The Future of Energy: How to Transition to a Renewable Economy
I like data. There, I said it. Actually, I love data, so this piece will contain quite a few numbers and charts looking at how we should make the transition to a predominantly renewable energy economy here in the U.S. There are many reasons to make this transition, but I’ll take as a given that we should make this transition, focusing instead on how we can best do this.
For those who are allergic to numbers, let me sum up the conclusions here in the beginning. If we are to be successful in mitigating climate change and achieving a sustainable and independent energy system, we need to ride the waves already coming our way and do our best to start new waves where we have the power to do so.
The biggest wave by far, which is already underneath us and swelling, is solar power. We need to ride this wave as far as it will go -- and it will go far. The cost of solar power has plummeted in the last few years by more than 50 percent, and we are already seeing solar power costs at or below the cost of utility power in an increasing number of jurisdictions; this is generally known as “grid parity.” A recent report (see p. 7) found that Germany, Italy and Spain are now at grid parity for solar PV and many other countries are close.
We may as well call the point at which solar power reaches grid parity in a majority of jurisdictions around the world the “solar singularity.” When this moment is reached, solar power will take off and become the dominant power source relatively quickly. My feeling is that we’ll see solar reach half or more of our power supply in the U.S. sometime in the 2030s. That’s still a ways off, but pretty soon in terms of energy transitions.
I argued recently that we are already effectively at the halfway point to solar ubiquity because we reached 1 percent of new power plant installations from solar in 2013. As strange as it sounds at first blush, 1 percent is halfway in terms of the doublings required to get from nothing to 1 percent and from 1 percent to 100 percent. So in terms of the time required, we may indeed be halfway to solar dominance. This is an example of Kurzweil’s law of accelerating returns. Time will tell if I’m right.
The next big wave is energy storage. It’s nowhere near as certain as the solar wave, and its swell is now only barely perceptible. But with the right policy support and an army of smart entrepreneurs, this energy storage wave will be just as rideable as the solar wave. Germany is leading the way (again) on installations, with more than 4,000 residential PV-plus-battery systems installed in the first year of a new storage rebate program. California is arguably leading the way on the utility-scale side. Energy storage will be key for integrating variable renewables like solar and wind into our grids as penetration reaches high levels (we won’t need it for a number of years, but by planning now for when we do need it, we will make the transition that much smoother).
Energy storage is more useful for the grid than natural-gas backup power because energy storage devices can go both ways: they can absorb anddispatch power to the grid, whereas natural-gas plants can only dispatch. So it’s two for the price of one when it comes to energy storage. The price, however, is the catch for now: even though research suggests that energy storage may already be cost-effective when we properly account for the benefits to the grid, most observers would agree that there’s still a lot of room for energy storage costs to come down. My feeling, admittedly tinged with optimism, is that we’ll see the same trend in the energy storage business that we’ve seen in solar in the last five years, with strong demand prompting a huge ramp in production and thus big drops in price.
The last wave I’ll mention here is the energy efficiency wave. We use energy very wastefully because, frankly, energy is still really cheap. In the U.S., we waste well over half of all the energy that is actually available in our system (see Figure 1). And when we consider the potential for conservation and behavior change to reduce energy use even further, we could, it seems, be just as productive as we are today on an energy budget that is approximately half of what we currently use.
For the western half of the U.S., a grid consisting of large amounts of solar, wind, hydro and biomass that is backed up with energy storage and flexible natural-gas plants could readily provide all or a large part of the power we need to maintain and grow a modern economy. Other parts of the U.S., particularly the South, don’t have quite the renewable energy endowment that the Western U.S. has, or even the Northeast. However, high-voltage DC power lines are an option for areas without an abundance of renewable energy. While distributed energy and localized grids are to be preferred, I’d rather see renewables supply the South via power lines from Texas and the Midwest, or from large offshore wind farms in the Atlantic, than see the South continue with its coal-dominated power mix in perpetuity.
