Using the narrow definition of the cost of electricity generation, commonly called the levelized cost of electricity (LCOE) , wind and solar are cheap and can compete with fossil fuels in some markets. However LCOE just measures the cost of electricity where it is attached to the grid. The cost of transmission and distribution and managing a reliable electricity supply has to be added to get the consumers price of electricity. It is false advertising to consumers to focus on LCOE.
In two previous blog posts that cover the case for Germany, California and the US as a whole I discussed a simple explanation based on ample public data on electricity generation and electricity capacity. This enables a simple calculation of overall capacity factor. In capital intensive industries like electricity supply, the lower the capacity factor, the higher the price needed to fund the capital expense.
Recently, the United Kingdom has also become a major economy that has a substantial percentage of its electricity generated from renewables, mainly wind and biofuels. Calculating the capacity factor for the UK from public data adds to the evidence of the previous three cases relating reduced capacity factor to higher electricity prices.
The electricity price could easily double from current levels which would be around five times the price of electricity from fossil fuel generation. The UK, Germany and the US may be able to afford this, but the developing world won't.
The biggest strategic problem with high electricity prices is how it raises the price of anything that uses significant amounts of electricity. Clean industrial processes for manufacturing commodities like steel, aluminum, copper and other metals will be uneconomic along with manufacturing clean synthetic fuels and processes like desalination. All of these are essential parts of a clean energy transition.
Cheap clean electricity is the essential base component of a clean energy transition. This is where Stratosolar comes in. Electricity for less than that generated using fossil fuels.
By Edmund Kelly