Most forms of renewable power differ from traditional electricity sources in a key way: they're intermittent. The sun doesn't always shine on photovoltaics, and when it does, it may vary in intensity. Wind speeds also vary across a wide range at many locations. All of which means that the electricity generated by wind and solar will also vary, with large implications for the stability of the grid.

It's clear that putting renewable energy onto the grid isn't without costs, but the exact nature of those costs is still the subject of some contention. Now, the International Energy Agency has weighed in with a report on integrating renewables. It finds that, as long as intermittent power sources are under 10 percent of the total energy use, they can essentially be added for free. The report also argues that renewable levels can go up to 40 percent at little or no cost, but that would require substantial reshaping of the rest of the grid—something that's much easier to do outside of mature economies.

The report lumps wind and solar into a category it terms "variable renewable energy," or VRE (as opposed to hydro and geothermal, which are typically baseline power sources). Used well, VRE can perform valuable functions for the electricity grid, like covering the peak of mid-day demand, which keeps utilities from activating their reserve plants, which are often old and inefficient. Used poorly, and you can end up with situations where the wholesale price for electricity becomes negative: the utilities have to pay someone to take power off their hands.

What makes the difference between using VRE well and poorly? The IEA report suggests that the answer depends on how much VRE there is on the grid. As a country initially starts deploying renewables, a set of best practices is all that's needed. One big problem is having all the renewable energy located in a single area, where a change in local conditions can cause huge spikes or drops in the amount of power being produced. These "hotspots" can be avoided with things like distributed solar, but may be harder to arrange with wind, where the temptation will obviously be to put the capacity where the wind resources are highest.

Other factors that contribute to the effective use of low quantities of renewables include the use of forecasting, so that changes in output can be anticipated, and rapid response of prices to supply and demand. In this latter category, Texas' ERCOT grid is recognized in the report as being a world leader, with energy prices changing every five minutes, allowing generators to quickly shape their output to demand.

With all of that in place, the cost of adding renewables ends up being equal to the cost of the renewable power itself. Things start to change as the fraction of power generated by VREs approaches 20 percent, and there are definitely new challenges as it reaches 30 to 40 percent.

From a technical perspective, going to 20 to 40 percent VRE does not pose any problems. The report also suggests that 50 percent is possible if the operators of the grid are willing to actively curtail renewable generation at times when the supply is copious. From an economic standpoint, however, there can be challenges.

The IEA modeled what would happen if a grid was switched to 45 percent renewable overnight. "The rapid introduction of VRE into a stable power system... tends to create a surplus of generation capacity," the report notes. "Such an oversupply (pre-existing capacity plus VRE additions) will tend to depress wholesale market prices." That causes economic hardships for the companies that operate the legacy equipment, which may have been built to run constantly (meaning as baseline power) under the assumption that its power would always get sold.

Additional costs also come from connecting all the new power to the grid and making the grid more robust to sudden fluctuations. All told, the IEA suggests that the rapid integration of VRE can raise the cost of electricity by up to 40 percent.

But, of course, that's an unrealistic scenario; building utility-scale renewables takes time. And, during this time, the grid operators can significantly reduce the associated costs. This can include building more capacity that can ramp up or down rapidly in response to changing power supply and demand. Or it may ultimately mean mothballing some existing baseline capacity—the report suggests that the government may have to step in and determine who pays for that activity. It will also involve growing the grid with the sites of future renewable power projects in mind and developing a degree of demand response to curtail usage when renewable resources are low.

The good news is that, if done properly, the IEA estimates that this will raise the price of electricity by only about 10 percent. And, the report notes, that's assuming renewables continue to be deployed at today's prices; chances are the cost will continue to come down, and the report suggests that there may be no net costs involved in the transition.

For developing economies, the picture is even brighter. Since they've not committed to a large baseline power infrastructure, they can build their capacity using more flexible generating sources, pre-configuring their grids to accept more renewable power. They can also start earlier with management approaches, like rapid price response, to help smooth over the variability of renewables.

Overall, the report is very optimistic about the integration of renewable power, suggesting that price increases and volatility don't necessarily need to be part of the transition to situations where wind and solar make a large contribution to the grid. But it does stop short at 50 percent renewable, well below what might be required to rapidly stabilize greenhouse gas concentrations; for that, other challenges will need to be met.