Business & Economics

Electric Dreams

To cut emissions and encourage economic growth, put renewable energy in its proper place

Image Credit: jia yu/Getty Images

Pundits, particularly in the West, are casting energy policy as a zero-sum game of renewable versus nonrenewable sources, with the stakes nothing less than the global economy and life on Earth. Typically, the zealots have taken over the argument—in the public sphere, anyway—so that the solution of a rational, balanced mix of electricity generators on the grid amounts to abject surrender to either the enviro-anarchists or the plutocratic planet-killers. But a rational, balanced mix of renewable and nonrenewable sources is possible and might be the best way to help both the environment and the economy.

Predictions about the impending collapse of the Earth’s environment a decade or so hence seem to roll over like certificates of deposit when the dates come due. At the same time, pumping unrestricted amounts of carbon dioxide, methane and more prosaic pollutants into our atmosphere, and in some cases our waters, is not a sustainable policy. Whatever an individual’s opinion of the state of climate science, most agree that pollution is bad, or at least that less pollution is preferable to more pollution if that can be accomplished without damaging the economy, and indeed the civilization, that fossil fuels have helped to create.

Renewable energy in practical terms means solar and wind power. While the official definition extends to hydroelectric power and more esoteric sources such as geothermal and tidal that do not consume fossil or fissionable fuels, the renewable energy industry currently is dominated by developers of photovoltaic (PV) and wind turbine projects. Most of the charges and countercharges about the viability and practicality of these sources revolve around efficiencies, scale and financial incentives, with the latter consuming the most oxygen in public discourse.

The economics of renewable and nonrenewable sources are difficult to untangle due to the myriad tariffs, mandates, regulations, subsidies and incentives at local, state and federal levels (and international, if you include emissions agreements). Depending on how the arguments are framed, renewable sources are either competitive with traditional sources on a kilowatt-hour (kWh) basis or wildly more expensive. They are either an environmentally friendly way of producing cost-competitive energy, or they are hiding their dirty secrets in the phases before and after their operational lives.

While all of these discussions are interesting and worthy on their own, they all deserve individual attention. For the purposes of this article, let us stipulate that solar and wind power are useful means of generating electricity at some scale. The question then becomes, how are they deployed most effectively?

Known Variables

Taken together, solar and wind power are termed variable sources because they are fundamentally dependent on the supply of sunshine and wind, respectively, that enables their electricity-generating processes. In a longer timeframe, even hydroelectric power can be seen as variable in that rivers are subject to seasonal and even epochal differences in the volume of water flowing through the dams. However, the variability of solar and wind—especially solar—is problematic from the perspective of an electric grid operator because dramatic changes in output may occur over intervals of hours or even minutes.

These variations produce power levels that are commonly described as “spiky” by power industry professionals. The highs and lows of electricity generated over the course of a day can produce sharp peaks and troughs. This is especially true of solar power; wind turbines have a certain inertia as they spin up or down with the prevailing conditions. The output of PV panels changes immediately with the amount of sunlight that falls on them. Consider the patterns of shadows across the land produced by passing fluffy clouds on an otherwise sunny day. Each of these shadows instantly reduces the output on rooftop and ground-mounted solar panels over which they pass.

It is a pleasant fiction that the solar panels on a house provide the power for that house. Unless that house is literally off the grid—and such systems are available for remote locations—this is not the case. Photovoltaic systems produce direct-current (DC) electricity. Grid-connected homes, businesses, and industry almost universally receive alternating-current (AC) electricity, which can be transmitted over power lines more efficiently. Photovoltaic systems include an inverter to convert the DC power produced into AC power for the electric grid. The inverters themselves operate on AC power from that grid. Thus, in a blackout the vast majority of solar power systems becomes inert, much to the dismay of many expectant homeowners.

The larger point is that residential- and commercial-scale solar projects in a given area may, depending on weather conditions, produce widely variable output even on sunny days. The same may also be said for cloud-dappled, utility-scale PV solar plants that cover many acres or even square miles. As indicated above, the inertia of utility-scale, spinning wind turbines tends to mitigate minute-to-minute and hour-to-hour variations in windspeed and direction over the course of a day. However, utilities that receive significant contributions of variable-source electricity watch weather forecasts and local conditions very closely.

Grid power levels that rise and fall sharply above and below projected demand and required output for a given day can damage the electricity transmission infrastructure or produce power outages. To compensate for this, utilities with variable sources in their generation mix produce or purchase electricity from other sources to provide a baseline level of power. This baseline generation helps ensure that demand can be met if variable production falls below minimum required levels and is set at such a level that the grid will not be overloaded during unexpected peaks in output. By and large, this baseline generation comes from traditional power sources: fossil-fuels, nuclear and hydroelectric plants.

And there’s the rub. Renewable energy sources produce electricity without the accompanying emissions of pollutants. Yet the most heavily touted renewable technologies are variable in nature and require baseline generation from traditional sources to operate effectively on the grid. If you are going to produce baseline generation to compensate for variability, why not just operate a fleet of traditional generation plants? Well, there’s the planet to consider. And around we go.

Constructive Friction

This basic conundrum is the source of virtually all the informed arguments about electricity price per kWh, life cycle costs, environmental impact, economic opportunities, and technological advancement. Renewable energy advocates are pinning their hopes on the development of a massive battery storage infrastructure to provide baseline capacity, not to mention keeping the lights on at night and on cloudy or windless days. Despite all the “gigafactories” extant and proposed, there will not be enough batteries in the foreseeable future to provide these services on a national, let alone worldwide, basis.

