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I currently have three thoughts going round and round and round in my head about renewable energy policy.
The first is whether we've reached the Sutton Gas Inflection Point yet, or not. The Sutton Gas Inflection Point is the point where forms of non-despatchable renewable generation (on-shore wind or solar PV in practice) are cheaper than the cost of the gas that is burnt in a Combined Cycle Gas Turbine. The capital and maintenance costs of the the solar panels is less than the cost of the gas. The reason this is important is that once you reach this point if you are building a CCGT it is cheaper to build some renewables too and avoid fuel costs in the future.
This I think has the following implications. Good times for renewables, they continue to be built and can be built a bit more until they start to bump up against system contraints. Bad times for coal and nuclear plants who will stuggle to compete on a combination of price and flexibility. Bad times for batteries who are being competed with on price by idle CCGT's. Good times for electricity users. Not sure if that's good news on climate change.
There is a second inflection point where renewables plus a small amount of storage are able to reliably supply day time power needs at a price cheaper than the cost of the burnt gas. Which would leave CCGT's supplying night time and emergancy power. Roughly 6 GW of installed solar PV to every 1 GW of CCGT back up.
Second thing is what happens to industy as it responds to changes in electricity prices. My expectation is that as solar PV builds out and continues to fall in cost then the price of electicity begins to fall in places that are good for solar PV. Dry, sunny equatorial regions. Preferably deserts. These places are good for solar PV because they gets lots of sun (being dry and sunny). They don't have big seasonal shifts in demand or supply because the climate is similar throughout the year and so both demand and supply are similar. Demand for cooling is matched to supply. This means that the need for long-terms storage is considerably less than in places like Europe. It's not hugely expensive to build some cables west and east.
All other things being equal this implies a differential in the cost of electricity between the equatorial areas and the temperate zones. Industries that are energy intense will be incentivised to locate toward the equator and to run their plants or processes only during the day. And they will take jobs with them. Good times if you live near the equator or own land there. Buy desest property in Africa or Mexico. Good times for Mexico. (Mexico will build an interconnector and America will pay.)
The third thing I'm chewing over is how much existing nuclear and existing and potential hydro, pumped hydro-storage capacity can be shared across grids and used as storage and back up to expanded renewable supply. This is important in a world where the cost of renewables plus 7 day battery storage is cheap but the cost of renewables plus 270 day storage is expensive. I think that a relatively small proportion of hydro or nuclear capacity could be used to avoid a lot of seasonal battery storage. Take Costa Rica as an example. It currently generates about 78% of its electricity from hydro schemes. How easy is it for Costa Rica increase its own solar PV generation and to import solar PV generated power from Honduras, Nicuragua and Panama during the day and then use it's hydro schemes to provide night power during the winter to Central America.
I don't know. Politics I expect will be an impediment.
But I think there is a big prize for parts of the world that get this right; dramatically cheaper industrial electricity compared to parts of the world that don't get it right.
The first is whether we've reached the Sutton Gas Inflection Point yet, or not. The Sutton Gas Inflection Point is the point where forms of non-despatchable renewable generation (on-shore wind or solar PV in practice) are cheaper than the cost of the gas that is burnt in a Combined Cycle Gas Turbine. The capital and maintenance costs of the the solar panels is less than the cost of the gas. The reason this is important is that once you reach this point if you are building a CCGT it is cheaper to build some renewables too and avoid fuel costs in the future.
This I think has the following implications. Good times for renewables, they continue to be built and can be built a bit more until they start to bump up against system contraints. Bad times for coal and nuclear plants who will stuggle to compete on a combination of price and flexibility. Bad times for batteries who are being competed with on price by idle CCGT's. Good times for electricity users. Not sure if that's good news on climate change.
There is a second inflection point where renewables plus a small amount of storage are able to reliably supply day time power needs at a price cheaper than the cost of the burnt gas. Which would leave CCGT's supplying night time and emergancy power. Roughly 6 GW of installed solar PV to every 1 GW of CCGT back up.
Second thing is what happens to industy as it responds to changes in electricity prices. My expectation is that as solar PV builds out and continues to fall in cost then the price of electicity begins to fall in places that are good for solar PV. Dry, sunny equatorial regions. Preferably deserts. These places are good for solar PV because they gets lots of sun (being dry and sunny). They don't have big seasonal shifts in demand or supply because the climate is similar throughout the year and so both demand and supply are similar. Demand for cooling is matched to supply. This means that the need for long-terms storage is considerably less than in places like Europe. It's not hugely expensive to build some cables west and east.
All other things being equal this implies a differential in the cost of electricity between the equatorial areas and the temperate zones. Industries that are energy intense will be incentivised to locate toward the equator and to run their plants or processes only during the day. And they will take jobs with them. Good times if you live near the equator or own land there. Buy desest property in Africa or Mexico. Good times for Mexico. (Mexico will build an interconnector and America will pay.)
The third thing I'm chewing over is how much existing nuclear and existing and potential hydro, pumped hydro-storage capacity can be shared across grids and used as storage and back up to expanded renewable supply. This is important in a world where the cost of renewables plus 7 day battery storage is cheap but the cost of renewables plus 270 day storage is expensive. I think that a relatively small proportion of hydro or nuclear capacity could be used to avoid a lot of seasonal battery storage. Take Costa Rica as an example. It currently generates about 78% of its electricity from hydro schemes. How easy is it for Costa Rica increase its own solar PV generation and to import solar PV generated power from Honduras, Nicuragua and Panama during the day and then use it's hydro schemes to provide night power during the winter to Central America.
I don't know. Politics I expect will be an impediment.
But I think there is a big prize for parts of the world that get this right; dramatically cheaper industrial electricity compared to parts of the world that don't get it right.
