Wind and solar power are even more expensive than is commonly thought ... SUBSIDIES for renewable energy are one of the most contested areas of public policy. Billions are spent nursing the infant solar- and wind-power industries in the hope that they will one day undercut fossil fuels and drastically reduce the amount of carbon dioxide being put into the atmosphere. The idea seems to be working. Photovoltaic panels have halved in price since 2008 and the capital cost of a solar-power plant—of which panels account for slightly under half—fell by 22% in 2010-13. In a few sunny places, solar power is providing electricity to the grid as cheaply as conventional coal- or gas-fired power plants. ... But whereas the cost of a solar panel is easy to calculate, the cost of electricity is harder to assess. It depends not only on the fuel used, but also on the cost of capital (power plants take years to build and last for decades), how much of the time a plant operates, and whether it generates power at times of peak demand. To take account of all this, economists use “levelised costs”—the net present value of all costs (capital and operating) of a generating unit over its life cycle, divided by the number of megawatt-hours of electricity it is expected to supply. ... The trouble, as Paul Joskow of the Massachusetts Institute of Technology has pointed out, is that levelised costs do not take account of the costs of intermittency.* Wind power is not generated on a calm day, nor solar power at night, so conventional power plants must be kept on standby—but are not included in the levelised cost of renewables. Electricity demand also varies during the day in ways that the supply from wind and solar generation may not match, so even if renewable forms of energy have the same levelised cost as conventional ones, the value of the power they produce may be lower. In short, levelised costs are poor at comparing different forms of power generation. ... the most cost-effective zero-emission technology is nuclear power.
A critical part of any analysis of high-renewable systems is the cost of backup thermal power and/or storage needed to meet demand during periods of low renewable generation. These costs are substantial; as a result, levelized costs of wind and solar are not the right tools to use in assessing the total cost of a high-renewable system ... High-renewable grids reduce CO2 emissions by 65%-70% in Germany and 55%-60% in California vs. the current grid. Reason: backup thermal capacity is idle for much of the year ... High-renewable grid costs per MWh are 1.9x the current system in Germany, and 1.5x in California. Costs fall to 1.6x in Germany and 1.2x in California assuming long-run “learning curve” declines in wind, solar and storage costs, higher nuclear plant costs and higher natural gas fuel costs ... The cost of time-shifting surplus renewable generation via storage has fallen, but its cost, intermittent utilization and energy loss result in higher per MWh system costs when it is added ... Balanced systems with nuclear power have lower estimated costs and CO2 emissions than high-renewable systems. However, there’s enormous uncertainty regarding the actual cost of nuclear power in the US and Europe, rendering balanced system assessments less reliable. Nuclear power is growing in Asia where plant costs are 20%-30% lower, but political, historical, economic, regulatory and cultural issues prevent these observations from being easily applied outside of Asia ... National/cross-border grid expansion, storing electricity in electric car batteries, demand management and renewable energy overbuilding are often mentioned as ways of reducing the cost of high-renewable systems. However, each relies to some extent on conjecture, insufficient empirical support and/or incomplete assessments of related costs