Five years ago, Elon Musk gave a speech before an admiring crowd in California in which he outlined his big idea for “a fundamental transformation of the way we deliver energy here on earth”.
Generation wasn’t the issue, explained the solar entrepreneur. There already existed technology that could generate power without producing carbon emissions. “We have this handy fusion reactor in the sky called the sun,” Mr Musk quipped. “You don’t have to do anything, it just works. It shows up every day and produces ridiculous amounts of power.”
The key challenge was to get round the next obvious problem — how to make power at night or on dull days when the sun wasn’t shining. But Mr Musk had the answer to that too: battery storage. And with that he unveiled his new product, the Tesla Powerwall, an electricity storage system that hangs on the wall of a garage.
“You can basically make all electricity generation in the world renewable and primarily solar,” Mr Musk said, before adding: “I think it’s something that we must do and that we can do and that we will do.”
The speech, recounted in a new book, Apocalypse Never, by the environmental activist and pro-nuclear campaigner, Michael Shellenberger, goes some way to explaining why California has just experienced its first electricity blackouts for two decades.
The US state has followed at least part of Mr Musk’s prescription, building plenty of renewable capacity. It now generates a third of its electricity from renewables such as solar and wind. What it hasn’t done so much is to commission lots of new back-up, whether non-intermittent generation or batteries such as scaled-up versions of Mr Musk’s Powerwalls. California has only about 500 megawatts (MW) of battery storage capacity.
Instead, it has relied on other states selling it their power surpluses to fill in gaps in its increasingly intermittent system, creating a wider network called the “Western Energy Imbalance Market”. This innovation has allowed the state to claim it has shaved some costs by exploiting generation synergies. In the five years to 2018, California’s independent systems operator claimed gross consumer benefits of $122m.
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These rather trivial gains must now be weighed in the balance against the outages Californian consumers have experienced in the recent “heat storm” — events that, the last time they happened in 2001, cost the then governor Gray Davis his job.
Solar might seem well designed to meet the greater demands for power hungry air conditioning in a heatwave. But the problem comes when the sun starts setting, solar output plummets and yet evening demand remains stubbornly high. It becomes even worse if the wind doesn’t blow when it is most needed. Then the essential fragility of the system is revealed, with its dependence on gas back-up or external supplies.
Of course, California is not alone in finding hidden pitfalls in energy transition. Germany too has installed heaps of renewables, only to find costs rising and emissions stalling because of the need to deploy fossil fuel generation to back up that green capacity. (California faces higher prices also: since 2011, they have increased six times faster than in the rest of the US).
It is a problem that is compounded by the perverse decision of both Berlin and Sacramento to retire fully-depreciated existing nuclear plants early, knocking out reliable and cheap carbon-free capacity and making the system more fragile. Germany’s policy is well-known, but California has also already closed one of its last two plants, at San Onofre, early. It plans to shut the last one, Diablo Canyon, in just four years’ time.
Michael Liebreich, of Bloomberg New Energy Finance, a strong advocate of renewables, has said that keeping such plants open is an “overwhelming priority”.
Nor does battery storage yet provide a practicable solution. As Shellenberger points out, California’s biggest facility, the lithium ion battery plant at Escondido, has the capacity to power 24,000 homes for four hours. California alone has 13m households, and there are 8,760 hours in a year.
Even assuming anticipated savings in battery costs estimated by the US Department of Energy by 2025, a single Escondido would still cost $43m. That’s better news for vendors such as Mr Musk than for energy consumers. Meanwhile, as Californians are discovering, buying from out of state only works if they have surpluses to sell.
As the American wit HL Mencken once said: “There is a well-known solution to every human problem — neat, plausible and wrong.” Among these may be the thought that we can dash to very high levels of renewables with the aim of achieving net zero in the short timetables many countries are setting themselves.
We need a balanced system that is both cost-effective and delivers power reliably. Otherwise the consumer may come to equate energy transition with the misery of rising prices and power cuts
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