Transcript Document

Teaching Microeconomics of
Renewable Energy
ISEE Conference
Reykjavík, Iceland
August 13, 2014
David Timmons
University of Massachusetts Boston
[email protected]
Renewable Energy: Physical Basis
Dam functions:
1. create head
2. store water
(store energy)
photo: Orkustofnun, Iceland National Energy Authority
kW = 9.8ηQH
Renewable Energy: Physical Basis
W = 0.5 ρAV3
Renewable Energy Cost Factors:
Net Energy Ratios
Energy Source
Oil (global)
Natural gas
Coal
Shale oil
Nuclear
Hydropower
Wind
Photovoltaic cells
Biomass: ethanol (sugarcane)
Biomass: ethanol (corn-based)
Biomass: biodiesel
Biomass: farmed willow chips
Net Energy
Ratio
35
10
80
5
5-15
>100
18
6.8
0.8 – 10
0.8 – 1.6
1.3
55
Adapted from Murphy and Hall (2010)
Reference
(Yandle, Bhattarai and Vijayaraghavan 2004)
(Hall 2008)
(Cleveland 2005)
(Hall 2008)
(Lenzen 2008; Murphy and Hall 2010)
(Hall 2008)
(Kubiszewski, Cleveland and Endres 2010)
(Battisti and Corrado 2005)
(Hall, Cleveland and Kaufmann 1986),(Goldemberg 2007)
(Farrell, Pelvin and Turner 2006)
(Hall, Cleveland and Kaufmann 1986)
(Keoleian and Volk 2005)
Renewable Energy Cost Factors:
Capital Intensity
Natural gas: combined cycle
Coal: advanced pulverized fuel
Hydroelectric
Nuclear: dual unit
Wind: onshore
Biomass combined cycle
Wind: offshore
Solar: photovoltaic
Solar: thermal electric
Adapted from EIA (2013)
Nominal
Capacity
(MW)
620
650
500
2,234
100
20
400
150
100
Capital
Cost
($/kW)
$917
$3,246
$2,936
$5,530
$2,213
$8,180
$6,230
$3,873
$5,067
Assumed
Capacity
Factor
90%
90%
75%
90%
25%
90%
35%
20%
20%
Capital
$/Expected1
kW
$1,019
$3,607
$3,915
$6,144
$8,852
$9,089
$17,800
$19,365
$25,335
Renewable Energy Cost Factors:
Intermittency
pumped storage: Northfield, Massachusetts
Renewable Energy Supply
World renewable energy in
likely developable locations
U.S. EIA levelized cost of
electricity estimates for 2019
400
$0.14
340.0
300
250
200
150
85.0
100
2030 50
est.
demand 0
= 17 TW
$0.12
2012 $/kWh
terawatts (TW)
350
$0.130
$0.10
$0.085
$0.08
$0.06
$0.080
$0.048
$0.04
$0.02
0.1
1.6
source: Jacobson and Delucchi (2011)
$0.00
source: EIA (2014)
Renewable Energy Supply
P
MCH
Q
A. Hydropower:
low initial cost,
but limited
quantity
Microeconomic Concepts:
marginal cost
Renewable Energy Supply
P
P
MCH
Q
A. Hydropower:
low initial cost,
but limited
quantity
MCW
Q
B. Wind:
higher cost,
higher
quantity
Microeconomic Concepts:
marginal cost
Renewable Energy Supply
P
P
MCH
Q
A. Hydropower:
low initial cost,
but limited
quantity
MCW P
Q
B. Wind:
higher cost,
higher
quantity
MCPV
Q
C. Solar PV:
highest cost,
unlimited
quantity
Microeconomic Concepts:
marginal cost
supply elasticity
Renewable Energy Supply
P
P
MCH
Q
A. Hydropower:
low initial cost,
but limited
quantity
MCW P
Q
B. Wind:
higher cost,
higher
quantity
MCPV P
MCagg
Q
Q
C. Solar PV:
highest cost,
unlimited
quantity
D. Aggregate
renewable
supply, and
demand
Microeconomic Concepts:
marginal cost
supply elasticity
aggregate supply
Renewable Energy Supply
P
P
MCH
MCW P
MCPV P
MCagg
D
Q
A. Hydropower:
low initial cost,
but limited
quantity
Q
B. Wind:
higher cost,
higher
quantity
Q
Q
C. Solar PV:
highest cost,
unlimited
quantity
D. Aggregate
renewable
supply, and
demand
Microeconomic Concepts:
marginal cost
supply elasticity
aggregate supply
market equilibrium
Renewable Energy Supply
P
P
MCH
MCW P
MCPV P
MCagg
D
Q
A. Hydropower:
low initial cost,
but limited
quantity
Q
B. Wind:
higher cost,
higher
quantity
Q
Q
C. Solar PV:
highest cost,
unlimited
quantity
D. Aggregate
renewable
supply, and
demand
Microeconomic Concepts:
marginal cost
supply elasticity
aggregate supply
market equilibrium
equimarginal principle
Renewable Energy Supply
P
P
MCH
MCW P
MCPV P
MCagg P
MCC
D
Q
A. Hydropower:
low initial cost,
but limited
quantity
Q
B. Wind:
higher cost,
higher
quantity
Q
Q
C. Solar PV:
highest cost,
unlimited
quantity
D. Aggregate
renewable
supply, and
demand
Microeconomic Concepts:
marginal cost
supply elasticity
aggregate supply
market equilibrium
equimarginal principle
Q
E. Conservation:
high quantity
available at MC of
solar PV
Geothermal Heating in Iceland
PJ (petajoule)
160
140
120
100
80
60
40
20
0
1900
1910
1 petajoule = 1015 joule = 0,278 TWh
Source: Orkustofnun 2004
1920
1930
Hydro Power
1940
1950
Geothermal
1960
1970
Peat
1980
Coal
1990
2000
Oil
Geothermal Heating in Iceland
PJ (petajoule)
160
100%
140
120
80%
60%
100
40%
80
20%
60
Proportional contribution of sources
0%
1900
1920
1940
1960
1980
2000
40
20
0
1900
1910
1 petajoule = 1015 joule = 0,278 TWh
Source: Orkustofnun 2004
1920
1930
Hydro Power
1940
1950
Geothermal
1960
1970
Peat
1980
Coal
1990
2000
Oil
Geothermal Heating in Iceland
Geothermal Heating in Iceland
Ísafjörður
District Heating System
District Heat
Energy Sources 2008
oil, 4%
incinerator, 10%
Ísafjörður, Iceland
Population: 2,600
electricity, 86%
incinerator plant
Midtown District (Skutulsfjardareyri)
Southern District (Holtahverfi)
Renewable Energy Transition Dynamics
P
MCfossil
MCrenewable1
t1
Time
Renewable Energy Transition Dynamics
P
MCfossil
MCrenewable1
MCrenewable2
t2
t1
Time
Renewable Energy Transition Dynamics
P
MCfossil
SMCfossil
MCrenewable2
t3
t2
Time