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In the earlier post I summarized my estimates on the limits to capacity utilization if production is done either with wind or solar power.  Here I will (over)think implication a bit further.  mthOn their own wind and solar power implied strong restrictions on achievable utilization rates. Overbuilding generation capacity (and associated distribution system) could increase utilization rates, but at the expense of ever increasing amount of wasted power and underutilized power lines. Storage could also help, but smoothing out the production profile would require large amount of underutilized storage capacity. There doesn’t seem to be away around this. Low capacity factor of variable power source has cascading effects elsewhere. If not fixed capacity utilization of end users would be strongly constrained and most likely too low to enable profitable business. On the other hand attempts to fix the problem would imply underutilized generators, power lines, and/or storage. Technical developments will not change this since the problem is not due to specific technology or costs.  Are there ways around these problems? Of course…

If you are planning to invest in a new plant producing for example solar panels and you find production to be unprofitable with utilizations rates implied by solar power, your first choice is simply not to invest. If economic preconditions do not exist, production never materializes even if we might find such production desirable or even critically important. Production would either not happen or move to a place where higher utilization rates are possible. Various shades of gray might also exists as they do today especially in the developing world. If production process is such that you could for example store some parts for later use, it might be possible to outsource only those phases which require reliable power elsewhere. Of course, this still opens up possibilities for those not saddled with the same constraints.

Another option is not to rely solely on variable renewables, but to have a fleet of dispatchable generators delivering the power services variable renewables cannot deliver. Today this most likely implies burning fossil fuels, but in principle hydro and nuclear power would work as well. This again implies overbuilding infrastructure and is unlikely to be economically optimal. However this fundamental reliance on existing infrastructure is the order of the day in the developed world.

Visions where variable renewables dominate are aspirational marketing material while on the ground unholy alliance seems to have quietly developed between many renewable and fossil fuel lobbyists. Cozy reliance on fossil fuels enables somewhat more variable renewables to be built before technical limitations become apparent. Supporting this modest buildup (with public money) buys fossil fuel industry social licence as well as removes long term threat of actual decarbonization. Petty about the climate, but the constituency for whom this is actually a priority is weak.  This is welcome also for many politicians who are only too happy to project an appearance of activity (at relatively low cost) while their policies imply changes which have a marginal impact on the actual problem. This relates to deep decarbonization in a same way as “champagne socialism” relates to revolution of the proletariat.

I recently read a very interesting book “Fossil Capital” by Andreas Malm on the history of industrial revolution in the United Kingdom. (Note: book is only worth reading until chapter 12. There the author got tired of thinking.)  Malm focused on the question of why coal and steam engine won over water power in the early decades of the 19th century. Remarkably coal did not win because water resource would have been insufficient. There was still plenty of untapped potential in the UK. Also coal did not win because it was cheaper. In fact, mechanical power from steam engines was more costly and many were of the opinion that it was also of worse quality. So what happened?

There were many overlapping reasons. For example, factories followed labour to the cities. In the early 19th century it was already clear from the demographics that labour was to be found in the cities. Water power was dispersed and getting meek labour to run the machines in the middle of nowhere was harder. In fact, owners of water powered factories were relatively more dependent on the apprenticeship system providing them with, what can apparently with some justification be called,  slave (child) labour. Water power was also more variable than steam, which made it even more important to have well behaved labour that would be willing to work long and irregular hours.

However, it turned out labour did not think their position was optimal (go figure) and started to make noise. This resulted in legal (and actually enforced) restrictions on working hours and gradual improvement on workers position. (It also induced technological change that made large number of especially troublesome workers redundant, but let us not talk about that here.) Owners did not of course like these limitations and lobbied against them, but relatively speaking those using steam found it easier to adapt. They could live with the shorter and more regular working week since reliable power could enable high productivity during working hours. Coal became the backbone of british industrial might and the road was opened for more broadly shared economic growth.

So can we learn something from this? I think we can since economic and social arguments for why coal won have not disappeared. If you listen to todays renewables promotion, you will be constantly bombarded with statements about how huge the potential energy resource is and how cheap it is…or is going to be any day now. Might it be a cause for concern that these two reasons were also promoted by water proponents in the 19th century Britain just when coal was taking over? Might there be a risk, we are discussing beside the point? If excessive reliance on variable renewables end up limiting capacity utilization, is there not a similar risk that water power faced in the 19th century? Who bears the cost of lower utilization? Labour? Lower salaries and/or more irregular working hours anyone? Vacations in the winter since solar power produces mainly in the summer?  If push comes to shove and such questions have to be asked, I am quite sure any techno-fetishes we might have, will evaporate.

