Is Bigger Best in Renewable Energy? Webinar Presentation

IS BIGGER BEST?
E X A M I N I N G T H E E C O N O M I E S O F S C A L E O F R E N E WA B L E E N E R G Y
John Farrell
Director of Energy Democracy
December 5, 2016

A H I S T O RY O F
B I G T H I N G S

Volume 1 8
Surface area 6 24x4
x8

ThermalEfficiency
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Maximum efficiency
Average efficiency
P O W E R P L A N T E F F I C I E N C Y
Source: Power Loss
1882 19941900 1925 1950 1975

W H I C H S TAT E T O P O W E R T H E M A L L ?

S U R P R I S I N G S AV I N G S I N
S M A L L N E S S

InstalledCost
$1,500
$1,700
$1,900
$2,100
$2,300
$2,500
$2,700
$2,900
$3,100
$3,300
$3,500
≤5 MW 5-20 MW 20-50 MW 50-100 MW 100-200 MW >200 MW
W I N D E C O N O M I E S O F S C A L E 2 0 0 7 - 0 9
Source: Wind Technologies Market Report
Average cost per kilowatt

W I N D E C O N O M I E S O F S C A L E
InstalledCost
$1,500
$1,700
$1,900
$2,100
$2,300
$2,500
$2,700
$2,900
$3,100
$3,300
$3,500
≤5 MW 5-20 MW 20-50 MW 50-100 MW 100-200 MW >200 MW
2011
2012
2013
2014
2015
Average cost per kilowatt, 2011-2015
2011 data

InstalledCost
$1,500
$1,700
$1,900
$2,100
$2,300
$2,500
$2,700
$2,900
$3,100
$3,300
$3,500
≤5 MW 5-20 MW 20-50 MW 50-100 MW 100-200 MW >200 MW
2011
2012
2013
2014
2015
2011 data
2015 data

InstalledCost
$1,500
$1,700
$1,900
$2,100
$2,300
$2,500
$2,700
$2,900
$3,100
$3,300
$3,500
≤5 MW 5-20 MW 20-50 MW 50-100 MW 100-200 MW >200 MW
2011
2015
2011 data
2015 data

InstalledCost
0%
20%
40%
60%
80%
100%
120%
140%
≤5 MW 5-20 MW 20-50 MW 50-100 MW 100-200 MW >200 MW
84%87%88%92%
100%
131%
Average cost per kilowatt as a percentage of 5-20 MW wind projects,
2011-2015 average data
$2,191/kW

W I N D V. W I R E S : R E L AT I V E C O S T O F
G E T T I N G W I N D P O W E R F R O M FA R A WAY
Source: ILSR
250 500 750 1000
10% 108% 131% 154% 176%
20% 93% 116% 139% 162%
30% 78% 101% 124% 147%
40% 64% 86% 109% 132%
50% 49% 72% 94% 117%
60% 34% 57% 80% 102%
Distance from electric customers (miles)
Baseline cost of 3.6¢ per kilowatt-hour
Increaseinwindspeed

W I N D V. W I R E S : R E L AT I V E C O S T O F
G E T T I N G W I N D P O W E R F R O M FA R A WAY
Source: ILSR
250 500 750 1000
10% 108% 131% 154% 176%
20% 93% 116% 139% 162%
30% 78% 101% 124% 147%
40% 64% 86% 109% 132%
50% 49% 72% 94% 117%
60% 34% 57% 80% 102%
Distance from electric customers (miles)
Transmission cost outweighs wind speed benefit
Baseline cost of 3.6¢ per kilowatt-hour
Increaseinwindspeed
Transmission lowers cost

S H O R T T R A N S M I S S I O N W O R K S B E S T
Weighing the wind resource benefit against transmission costs
Transmission cost outweighs wind speed benefits
Minneapolis
Chicago
Columbus
Pittsburgh
New York City
Cost within +/-5%
Wind Speed
Faster
Slower

Chicago
Cost within +/-5%
Wind Speed
Faster
Slower

Chicago
New York City
Cost within +/-5%
Wind Speed
Faster
Slower

T H E P R I C E T H AT
M AT T E R S

W I N D P R I C E S V. T H E M A R K E T
20-year levelized cost per kilowatt-hour, 2011-2015
Price of competition
Annual average day-ahead wholesale price, PJM (2015)
Distributed wind “avoided cost”
InstalledCost
$0.00
$0.01
$0.02
$0.03
$0.04
$0.05
$0.06
≤5 MW 5-20 MW 20-50 MW 50-100 MW 100-200 MW >200 MW
$0.035$0.036$0.037$0.038
$0.042
$0.054

S O L A R E C O N O M I E S O F S C A L E
InstalledCost
$0.00
$1.10
$2.20
$3.30
$4.40
Residential ≤10 10-20 20-50 50-100 100-250 250-500 500-1000 5-10 MW 10 to
20 MW
20 to
100 MW
100 to
1,000 MW
Median reported installed costs 2015*
kilowatts megawatts
Sources: Tracking the Sun IX and Utility-Scale Solar 2015
(SunShot, Berkeley Labs)
DOES NOT INCLUDE COST OF DELIVERY
*Utility-scale figures reported in $ per AC-watt and
are adjusted down 10%

