Q&A Series, Part-One: Christian Breyer Talks About the Economics of Renewable Energy

Christian Breyer is a Professor for Solar Economy at LUT University, Finland. His major expertise is research of technological and economic characteristics of renewable energy systems specializing for highly renewable energy systems, on a local but also global scale. Research includes integrated sector analyses with power, heat, transport, desalination, industry, NETs, CCU and Power-to-X. He worked previously for Reiner Lemoine Institut, Berlin, and Q-Cells (now: Hanwha Q Cells). He is member of ETIP PV, IEA-PVPS, scientific committee of the EU PVSEC and IRES, chairman at the Energy Watch Group and reviewer for the IPCC.

 

Question: In 2018, you co-authored a paper titled “Response to ‘Burden of proof: A comprehensive review of the feasibility of 100% renewable-electricity systems,’” published in Renewable and Sustainable Energy Reviews. You took issue with an article that doubted the ability of countries to achieve 100% renewable energy systems. In your summary you wrote, “Energy systems based on renewables are not only feasible, but already economically viable and decreasing in cost every year.” How would you define the roadmap to a 100% renewable energy economy, and what are the doubters getting wrong?

Christian Breyer: Several steps must be taken on such an energy transition pathway. First, and most important is societal consensus on the target. In countries where the target is not questioned the execution is more efficient, faster, and thus also cheaper for all stakeholders. The concrete steps include phase-out of all subsidies which do not support the target and introduction of polluter-pays rules, where required. Just think of the enormous costs of air pollution from coal-fired power plants and combustion vehicles of all kinds. Higher emission standards and fees for covering extra costs in the health system are an effective measure. The power sector is the central field of action since a 100% renewable energy system is finally based on a broad electrification of most energy services, but high emissions in the power sector would block positive effects in other sectors. Fair benefits have to be introduced for areas of wind energy utilization so that local communities welcome new wind power plants, which is typically the case, if tax income is generated for local municipalities and if local people have the right to become shareholders of wind farms built in their neighborhood. All rooftops shall be used for solar photovoltaic utilization in a win-win situation for building owners and society. Switching from combustion vehicles to electric vehicles is another major pillar. Power-to-X is the third major pillar. This implies the conversion of electricity to forms like heat (via heat pumps for space heating), fuels (for marine and aviation transportation, or seasonal storage via hydrogen or synthetic methane) and chemicals and materials (for hydrogen direct reduced ion processes for green steel), or clean water (via seawater reverse osmosis desalination). The Power-to-X processes require low-cost electricity and are most important for achieving the targets of the Paris Agreement.

There is much outdated information diffusing around on the real cost of renewable energy, but wind and solar electricity is the least cost form of electricity in most countries in the world nowadays. The high value of sector coupling and system flexibility is often not noticed. Smart charging of electric vehicles in times of solar and wind excess electricity is an example, as well as hydrogen production with electrolysis. Another flexibility is the utilization of hydro dams and bioenergy plants only in times of low solar and wind resource availability. Energy system flexibility and low-cost renewable electricity are key drivers for a highly efficient and well affordable energy system based on 100% renewables.

Q: As someone who specializes in the economics of renewable energy, how would you characterize current global trends in clean energy investments and deployment, and at what point do you think the cost of producing zero-emissions electricity will be so low that it will become the de facto energy production model worldwide.

Breyer: Since 2018 all annually installed solar photovoltaic capacity in the world is more than that of coal, gas, oil and nuclear together. This documents the already very strong economic status of solar energy. New wind electricity is available below 30 €/MWh in a country like Finland, but wind resources are partly better in other countries, while many solar photovoltaic tenders in the world are below 30 €/MWh (as low as 14 €/MWh which is the current record in Qatar). Conventional generation costs more, partly by factors. A huge problem are subsidies for conventional fuels, which also include practically no cost for CO2 emissions all over the world. The real cost of CO2 emissions, even within the 2°C target of the Paris Agreement is around 200 €/tCO2. With a real polluter-pays rule the power sector would practically switch to renewables very fast, all around the world. Without an effective CO2 price, the same happens, according to our research, but it takes longer, and time is the tightest resource in times of climate emergency.

Q: What do you see as the primary barriers or obstacles holding back both developed and developing economies from a faster build-out of renewable energy?

Breyer: Two main reasons can be identified: existing subsidies for conventional fuels and vested interests in the conventional energy system. Major global fossil fuel companies became aware of climate change risks in the 1980s and realized the fatal consequences for their existing business. Instead of convincing society to go for new technologies to avoid a climate collapse, major global fossil fuel companies decided for the other option: slowing down the not avoidable change. It is great to see that a fast-growing number of investors and companies now go for the right solutions, since it is better for their economic performance. Big Oil is the new tobacco, as recently summarized by Jim Cramer. The more agile fossil fuel companies have started investments in renewables. Much more will be needed. The Paris Agreement will lead to the situation that a fossil fuel-based business will be scaled down to zero by 2050, so better to adapt now in respective renewals for business models which really support societal targets.

Q: You’ve said, “flexibility in demand is key.” Why is flexible power generation so critical and how do you see the industry embracing—or only slowly adopting — this technology?

Breyer: Bulk power generation will be variable but not flexible in future, since wind turbines harvest the wind when available and solar systems convert sunshine when available, and these two low-cost renewable sources will provide more than 80% of all primary energy in future due to low-cost, scalability and resource availability. Flexibility options comprise flexible demand, supply flexibility of dispatchable renewables, power grids, sector coupling and storage. The most important flexible demand is smart charging of electric vehicles, heat pumps for space heating and electrolysers for various Power-to-X applications. Dispatchable renewables are mainly hydro dams and bioenergy plants which will be used in times of low wind and solar resource availability. Flexible electricity generation will be very important to guarantee the matching of supply and demand of electricity in every minute throughout a year. This can be done by highly flexible engines or gas turbines, which gradually switch to renewable fuels, including electricity-based fuels, such as hydrogen or synthetic methane. Wind and solar electricity partly cause strong variability in the power system which requires effective balancing by fast responding storage, such as batteries (stationary and electric vehicles), but also engines and gas turbines.

Q: Apart from flexibility, you advocate a range of clean energy solutions from battery storage to electric vehicles to biomass to wind-generated energy transmission across great distances. What are some of the most effective ways, or places, where you see innovative combinations of renewables technology working to produce real results?

Breyer: Most of the energy supply will be domestic, which will lead to drastically declining energy imports all around the world. Fact is that the sun shines all around the world, wind is available in many regions and humans typically founded cities along rivers, which are often used for hydropower. We found that typically 80%, or more, of energy supply can be organized domestically. This does not mean that power grids will become less important, this goes along with stronger grids, domestically and also for interconnections of neighboring countries to support each other, for the benefit of all. In general, we find that power grids are more supportive for wind energy, since large weather systems move across larger rims, and a very good power grid can harvest a maximum and then distribute this electricity across all interconnected regions. Solar electricity is more local, but faces the day night rhythm, which makes batteries (stationary and in electric vehicles) most important. Electrolysers match very well to wind and solar according to our findings. In the end it’s the positive interaction of several key energy system components: wind and solar electricity generation, batteries, electrolysers, power grids and flexibility options for guaranteeing system stability throughout the year.