almost immediately. There are probably thermal projects in the planning stage that will be overtaken by cheaper PV if solar PV costs fall at the quicker end of expectations.
And then the price keeps falling.
Which is a pretty big change for the world in terms of the long term cost of energy, climate change and the politics of energy.
Developing Nations Ability to Leapfrog
One of the things I don't know much about but I think is important is how able are countries like China and India or Tanzania or Kenya able to get hold of and apply the best 21st century energy technology straight away without going through a similar build out process to the developed nations. I think on this question turns the ability of developing nations to quickly produce the same material standard of living that developed nations enjoy.
Decoupling GDP from Energy and Energy from CO2
Another question which I think is important but which I don't know enough about is how able are developed and developing countries able to have GDP growth without using more energy and how able are they to have energy growth without producing more CO2. (Which gets in to thorny questions of global justice and a fair opportunity to develop.)
If developing nations can go straight from where they are to using mostly renewable and nuclear energy, brand new efficient manufacturing plant and having a large service sector - then perhaps they don't need to be able to produce lots of CO2 whilst they become prosperous.
Saudi oil policy (or the lack of it)
It's worth spending a bit of time reading some opinion on what the Saudis are up to with their oil policy. The question most people ask is "Who are the Saudis after?" Answers include
Iran
ISIS
US Fracking
Renewables
Russia at the behest of the USA
Saudi religious extremists
Their own indolent population who will have to get a proper job soon and had better get used to it in plenty of time or else there are going to riots when the oil money runs out, the guest workers go home and no one knows how to do anything.
Secondary questions are whether their policy is actually working to do the thing they hope it will do and how long they are prepared to take the pain.
This of course assumes that the Saudis have a policy and aren't just trying to cover up the fact that they have lost control of world oil prices. Which is what I think is going on but that's really just a guess on my part. Nobody knows, probably up to and including the Saudi oil ministry.
Fracking and the medium term cost of energy
I think the medium term cost of energy is largely driven by shale gas, tight oil and all the other products of fracking. So the lowest price that large amounts of fracking is economic at become the floor at which energy sells. As supply drifts up and prices down fracking will cut back production. As supply comes off the market and prices drift up fracking will start up again.
Fracking has some interesting qualities as a swing producer - the production units are fairly small (you need to move the well every 6-18 months), costs are up-front but modular - so once you had a well operating you could live with low oil prices until you had to move the well, and then you reduced production by closing the well and not opening another one. So, it ought to be pretty responsive to prices below the cost of production.
Conventional wisdom had it that fracking was uneconomic at below $80 a barrel. It's been a while since I looked but fracking seems to be better than expected with oil at $40 a barrel. If this is the case and remains so for 5-10 years then whatever the Saudis are up to they are going to have to stick to for a decade.
The two items above have a couple of impacts. Firstly and most obviously on the world economy where low energy prices ought to mean faster growth and more consumption. Secondly, on conventional energy infrastructure building. Low energy prices suggest new building will be delayed and existing plants run a little longer. It also changes the balance between capital costs and fuel costs in the levelised cost of generation. Thirdly it will have an impact on the adoption of rewewables. With cheap-ish energy there is less incentive to adopt renewables as the cost of renewable energy has to fall further before it is cost competitive with thermal generation.
Personally, I'm of the view that we've already passed the point where the cost-path of solar PV and onshore wind has a virtuous circle where they get below the cost of thermal generation at some point in the 2020's. (And therefore, if the Saudis were out to get renewables then they've missed.) But I could be wrong. There's a scenario where energy prices are low, this delays thermal generation investment a bit and then this gets swapped for renewables as they demonstrate they are cheaper in the long run. There's also a scenario where energy prices are low, new generation is delayed, renewables can't quite get cheap enough quickly enough, panic buying ensues and a whole load of gas and nuclear plant is built in a rush with life spans of 30-60 years.
Mechanisms for technological support
What are the ways in which financial support can be directed to new (usually renewable) technologies or cleaner technology and what works best?
By this I mean things like Feed-in Tarriffs (FIT) , tradeable Renewable Obligation Certificates (ROC), Carbon Cap and Trade scheme, carbon levies, tax breaks and subsidies as well as early stage public financing for research and proto-types and grants and soft loans for small schemes.
What behaviours do they drive when operating? Feed-in Tarriffs tend to be simple but clumsy and either undershoot or overshoot depending on whether the FIT is set too low or too high. ROC's and CO2 certificates are complex to operate.
Perhaps my most over-used phrase when talking about energy is "negative policy price". I think we're about to reach the point where the cost of renewables falls below the cost of thermal or nuclear generation and the then the price one has to pay for reducing CO2 becomes negative.
How these mechanism vary from the developed world to the developing world I don't know. Again, fascinated to hear your views on what works in places llike Pakistan.
Where infrastructure is and where it needs to be.
(this is linked to the leapfroging point above).
In the developed world a lot of our infrastructure is in the wrong place and doing the wrong job. It's also a bit old and rickety. The USA has a poor grid and it's largely in the North East and the South West . Which is a problem for them as they have superb and cheap solar and wind resources in the middle and south of their country. Similarly the UK - our grid was built to carry energy to the industrial north and London from power stations built in the industrial north and London. It's not designed or built to carry electricity from a post-industrial Scotland to London and it's worse for carrying wind-generated electricity from the Highlands.
And so on around the world.