To me conclusion seems clear. It is unlikely humanity will ever be primarily powered by variable renewables. If fuel etc. costs for dispatchable generators are high compared to the cost of electricity from variable renewables, wind and solar might be economically justified as a part of a more diverse fleet of generators. However, it is also possible that on economic grounds they will remain niche producers whose existence is dependent on subsidies and political good will. Future will tell.

This will probably be a fairly long post mainly summarizing findings from my simple toy model….so proceed at your own peril.  For a while I have been interested in how the properties of the power source affect the end user. For the consumer different power sources deliver very different value, but the public discussion is typically centered (more or less honestly) on costs. I think one issue of great relevance is the capacity utilization and the aim of this post is to record my studies on the matter. In particular I wish to explore the variable power sources such as wind and solar in the context of capacity utilization. My thoughts are in the end closely related to “capacity factor rule” discussed by John Morgan, but I approach the issue from somewhat different angle.

What is a capacity utilization  and why it matters?

Capacity utilization compares realized production with what could be possible. The concept seems to be somewhat fuzzy since theoretically maximum output could be defined in different ways. However, for an advanced economy capacity utilization is high, for example, in EU it is typically higher than 80% with a scary dip during last financial crisis. In an undeveloped country capacity utilization is lower, for example around 55% in Bangladesh. This makes sense, since things like poor infrastructure hamper production that might have otherwise happened. High capacity utilization is needed especially when lots of capital is spent since otherwise production could not cover capital costs. If high capacity utilization cannot be ensured, investments requiring large amounts of capital will not happen (unless one finds someone to pay for the losses).

In a developed economy capacity utlization is not really limited by the power supply. We get power from the plug whenever we need it. Capacity utilization is limited more by things like rising labour costs if one aims for maximum production or perhaps uncertainty on whether or not a buyer can be found for the product. However, our electricity production follows the demand and not all power sources can do that. Some view it desirable that consumers should in fact adjust their consumption according to weather. This raises the question: “How will this limit the capacity utlizations?”

This is a hard question and I can only scratch the surface here. I assume a “machine” or factory that can use certain amount of power and what is produces is proportional to its electricity consumption. I will then either use wind power or solar power as a power source and also add a storage to help even out the power variations. If there is excess power and storage is not full, we fill it. If power supply is lacking, we drain the storage. (I assume 80% round trip efficiency.) How much power machine can use, is a variable. It probably makes no sense for this to be higher than the wind or solar capacity, but if it is reduced utilization rate for the machine can probably be increased. It should be noted that the estimates below do not (of course) use the economists definitions for capacity utilization. This is more likely to give an estimate on the additional limitations on capacity utilization on top of all those other factors that are operating in any case.

So let me quickly summarize what I find…

Figure 2: Wind power source limited capacity utilization as a function of “machine capacity” (i.e. what fraction of power source capacity it can use) and storage (days at average wind production). Wind power data from UK 2013.

Figure 3: same as Figure 1, but using solar power as a source. (Production data from Germany 2015.)

Figures 2 and 3 show my rough estimates for the “capacity utilization” as a function of machine capacity and amount of storage (hours of average power production). If machine capacity is equal to the capacity of the power source, capacity utlization is limited by the capacity factor of the power source. As machine capacity is reduced and/or storage is added capacity utilization can increase. However it is very hard to get to a situation where power source would not be a factor substantially limiting the overall capacity utilization.

In terms of capacity utilization wind power tends to beat solar power which has strong seasonal production profile. Removing that is hard since it would require massive amounts of seasonal storage which would (by definition) be used only by about once a year.

As machine capacity is reduced, the “factory”can run at a higher capacity utilization, but then certain fraction of the produced power will be wasted although waste can be reduced somewhat by storage. If we aim for high capacity utilization, wasted fraction can unfortunately be substantial. The unit cost of useful energy will rise with increasing waste.

Figure 4: Fraction of wasted wind output.

Figure 5: Fraction of wasted solar output. (Once daily variation is covered it is very hard to change things by adding even more storage.)

Waste can be reduced with storage, but then the question arises that how efficiently this storage is being utilized? Figures 6 and 7 illustrates this. If we add so much storage that capacity utilization is high and amount of wasted power is low, we tend to have a large amount of under utilized storage capacity lying around. Storage that is combined with solar power tends to be more efficiently used because of regular daily variation.

Figure 6: How efficiently storage is being utilized with wind power. (Here the scale is more arbitrary. I assumed full utilization amounts to one full cycle a day.)

Figure 7: Same as figure 5, but with solar power.

I suspect that these estimates are in fact too optimistic. If I choose a point from figure 2 with relatively high “capacity utilization”, the power supply for the machine is still quite erratic as seen in Figure 8.

Figure 8: Example power input to the machines when machines powered by wind had a capacity of 0.26 of wind capacity and system had 36 hours of storage at average wind output. Still a mess.

