I’ve lurked here since the Dubya administration, and was never seriously tempted to write a diary. Now I’ve lost my mind, apparently (smile).
Anyway, in a post here a couple of days ago, a commenter wrote about how cheap solar and wind generation have become. Everybody’s saying that these days. And it’s true, costs for both have come down dramatically. Quoted numbers vary, and it depends on whether you’re talking about right now or projecting into the future, but here’s an estimate (for solar) that seems to fall somewhere in the middle: GTM Research projects US$24 cent/w solar panels and utility scale fixed-tilt systems at US$70 cent/W by 2022, which opens up new possibilities for ultra-cheap power from solar.
24 cents a watt – nice! I live in New Mexico, where our wonderful Democratic state government has made a deal with the state power utility, PNM, to shut down the remaining half of the San Juan Generating Station by 2022. That’s 850 MW of coal generation to be replaced by renewables. Of course, you don’t just put up solar panels and wind turbines and switch off the coal plant.
No, before you flip the switch, you also need storage, for the times when there’s no wind and no sun. Hypothetically, this could mean a number of things, compressed air, pumped hydro, et cetera. But in practice, if you don’t have years to wait, new storage means lithium-ion batteries. So I got curious – people don’t talk about that expense very much when celebrating how cheap wind and solar have become.
One valid reason for that is that the question, “how much storage?” does not have a straightforward answer. It depends on pesky details like where you are, how big of an area you can draw from over reasonably efficient transmission lines, whether the wind and the sun in your region tend to happen at different times (like in Germany) or less fortunately, tend to be more correlated (like in California). And 100% is out of the question – no matter how much storage you build, you could hit a bad month or two of cloudy, windless weather and run out. So realistically, you want enough batteries to cover your needs most of the time, not all of the time.
We need some kind of rule of thumb, so we don’t drown in details. Fortunately, some good studies have been done. Here is one that says that broadly speaking, storage equal to 24 hours’ worth of your generating capacity will allow you to meet your needs about 90% of the time. That’s probably a decent sweet spot in terms of cost/benefit, especially in these early days of the transition away from fossil fuels. If we have to resort to natural gas peaker plants (which are almost always the backup for new renewable capacity) to supply the other 10% of our needs, we’ve still cut our CO2 emissions by 90% relative to gas, and even more than that relative to coal (since coal emits more CO2 than gas does). That’s a great start, and it won’t take years and years to do.
OK, let’s go shopping for storage. What do lithium-ion batteries cost? Another moving target. Some people think they will keep getting cheaper until they just about pay you to take them off the truck – I consider that magical thinking, but that’s another topic. So here’s a study someone has done to make an optimistic but not wild-eyed estimate of the near future cost of lithium-ion at utility scale: GTM estimates that lithium-ion battery rack prices will decline by 10% over the next five years, reaching $144/kWh compared with an estimate of $207/kWh for 2018. Let’s round that to $150 per kilowatt-hour. (Phenomenally cheap compared to a few years ago, by the way.)
Just to put real numbers on it, let’s say we want to build 1 MW of solar panel capacity. At 24 cents per watt, that’s $240,000 for the panels.
Batteries for 24 hours, that’s 24 MWh. At $150 per kWh, our battery cost is 24 * 150 * 1000, or $3.6 million.
Bottom line: Out of every $16 spent, you will spend $15 on the batteries, $1 on the panels.
So yes, those solar panels sure are getting cheap. So cheap – compared to the batteries – that if they became free tomorrow, you’d hardly notice the difference. (I was shocked by this number, and I’d love to be proven wrong.)
And that’s for a measly 24 hours of storage. Keep that in mind when you hear about how cheap solar and wind are compared to gas and nuclear, both of which have multiple years’ worth of storage for 24/7 generation built in at no extra charge.
I’m not saying this to be defeatist. I just want to point out that coming up with cheaper storage should be our absolute top priority, and we have a long way to go.
P.S. why “Fig leaf”? Because I have a theory. I suspect that all the states and utilities that are signing on to ditch their coal plants by 20XX – and are getting glowing press for it – know that their rate-payers are not going to be happy when told “by the way, we need you to cough up billions of dollars for batteries to make this happen, so get ready for a jaw-dropping rate increase.” But utility customers also demand 24/7 electricity, and at least as much of it as they’re used to. So I think the utility people know that they can put up a bunch of inexpensive solar panels and wind turbines (with more hoopla), buy a token amount of battery storage, shut down the nasty old coal plant, and if behind that fig leaf they quietly get much of their electricity by buying it from gas-fired plants (ideally out of state), maybe nobody except a few bean-counters and utility wonks will even notice.