Around much of the world, coal-fired electricity generation is on the way out, due to its high carbon emissions and the increasing availability of cheap renewables. In the UK coal-fired generation, already at a low level, is to be phased out entirely by 2025. Much of the rest of the EU is following suit, although there are big issues and some laggards. Amongst them is Germany, which has done well phasing out nuclear with renewables but is still burning coal, mainly to feed the lucrative power-export market. A German government commission has been looking at the phase-out options. A further acceleration of renewables is one but it’s a big ask.
However, a 2038 final deadline for German coal phase-out is now on the cards, and with a few central and eastern EU exceptions, the real problem areas are elsewhere, especially in the developing world and in the fast expanding economies of Asia. China certainly has big problems; it uses around 50% of total global coal output. It’s trying to cut back, and is expanding renewables massively, but it is still building coal-fired plants so its emissions are still rising. And it is also exporting coal plant technology. India is another problem area, still pushing coal alongside renewables and nuclear, but it’s also trying to cut back.
Some progress
So the global picture is mixed, and is arguably worsened by the slow progress being made on carbon capture and storage: as I noted in earlier posts, that short-term technical fix option no longer looks like being very significant. Nevertheless, overall, progress on phasing out coal is being made. Certainly there is some good news. Over 90% of South Africa’s power comes from coal at present. However, it now plans to get that down to 46% by 2030, without new nuclear. And it’s talking of the coal share falling to 30% by 2050. That’s because it’s ramping up renewables. The plan envisages wind power supplying 15% of the nation’s electricity by 2030 from 8.1 GW of new wind turbines, solar producing 11% from 5.7 GW and hydro 10% from 2.5 GW, topped up with 16% gas and just 1 GW of new coal plant. Nuclear stays at 2% from South Africa’s one existing 1.8 GW plant. “There will be a study to determine if more nuclear is needed after 2030,” said energy minister Jeff Radebe. “But until then, there is no increase in nuclear generation envisaged.”
The market value of renewable resources, as captured by the wholesale market, is rapidly diminishing with each additional MW of solar capacity added to the California grid
Energy Institute at Haas
One problem is that the trade unions in South Africa, many of whose members work in coal mining and in the big state-controlled coal-based power utility, don’t like the Independent Power Project approach that is being used to develop renewables – it’s all private-sector led. They fear that their jobs will go and be replaced by less well-paid and less secure employment. But across Africa, for good or ill, state utilities are increasingly seen, in the drive to market liberalization, as blocks to progress. And the greens have been pushing sustainable energy as a job-creating alternative. So there is a political battle ahead with differing views on what’s best for the future. Though it’s pretty clear that coal, and nuclear, are on the way out.
The Californian dream
At the other extreme, there is California — already (almost) there. The state will soon have no coal or nuclear generation and has set a 100%-carbon-neutral-by-2045 target but it is having problems with renewables. The aim is to get 60% of power from these by 2030 but they are already supplying too much low-cost power at times, unsettling the energy market. This problem has already emerged in Germany and indicates some of the issues that lie ahead for renewables.
A study from the Energy Institute at Haas, Berkeley, US, looked at how wholesale electricity prices have responded to the dramatic increase in utility-scale solar capacity in California. It says “while a substantial decline in daily average prices can be attributed to the solar capacity expansion, this average price impact masks a substantial decrease in mid-day prices combined with an increase in shoulder hour prices. These results imply that short-term power markets are responding to the renewable expansion in a fashion that could sustain more flexible conventional generation, while seriously undermining the economic viability of traditional base-load generation technologies”.
Whatever happened to carbon capture?
So far so good – it’s clear that the old system and the new system don’t work well together. But the Haas study found that, as costs fall “the market value of renewable resources, as captured by the wholesale market, is rapidly diminishing with each additional MW of solar capacity added to the California grid”. That’s the so-called “market cannibalization” effect. Falling sale prices from market success reduce the incentive to invest in expansion.
The Haas report says that, under the market system in California, “the marginal revenue generated by the tenth gigawatt of California’s grid-level solar capacity is less than half of the marginal revenue generated by the second gigawatt of capacity”. So there is no incentive for suppliers to produce more. And providing subsidies to entice them just accelerates the market cannibalization process: “Renewable portfolio standards and production tax credits continue to incentivize investment in renewable capacity that has little to no market value”. Even with a high carbon tax “there will be little incentive to continue to invest in clean energy sources that are only able to produce during periods that are already experiencing a glut of clean energy”. There’s just too much, some at the wrong time.
An obvious technical answer is storage and demand management: excess daytime solar can be used to offset expensive conventional plant at night, and night-time peak demand can be time-shifted to fit better with what’s available, topped up with grid imports from other states, and exports at times of surplus. Haas doesn’t go that far, and of course adding this flexibility may add costs, but they do say their results show that base-load generation is “being penalized by renewable expansion, but that fact is consistent with the view that this market does not need base-load generation. In contrast, the market does need flexible generation, and the market responses are reflecting that this value is, at least qualitatively if not fully, reflected in prices”.
Hope for the future
California is clearly ahead of most other states in the US but it is worth noting that, overall, the US isn’t doing too badly on emissions. That is partly due to the decarbonization programmes that Obama set in train, including the expansion of renewables, which Trump has not yet managed to significantly reverse. Indeed, cannibalization issues in some states apart, renewables are booming as prices fall (so far). However, in parallel there has been a switch from coal to gas generation, enabled by the boom in shale gas production. That may not last long — well productivity has been falling — and it has major environmental implications but burning gas, while it lasts, does produce much less carbon dioxide than burning coal. So despite Trump’s attempts to revive coal, while global carbon dioxide emissions from energy in 2017 grew by 1.6%, in the US they fell by 0.5%.
Clearly not all of that small US gain is due to shale gas, and it has to be set alongside the 26-28% emissions cut by 2025 that the US committed to under Obama. What’s more, it must be noted that the shale gas boom means the US now exports a lot of coal, creating emissions elsewhere. So better US policies are needed and are unlikely to come from Trump. Or, sadly, from the new Australian administration. Under the Paris climate agreement, Australia committed to reduce its carbon emissions by at least 26 to 28% on 2005 levels by 2030 but that now looks uncertain. Coal, a major Australian export, is back centrally on the agenda with the nation’s emissions on the rise — over 60% of its power comes from coal and only around 15% from renewables. This in a country ideally suited to exploiting solar energy and hard hit by climate and weather shocks. Though, plainly, not everyone sees it that way and the battle continues. With Canada’s climate policies also under threat, it seems it may take a while for coal to go in some places.
It’s fascinating to look at how emissions have risen since the industrial revolution, first led by the UK, then the US, now China. But, although it is still patchy and gas is still a major player, a new direction of travel is becoming clear — coal is on the way out in most places, with renewables increasingly taking over. Meanwhile, nuclear is still trying to find a way back in; see my next post on the NEA (Nuclear Energy Agency’s) new study.
