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⇑ Wind Power Installation Amplifies

The Growth Of Fossil Fuel Energies

“[A]s RES [renewable energy sources] increases, the expected decreasing tendency in the installed capacity of electricity generation from fossil fuels has not been found.” – Marques et al., 2018

In late 2012, a prophetic article appeared in the Los Angeles Times that warned:

“As more solar and wind energy generators come online, […] the demand will rise for more backup power from fossil fuel plants.”

Image Source: LA Times

Wind turbines cannot produce energy when the wind is not blowing. Consequently, wind power routinely needs to be backed up by reliable and immediately-available energy sources — which are often fossil fuels-based (gas, oil, coal).

So as wind power installation expands across the world, more fossil fuel plants will need to be built to back them up.

A new observational analysis using data from 10 European Union countries affirms the rather devastating conclusion that wind power installation “preserves fossil fuel dependency” because for every 1% increase in the installed capacity of wind power there is a concomitant ~0.25% increase in the need for more electricity generation from fossil fuels.

And, sure enough, the growth in natural gas production and consumption across the globe is expected to explode in the coming decades (EIA, 2016), nearly doubling in production (from 300 to nearly 600 billion cubic feet per day) between 2010 and 2040.

Currently, 1,600 new coal plants in 62 countries are planned or in the process of being constructed across the world, expanding the world’s coal-fired energy capacity by 43% in the coming years (New York Times, 2017).

There can be no long-term CO2 emissions reduction benefit to installing more and more wind power if the long-term net effect of doing so leads to the requisite construction of more fossil fuel energy plants.

♦ “The installed capacity of wind power preserves fossil fuel dependency. … Electricity consumption intensity and its peaks have been satisfied by burning fossil fuels. … [A]s RES [renewable energy sources] increases, the expected decreasing tendency in the installed capacity of electricity generation from fossil fuels, has not been found. Despite the high share of RES in the electricity mix, RES, namely wind power and solar PV, are characterised by intermittent electricity generation. … The inability of RES-I [intermittent renewable energy sources like wind and solar] to satisfy high fluctuations in electricity consumption on its own constitutes one of the main obstacles to the deployment of renewables. This incapacity is due to both the intermittency of natural resource availability, and the difficulty or even impossibility of storing electricity on a large scale, to defer generation. As a consequence, RES [renewable energy sources] might not fully replace fossil sources.”

♦ “The literature proves the existence of a unidirectional causality running from RES [renewable energy sources] to NRES [non-renewable energy sources] (Almulali et al., 2014; Dogan, 2015; Salim et al., 2014). This unidirectional causality proves the need for countries to maintain or increase their installed capacity of fossil fuel generation, because of the characteristics of RES [renewable energy sources] production.”

♦ “In fact, the characteristics of electricity consumption reinforce the need to burn fossil fuels to satisfy the demand for electricity. Specifically, the ECA results confirm the substitution effect between the installed capacity of solar PV and fossil fuels. In contrast, installed wind power capacity has required all fossil fuels and hydropower to back up its intermittency in the long-run equilibrium. The EGA outcomes show that hydropower has been substituting electricity generation through NRES [non-renewable energy sources], but that other RES have needed the flexibility of natural gas plants, to back them up.”

♦ “[D]ue to the intermittency phenomenon, the growth of installed capacity of RES-I [intermittent renewable energy sources – wind power] could maintain or increase electricity generation from fossil fuels. … The electrification of the residential, services and industrial sectors has been continuously pursued to diminish the consumption of fossil sources. Nevertheless, the increased electricity consumption intensity in the economy has been satisfied by fossil fuel burning, which has cancelled out the advantages of that shift.”

♦ “The installed capacity of wind power preserves fossil fuel generation to back up its electricity generation. In fact, the installed capacity of wind power has been deployed in large amounts to increase the exploitation of natural resources. But, the intermittency phenomenon, more noticeable in wind power, means that, unlike fossil fuels, the installation of this RES capacity does not correspond to growth by the same amount of electricity generation. On the one hand, this can cause a lack of energy in the grid, i.e., the excess of installed capacity does not correspond to the effective generation to satisfy the entire demand. … In short, the results indicate that the EU’s domestic electricity production systems have preserved fossil fuel generation, and include several economic inefficiencies and inefficiencies in resource allocation.”