Maybe there are processes that do not mind this, but there are  also plenty of industrial processes where steady power supply is needed and where abrupt power cuts will undermine the economics of the plant. (It would be interesting to have real world examples of production economics as one changes between power sources. Do you know any? I suspect that current way of delivering power to industries in developed economies is close to optimal for their needs.)

I think I will stop here and discuss later what I think this will imply. Main point here is that nature of the power source will affect the capacity utilization and have economic consequences that are not accounted for when myopically computing the “cost” of electricity for the power sources.


Financial advisory and asset management firm Lazard regularly publishes a set of slides on the levelized cost of energy. These slides are routinely used to market wind and solar power (and are often annoyingly called “a report” which in my opinion gives them an undeserved aura of academic respectability). Alex Trembath has already pointed out that Lazards results are strange In this post I will point out some of the reasons why this is so.

In the early versions (v. 1-5) of their slides Lazard subtracted subsidies from the costs and then happily reported how competitive wind power was (point #2 on my short list). This was very naughty of them. Apparently somebody got too embarrassed by it and the trick was suspended. I think remorse is good and I am willing to forgive people acting in good faith. However, Lazard makes this harder for me since they seem to have replaced one form of misdirection with others.

Let me start by showing a slide slide Lazard uses to justify their figures.

Fig 1: Lazard assumptions

Fig. 2: Lazard assumptions. 2015 incarnation.

Their range for wind power capacity factor is 30-55%. Wow! While 30% is close to what is typical in US, 55% seems awfully high. U.S. department of energy publishes “Wind technologies market report” which gives far more detailed picture so let us have a look. Figure 32 from the report seems useful and it shows a range of capacity factors in US. I will add into the figure red lines to mark ranges given by Lazard before and after they stopped the trickery with subtracting  subsidies.

Fig. 3: Wind capacity factors according to “2014 wind technologies market report”

Hmmm…real data doesn’t seem to support 30-55% range. What Lazard has done is to use a lower range which is roughly typical in US and upper range higher than anything in the “Wind technologies market report”. The real lower range is missing. It should be around 10%, but they decided to use different “criteria” at one side of the distribution. Remarkably this nonsense seems to have started when they stopped subtracting subsidies from costs. Then assumed capacity factors started a rapid increase even though in the real data such increase has been very modest. If I have to guess, they did this in order to torture the numbers to conform to the narrative Lazard wanted to tell. They needed extra layer of nonsense to compensate for their earlier nonsense with subsidies. Otherwise “costs” would have shown a sudden jump.

Fig. 4: Trend in US wind power capacity factors

What about the cost assumptions? The next figure compares the Lazard’s range with longer time series from US. The real data basically tells that in US wind power today costs about the same as 15 years ago. If you want a narrative a declining prices, you have to cherry pick 2009 as the high point and ignore the cost increases before that. (This is indeed what many including Lazard and even IPCC do.)

Fig. 5: Costs for US wind power projects. I marked Lazard’s range with green colour.

The range that Lazard gives for the costs is again distorted. Their lowest cost seems to be the lowest cost in US while the upper range is roughly a typical US cost. The real upper range has been mysteriously removed. The combined effect of these tricks is to make costs appear lower than what they typically are. Finally I typed Lazard’s upper range numbers into simple LCOE calculator provided by the national renewable energy laboratory. Lazard assumed “60% debt at 8% interest rate and 40% equity at 12%”. Since I don’t know exactly what that means and I am too lazy to figure it out, I will just use 10% discount rate. (That seems to give about the same result for nuclear power LCOE as Lazard states.) Why is it that I get 9.1 cents/kWh instead of something close to 7.7 cents/kWh that Lazard claims?

Fig 6: Why cannot I get about 7.7 cents/kWh? What am I doing wrong?

Does any of this matter? Who cares what some Wallstreet analyst says? Unfortunately, it does matter since gray literature a’la Lazard is being used as an excuse to deny the validity of more solid research. This is not only done by the media, but also by some academics. Here is an example of Stanford professor Mark Jacobson justifying ignoring results from “Deep decarbonization pathways project” for US, which did use proper sources for their data. (In fact, you might want to read his whole timeline during those days. I call that intellectual bankruptcy.) And make no mistake. Lazard knows exactly what they are doing. They know the figures and set out to deliberately twist them in order to mislead. This is unethical. By muddying the boundary between serious research and advocacy, they do disservice to both.

Screen Shot 2015-12-31 at 08.36.11


Addition: By the way…note that when Lazard claims 61% decrease in wind power costs since 2009 they don’t only cherry pick 2009 as the starting point, but also compute this by taking the average of their upper and lower ranges. This makes no sense. Computing such number for the median would be more sensible, but Lazard is very keen on NOT showing the actual distributions. They prefer to party with the outliers.

