Seminar
Cornelis van Kooten: Economics of Renewable Energy and Electricity Grids
Mitigating climate change will require reduced use of fossil fuels to generate electricity. To do so and eschewing nuclear power, countries have turned to wind, solar and especially biomass energy. Wind and solar sources suffer from intermittency that has been shown to destabilize electrical grids, while biomass energy may not be carbon neutral.
Prospects for Biomass, Wind and Solar
Whether biomass is carbon neutral depends, surprisingly, on the urgency with which global society wishes to address climate change. Generous subsidies for wind and solar energy have been generally effective in bringing about the investments governments desire. However, economic studies that only examine costs and benefits on a macro scale neglect or underestimate the indirect costs of wind energy, which are associated with the impact that intermittent supply has on the operation and management of an electricity grid. To gain a handle on these costs, electricity systems are discussed from generation through transmission and distribution to retail demand. I show that there are likely economic and physical limits to the proportion of electricity that can be generated by wind, solar and other intermittent energy sources. While wind and solar have their place, if society is serious about addressing climate change, the nuclear option may be the only one available in today’s policy arsenal.