Economic potentials of renewable energy

Substantial cost reductions in the past few decades in combination with government policies have made a number of renewable energy technologies competitive with fossil fuel technologies in certain applications. However, making these renewables competitive will require further technology development and market deployment, as well as an increase in production capacities to mass-production levels (Johansson and Goldemberg, 2002; van Sark et al, 2005). The present status of 'new' renewables shows that substantial cost reductions can be achieved for most technologies (see Table 2.7).

Experience curves for renewable energy

Because many renewable technologies are small in scale and modular, they are good candidates for continued cost cutting (Neij, 1997; Junginger, 2005). Such cost reduction can be illustrated using experience curves, which describe how cost declines with cumulative production, where cumulative production is used as an approximation for the accumulated experience in producing and employing a certain technology (see Figures 2.2 and 2.3). Cost data are hard to find, and prices are often taken as a proxy for cost, introducing uncertainties, especially in non-competitive markets. In addition, the cost reductions illustrated by the experience curves only show the cost reduction of technologies. The cost reduction of generated heat or electricity could be larger, owing to additional sources of cost reduction such as reduced installations costs and improved availability (Neij et al, 2003). For some resources, such as hydro and wind, cost reductions of generated electricity may level off when all 'good sites' are occupied. Technologies may also mature. Furthermore, the slope of experience curves may depend on the chosen timeframe and system boundaries. The experience curves depicted here represent only a limited number of experience curves developed over recent years (see Figures 2.2 and 2.3). Experience curves have been developed for additional energy technologies, and several experience curves have been developed for one and the same technology (Junginger,

Table 2.7 Status of renewable energy resources and technologies, 2001

Resource and technology

Expansion

Operation

Capacity factor

Energy

Turnkey invest

Current energy

Potential energy

in energy pro

capacity

(%)

production

ment costs in

cost

cost

duction from

(2001)

(2001)

2001 (US$/kw)

1997 to 2001

(%/yr)

Biomass energy

Electricity

-2.5

-40 GWe

25-80

-170 TWh (e)

500-6000

3-12 $/kWh

4-10 $/kWh

Heat

-2

-210 GWth

25-80

-730 TWh (th)

170-1000

1 -6 $/kWh

1 -5 $/kWh

Ethanol

~2

-19 bin litres

-450 PJ

(8-25 $/GJ)

(6-10 $/GJ)

Biodiesel

-1.2 bin litres

-45 PJ

(15-25 $/GJ)

(10-15 $/GJ)

Wind energy

Electricity

-30

23 GWe

20-40

43 TWh (e)

850-1700

4-12$/kWh

3-10 $/kWh

Solar energy

Photovoltaic electricity

-30

1.1 GWe

6-20

1 TWh (e)

5000-18,000

25-160 $/kWh

5 or 6-25 $/kWh

Thermal electricity

-2

0.4 GWe

20-35

0.9 TWh (e)

2500-6000

12-34 $/kWh

4-20 $/kWh

Heat

-10

57 GWth

8-20

57 TWh (th)

300-1700

2-25 $/kWh

2-10 $/kWh

Hydro energy

Large

-2

690 GWe

35-60

2,600 TWh (e)

1000-3500

2-10 $/kWh

2-10 $/kWh

Small

-3

25 GWe

20-90

100 TWh (e)

700-8000

2-12 $/kWh

2-10 $/kWh

Geothermal energy

Electricity

-3

8 GWe

45-90

53 TWh (e)

800-3000

2-10 $/kWh

1 or 2-8 $/kWh

Heat

-10

16 GWth

20-70

55 TWh (th)

200-2000

0.5-5 $/kWh

0.5-5 $/kWh

Ocean energy

Tidal barrage

0

0.3 GWe

20-30

0.6 TWh (e)

1700-2500

8-15 $/kWh

8-15 $/kWh

Wave

20-35

0

2000-5000

10-30 $/kWh

5-10 $/kWh

Tidal stream

25-40

0

2000-5000

10-25 $/kWh

4-10 $/kWh

OTEC

70-80

0

8000-20,000

15-40 $/kWh

7-20 $/kWh

Source: WEA (2004)

Source: WEA (2004)

Cumulative ethanol volume (100 m3)

Cumulative ethanol volume (100 m3)

100,000

1,000,000

100 1,000 10,000 Cumulative installed capacity in MW (PV.Wind)

Note: Data from several sources, including wind turbines produced in Denmark (Neij et al, 2003), photovoltaics worldwide (Parente et al, 2002), and ethanol produced in Brazil (Goldemberg et al, 2004). Costs are expressed in year 2000 prices.