I glanced at the IEA report “Energy technology perspectives 2012”. (There is also a 2015 version, but I didn’t have access to that. Annoyingly IEA charges dearly for these reports so that even though they are commonly referred to in discussions, they are not widely available.) In their baseline 2DS scenario IEA estimates cumulative saving (savings in fuel minus investment costs) over 6DS scenario of 26 trillion US dollars by 2050. Interestingly enough they also have a “high” nuclear scenario where they tolerate more nuclear power than in the baseline. In this scenario the savings are largest, 27.9 trillion. Strangely enough this result was buried to the page 384 of the report. Wouldn’t it have been useful to highlight this since there are plenty of people and (believe it or not) politicians who don’t know this? After all this ignorance might make them promote policies that are counter productive in fighting climate change.

IEA_ETP2012_TableOfScen 2015-06-02 12:42:18_mod

We can also look at the required investment level to follow the 2DS scenario. Here IEA assumes large cost reductions for renewable energy sources. This might or might not happen, but let us just accept this for now. I highlight some relevant numbers from the report in the following table.

IEA_ETP2012_NeededInvestments2015-06-02 12:34:38

Source Investment 2030-2050 per year (billion) Production 2050 (TWh) TWh/billion
Nuclear 119 7918 66.5
Wind 167 6145 36.8
Solar 232 5988 25.8
Wind+solar 399 12133 30.4


As you can see, even though IEA has baked in massive cost reductions assumptions into solar and wind by 2050, they still deliver less than half as much electricity per investment than nuclear (for which IEA didn’t seem to assume learning effects). IEA 2DS baseline is not a cost minimizing scenario, but presumably reflects sufficiently conventional wisdom that authors believe is more palatable for IEA funders.

What would happen if we were to simply divert investments spent from more costly decarbonization options to nuclear? That 399 billion for wind and solar would then enable about 14000 TWh/year more carbon free electricity than the 2DS baseline. This would be enough to eliminate coal, coal+CCS, natural gas, natural gas+CCS, biomass+waste, and biomass+CCS from the electricity mix at 2050 with more than 1000 TWh left over. As these sources of electricity disappear, more than 100 billion a year is also saved in investment costs and lots more in fuel costs. Based on the difference between IEA 4DS and 2DS scenarios, I estimate around 20 trillion additional cumulative savings in fuel costs. Not bad, I would say given the speculative nature of CCS technology, environmental and social impacts of bioenergy schemes, and the need to decarbonize also other sectors than electricity production. (Incidentally, it tells something of the absurdity of current energy discussions, that many celebrate large investments as a good thing. It doesn’t seem to matter what the investment actually buys. More expensive the better, because that means more investment and larger business opportunities in “cleantech”.)

Do I think this will happen in the near future? Of course I don’t. If there would be a wartime-like urgency, who knows, but as it stands such scale up is not going to happen. However, even if unrealistic this option is MORE realistic than the renewables-only party line. It is more realistic economically, technically, and in terms of material limitations. Since it is not going to happen, (as I have said many times before) we can look forward to much more than 2 degrees warming.

IMG_1276.JPG 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.


Fig 1: A plant producing synthetic fuels will receive this electrical power as an input. In the lower figure there is also a line indicating the required backup generation for those periods when wind is not adequate to meet the demand.

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
Plant capacity 36 132
Utilization rate 56% 20%
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.)


Fig. 2: Cost comparison for options A and B (Never mind the units on the y-axis…)

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.

Fig. 3: Use all power generation for fuel production. Base load vs. variable

Fig. 3: Use all power generation for fuel production. Base load vs. variable

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.

Heysham nuclear power plant

In the second week of august EDF decided to shutdown their reactors in Heysham and Hartlepool.This was a precautionary measure after finding a defect in the boiler of Heysham unit 1. In total 4 reactors with total capacity of about 2.6 GW have been taken offline. Some were quick to declare that wind power came to the rescue when nuclear power was proven unreliable (for example Ari Phillips in Thinkprogress, Greenpeace, Giles Parkinson in…)  More recently Justin McKeating from Greenpeace repeated the claim.
…we see a reversal of the view that renewables need to be supported by nuclear power. Although nuclear and wind power do not have the same generation characteristics, nuclear reactors now needing to lean on renewables means the nuclear industry has a big problem.” Given that the claim appears unlikely on meteorological grounds and no evidence for it was provided, I felt a more careful scrutiny was called for.

So, did wind power replace missing nuclear capacity? Short answer is, no it did not. Missing nuclear generation was mostly replaced by increasing use of coal. In Figure 1 I show the output of relevant power sources in UK between Saturday 9.8 and Thursday 14.8. EDF reactors were ramped down during this period and this can be clearly seen in the figure. Equally clear is that when nuclear output was declining, wind power output was declining even more steeply. So rather than coming to the rescue, wind power was unfortunately galloping away when the action started. The reduction in the amount of wind and nuclear power, was mirrored by a clear increase in gas and coal power. Contrary to earlier claims, low carbon sources were replaced by fossil fuels.

