Every field of study has its own vernacular. Energy policy is no different. When discussing and comparing the benefits and challenges from the differing technologies and approaches for meeting society’s demand for electrical power, it’s good to know the right terms. Furthermore, some of these concepts describe real, emergent and often immutable phenomena and limitations which can’t be justifiably neglected in commentary and analysis.
- Load: We would normally think of this as the amount of electricity our appliance or whole house is using at any given time. Add it all up from every house, plus shops, hospitals, offices, factories, etc, and you get the load on the electrical grid. This load oscillates up and down over time as total demand changes, defining a curve. Certain types of power plants are valued for their constant output and reliability at relatively low operating costs, providing the base of of this curve.
This is the baseload of an established electrical supply market. The remaining intermediate and peak load above this is met with generators which operate more sporadically, often for a mere few hours, requiring higher market prices (or government assistance) to meet their costs. Taken all together, this supply, universally measured in megawatts (MW, or thousands of kilowatts), must equal the load at all times to maintain the stability of the distribution system. The order in which different generators supply their market is determined by their marginal cost, and is known as the merit order. Every account holder pays for this by the kilowatt hour (kWh), while it is traded on the wholesale electricity market by the megawatt hour (MWh = 1000 kWh). When analysing a year or more’s worth of demand, the unit is usually terawatt hours (TWh = a billion kWh).
factor: this is the proportion of an electrical generation technology’s actual output over time. For example, photovoltaic solar power output is constrained from producing at full rated power by night and clouds, and so exhibits an annual capacity factor in Australia of about 15%. If a natural gas-fired plant is only operated in summer to meet peak demand for air conditioning, it might have a capacity factor of 10% or less. Certain generators, such as coal fired stations in the eastern states and some hydropower in Tasmania have capacity factors closer to 100% as they provide a baseload supply.
The estimation of Australian rooftop solar capacity factor, accounting for steady addition of capacity, is shown here. For wind, a factor of 29% is provided in this article.
- Capacity credit: the IEA defines this factor clearly in their World Energy Outlook.
The capacity credit is the peak demand less the peak residual demand, expressed as a percentage of the variable renewables installed. For example, if 10 GW of wind power plants are installed in a region, and their capacity credit is 10%, then the there will be a reduction of 1 GW in the amount of other plants required, compared to a situation with no wind capacity. This is due to the weather-influenced output of variable generators (generally wind and solar, and also wave and tidal).
10% is a realistic figure for wind: South Australia’s substantial wind power capacity has been reported on:
During periods of peak demand, only a small amount of the total installed wind capacity can be relied on firmly to be providing electricity; the Australian Energy Market Operator currently assumes only 8.6% for summer and 7.9% for winter peak demand in South Australia (more precisely, for every MW of wind-generating capacity installed, the Market Operator can only rely on a statistically ‘firm’ 8.6% of that capacity being available during 85% of the top 10% highest demand periods of the year).
What does this mean? Well, the periods of substantial wind-powered supply on the grid are pretty random when compared to demand, so on the hottest afternoon in January, for example, when virtually every air conditioner and fridge is adding to load, odds are that the majority of it – “residual demand” – is being met by the conventional switch-on-and-off generators with very little help from wind capacity. To illustrate, from the above curve, during 90% of these high demand periods less than 10% of wind capacity is available. This cannot be appreciably improved by adding to South Australia’s existing 1473 MW of wind power, nor would putative economical grid-scale battery storage mitigate this limitation, as charging such capacity would effectively present another source of set demand (which would be met more reliably and economically by charging with conventional generators). This, clearly, is why it is claimed that sources like wind and solar cannot substitute for conventional generators, while it is also apparent that siting them to maximise capacity credit makes the most sense.
- Life Cycle Analysis (LCA): these analyses estimate the carbon emissions involved in the full life cycle of an energy producing technology, from construction, through fuel consumption, to decommisioning. It is on this basis that the IPCC calls for more renewable and nuclear energy (page 82). It also allows for nifty estimations of the real-time carbon intensity of electrical grids, such as for Ontario Canada, and the Australian states in the National Electricity Market.
