Renewables Mix Beats Nuclear on Price in Future Energy Systems
A new way of assessing costs of different energy sources shows that an optimal mix of renewables will be cheaper than nuclear power in future energy systems, where linking different sectors together drives down costs.
David Pickup, manager of the electricity program for the Pembina Institute, told The Energy Mix the new study, published in the journal Energy, echoes what’s been shown in other analyses, that “a range of different electricity supply types is needed to deliver the lowest-cost system.”
“It also highlights that growing low-cost wind and solar energy goes hand in hand with smart and flexible electrification, including energy storage, electric vehicle charging, and heat pumps,” he added.
Cost comparisons of different energy sources are often presented through the levelized cost of electricity (LCOE) metric, which identifies the cost of the production of one unit of electricity, factoring in investment costs, a power plant’s operation and maintenance costs, fuel costs, and other elements. But LCOE only tells part of the story because it excludes the costs or savings of operating that source within a larger energy system. Any given energy source may be more or less expensive depending on the wider system into which it is integrated.
The study presents a system-level LCOE (SLCOE) that aims to pull those different factors together. “It is clear that to assess the system costs of any technology, the only meaningful way is to conduct an analysis of the entire energy system,” it states.
“While the LCOE is a function of the technology itself, the SLCOE is a function of both the technology and the energy system context in which the technology operates,” the researchers write.
The analysis also goes a step farther than other attempts to expand on LCOE by comparing system costs in current energy systems, in which sub-sectors are only minimally electrified, to those in “climate neutral” systems that have fully electrified sub-sectors—heating, cooling, industry, and transportation.
The results suggest the costs for renewable energy in the current energy system are different from the future climate-neutral system, largely because the different sectors in the future scenario are integrated—or coupled. This allows for greater flexibility across the different energy sources and storage options, like thermal or hydrogen storage, flexible heat pump operation, and electric vehicle smart charging. The cost of energy storage, which is required in systems that use intermittent energy sources like wind or solar, is also expected to decrease over time as batteries become cheaper.
A least-cost mix of offshore wind and solar in the future coupled energy systems is roughly half as expensive as nuclear power, which has high capital costs. The analysis is based on current and possible future energy systems in Denmark, which has ample wind power resources. The results will vary in other places because of the system-specific nature of SLCOE. An energy system based on solar power and battery storage will be more effective for regions with high solar availability, like in the Middle East, Southern Europe, or India, study co-author Christian Breyer, a professor of solar economy at LUT University in Finland, told PV Magazine.
Pickup said Canada’s economic competitiveness will increasingly depend on having a low-cost electricity system, incorporating a lot more wind and solar than we have today. He added that there is still headroom to expand renewable energy capacity across provincial grids. The study “further confirms that this can be done while maintaining a low-cost and reliable system.”
But “to achieve this, we’ll need all orders of government to work together,” said Pickup. “We’re seeing some good early signals of this—10 provinces and territories recently signed up to cooperate on building more electricity infrastructure, and the federal government also highlighted this as a priority in the spring budget statement.”