Fig 1: UK power production during the reactor shutdows.

Fig 1: UK power production during the reactor shutdowns.

This quick check does provide the answer to our specific question, but with the data available we can learn more. In the following table I show the average power levels for the most relevant quantities shortly before and after the shutdowns. Most pronounced changes were in the amounts of power derived from fossil fuels, nuclear power, and wind power. There has also been some increase in hydropower generation.Recent weeks have in fact been more windy (not unusually so) than weeks prior to shutdowns and power generation from fossil fuels has increased slightly. However, as the earlier figure makes clear, to understand which power source is replacing which one must look deeper than averages.

Period 27.7-9.8 [GW] 14.8-28.8 [GW] Change [GW]
Demand 30.4 30.3 -0.1
Nuclear 7.9 6.0 -1.9
Wind 1.3 2.3 +1.0
Gas 12.4 11.5 -0.9
Coal 4.6 6.1 +1.5
Interconnects 2.6 2.6 0

To get a clearer insight as to how different power sources are connected in UK, we can inspect the data for the year 2013. Figure 2 shows the scatter plot of wind vs. gas for one month period in 2013 together with a least square fitted line. When wind generation is high, gas generation tends to be lower by almost the same amount as wind power generation. The color indicates power demand at that moment. As is clear there is clear gradient towards red with increasing use of gas demonstrating how gas power is used to meet increasing demand. Similar gradient is missing as wind power output increases. (Why did I take one month sample? If we do similar exercise over whole year, we will find spurious correlations between power sources since power demand has seasonal variability so that it peaks in the winter. Wind power production also tends to be higher in the winter. These suggest that if looked over the year, increasing amount of wind power would imply increasing coal and nuclear generation as well. This is clearly nonsense and correlation is caused by increasing base load demand in the winter and scheduled maintenance of nuclear power plants in the summer which happen to correlate with wind speeds. Aggregating the data to monthly sets removes most of these artifacts.)

Fig 2: Scatter plot of the wind power generation vs. generation with natural gas for a month around april 2013.

Fig 2: Scatter plot of the wind power generation vs. generation with natural gas for a month around April 2013. Color indicates power demand at that moment.

What this kind of analysis reveals is that wind power has essentially no correlation with either monthly demand nor with nuclear power production. It does correlate strongly with gas power and less strongly with coal.

To figure out which power source is replacing which we should look at rate of changes in the output. This suggests that further insights may be gained by Fourier transforming into frequency space. Result is demonstrated in Figure 4. Demand shows clear peaks which indicate the familiar regularities. There is a strong peak at zero frequency corresponding to base load demand, there are peaks close to zero frequency corresponding to weekends, and then strong peaks corresponding to a period of about one day.

Nuclear power is strongly peaked at zero frequency demonstrating that it caters for the the base load demand. The peaks in demand have their matches in coal and especially in gas generation. Wind power has a broad featureless spectrum and in order for it to “replace” another power source, this other power source must have appreciable amplitudes at the same frequencies. Only for gas and to a lower extent coal power is this true.

Fig 4: Demand and production in frequency space. (Never mind the units along y-axis)

Fig 3: Demand and production in frequency space. (Never mind the units along y-axis)

In conclusion, UK production and demand data suggest common sense relationships. Wind power acts mainly together with gas while missing EDF reactors were (sadly) mostly replaced by increasing the use of coal.

2.9.2014: Minor changes. The time period after shutdowns, in table with average power levels, was changed to start from thursday 14.8. Previous starting date included the ramp down as well.

I usually write this blog in finnish, but since these thoughts originated from the comments to a recent post in Carbon Commentary this one will be in english. (See especially the comments by J. M. Korhonen and Dominic Hofstetter.) I want to understand some general issues regarding attractiveness of electricity storage and also how storage schemes are likely to differ between intermittent power sources and baseload power sources.

Since storage would pay for itself from the spread of electricity prices at different times, as a first step, I wanted to know how much do the prices actually vary. I checked this for the Swedish market and show the result in the figure. In Sweden the average range for daily variation in price is about 18 euros/MWh. Data implies that the price varies from about 0.75 times the daily mean price (typically) at night to about 1.25 times the mean price during peak demand.

Swedish spot prices (2012)

Swedish spot prices (2012)

So each stored kWh should make a profit from this spread and cannot therefore cost more than this. So it would seem that for large scale electricity storage to be interesting, the cost should certainly be less than about 10 euros/MWh. Unfortunately storing electricity is costly.
Over the lifetime the prices per kilowatt hour can vary from hundreds of dollars to thousands. If we optimistically assume a cost of 100 euros/kWh, to get the cost for a single cycle to the 10 euros/MWh range implies around 10000 cycles. If there is one cycle per day, this implies a lifetime of around 30 years. For battery systems both the cost assumption as well as the lifetime assumption are quite unrealistic. Pumped hydro is somewhat more realistic (although it has its share of problems…see here), but it is geologically limited resource and implies flooding large areas of land.