Transportation energy
Let’s start with the hard part first. Shifting to a predominantly renewable electricity system seems almost inevitable at this point. The transportation sector is a tougher nut to crack because we’re still so dependent on petroleum. Electrification is the key, however, to weaning us from petroleum, as well as from coal and natural gas. There are a ton of other ways to reduce petroleum demand -- hybrid cars, smaller and more efficient cars, biking, walking more, carpooling, increasing busing and train routes, smarter urban planning, etc. -- but to actually get us off petroleum, we should look primarily to the electrification of vehicles. I won’t rehash the arguments here, but I covered the debate over electric vehicles vs. fuel cell vehicles here. In sum, I don’t see fuel cell vehicles as a significant player in our future.
EIA, as mentioned, projects 25.5 quads will be needed for transportation energy by 2040, but this forecast includes only a small amount of electrification. Based on the logic described above, to account for increased price-induced conservation and improved efficiency, I reduce this figure by 25 percent to 19.1 quads. This means that higher petroleum prices will induce a stronger shift away from traditional vehicles, and away from driving more generally, than EIA currently projects.
While biofuels like ethanol and biodiesel are far from perfect solutions, we can’t ignore that they have in fact grown rapidly in recent years and are probably here to stay. Ethanol now provides about 1 million barrels of fuel per day in the U.S., which, after adjusting for energy content, is equivalent to about 700,000 barrels per day of oil, or about 3.7 percent of U.S. consumption. Assuming only that biofuels production stays constant, subtracting this amount from 19.1 results in a total of 18.4 quads needed for transportation energy by 2040.
Since I’ve defined a renewable energy economy as one that gets 80 percent or more of its power from renewables, we can reduce this 18.4 quads to 14.7 quads, which assumes that 20 percent of transportation will still come from fossil fuels by 2040. Since this column is an outline, I’m going to forecast at this point that this 14.7 quads will come entirely from electricity due to relatively rapid electrification of transportation through various types of electric vehicles. This point is, of course, highly debatable and uncertain, but, again, I think it’s plausible, given the trends we’re seeing today. We have 26 years to get there.
The astounding thing about electric vehicles is that they use energy about three times more efficiently than internal combustion engine vehicles. So switching our fleet to EVs entirely by 2040 would allow us to meet all 80 percent of our transportation needs with only about 5 quads of electricity. (If you don’t believe me, feel free to double-check my math.)
Electrifying our transportation sector also allows us to focus on how we produce electricity in our country as the key task for transitioning off fossil fuels economy-wide, which we discuss next.
Maintaining grid reliability
Grid reliability is a major issue when it comes to high penetration of renewables. As discussed briefly in my introduction, we will need large amounts of energy storage to balance a predominantly renewable energy grid. For present purposes, I’m simply going to assume that the nascent energy storage wave I discussed above swells fast enough to allow integration of renewables at the levels I project in this article. This is a very big assumption, and time will tell if I’m way off. Keep in mind, however, that I have allowed 20 percent of electricity to come from non-renewable sources in my definition of a renewable energy economy, and this allows some padding to help balance a high-renewables grid, along with lots of energy storage and interconnected grids for further balancing.
Substituting for natural gas
So far we’ve covered petroleum and electricity. This covers the lion’s share of energy use in the four energy consumption sectors of industrial, commercial, residential and transportation energy. It leaves out, however, heating, cooling, and industrial use of natural gas. EIA calculates about 20.8 quads of natural gas use for heating, cooling and industrial processes by 2040. Reducing by 20 percent due to our definition of “predominantly renewable,” we get 16.6 quads that we need to source from additional renewables to get to our goal.
Solar PV’s poor cousin is solar water heating technology. In fact, solar water heating may be more prevalent in the world today than solar PV; it’s just not as sexy. China's solar water heating rivals the rest of the world’s installed PV capacity, with about 118 gigawatts equivalent of solar thermal installed in China by 2010 and significant growth since then.
Solar water heating is growing in the U.S., but not as fast as solar PV. California has had a rebate program for solar water heating for a number of years, but it’s still a relatively small program. A 2007 NREL study found only 0.5 quads of technical potential for SWH in the US. This leaves 16.1 quads to make up. This is a tough sector to source predominantly from renewables, but for present purposes, I’m going to project that a mix of SWH, biomass and renewable electricity can meet these 16.1 quads. This will require a higher growth rate for renewable electricity sources than I have projected above, so it may be the case that natural gas for industrial processes and heating and cooling will take a bit longer to source predominantly from renewables than transportation and electricity.