Sooner or later we will have to decarbonize also transport and it is quite likely that it will involve production of synthetic fuels using carbon free electricity as an input. Let us think a bit what this implies for the power source used to power this production. (For some related thoughts with respect to electricity storage see here.)
Imagine an option A, where we built so many nuclear power plants that they meet maximum demand (electricity sector has then been decarbonized) and then use excess power to run plants producing synthetic fuels. In option B we will do the same, but with wind power. We will built so many turbines that they produce the same amount of electricity as nuclear power plants in option A. We will use the excess again to produce synthetic fuels. Since I have the production and demand date for United-Kingdom easily available, I will use that (for the year 2013) to give me characteristic production and demand profiles.
The following table gives estimates (based on UK figures) for the required capacity for electrical generation, synthetic fuel plant capacity, utilization rate of plant capacity, amount of electricity plants have available over the year (presumably proportional to synthetic fuel production), and required (dispatchable) backup capacity. As is clear, synthetic fuel plants working with wind power have a much lower capacity utilization rate since they have to be able to process much higher electrical powers even though that peak power is rarely available.
|Option A||Option B|
|Capacity||63 GW||163 GW|
|Electricity input||180 TWh||231 TWh|
|Backup||0 W||47 GW|
From these we can also calculate estimates for what the synthethic fuels might cost. Here my only interest is on the RELATIVE cost of options A and B so do not take specific numbers too seriously. For concreteness I assume that synthetic fuel plant will cost 3 billion/GW, has a life time of 40 years, and costs are dicounted with 5% discount rate. (Numbers are made up just for the sake of comparing options…that is all.) I could imagine that plants coupled to wind power might have lower costs per gigawatt due to economies of scale, but since they have to cope with less reliable input power, in first approximation, it feels fair to assume same capital costs for plants. I also assume that operation and maintenance costs are the same so only difference is in the characteristics of the source of the input power.
Fig. 2 shows the result so that on the x-axis we have the relative share of operation and maintenance costs. It is clear that plants coupled to nuclear power plants can produce synthetic fuels at much lower cost. This difference is mainly caused by the higher capacity utilization rates they enable. If the goal is to displace oil, it will happen easier with an option whose costs are lower. (Not that this goal interests all.)
Of course we could imagine building power generation capacity that is intended only to run plants producing synthetic fuels. Figure 3 demonstrates this option and shows that it doesn’t change anything of relevance in the comparison.
It should be noted that these differences will not disappear with political will or technical progress. Characteristics of the power source has cost implications for the user of electricity (plant, somebody providing services, consumer…). Producers who have access to reliable power supply can outcompete others since higher capacity utilization rates are enabled (and more reliable operations in general). This is an obvious point, but strangely few seem to realize this. Here I used synthetic fuel production as an example, but obviously the argument is equally valid for any production that uses electricity as an input. Even if electricity would be free costs for the consumers are not the same. Cost is not the same thing as value.
I will end with a brief disclaimer. Based on John Morgan’s estimates, in option A UK could produce less that 5% of the oil consumption using excess power. If synthetic fuel production is to play a significant role, electricity production must increase drastically.