Costofelectricity
0.0¢
2.0¢
4.0¢
6.0¢
8.0¢
10.0¢
12.0¢
14.0¢
20 MW
20 to
100 MW
100 to
1,000 MW
Estimated levelized cost of electricity based on reported 2015 costs*
kilowatts megawatts
(SunShot, Berkeley Labs); SAM (NREL); ILSR

Costofelectricity
0.0¢
2.0¢
4.0¢
6.0¢
8.0¢
10.0¢
12.0¢
14.0¢
20 MW
20 to
100 MW
100 to
1,000 MW
S O L A R C O M P E T E S AT M O S T S I Z E S
kilowatts megawatts
(SunShot, Berkeley Labs); EIA (2014 data); CPUC (2011); NYMEX (2016); ILSR
Residential
retail price
Commercial
retail price
Industrial
retail price Calif. Market Price Referent
Price of competition
Price advantage
Estimated levelized cost of electricity based on reported 2015 costs*

S I Z A B L E D E P L O Y M E N T S

S O L A R ’ S S P E E D Y AT A N Y S I Z E
Germany
USA
Annual installed megawatts
0 5,000 10,000 15,000 20,000 25,000
22 gigawatts,
75% < 500 kW
23 gigawatts,
42% < 1,000 kW
2007 2008 2009 2010 2011
2011 2012 2013 2014 2015

InstalledCost($/Watt)
Germany Japan USA Australia France
$2.10
$1.60
$3.50
$2.10
$1.20
$2.60
$1.80
$4.00
$2.90
$1.70
Residential
Small Non-residential
$0.0 $1.3 $2.5 $3.8 $5.0
33 GW 32 GW
12 GW
5 GW 4 GW
C O M PA R I S O N O F D I S T R I B U T E D S O L A R
I N S TA L L E D P R I C E S
TotalInstalledDistributedPVCapacity(GW)
Source: Lawrence Berkeley National Laboratory

InstalledCost
$0.00
$1.10
$2.20
$3.30
$4.40
20 MW
20 to
100 MW
100 to
1,000 MW
Median reported installed costs 2015*
kilowatts megawatts
(SunShot, Berkeley Labs)
*Utility-scale figures reported in $ per AC-watt and
are adjusted down 10%
S M A L L S O L A R
P R I C E S I N
G E R M A N Y B E AT
A N Y S O L A R
P R I C E I N U . S .

0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Rate impact
2.7%2.5%
Southwest Utility
Northeast Utility
B O T T O M L I N E of 10% customer-owned solar
Minimal impact to
customer bills

-20.0%
-15.0%
-10.0%
-5.0%
0.0%
Earnings impact Equity return impact
-8%-15% -3%-8%
Southwest Utility
Northeast Utility
B O T T O M L I N E of 10% customer-owned solar
Significant impact
for utility earnings

“There is one
great advantage
that must follow
regulation, and
that advantage is
protection"

“We come to work each day to
do what we did the day before”

3.2
3.3
3.4
3.5
3.6
3.7
3.8
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
I N W H AT Y E A R S D I D E L E C T R I C I T Y
S A L E S P E A K ?
trillion kilowatt-hours

3.2
3.3
3.4
3.5
3.6
3.7
3.8
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
P E A K
S TA G N A N T R E TA I L S A L E S
trillion kilowatt-hours

RevenueRequirements
(millions,nominal)
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
PG&E
SCE
SDG&E
R I S I N G T R A N S M I S S I O N R E V E N U E
R E Q U I R E M E N T S
Sources: CPUC (2016)

D I S T R I B U T I O N G R I D I N V E S T M E N T
L A G G I N G
American Society of Civil Engineers
“America will see an investment gap in distribution
infrastructure of $57 billion by 2020”

F R E E D O M T O G E N E R AT E U N D E R F I R E
STATES FACING CHALLENGES TO DISTRIBUTED POWER
May 2016
- Q1 2016 action
- No recent action
Source: The 50 States of Solar: Q1 2016, NC Clean Energy Technology

N E W R U L E S
• Enable alternatives

N E W R U L E S
• Set up markets

N E W R U L E S
• Allow power
sharing

Report: Is Bigger Best in Renewable Energy?
Download the report
Introduction: the Savings of Size?
—————————————————
Renewable Energy Economies of Scale
—————————————————
Evidence to the Contrary
—————————————————
Limits to Scale in Wind
—————————————————
Limits to Scale in Solar
—————————————————
Does Big or Small Grow Fastest?
—————————————————
Evidence to the Contrary
—————————————————
Summary
John Farrell

T H A N K Y O U !
@johnffarrell
www.ilsr.org
C H A N G I N G
T H E R U L E S
P R O V I D I N G
T O O L S
1 0 0 % R E N E WA B L E
L O C A L E C O N O M Y
H U M A N
S C A L E
L O C A L
O W N E R S H I P
D E M O C R AT I C
A U T H O R I T Y
I L L U S T R AT I N G
T H E V I S I O N

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Is Bigger Best in Renewable Energy? Webinar Presentation