Critics of renewable energy point to the demonstrable emissions reductions of natural gas- fired plants and nuclear power stations over oil- and coal-fueled plants. But emissions from natural gas power are roughly half that of coal, not zero. Moreover, an inexhaustible supply of inexpensive fuel cannot be assured. Nuclear power, while negligible on the emissions front, has its own litany of drawbacks as to why it cannot be relied upon as the sole provider of electricity. Fusion power, as the saying goes, is 20 years away—and always will be.

One of the issues for renewable energy in the Unites States is that very often the land required for large-scale wind and solar projects is usually found at some distance away from population centers. Moreover, some of the most attractive land—say, vast deserts for solar and empty hills or offshore for wind—is environmentally sensitive in one way or another. Texas and many states in the Midwest have significantly increased their share of wind-generated energy by building grid interconnection infrastructure to transmit the electricity produced from barren, nonsensitive areas to areas where people need it.

While there are a number of very large-scale solar PV projects in the United States, these are difficult to develop successfully outside the Western deserts. It should be noted that concentrated solar power, which uses arrays of mirrors to heat a medium in a central tower through which water is passed and steam generated to run turbines, is a completely different technology than solar photovoltaics and, if anything, is even more difficult to develop successfully.

Utilities with mandates or incentives to provide solar power are finding it possible to successfully develop projects much closer to cities and outlying suburban communities without having to invest heavily in transmission infrastructure or clearing wild spaces. According to the U.S. Energy Information Administration, most of the utility-scale solar PV projects in America are 5 megawatts or smaller. A number of solar project developers have specialized in deploying projects on capped landfills, fallow farmland, former industrial land, and even Superfund sites. Such projects are able to provide renewable energy near the regions of consumption and often just require a point of interconnection with the existing grid.

Even closer to the consumer are commercial-scale solar projects in which private companies and municipalities with available land or other spaces host installations that they own or lease to power providers. Big box stores, distribution centers, manufacturers, and other businesses with lots of flat roof space can support extensive solar arrays. Large parking lots are also useful locations for solar installations in the form of angled structures that provide shade for cars and support for solar panels.

As for residential-scale solar, this sector may not generate the most power from photovoltaics—that award goes to utility-scale projects—but it generates the most jobs by far. According to The Solar Foundation’s National Solar Jobs Census 2019, approximately 250,000 US workers were employed in the solar industry, with about 56% of those involved in the residential sector. Utilities also consider residential solar to be the most burdensome from a technical perspective, in part because of the sheer number of interconnections that are required and the need to strengthen the distribution system to accommodate the spiky PV power.

New Power Structure

Technology advances are still required in order for renewable energy—and solar power in particular—to take on the lion’s share of power generation requirements. As indicated earlier, batteries are widely considered solar’s “killer app.” At a residential level, solar would enable a homeowner to store power for use at night or when the PV array is not available. At a larger scale, batteries are needed at the utility level for storing power and for leveling out variability in generation without calling on other sources.

Tesla, which has incorporated Solar City (Elon Musk’s PV installation business), is hoping the lithium-ion batteries it produces for its electric vehicles will provide economies of scale for use as battery storage in homes and businesses. Nevertheless, skeptics says batteries in general probably will never be numerous or cost-effective enough to handle the requirements of the US energy grid.

Meanwhile, a new generation of nuclear power systems may be on the way. In September, the US Nuclear Regulatory Commission approved the construction of a small-scale nuclear reactor under development by NuScale Power of Portland, Ore. The modular design is expected to have a capacity of 60 megawatts and would be significantly smaller than the 1-gigawatt-scale reactors typically in service. The first plant is being built at a US Department of Energy (DOE) site in Idaho for Utah Associated Municipal Power Systems, which says it wants 12 of the plants by 2030. DOE has just approved a $1.4 billion grant to keep the project on track, which raises questions about the project’s cost effectiveness.

There are many renewable energy advocates who are wary of any new investment in nuclear power. While some see nuclear reactors as a reliable means of generating vast amounts of electricity with relatively few emissions, others see such spending as undermining the development of renewable sources. A recent study conducted by the UK-based University of Sussex Business School concluded that countries that invest in nuclear power starve renewables projects of funding and do not receive the same benefits in reducing emissions. On the other hand, many have pointed out that major investments in renewable energy also have not turned out as planned.

The answer is for makers of energy policy to stop deifying their preferred providers and demonizing the other camp. If a nation or state does not insist on zero emissions for future energy production and is willing to invest in the appropriate infrastructure, it may eventually be able to supply a significant portion of its energy requirements from renewable sources. But, if countries or states do not plan accordingly, they run the risk of falling back on coal plants or importing natural gas (like Germany) or imposing scheduled power outages and importing power from outside entities burning fossil fuels (like California).

Ultimately, a successful energy policy that provides for economic growth and emissions reduction is possible by deploying renewable sources such as wind and solar where most appropriate, backed by baseline generation from modernized traditional sources such as natural gas and nuclear power, all backed by a properly fortified grid infrastructure. The zero-sum game played by advocates on either side of the energy divide is creating more heat than light.

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