Costs and benefits of energy transition
Overall Concept
The study of whether energy transition towards 100% renewables is socially and economically feasible is yet under hot debates. Some famous debates recently in the scientific communities includes the attacks on Mark Z. Jacobson's 100% RE studies[1][2][3] and also T.W. Brown's response to a critical review of 100 % RE systems[4][5].
In these debates, the question of how much an energy system with 100% renewables costs is often the main reason both parties disagree with each other. Therefore, it may be important to know how a solid, dynamic, and system oriented analysis on the costs and benefits of energy transition should look like.
In short, there are three scales of CBA (cost-benefit analysis) one should consider for such full scale overview. On the energy system level, the microeconomic level, and the macroeconomic level. The three levels show different perspectives of the effects of energy transition: the energy system level discusses impacts that occur from a technical or engineer point of view, the microeconomic level discusses impacts of different individuals energy transition have on; and the macroeconomic level discusses the net benefits/losses an entire industry or the society itself as a whole will gain during the transition process.
Effects on Energy Systems
There are two kinds of costs that constitute the system total cost of an energy system: the generation cost and the integration cost.
The generation costs are the costs of different types of energy sources to produce energy. One common indicator of this cost is the levelized cost of energy (LCoE). The integration costs are the additional costs to integrate different sources of energy onto the system so that supply meets demand.
Because the LCoE of renewable energy sources have been declining in a rapid speed, and are already cost-competitive with conventional sources under some scenarioes[6], the larger amount of deployment of renewables during the transition process will definitely lower the generation costs of an energy system.
On the other hand, most renewables that are deployed currently are variable renewable energy soures such as solar and wind. These sources require new mindset and investments for balancing of their fluctuating characteristics, with undermines the benefits of generation costs reduction.
The increase of integration costs during energy transition is nonetheless small compare to the overall benefits gained by generation costs. Even if we add all the additional integration costs to the generation costs of renewables, VRE are still cost competitive to other conventional alternatives in most modeled scenarioes[7].
Microeconomic (Distributional) Effects
Macroeconomic Effects
References
- ↑ Mark Z. Jacobson, Mark A. Delucchi, Mary A. Cameron, Bethany A. Frew, Low-cost solution to the grid reliability problem with100% penetration of intermittent wind, water, andsolar for all purposes, 2015
- ↑ Christopher T. M. Clack et. al, Evaluation of a proposal for reliable low-cost gridpower with 100% wind, water, and solar, 2017
- ↑ Mark Z.Jacobson, Mark A. Delucchi, Mary A. Cameron, Brian V. Mathiesen, Matching demand with supply at low cost in 139 countries among 20 world regions with 100% intermittent wind, water, and sunlight(WWS) for all purposes, 2018
- ↑ Burden of proof: A comprehensive review of the feasibility of 100% renewable-electricity systems
- ↑ T.W. Brown, T. Bischof-Niemz, K. Blok, C. Breyer, H. Lund, B.V. Mathiesen, Response to ‘Burden of proof: A comprehensive review of the feasibility of100% renewable-electricity systems’, 2018
- ↑ Levelized Cost of Energy Analysis 10.0, https://www.lazard.com/media/438038/levelized-cost-of-energy-v100.pdf
- ↑ In-depth: The whole system costs of renewables, https://www.carbonbrief.org/in-depth-whole-system-costs-renewables