- Energy Returned on Energy Invested (EROEI): there’s no such thing as a free lunch, and the technology providing energy to us also uses energy in the production of steel, aluminium, concrete, fuel etc in the first place. While different assumptions can yield widely varying results, EROEI can provide an indication of how well our preferred technology is contributing to supplying us in the long run (obviously, we want to see a better result than 1:1!). A fairly comprehensive example is discussed here, and while the chosen figures for EROEI may be disputed, it is critical to appreciate that, counter-intuitively, energy storage decreases EROEI – the so-called “Catch-22“.
- Levelised Cost of Electricity (LCOE): in a country like the US where all methods of generation have been used, comprehensive dollar costs for different technologies, levelised for the megawatt hours they produce (i.e. $/MWh) can be calculated.
- System LCOE: comparing technologies on the basis of LCOE becomes misleading when they are not necessarily interchangeable. As many electricity markets around the world establish a proportion of renewable energy technologies like wind and solar power, more sophisticated analysis has been used to provide the System LCOE or Integration Costs of these generators. This approach quantifies the additional costs to the system in which a generator like wind is operated and supported.
These additional costs can be thought of as the sum of the reduced economy of conventional generators due to wind’s capacity credit (profile costs), the extra expense of ramping other generators to match the fluctuations in wind conditions (balancing costs) and the various extra grid infrastructure necessary only for integrating wind capacity into the supply system (grid-related costs). They are negligible at low levels of deployment (q), but as more wind farms are connected to the grid they manifest as a mix of subtle and obvious burdens upon both them and the economy of conventional generators.
- Deaths per Kilowatt hour: this morbid metric has become regrettably necessary for demonstrating the safety of nuclear energy when appreciated in the context of meeting energy demand at nation and global scales. Despite the handful of spectacular accidents that everyone has heard of, when all sources of electricity are levelised by the unit of their product (as with LCOE) it is clear that, regardless of the urgency of climate change concerns, it is the use of fossil fuels (and not nuclear) which results in an appreciable death toll.
The most glaring ramification of this metric is for the role of hydropower. Invariably counted as renewable when emphasising the achievements of renewable energy growth, the immediate death and destruction directly resulting from catastrophic dam failures provides stark perspective on even the most conservative authoritative statistical estimations of Chernobyl‘s long-term impacts.
- Efficiency: when, with a bit of thinking, planning or effort, we can do without some of the energy we would have otherwise used, we can gain efficiency. This can help with domestic power bills – less heating and air conditioning through better insulation, LED lights replacing old hot incandescent bulbs – and definitely helps with the competitiveness of the industrial sector. At the regional scale efficiency also helps to mitigate emissions from fossil fuel power stations. But effectiveness can be limited: savings due to efficiency are likely to be reinvested in alternate ways to use energy, a so-called rebound in energy use. The rebound effect can sometimes even reach 100%, cancelling out the initial efficiency effort! This isn’t to disparage efficiency, only to draw attention to sometimes unforeseen – or neglected – consequences, and that using efficiency primarily to free up energy for other productive uses may be the most realistic path.
A note on idle plant: if you think of plant as equipment with a productive use, we are all surrounded by idle plant every day. For example, a slice of toast, maybe two, is nice, yet we don’t fill all the slots up repeatedly just so the toaster isn’t sitting idle. But compare that to the guy you might know who spent five figures on a carbon fibre road bike which hangs in his garage most weekends, instead of being ridden. Its increased use would provide benefits and make the investment worthwhile.
Industrial-scale machinery is expensive. Once it is bought and running, a return on the investment is achieved best by running it a lot. Depreciation is balanced by scheduled maintenance and correct operation within tolerances. If you think of power stations as factories which make electricity, the comparison becomes clearly obvious.
For technologies like wind and solar power, idle plant is inherent. Thus, it is factored in to operating costs and offset in many regions by legislated financial support (tradable certificates in Australia). Peaking plants are also idle until very high demand arises, with their higher costs covered by higher prices for their services. But conventional power stations need to minimise outages and maximise output to maintain profitable operation. If they can’t, they end up closing, and just like with any closing factory, this means loss of jobs and regional economic consequences. When they close without anything in their place which provides an equivalent or improved service, these impacts will be felt throughout the whole electrical supply system.