What kind of efficiency should we expect from our storage system? Let us say we have an efficiency E so that to get 1 kWh of stored electricity for sale, we need to spend 1/E kilowatt hours during storage and lose “minimum price/E” worth of sales. Selling the stored electricity will gain us (at best) “maximum price” and in order for the process to make sense efficiency must be much better than about “minimum price/maximum price”. With Swedish figures anything that has a roundtrip efficiency less than around 60% makes no sense. Naturally, less efficient the system is less it should cost so that it can still make a profit within that 18 euros/MWh range.

Increasing amount of wind power in the grid will increase price volatility. Why this would be desirable is unclear. Typically increased uncertainty is a thing to avoid since it increases the likelihood of proverbial shit reaching all the way up to the proverbial fan. Here it would seem that we first pay someone subsidies for extra volatility and then someone else to get rid of it. Maybe there is beauty in here, but it does seem well hidden. In any case increased volatility can make some storage schemes more viable, but who would build such storage? Currently wind power producers are guaranteed a market AND the price so they do not have an incentive to move their production to some other time periods using storage. For storage the system should be changed so that wind power producers do not get guaranteed prices and have to find actual customers for their product. However, even then the volatility increases to make (theoretical) large scale storage viable would have to be very dramatic and storage schemes would still have to compete with generators burning stored energy contained in fossil fuels.

How would a storage scheme coupled to say wind power compare with a scheme coupled to a baseload power plant? Even if the size of the storage would be the same, storage for wind power would have to live with much larger swings in power levels. A 1 GWe baseload power plant could store night time production at a rate from zero 0 to 1 GWe. If same amount of electricity is produced with wind power storage would be fed with anything between zero and 3 GWe. This would add to the costs. Similar conclusions apply to the rate at which the storage is discharged. If it has to cope with baseload plant dropping off grid, output of 1 GWe is enough. If it has to compensate for swings in wind power production, much more might be required. (Also, it might not be a good idea to put large mass of water moving upwards and then suddenly stop. Reliable pump power seems more fit for this purpose, but someone with required engineering skills can correct me if I am wrong.)

Since the output of a baseload power plant is also predictable, it seems clear that anyone who has storage to spare will find it easier to make a profit by coupling this storage to a baseload power plant. Finally, it should be noted that with wind power storage for about 12 hours is not enough to create a wholly renewable system. Not even close. With such a short time storage we would still need reliable (fossil fuel based most likely) power plants with capacity that is enough to cover all electricity consumption. On the other hand, 12 hours of storage coupled to a baseload power plants would go some way towards removing the need for peaking power plants.

All of the above is of course purely theoretical. I do not see any reason to believe that the cost for electricity storage would become so low as to make it economically viable in anything but fringe applications. Perhaps more viable route is to use night time production to produce heat and fuels that would reduce emissions outside the electricity sector?

Updated on 19.3.2013:  Anders Örbom raised an issue in Twitter as to how representative Sweden is due to price levelling effects of their hydro power. I hand’t thought of that and I used swedish data mainly since that I had readily available. From the link in the text one can also get the spot price in Germany. It turns out that in Germany the daily variation is stronger and amounts to about 39 euros/MWh on average. So there the storage can cost more than in Sweden and still be interesting. Nevertherless, to get the price low enough is still a huge challenge even in Germany.

Suomessa “uusia Nokioita” puhkutaan kiihkeästi ja niiden syntymää on ennustettu mm. tuuli- tai aurinkovoiman ympärille. Ensimmäinen kuva vertailee Nokian viime aikaista kurssikehitystä Vestaksen, Gamesan ja First Solar:n kurssikehitykseen. Vestas on maailman suurin tuuliturbiinien valmistaja, Gamesa neljänneksi suurin ja First Solar valmistaa ohuita aurinkopaneeleita. Vertailu Nokiaan on ehkä osuvampi kuin mitä hypettäjät tarkoittivat. Vestaksen kohdalla Tanskan hallitus on jopa kokenut tarpeelliseksi todeta, ettei aio tulla apuun mikäli Vestas ei pysty maksamaan velkojaan. Olisi kiva tietää mitä ovat ne kuningasideat, joiden turvin suomalaiset yritykset pärjäisivät tuossa ympäristössä, kun suuremmatkin ovat vaikeuksissa? Ainakaan yrityssaneeraukseen ajautunut Winwind ei niitä ideoita keksinyt.

