The fallout from last Decembers Energy White Paper included a claim from the contrarian Global Warming Policy Foundation (GWPF) that system costs for a high renewables zero carbon future had been down played. It said they would in fact be higher than the social cost of carbon. That in turn relied on close reading of an appendix to the White Paper on modelling UK electricity supply, which itself also has some very odd things to say: it seems to see nuclear (and carbon capture) as low cost: ‘low-cost solutions at low carbon intensities can only be achieved with a combination of new nuclear and gas CCUS’. However, it says that the use of hydrogen makes it more flexible, and it admits that ‘it is technically possible for higher levels of hydrogen-fired generation to also replace nuclear and gas CCUS’, although it adds that ‘this is dependent on the quantity and cost of hydrogen available for generating electricity’.
Quite a range of views then, turning mainly on costs- these still being subject to some debate. The White paper promised that a review of all existing energy National Policy Statements (NPSs), and presumably their cost and demand assumptions, would be carried out over the next year. This is important since the old very dated NPSs (which were all designated by the government in 2011) have been used to justify decisions on energy. For example, the old NPSs were sometimes used to justify nuclear expansion on the basis of then expected growth in demand for electricity, whereas it’s actually fallen a lot. It may help that the White Paper also noted that BEIS is to further upgrade its energy modelling work, going beyond its Mackay Carbon Calculator, its update of the late Prof. David Mackay’s 2011 modelling system.
For now however, the ‘Modelling’ Appendix to the new UK Energy White Paper certainly open up lots of modeling issues. It seems to be based on the assumption that nuclear/CCUS will be flexible and also cheap- and better for displacing gas than renewables: ‘The additional renewable capacity required to replace unabated gas generation during periods of low renewable output either increases systems costs more than using additional nuclear and/or gas CCUS to do the same thing, or is not achievable within the build limits used in this modelling.’
That’s far from clear. What is clear is that, as the Appendix says, flexibility is vital and hydrogen offers it. It says that, without the use of hydrogen, ‘to deliver carbon intensity at or below 5gCO2/kWh at higher demand, combinations comprising 20GW-40GW of nuclear and 15-30GW of gas CCUS (at least 50GW in total) are needed to provide low cost solutions over all technology cost scenarios’. However, ‘including a relatively small amount of hydrogen-fired generation - in this case 20TWh - reduces the requirement for both nuclear & gas CCUS at all levels of demand and carbon. For example, to deliver a carbon intensity at or below 5gCO2/kWh at higher demand, combinations comprising 15GW-30GW of nuclear and 15-30GW of gas CCUS (at least 35GW in total) are needed to provide low-cost solutions over all technology cost scenarios.’
That is still quite high, but it is an improvement, BEIS says, because ‘in our modelling, hydrogen-fired generation operates with the same flexibility as unabated gas today and can be delivered for relatively low capital costs compared to other low-carbon generation. By only generating when required it can provide additional low-carbon electricity to meet demand during periods of low wind or solar irradiance more efficiently than nuclear, CCUS or increased renewable capacity. In other words, without hydrogen more low-carbon capacity is required to ensure the same proportion of low-carbon generation. This leads to higher levels of renewable curtailment & higher overall costs’.
Moreover, it says ‘longer term storage, including using excess renewable generation to produce hydrogen, which is stored and then used to generate electricity, will further reduce systems costs by using excess renewable generation in one period to help meet demand in another.’ And finally it says ‘Moderate levels of low-carbon hydrogen could replace unabated gas-fired generation and reduce the requirement for new nuclear and gas CCUS in low carbon systems.’ And, crucially, as noted above, it added ‘it is technically possible for higher levels of hydrogen-fired generation to also replace nuclear & gas CCUS’, though ‘this is dependent on the quantity and cost of hydrogen available for generating electricity’.
So we are back to the debate over whether, or rather when, green gas from renewables will be cheaper than so called blue hydrogen from fossil fuel. The impression is that this will take time, but the charts in the Appendix do show green hydrogen as having a similar carbon abatement cost to blue hydrogen, or perhaps lower costs at higher CO2 savings, to be attained possibly later on. So we might expect more of a commitment to green hydrogen- unless nuclear is somehow seen as still winning out!
Mind you these abatement curves are the ones that the GWPF used to claim (see above) that the overall cost of zero carbon futures was very high. Depending on the carbon saving target used, the the abatement cost range from £400-900/tonne carbon. They say that ‘even at the lower end, these greatly exceed mainstream estimates of the social cost of carbon, which stands at between £30 & £50/tCO2e. At these prices, the total annual cost of reducing emissions from 25g/kWh to 5g/kWh would range between £3.6 billion and £8 bn per year’.
There certainly are cost issues to face up to up. As far as it has panned out so far, nuclear would add even more costs (including curtailment costs) and doesn’t seem very suited to balancing variable renewables. CCS/CCSU may be similarly expensive and operationally constrained. But although renewables have got dramatically cheaper and green hydrogen conversion for balancing may do too, there will still be system integration costs. As I noted in a recent post, they have been put, in an Imperial College London review, at €14 per MWh at up to 35% renewable penetration, right up to £30/MWh at up to 85% penetration, well below typical green generation cost. Some of these costs will fall, as the technology improves, and will be offset by efficiency savings, as energy supply and demand balancing gets better, but they are not zero.