Have we reached electricity’s carbon-free tipping point?

This piece in Inside Story is an updated and expanded version of a post I sent out on 1 March

Looking at recent news on global heating, it’s easy to give way to despair. After a brief slowdown during the lockdown phase of the Covid pandemic emissions of greenhouse gases have continued to rise. Even coal, which reached a plateau in 2013, bounced back as a result of the cutoff of Russian gas, hit an all-time high in 2022.

But there are some bright spots. In particular, there’s a good chance that 2023 will be the year that coal use finally begins a sustained decline, and relatedly the year the carbon dioxide emissions from electricity generation start to fall. And, once the transition begins in earnest, it will accelerate rapidly.

This is by no means a sure thing. The International Energy Agency predicts that the current equilibirum, in which nearly all new electricity demand will be met by solar PV and wind[1], will be sustained for several years to come. That would leave coal and gas use almost unchanged. But the IEA has a long track record of underestimating solar and wind, and there are plenty of reasons to think that this has happened again

https://www.iea.org/reports/coal-2022/executive-summary

Total electricity demand is currently a bit over 25000 TWh (terawatt hours a year), growing at around 3 per cent per year. So, to meet the growing demand, we need to generate an additional 750 TWh from solar and wind ( Other carbon-free sources, such as hydro and nuclear have been essentially static.)

Assuming solar PV generates at full power for 2000 hours per year, each gigawatt (GW) of solar capacity generates two TWh of electricity per year. So, meeting additional demand with solar alone requires addition of between 375 GW of solar PV per year, with any shortfall made up by wind.

The good news is, that’s already happening. Bloomberg BNEF estimates 315 GW of solar will be installed in 2023, up from 268GW in 2022. Additions of wind power have been around 100 GW a year recently, which amounts to between 250 and 300 TWh per year.

Assuming the 2022 installations are already connected to global grids, we should see a reduction in carbon-based electricity generation this year, and steadily larger reductions in the future. That will be true even if electricity begins to substitute for oil and gas in transport, heating, cooking and so on.

Underlying this shift is the steadily decreasing cost of wind and, even more, solar power. This trend was interrupted by the supply shocks of the pandemic and Putin’s war, which led to a big increase in the price of polysilicon, as well as those of coal and gas. But while coal and gas prices remain high, the polysilicon price, while still volatile, has dropped back to more normal levels.

More importantly, new investment in solar PV is raising production capacity even further Output of polysilicon is heading for 500GW by the end of this year, and this will translate fairly quickly into production and installation of solar cells. https://pv-magazine-usa.com/2022/08/30/polysilicon-price-relief-in-2023-as-industry-scales-to-500-gw-capacity/, and as much as 700GW by 2025. https://cleantechnica.com/2023/02/27/solar-installation-growth-expected-to-reach-700-gw-by-2025/ Installations on that scale would imply a rapid shutdown of existing coal-fired and gas-fired generation.

Is this feasible? In terms of simple economics, the answer is clearly “Yes”. Solar PV and wind have been cheaper than new coal or gas for some time. They are now cheaper than continued operation of existing coal and gas in many places. And as the example of South Australia shows, the problems of intermittent supply can be resolved with a combination of battery storage, interconnection and a modest amount of gas-fired power, in a system which now relies in wind and solar for as much as 80 per cent of its power https://reneweconomy.com.au/south-australia-enjoys-80-1-pct-wind-and-solar-share-in-blackout-free-summer/

The task is even simpler where pumped hydro power is available for storage, or where existing nuclear power plants can supply any remaining demand for 24-hour power (new nuclear is hopelessly uneconomic).

And technological progress continues apace. Commercially available solar cells now routinely exceed 20 per cent efficiency https://www.cleanenergyreviews.info/blog/most-efficient-solar-panels, while new multi-junction technologies are approaching 50 per cent https://www.nrel.gov/pv/interactive-cell-efficiency.html

Concerns that shortages of ‘critical minerals’ like lithium and cobalt will constrain the process appear misplaced. Some sources of these minerals, such as lithium brines and cobalt mines in Africa are indeed problematic, as is China’s dominant position as a supplier of refined ores and batteries. But there are always alternative sources. Australia has huge resources of lithium, derived from ordinary hard rock mining. We are now developing refining, and could easily manufacture batteries for domestic use and export. Similarly, the price of cobalt has plunged recently, partly because of competition from lithium and partly because of a new source of supply, as a by-product of Indonesian nickel plants

As the urgency of ending reliance on coal, gas and oil has become more evident, supportive policies have reduced costs. The result is that solar panels are expected to become cheaper in 2023 and beyond. https://www.latestcarnews.net/solar-panel-prices-will-be-cheaper-in-2023/ In Europe, the need to respond to the cutoff of Russian gas and oil has led to the removal of some of the NIMBY obstacles to wind farms, transmission lines and so on that have delayed the transition.

The big exception to all of this is China, where coal-fired power has made a resurgence. Up to 100 new coal plants have been granted permits in the last year. This doesn’t make economic or geopolitical sense for China. It does, however, make plenty of sense for regional governments desperate to keep up a flow of large projects, both to maintain employment in coal-related industries, and for the corruption opportunities such projects inevitably generate. It seems likely that most of these plants will, if they are completed at all, lose money and either close early or force the early closure of competing plants.

In our current energy system, electricity is only part of the story, accounting for around a third of energy-related emissions. But electrification, based on carbon-free sources, is the only realistic path to decarbonizing transport and producing the hydrogen needed to replace coal and methane gas in industrial uses. If this is to be achieved in reasonable time, even 700 GW of new solar every year won’t be enough. Production will have to shift to a Terawatt scale.

There’s still no sign of the urgency needed here, certainly not in Australia. But in electricity at least, there has been far more progress than seemed possible ten or even five years ago.

fn1. I avoid the terms ‘renewables’ and ‘fossil fuels’ which date back to the energy crises of the 1970s, when we were worried about running out of oil and coal. What matters isn’t that solar and wind are renewable, it’s that they are carbon-free.