Comparison of Dispatchable Renewable Electricity Options
Total Page:16
File Type:pdf, Size:1020Kb
COMPARISON OF DISPATCHABLE RENEWABLE ELECTRICITY OPTIONS Technologies for an orderly transition 2018 Prepared for ABOUT ARENA ARENA was established by the Australian Government to make renewable energy technologies more affordable and increase the amount of renewable energy used in Australia. ARENA invests in renewable energy projects, supports research and development activities, boosts job creation and industry development, and increases knowledge about renewable energy. ARENA is currently supporting more than 200 projects and is actively seeking new projects to support. ABOUT THE TEAM The ITP Energised Group (ITP) was formed in 1981 and is a specialist renewable energy, energy efficiency and carbon markets engineering and consulting group of companies. It has member companies and offices in the UK, Australia, India and China and has completed projects throughout the world. The Institute for Sustainable Futures (ISF) was established by the University of Technology Sydney in 1996 to work with industry, government and the community to develop sustainable futures through research and consultancy. ISF’s mission is to create change toward sustainable futures that protect and enhance the environment, human well-being and social equity. ITK Consulting (ITK) specialises in analysis of electricity, gas and carbon markets. It offers insights into valuations, demand and supply, industry structure, trends and policy analysis. Research is based on 33 years of stockbroking research experience. Clients include government organisations and businesses operating in the Australian electricity and gas industry. Comparison of dispatchable renewable electricity options Authors: K Lovegrove, G James, D Leitch, A Milczarek A Ngo, The views expressed in this document are views held by the J Rutovitz, M Watt, J Wyder authors. This document is for general information only. While reasonable efforts have been made to ensure the accuracy, For further information contact: completeness and reliability of the material contained in this ITP document, the authors accept no liability for the accuracy of Phone: 61-2 6257 3511 or inferences from the material contained in this publication, Email: [email protected] or for any action as a result of any person’s or group’s Web: www.itpau.com.au interpretations, deductions, conclusions or actions in relying on this material. The document does not seek to present the © ITP Thermal Pty Ltd views of ARENA or the Australian Government. Design: 2B.com.au All images courtesy of istockphoto.com and/or dreamstime.com unless otherwise noted. II ABOUT THIS REPORT The Australian Renewable Energy Agency (ARENA) commissioned a team lead by the ITP Energised Group working with The Institute of Sustainable Futures and ITK Consulting to examine the various options for providing dispatchable renewable electricity generation. Keith Lovegrove Jay Rutovitz Managing Director Research Director ITP Thermal Institute for Sustainable Futures Keith has worked in Renewable Jay has worked in renewable energy energy systems engineering, and energy efficiency since 1994. research and policy advocacy since She has a long standing interest in 1987. Including 15 years teaching bioenergy, integrating renewables into the at the ANU as leader of the Solar wider energy system and develop ping Thermal Group. appropriate market structures for the ongoing energy transformation. Geoff James Muriel Watt Research Principal Principal Consultant Institute for Sustainable Futures ITP Renewables Geoff’s research and consulting interests Muriel has worked on renewable energy included demand management, integrating research, education and policy since 1980. renewable generation, distribution network Past appointments include Associate Professor, evolution, transmission planning, energy PV and Renewable Energy Engineering, market development, and energy storage University of NSW; Chair, Australian PV technology and applications. Institute; Australian representative, and IEA PV Power Systems program. David Leitch Joe Wyder Principal Projects Manager ITK Services Australia ITP Renewables David is the principal of ITK a small Joe manages a range of energy policy, consultancy specialising in analysis of feasibility studies and deployment the electricity and gas industry and the projects. His experience includes work implications of decarbonisation of the on renewable generation and energy Australian and Global economy. efficiency projects in remote locations in Australia and the Pacific. Annie Ngo Senior Consultant ITP Renewables Annie has over a decade of experience in the Australian energy sector in specialist advisory roles to government and industry. In these roles she has provided advice on energy