Grids next to each other are not very well inter-connected. This is true in North America and Europe.
So in order to access new forms of energy and to accomodate it on the grid lots of investment in infrastructure is required. Vast sums of money and decades of time.
This might give developing nations an advantage as they can build their grids in the right place first time. Or it might not, if they can't, or don't or end up in a bidding war for copper with the USA and Europe and China.
Peace and security and energy supply
One of the nice things about renewables for me is that the US and the EU can become less dependent for energy supplies on places like Russia and Saudi Arabia and the problems that presents us with diplomacy and conflict. On the other hand - perhaps the easiest place for Europe to access solar PV electricity is from the Sahara - and we don't appear to be great at keeping places like Algeria, Tunisia and Morocco friendly, peaceful and willing and able to trade with us.
The threat of Russia turning off the gas to us is probably over stated. Milton Haven and Dragon can process huge amounts of LNG from around the world. I expect other parts of Europe have or are building similar landing stations and the European gas grid is fairly well connected. We'd have to deal with one cold winter before the US frackers turned up their pumps and LNG was being shipped in in plentiful supply. But we'd feel it in our pockets and other countries we care about are probably less able to ride out a Russian boycott.
Trust is a big issue here. In Scotland we've just closed Longgannet power station - which we can do because we trust England to buy our renewable power when we produce it and to sell us gas generated electricity when the wind is not blowing. The UK trusts France to keep their nukes on and the interconnecting running. The larger your circle of trust the cheaper and more reliable your energy supply.
Demand management and Storage
Energy policy tends to be about predicting demand and then working out the best and cheapest way of satisfying that demand as the time it falls due. There's not much work been done on trying to reduce overall demand or to shift demand to times when electricity prices are low.
There are two parts, reducing overall demand by, for example, designing and building houses to be very energy efficient and demand shifting by helping / paying people to consume electricity when it is cheap. Some papers below.
https://www.gov.uk/government/uploads/.../early_findings_revised.pdf
researchbriefings.files.parliament.uk/documents/...PN.../POST-PN-452.pdf
www.mckinsey.com/~/media/McKinsey/dotcom/.../MoSG_DSM_VF.ashx
The national grid do grid balancing in the UK but mostly by paying power stations to increase or reduce supply
http://www2.nationalgrid.com/uk/our-company/electricity/
http://www2.nationalgrid.com/UK/Our-company/Electricity/Balancing-the-network/
A lot is written about the potential of electric cars to soak up supply and shift demand but fridges might also work. I once met the guy behind this scheme at DECC. Nice guy. I can't find his original DECC briefing note. Sic transic gloria internet.
http://utilityweek.co.uk/news/Trials-to-begin-on-using-domestic-appliances-to-manage-electricity-demand/767322#.VwUrLXr3iJI
Part of this is about using smart technology to allow consumers to easily match their consumption with supply and incentivising them to do so. When I was working with some politicians on energy policy we used to joke that once Scottland was 100% wind powered the weather forecast would include a predicted electrity price.
And part of it is about the incentivisation itself.
Sitting along side this is the question of energy storage. Energy can be stored in a battery, or a pumped storage hydro scheme or as gas or coal that isn't burnt or as money to be used to buy energy when it's needed (although you need to trust the people you're doing business with).
The surprising good news is that it turns out that the Grid in Europe can handle a surprising amount of intermittent non-dispachable renewables. So schemes like the French battery didn't prove cost effective (as far as I can tell) and Germany seems to be able to produce huge amounts of solar PV and wind and export it.
http://www.renewableenergyfocus.com/view/38807/alstom-and-saft-to-provide-edf-concept-grid-with-energy-storage-battery-system/
http://energytransition.de/2015/07/renewables-covered-78percent-of-german-electricity/
Generally speaking my opinion is that if you can make battery storage pay at the moment then your grid is either broken or too small and you should probably fix the grid first. But this may not be the case outside of the developed world where grids are less well developed.
Market mechanics
I found getting my head around how the mechanics of the various energy markets work in the UK very helpful. It's not that they are particularly a model of long term effectiveness but I found once I understood how the UK markets worked (or didn't) I had a good model to understand how other energy markets worked.
https://www.ofgem.gov.uk/electricity/wholesale-market/gb-electricity-wholesale-market
Some source of information
The UK grid operators are full of lovely sources of information.
Such as the Gas Ten Year Statement
http://www2.nationalgrid.com/UK/Industry-information/Future-of-Energy/Gas-Ten-Year-Statement/
The electricity Ten Year Statement
http://www2.nationalgrid.com/UK/Industry-information/Future-of-Energy/Electricity-Ten-Year-Statement/
and the future of energy papers
http://www2.nationalgrid.com/uk/Industry-information/Future-of-Energy/
I think understanding the current and likely future levelised cost of generation is key to understanding the electricity sector
http://www.nrel.gov/analysis/tech_lcoe.html
http://instituteforenergyresearch.org/studies/levelized-cost-of-new-generating-technologies/
I'd check out Ramez Naam on rewewable energy for good thinking and handly links.
http://rameznaam.com/2015/08/10/how-cheap-can-solar-get-very-cheap-indeed/
Also Noel Maurer on fracking in the US
http://noelmaurer.typepad.com/aab/2016/02/saudi-arabia-will-not-win-its-war-on-fracking.html
http://noelmaurer.typepad.com/aab/energy/
That's my energy starter for ten.