Osakekurssit: Nokia, Vestas, Gamesa ja First Solar

Osakekurssit: Nokia (punainen), Vestas (ruskea), Gamesa (vihreä) ja First Solar (sininen)

Onko kyse pelkästään yksittäisistä yrityksistä. Ehkä sektoreilla kokonaisuudessaan menee loistavasti? Seuraava kuva vertailee eri sektoreille sijoittavien ETF:ien kurssikehitystä. Ei hyvältä näytä. Parhaiten pärjäsit, jos laitoit säästösi fossiilisiin polttoaineisiin. Muilla hävisit rahaa tuon vertailujakson aikana. Vähiten hävisit ydinvoimalla, tuulivoimaan sijoittamalla hukkui liki 80% säästöistä. Jos sijoitit säästösi aurinkovoimaan, on niistä jäljellä pelkät rippeet.

ETF vertailu: Öly+kaasu (sininen), ydinvoima (punainen), tuulivoima (ruskea) ja aurinkovoima (vihreä)

Mutta ei hätää. Lopetettuaan ensin omat satsauksensa aurinkovoimaan esimerkiksi Shell arpoo, että aurinkosähkö voi olla merkittävin teholähde…vuonna 2070. Sitä odotellessa se voi rauhassa myydä enemmän öljyä ja kaasua. Ja jos arvaus on väärä? No, kuka siitä oikeasti 60 vuoden päästä välittää sen enempää kuin me piittaamme 1950-luvulla tehdyistä ennusteista? Shell on varmasti valmis tuolloinkin myymään hiukan lisää öljyä ja kaasua…sopivaa korvausta vastaan. Tärkeintähän on kivan vision tuoma imagohyöty nyt. Rikkana rokassa Shell muuten visioi myös, että fossiilisten polttoaineiden kulutus kasvaa merkittävästi ja aurinkosähkön osuus primäärienergian kulutuksesta on korkeintaan noin 20%. Ilmastovaikutus ei heidän mukaansa ole ehkä niin paha, koska CCS. Miksi en ole vakuuttunut?

Lisäys 21.3.2013: Kiinalainen Suntech,yksi maailman suurimmista aurinkopaneelien valmistajista, on juuri ajautunut konkurssiin. Edes kiinalaiset eivät pysty tekemään tulosta näillä markkinoilla.

Paul Frederik Bach on koonnut usealta vuodelta tuulivoiman tuotantotietoja Saksasta, Tanskasta, Ranskasta, Iso-Britanniasta ja Irlannista. Otokset annetaan tunnin välein ja Saksasta Bach antaa myös osan aurinkosähkön tuotantotiedoista ja lisää löytyy mm. 50hertzin sivuilta (kaakkois Saksasta). Hienoa, että Bach on jaksanut tätä tehdä ja jakaa työnsä tulokset , koska realistisia lukuja tarvitaan järkevään keskusteluun. Kokosin itse hänen tietojensa pohjalta yhteenvedon vuodelta 2011. Lisäsin sinne myös kuvitteellisen “supergrid” sarakkeen laskemalla eri maiden tuotantotiedot yhteen joko niin, että kunkin maan osuus painotettiin maan BKT:lla tai niin, että kunkin maan vuosituotanto oli sama. Lisäksi tiedostossa on joidenkin maiden kulutustietoja. Kiinnostuneet voivat imuroida tiedoston täältä (open document format). Rajallisempi aurinkosähkön datasetti löytyy täältä. Oheiset kuvat demonstroivat hiukan datan luonnetta.


On ollut jonkin verran keskustelua siitä mikä osuus Tanskan tuulivoimasta päätyy vientiin. Toiset ovat sanoneet, että melkein kaikki ja toiset, että ei juuri mitään. Ne jotka sanovat, että melkein kaikki perustavat väitteensä vahvaan korrelaation tuulivoimatuotannon ja sähkön viennin kanssa. Ne jotka sanovat, että juuri mitään ei päädy vientiin argumentoivat, että vientiä ovat ne jännite-erot, jotka ovat peräisin fossiilisista voimalaitoksista. Tuulivoima vain “mahdollistaa” näiden tuotannon viemisen rajojen ulkopuolelle. (Tämä fossiilinen voima on suurelta osin yhdistettyä sähkön- ja lämmön tuotantoa ja minulle on epäselvää kuinka helppoa tanskalaisten on näitä laitoksia ylipäätään sammuttaa talvella milloin heidän tuulivoimalansa tuottavat eniten. Jotenkin sitä luulisi, että he tarvitsevat lämmön joka tapauksessa.) Itse en oikein ymmärrä miksi tämä muuttaisi mitään olennaista. Perusasia on kuitenkin edelleen sama eli, että tuulitehon nousu ei tarkoita samassa suhteessa alhaisempia tehoja Tanskan fossiilisia polttavissa voimalaitoksissa ja näin ollen suuri osa luvatuista päästövähennyksistä jää Tanskassa toteutumatta. Lisäksi kukin voi itse katsoa datasta mitä Tanskan fossiilinen tuotantokapasiteetti tekee. Siinä on selvä yö-päivä, arkipäivä-viikonloppu, kesä-talvi rytmi, mutta se ei näytä reagoivan juuri mitenkään tuulitehon muutoksiin. Sen sijaan Tanskan vienti ja tuonti seuraavat melko luotettavasti muutoksia tuulivoiman tuotannossa. Tämä on erityisen selvää silloin, kun tuulivoiman tuotannossa on suuria muutoksia.

