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Energy and Environmental Economics 2015-2016
Renewables
Renewable Sources
By renewable sources we mean a group of primary and secondary sources of energy which are (to all practical purposes) non-exhaustible, like wind, solar, geothermal, tidal, hydro energy (the only limit being our capability of capturing them),
or reproducible, at least within given limits, like biomass
(i.e. the biodegradable component of agricultural production and waste, and of industrial and urban waste and dump gases)
Non-exhaustible does not mean costless, not even in environmental terms
Solar: capacity growth and geographical distribution
Source: BP Statistical Review of World Energy 2014
A spectacular expansion
0
20000
40000
60000
80000
100000
120000
140000
160000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Solar capacity - world(MW)
Solar capacity - world(TW)
Solar: a European leadership
Total North America 4%
Total Europe 14%
Total Others 82%
World distribution of solar capacity 1996
Solar Total North America
4%
Total Europe 36%
Total Others 60%
World distribution of solar capacity 2004
Total North America 10%
Total Europe 57%
Total Others 33%
Wordl distribution of solar capacity 2013
Sweden 4%
Netherlands 8%
Switzerland 21%
Germany 27%
Italy 40%
Solar Capacity First 5 countries Europe 1996 (95%)
Spain 2%
France 2%
Italy 3%
Netherlands 4%
Germany 89%
Solar Capacity First 5 countries Europe 2004 (92%)
Belgium 5%
France 7%
Spain 7%
Italy 27%
Germany 54%
Solar Capacity : First 5 countries Europe (83%) 2013
Wind: capacity growth and geographical distribution
Source: BP Statistical Review of World Energy 2014
Wind: spectacular growth again
0
50000
100000
150000
200000
250000
300000
350000
Wind Capacity-World
Wind Capacity-World
Australia 0%
China 13%
India 84%
Japan 2%
New Zealand
0% South Korea 0%
Taiwan 0%
Other Asia Pacific 1%
Wind power distr. Asia 1997
Wind: an Asian Leadership
Australia 8%
China 14%
India 55%
Japan 18%
New Zealand
3%
South Korea
1% Taiwan 0%
Other Asia Pacific 1%
Wind power distr. Asia 2004
Australia 3%
China 76%
India 17%
Japan 2%
New Zealand
1% South Korea 0%
Taiwan 1%
Other Asia Pacific 0%
Wind power distribution Asia 2013
Geothermal: capacity growth and geographical distribution
Source: BP Statistical Review of World Energy 2014
Geothermal: a comparatively slow growth
0
2000
4000
6000
8000
10000
12000
14000
1975 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Geothermal power-world
Geothermal power-world
Japan 7%
Italy 11%
Mexico 13%
Philippines 20%
US 49%
Geothermal 1995
Italy 11%
Indonesia 11%
Mexico 13%
Philippines 27%
US 38%
Geothermal 2004
New Zealand 10%
Italy 11%
Indonesia 16%
Philippines 22%
US 41%
Geothermal 2013
Hydropower: Capacity distribution
World resource Institute
Africa 2%
Europe 18%
US+Canada 16%
China India 29%
Latin & Centr.America 15%
Other Europe 2%
Former USSR 7%
Asia Pacific 6%
Ither Asia 5%
Hydropower Capacity 2011
Electricity production from renewables: shares of hydropower sources (OECD)
(Source: IEA)
0,75
0,8
0,85
0,9
0,95
1
1,05
1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Hydro Share (World)
Hydro Share (NO OECD)
The changing composition of electricity production from
renewables
Source: International Energy Agency
Electricity production from renewables shares of non-hydro sources (world)
0
0,02
0,04
0,06
0,08
0,1
0,12
0,14
1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Geo Share(World)
Wind share
Photov. Share
Tide
Electricity production from renewables: shares of non-hydro sources (Non-
OECD)
0
0,01
0,02
0,03
0,04
0,05
0,06 1
97
1
19
73
19
75
19
77
19
79
19
81
19
83
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
20
03
20
05
20
07
20
09
20
11
Geo share (Non-OECD)
Wind share
Photov. Share
Tide share
Electricity production from renewables shares of non-hydro sources (OECD)
0
0,05
0,1
0,15
0,2
0,25
1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
Wind share OECD
Photovolt. Share
Geoth. Share
Tidal share
Electricity production from renewables shares of non-hydro sources (OECD-
Europe)
0
0,05
0,1
0,15
0,2
0,25
0,3
19
60
19
62
19
64
19
66
19
68
19
70
19
72
19
74
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
Wind share (OECD Europe)
Photov. Share
Geo Share
Tide share
Renewables: advantages
• Non-exhaustible or reproducible
• Limited environmental cost (but not zero: landscape (wind, geothermal, hydropower) soil (biofuels, geothermal, hydropower), overall environmental damage (hydropower))
• Not geographically overconcentrated (Energy dependence)
Renewables’ drawbacks
• Relatively “young” technology (i.e. promising but still costly)
• Discontinuous availability of some sources (wind, solar, hydropower) with problems for balancing and despatching in the electric power sector.
