Aug 16, 2019 - Energy & Environment

As wind and solar energy grow, so do their challenges

Data: WoodMac; Chart: Axios Visuals
Data: WoodMac; Chart: Axios Visuals

Costs for wind and solar electricity have plummeted in the U.S. and around the world, driving incredible growth in these cleaner sources of energy and helping combat climate change.

But, but, but: The costs associated with the variability of wind and solar — it’s not always windy or sunny — are growing as states, progressive politicians and corporations push for rapid increases in these resources to levels much greater than what we have today.

Driving the news: A power grid run completely on renewable energy would greatly increase the risk of blackouts, according to internal modeling completed by Wood Mackenzie. Renewable energy would also need significant government support to remain financially afloat at this point, the modeling shows.

  • The work, described to Axios in an interview, was part of an analysis the firm did for a report released earlier this summer, finding that such a transition would cost $4.5 trillion within a couple decades.

What they’re saying: “Not only are [renewables] causing intermittency issues, they can no longer recover costs in the power market,” said Robert Whaley, principal analyst of power and renewables at Wood Mackenzie. "At the point of 100% saturation, they’re completely dependent upon government policy or subsidy.”

Yes, but: Some renewable-energy advocates argue 100% wind and solar will be affordable and provide stable power. As is often the case in modeling, this analysis doesn't assume technological breakthroughs, which could drive costs lower and improve energy storage capabilities that minimize risk of blackouts.

We're also a far cry from 100% wind and solar.

By the numbers, America’s electricity mix is mostly natural gas and coal (63%) and about 17% renewable, including:

  • 6.5% = wind
  • 2.3% = solar
  • 7% = hydropower, which is considered renewable but is not projected to grow substantially in the coming decades.
  • Electricity mixes vary widely by state, but most electricity grids operate across state lines.

Where it stands: The above chart illustrates the dramatic decline in wind and solar electricity costs compared to natural gas and coal. The visualized costs of wind and solar exclude federal tax credits (they’re even cheaper with them). This chart shows similar declines in South Asian nations.

  • These charts measure the "levelized cost of electricity," or LCOE. This metric calculates the lifetime cost of an electricity source, including the price of building it.
  • LCOE is a popular way to compare different fuel sources, but does so in a silo. The metric does not consider the indirect costs sources may have on the electricity grid they’re feeding into.
  • This is particularly relevant for wind and solar that can’t power on or off on demand like more traditional sources of electricity, namely coal, nuclear power and natural gas.

“In the next five to eight years, getting out post-2030 LCOE is increasingly not the full story,” said Whaley. “A lot of these markets can handle 45%-50% [wind and solar] no problem. It’s when you get past that 50% mark that it gets trickier and more nuanced.”

Go deeper: Why America is avoiding Australia’s electricity woes

Go deeper