Solar and Wind

We relied primarily on coal power for over 100 years, but it is now rapidly phasing out and replaced by cleaner sources of generation as more solar and wind enters the market writes Eaton.

This is good for our air, water, and health, but why is it happening?

Some people still incorrectly assume or say that it is driven by the “climate change agenda". However, the rapid drawdown of coal is due primarily to economics, as newer technologies have resulted in lower-cost sources of energy. 

Most notably, the steady drop in solar and wind costs has created an economic ‘tipping point’ where clean power – even from our own roofs – has resulted in cheaper electricity in multiple locations around the world.   Such steady, but relentless falling costs inevitably lead to a technological ‘tipping point’ – where newer technology suddenly grows and is adopted rapidly. A recent example of this dynamic is the IT revolution of recent years, which has resulted in most of us carrying smart phones in our pockets. 

The first tipping point has already been reached – and the second is on the way

Energy from wind and solar is already the cheapest option for new power generation in most European countries. That means that as current plants are decommissioned or demand grows, it is solar or wind generation that is being built, even without subsidies or incentives. 

This economic tipping point means that for new generation, renewables are already winning the race against coal, gas and nuclear. Importantly, a second economic tipping point is coming relatively soon, where existing generation plants cannot compete with renewables. Wind or solar – even rooftop solar – will have the lowest cost of energy, and at that point, renewable energy rapidly replaces fossil fuel generation – and forces nuclear plants to run at a loss or be shut down.

The changing mix of electricity must be managed

A new study, ‘Beyond the Tipping Point: Flexibility Gaps on future high renewable energy systems in the UK, Germany and Nordics’ by Bloomberg New Energy Finance (BNEF) in partnership with Eaton and the Renewable Energy Association (REA) highlights the speed at which this revolution is happening and the impacts that variable power from wind and solar will have in the UK, Germany, and the Nordics as representative markets.

By 2030, all three markets are dominated by renewables.

The good news is that these renewable energy sources will meet demand much more often. However, because wind and solar depend on the weather, the study also explores the volatility this mix will bring over hours, days, weeks, and even months. 

For example, by 2030, on sunny and windy days, almost all the electricity in the UK or Germany will come from wind and solar. On the flip side, there will be periods where wind and solar cannot provide much electricity at all. Without changes, the need for back-up power from other sources remains similar in 2040 as it is today in these markets. Since these other sources will only be used occasionally, traditional energy sources like nuclear or fossil fuels will cease to be profitable.  

As a result, we see the need for new ways to manage the volatility of supply and longer duration “seasonal” gaps. On the plus side, battery storage can address the short term concerns, but for longer gaps, we need to think about different policies, stronger interconnectors between countries and regions, and dispatchable generation such as from bioenergy. This is also the time to consider how to foster and use new technologies such as electric vehicles batteries when idle, and long term storage from Hydrogen gas and/or compressed air. 

With proper planning, it all works out

The electric system is evolving to lower-cost sources. This requires planning and investment starting now to ensure reliable, low-cost electricity in the future. The energy market is a unique hybrid system involving both public power and private capital.

The recent review of the UK market by Dieter Helm, ‘Cost of Energy’ proposes that public policy objectives — security of supply and a progressive reduction in emissions and competitiveness — can be met by allowing the market to decide the best solutions. Indeed the BNEF research touches on the fa