• Opportunity costs: an example are biofuels, whose production subtracts land to food production, with an obvious impact on food prices.
Evaluating alternative energy sources
Define: It Investment expenditure mt maintenance expenditure ft fuel expenditure Et Energy output all evaluated at time t, Then the Levelized cost of Energy (LCOE) is defined as:
Levelized cost of Energy (LCOE)
LCOE
t0
TtI tm tft
t0
TtE t
LCOE can be interpreted as the constant sale price for energy such that all costs are recovered keeping the cost of capital into account (β is the discount factor)
Assuming that investment costs are borne only in the first Z periods (the building period) LCOE can be broken in two components:
LCOE
t0
ZtI t
t0
TtE t
tZ1
Ttm tft
t0
TtE t
Then in comparing alternative sources of energy and alternative technologies for energy conversion, results depedn crucially on:
• Construction period versus operation period costruzione (Z:T-Z),
• Discount factor
• Fuel price
• Production profile (the Et profile)
The costs considered in LCOE are private costs, but it lends easily itself to be corrected for environmental costs
A study on LCOEs
US Energy Information Administration “Projected Costs of Generating Electricity 2015”
• 181 plants in 22 countries (3 non-OECD) • I have been able to consult only the free, short edition,
which contains only a partial disclosure of results and methodologies
• In such edition, data are disclosed for three “conventional” technologies (CCGT, Coal and Nuclear) and for two Renewables (Solar PV and Wind)
• LCOEs have been computed for three discount rates (3%,7%, 10%) and are expressed as USD/MWh
Conventional technologies, minimum LCOE values (OECD)
0
10
20
30
40
50
60
70
80
90
3% 7% 10%
CCGT min
Coal plants min
Nuclear min
Renewables, minimum LCOE values (OECD)
0
20
40
60
80
100
120
140
160
180
3% 7% 10%
Solar (residential) min
Solar (commercial)
Solar (large)
Onshore Wind
Offshore wind
Conventional technologies, maximum LCOE values (OECD)
0
20
40
60
80
100
120
140
160
3% 7% 10%
CCGT max
Coal plants max
Nuclear max
Renewables, maximum LCOE values (OECD)
0
50
100
150
200
250
300
350
400
3% 7% 10%
Solar res. max
Solar comm. max
Solar large (max)
Onshore Wind max
Offshore Wind max
Waste and biofuels
Will biofuels replace oil/gas?
0
0,00001
0,00002
0,00003
0,00004
0,00005
0,00006
0,00007
0,00008
0,00009
Biogases production/Natural Gas Production
Biogases production/Natural Gas Production
0
0,0002
0,0004
0,0006
0,0008
0,001
0,0012
0,0014
0,0016
Biogas production/Oil production TJ/kt
Biogas production/Oil production
Waste
0
0,01
0,02
0,03
0,04
0,05
0,06 1
97
1
19
74
19
77
19
80
19
83
19
86
19
89
19
92
19
95
19
98
20
01
20
04
20
07
20
10
Waste/Natural gas
Waste/Natural gas
0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
0,8
0,9
1
1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
Waste/oil (TJ/kt)
Waste/oil (TJ/kt)
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