Jos seuraan CEPOS laitoksen lähestymistapaa,  oma arvioni olisi, että nykyään noin 80% Tanskan tuulivoimatuotannosta päätyy vientiin Norjaan, Ruotsiin ja Saksaan. (Päätyykö se sinne suoraan vaan sitä kautta, että tuulivoima on fossiilista tuotantoa mahdollistava teknologia on toissijaista.) Mihin perustan arvioni? Imuroin Tanskan tiedot vuodelta 2011 täältä (yhteen järjestellyt numerot voi imuroida myös täältä). Keräsin yhteen tuulivoimatuotannon, hintatiedot eri alueilta ja sähkön siirtomäärät Tanskan ja sen naapurien välillä. Oheinen kuva näyttää miten tuulivoimatuotanto korreloi sähkön viennin ja sähkön hinnan kanssa.  Kun ylläolevan kuvan y-akselilla on positiivinen luku, Tanska tuo sähköä. Kun se on negatiivinen, Tanska vie. Jos dataan sovittaa suoran, on suoran kulmakerroin 0.78. Ts. näin laskettuna vaikuttaisi siltä, että noin 80% heidän tuulivoimatuotannostaan päätyi vientiin vuonna 2011.

Tanskan tuulivoimatuotanto ja sähkön tuonti-vienti tase vuodelta 2011

Toinen kuva näyttää kuinka tuuliteho korreloi Norjan ja Tanskan välisten sähkön hintaerojen kanssa. Paljon tuulta länsi Tanskassa implikoi suurempaa hintaeroa mikä taas kannustaa viennin lisäämiseen Norjan suuntaan. Alhaisen tehon aikana hinnat ovat Tanskassa korkeampia kuin Norjassa ja norjalainen vesivoima pitää Tanskassa valot päällä. (Ruotsista voisi tehdä vastaavan esityksen.)

Länsi Tanskan tuuliteho ja sähkön hinnan erotus Norjan ja länsi Tanskan välillä. Värikoodi indikoi tuonnin ja viennin suhdetta. Positiivinen luku tarkoittaa tuontia.

Tanskahan on muuten sähkönsiirtokapasiteettinsa puolesta aika erikoinen maa. Heillä on riittävästi kaapeleita siirtämään sähköä naapurimaiden välillä suunnilleen yhtä paljon kuin mitä heidän oma kulutuksensa on (keskimäärin). Muissa maissa näin ei yleensä ole. Esim. Isosta-Britanniasta taitaa lähteä naapureihin kaapeleita joiden siirtämä maksimiteho on paljon alle 10% heidän kulutuksestaan. Saksassa se on ilmeisesti jonkin verran yli 10%, mutta alle 20%. Suomessa kait jossain 50% nurkilla. Nämä luvut pitäisi vielä varmistaa, mutta eivätköhän ne ole suunnilleen kohdallaan. Tämä tarkoittaa käytännössä sitä, että Tanskalla on mahdollisuus laimentaa oma tuulivoimatuotantonsa itseään paljon suuremmille markkinoille, kun taas esim. brittien on aikaisemmassa vaiheessa maksettava tuotannon satunnaisuudesta aiheutuvia kuluja. Olisi kiva oppia kuinka suuria kustannuseroja tämä voi käytännössä tarkoittaa.

Toinen hauska ilmiö on Tanskassa aika ajoin esiintyvät negatiiviset sähkön hinnat. Näitä näyttää esiintyvän lähinnä silloin, kun maasta pois vievät kaapelit ovat täynnä ja lisääntynyt tuulivoiman tuotanto on pakko käsitellä maan sisällä. Tällöin fossiiliisia polttavat voimalaitokset joutuvat maksamaan toiminnastaan. Ilmeisesti tätä tarvitaan, koska hintojen putoaminen nollaan ei välttämättä ole riittävän vahva kannuste sammuttaa laitoksia. Ilmeisesti sammuttamiseen ja uudelleen käynnistämiseen liittyy kustannuksia ja ne kustannukset ollaan valmiita maksamaan vain piiskan kannustamana.

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