♦ “[A]n increase of 1% in the installed capacity of wind power provokes an increase of 0.26%, and 0.22% in electricity generation from oil and natural gas, respectively in the long-run…. Natural gas plants are the most commonly used to manage the scarcity of RES electricity supply and the uncertainty of electricity demand. Indeed, the flexibility and storage facilities of natural gas plants allow the electricity production systems to effectively match the electricity demand with the electricity supply. Hence, this implies that the greater the electricity consumption peaks, the larger the capacity for generation from natural gas plants must be and, consequently, the longer and larger the capacity needed on stand-by status.”

To Grow Renewables’ Market Share,

More Fossil Fuel Plants Are Needed

“Paradoxically, in order for renewable technologies to continue growing their market share, they need to co-exist with fossil fuel technologies.”

In another new paper that lends support to the conclusions of Marques et al. (2018) above, Blazquez et al. (2018) (full paper available for download) find that renewable energy paradoxically becomes more and more costly to consumers the further it penetrates the market, and thus simultaneous growth in fossil fuel technologies is needed to keep the costs of renewable energy sustainable.

Moreover, Blazquez et al. (2018) conclude that “transition towards a full 100% renewable electricity sector is unattainable.”

♦ “However, promoting renewables –in liberalized power markets– creates a paradox in that successful penetration of renewables could fall victim to its own success. With the current market architecture, future deployment of renewable energy will necessarily be more costly and less scalable. Moreover, transition towards a full 100% renewable electricity sector is unattainable. Paradoxically, in order for renewable technologies to continue growing their market share, they need to co-exist with fossil fuel technologies.”

♦ “The paradox is that the same market design and renewables policies that led to current success become increasingly less successful in the future as the share of renewables in the energy mix grows. The renewable energy policy paradox results from the interaction between several factors, including: [1] the (almost) zero marginal costs of renewables, [2] the intermittent nature of renewables, [3] the interplay between price volatility and renewable technologies. The first feature above explains why renewables have priority of dispatch. The structure of renewable technologies, which have a high levelized cost of electricity but almost zero marginal cost of production, gives renewable energy priority in the order of dispatch. However, renewable technologies are often not the cheapest in terms of total cost, not marginal cost. This leads to a divergence between the true cost of the system and the evolution of price of electricity in wholesale markets, in markets with high penetration of renewable energy.”

♦ “To illustrate this point, we performed simple calculations for three European countries using Eurostat data which show a sharp decrease in wholesale prices that concur with high penetration of renewable capacity but also a surge in the final consumer price for the period 2008–2014. In Germany there was a simultaneous increase in the price of electricity to consumers of 41 percent, a decrease of the wholesale price of electricity of 50 percent and renewable penetration increased from 15.1 percent to 28.2 percent.”

♦ “In the longer term, investors will not reinvest or recapitalize electricity markets without sufficient guarantees on returns. These additional costs will eventually be borne by taxpayers or consumers. In Germany the feed-in tariff subsidy program has already cost more than $468 billion, and its total cost could exceed $1.3 trillion by the time it expires, according to 2015 estimates. German consumers paid an 18 percent surcharge on their monthly power bills in 2014 to finance renewables. This is more than a fivefold increase since 2009.”

♦ “Full decarbonization of a power sector that relies on renewable technologies alone, given the current design of these markets, is not possible as conventional [fossil fuel] technologies provide important price signals. Markets would collapse if the last unit of fossil fuel technologies was phased out. In the extreme (theoretical) case of 100 percent renewables, prices would be at the renewables marginal cost, equal to zero or even negative for long periods. These prices would not be capturing the system’s costs nor would they be useful to signal operation and investment decisions. The result would be a purely administered subsidy, i.e., a non-market outcome. This is already occurring in Germany as Praktiknjo and Erdmann [31] point out and is clearly an unstable outcome. Thus, non-dispatchable technologies need to coexist with fossil fuel technologies. This outcome makes it impossible for renewables policy to reach success, defined as achieving a specified level of deployment at the lowest possible cost. With volatile, low and even negative electricity prices, investors would be discouraged from entering the market and they would require more incentives to continue to operate.”