The renewable energy lobby likes to point out how wind and solar power soon will be able to compete with traditional fossil fuel based energy production. Ideologically this is of course very attractive. "Who would not want clean and ´free´energy for everyone forever?", as research scientist Schalk Cloete put it in his excellent recent article "The Renewable Energy Reality Check".
Now Cloete has written another article in which he shows that it is "unlikely (read impossible, NNoN) that we will see a large scale market driven displacement of fossil fuels by renewable energy in the first half of this century."
So, what does renewable energy have to accomplish before it can compete with fossil fuels in an open market? Well, in short, we will have to overcome the diffuse and intermittent nature of renewable energy more efficiently than we can overcome the declining reserve qualities and unrefinhoed nature of fossil fuels.
In other words, renewables need to overcome the following two challenges in order to displace fossil fuels in a fair market:
- Solar panels and wind turbines need to become cheaper than raw fossil fuels. This is the challenge posed by the diffuse nature of renewables.
- Storage solutions need to become cheaper than fossil fuel refineries (e.g. power plants). This is the challenge posed by the intermittent nature of renewables.--
The reason behind this is called the second law of thermodynamics which states that energy must flow from a concentrated form to a more diffuse form in order to do work. Our entire society was built on the work performed through transforming concentrated fossil energy to diffuse heat and, in order to compete, renewable energy technologies also need to deliver such concentrated energy.--
In order for intermittent renewable energy sources such as solar PV to effectively compete with fossil fuels like coal, both the price of installed solar panels and the price of battery storage will need to reduce by a full order of magnitude. In addition, optimistic long-term projections state that both solar panels and battery storage will reach technological maturity at roughly triple the cost of their fossil fuel counterparts.
Does this mean that it is fundamentally impossible for renewable energy to trump fossil fuels? Well, I would stop short of saying that, but, from this analysis, it appears unlikely that we will see a large scale market driven displacement of fossil fuels by renewable energy in the first half of this century.