Source: WEA (2004)

100,000

1,000,000

100 1,000 10,000 Cumulative installed capacity in MW (PV.Wind)

Note: Data from several sources, including wind turbines produced in Denmark (Neij et al, 2003), photovoltaics worldwide (Parente et al, 2002), and ethanol produced in Brazil (Goldemberg et al, 2004). Costs are expressed in year 2000 prices.

Source: WEA (2004)

Figure 2.2 Experience curves for photovoltaics, wind turbines and ethanol production

% « 10

1980 1986

. 2004 J

-W96-

—N

" yCtl___♦ —

2002

100,000 150,000 200,000

Ethanol cumulative production (thousand m3)

♦ Ethanol prices in Brazil ■ Rotterdam regular gasoline prices ---Trend (Rotterdam gasoline prices)---Trend (ethanol prices)

100,000 150,000 200,000

Ethanol cumulative production (thousand m3)

♦ Ethanol prices in Brazil ■ Rotterdam regular gasoline prices ---Trend (Rotterdam gasoline prices)---Trend (ethanol prices)

Source: Coelho (2005)

Figure 2.3 Experience curves for ethanol and gasoline

Present costs for renewable energy

Wind power in coastal and other windy regions is a promising energy source (see Figure 2.4). Other potentially attractive options include low-temperature solar heat production, and solar electricity production in remote applications (see

Figure 2.5). Wind and solar thermal or electric sources are intermittent, and not fully predictable. Nevertheless, they can be important in rural areas where grid extension is expensive. They can also contribute to grid-connected electricity supplies in appropriate hybrid configurations. Intermittent renewables can reliably provide electricity supplies in regions covered by a sufficiently strong transmission grid if operated in conjunction with hydropower or fuel-based power generation (Hoogwijk, 2004). Emerging storage possibilities and new strategies for operating grids offer promising indications that the role of intermittent technologies can be extended much further. Alternatively, hydrogen may become the medium for storing intermittently available energy production.

Modern, distributed forms of biomass, in particular, have the potential to provide rural areas with clean forms of energy based on biomass resources that have traditionally been used in inefficient, polluting ways (see Figure 2.6). Biomass can be economically produced with minimal or even positive environmental impacts through perennial crops. In the US, cellulosic biofuels could be cheaper than fossil fuel gasoline and diesel (NDRC, 2004). Biomass production and use currently is helping to create international bioenergy markets, stimulated by policies to reduce carbon dioxide emissions. Bioenergy is complex and may be differentiated into different subsystems including different resources, supply systems, conversions systems, and energy carriers (Hoogwijk, 2004). Each

Note: The costs of wind electricity may come down as a result of further technological development. Source: Hoogwijk (2004)

Figure 2.4 Geographical distribution of present costs for wind energy

Note: The costs of wind electricity may come down as a result of further technological development. Source: Hoogwijk (2004)

Figure 2.4 Geographical distribution of present costs for wind energy

_ Excluded areas

Note: The costs of solar electricity may come down as a result of further technological development. Source: Hoogwijk (2004)

Figure 2.5 Geographical distribution of present costs for solar energy subsystem includes different technologies with individual learning processes for cost reductions. The development of bioenergy will in some cases be based on modular technology development but in other cases be more like conventional technologies for heat and power production.

Renewable Energy 101

Renewable Energy 101

Renewable energy is energy that is generated from sunlight, rain, tides, geothermal heat and wind. These sources are naturally and constantly replenished, which is why they are deemed as renewable. The usage of renewable energy sources is very important when considering the sustainability of the existing energy usage of the world. While there is currently an abundance of non-renewable energy sources, such as nuclear fuels, these energy sources are depleting. In addition to being a non-renewable supply, the non-renewable energy sources release emissions into the air, which has an adverse effect on the environment.

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