policy, regulation and market development. III DISPATCHABLE RENEWABLE ELECTRICITY WHAT IS DISPATCHABLE RENEWABLe eLECTRICITY? Renewable energy power plants or that can vary output (up or down) at the command of the operator. Biomass Battery with Pumped Hydro PV and/or Wind Energy Storage (PHES) with PV and/or Wind All currently in use commercially around the world. Concentrating Solar Thermal (CST) Hydrogen with Geothermal PV and/or Wind HAVING SOME DISPATCHABLE ELECTRICITY IS ESSENTIAL 3 WIND PUMPED HYDRO HYDROGEN EQUALS MIX OF ENERGY STORAGE WIND GEOTHERMAL PHOTOVOLTAICS Least cost 3 Technologies CONCENTRATING HYDROGEN Locations SOLAR THERMAL = Least risk BIOMASS PUMPED HYDRO PHOTOVOLTAICS ENERGY STORAGE Durations WIND Orderly BIOMASS transition COST VS VALUE ACHIEVABLE GROWTH LONG TERM Dispatchable renewable Achievable growth rates In parallel, long term energy costs more than could keep pace with coal energy reserves can variable renewable energy but retirements and enable an be added to ensure is considerably more valuable. orderly transition to a large generation in critical share of Renewable Energy. periods. Electricity from coal Overall electricity demand Electricity from renewable sources IV COMPARING COST OF ELECTRICITY Levelised Cost of Energy (LCOE) for the different combinations at zero, one, six and twelve hours of storage or duration of delivery for systems at 100MWe nominal capacity evaluated with a 6.5% weighted average cost of capital. RENEWABLE $500 1 DISPATCHABLE Figures show the HOUR ELECTRICITY $400 contributions to VARIABLE $300 RENEWABLE LCOE for each of ENERGY (NOT DISPATCHABLE) $200 the collection, initial conversion, storage $100 and final conversion Levelised cost of energy ($/MWh) subsystems in each case. Wind/Batt Wind/H2 Wind/PHES Grid VRE/H2 Conc. SolarBiomass+AD Wind no store Utility PV/Batt Utility PV/H2 Grid VRE/Batt Utility PV/PHES Grid VRE/PHES Rooftop PV/Batt HSA GeothermalEGS Geothermal Utility PV no store Dry Biomass $5/GJ Dry Biomass $2.5/GJ RENEWABLE For each timescale $500 6 DISPATCHABLE HOUR ELECTRICITY there are multiple $400 cost competitive VARIABLE $300 RENEWABLE ENERGY (NOT options below the DISPATCHABLE) $200 line representing $100 2 x the cost of VRE Levelised cost of energy ($/MWh) Wind/Batt Wind/H2 Wind/PHES Grid VRE/H2 Conc. SolarBiomass+AD Wind no store Utility PV/Batt Utility PV/H2 Grid VRE/Batt Utility PV/PHES Grid VRE/PHES Rooftop PV/Batt HSA GeothermalEGS Geothermal Utility PV no store Dry Biomass $5/GJ Dry Biomass $2.5/GJ RENEWABLE $500 12 DISPATCHABLE For each HOUR ELECTRICITY $400 timescale different VARIABLE technologies are $300 RENEWABLE ENERGY (NOT DISPATCHABLE) seen to offer the $200 lowest cost energy $100 Levelised cost of energy ($/MWh) Wind/Batt Wind/H2 Wind/PHES Grid VRE/H2 Conc. SolarBiomass+AD Wind no store Utility PV/Batt Utility PV/H2 Grid VRE/Batt Utility PV/PHES Grid VRE/PHES Rooftop PV/Batt HSA GeothermalEGS Geothermal Utility PV no store Dry Biomass $5/GJ Dry Biomass $2.5/GJ RENEWABLE $500 24 DISPATCHABLE Each technology HOUR ELECTRICITY $400 has timescales and VARIABLE $300 RENEWABLE configurations for ENERGY (NOT DISPATCHABLE) which it is best $200 suited. $100 Levelised cost of energy ($/MWh) Wind/Batt Wind/H2 Wind/PHES Grid VRE/H2 Conc. SolarBiomass+AD Wind no store Utility PV/Batt Utility PV/H2 Grid VRE/Batt Utility PV/PHES Grid VRE/PHES Rooftop PV/Batt HSA GeothermalEGS Geothermal Utility PV no store Dry Biomass $5/GJ Dry Biomass $2.5/GJ 2 x cost of VRE Collection Initial conversion Storage Final conversion V Comparison of Dispatchable Renewable Electricity Options EXECUTIVE SUMMARY Key Findings • There are multiple affordable options for firm dispatchable renewable electricity generation over all timescales at one and a half to two times the cost of variable renewable energy (VRE) when used regularly. • The dispatchable renewable options of; PV or wind driven batteries, pumped hydro energy storage (PHES) or hydrogen; concentrating solar thermal; bioenergy and geothermal all have a role to play. There is no single winner, and at each timescale there are multiple options that fall within a general least-cost band. • The likely least-cost future electricity system solution is a mix of both variable and dispatchable renewable technologies, durations and locations with an average cost of electricity considerably lower than dispatchable generation alone. • Additional, long term energy reserves can be added to a generation system to ensure generation in critical periods at two to three times the cost of VRE alone in critical periods. • The cost of electricity from dispatchable renewable generation is comparable with estimates for new build gas while avoiding the associated fuel and carbon price risks. • For a small number of events per year, emergency demand response is more cost effective