Wind and solar energy are currently the preferred alternatives to fossil fuels in generating electricity. This is especially true if hydraulic storage is available to address the intermittency issues associated with these energy forms. For the most part, this shibboleth remains unchallenged, although biomass, run-of-river and geothermal have been touted as potential candidates as well. Nuclear energy is ruled out and not only because of public fears related to the Fukushima incidence. It is generally felt that nuclear energy cannot compete with wind on the basis of cost. (I consider wind as it is currently better on cost and other grounds than solar, especially in northern latitudes.) Recent research suggests that this may not be the case, and for a surprising reason.
In his thesis, Conrad Fox used the method of screening curves to determine the optimal generation mix for Ontario, which has a feed-in tariff (FIT) program to encourage wind and other renewable energy sources in the production of electricity. As I explain in Chapter 11 of my book, the screening curves are used in conjunction with the load duration curve to determine the optimal capacity (measured in megawatts, MW) of each asset to install. Fox used a carbon tax to prevent coal from entering the generating mix while encouraging clean energy; the tax essentially changes the slope of the screening curves for any generating asset that releases CO2. As the carbon tax increased, nuclear power turned out to be greatly preferred to wind, with very little wind entering the mix. However, Fox had no storage option to smooth out the variability in wind output.
In a recent paper I examine this issue. In contrast to Fox, I employed a mathematical programming model that maximizes the annual net revenue from generating electricity as well as trading it with other jurisdictions. Optimization occurs subject to constraints that require demand (load) is met in every hour, generation by any generator type does not exceed its rated capacity, the speeds at which various generators can ramp up or down to meet load from one hour to the next are satisfied, and other technical operating requirements are met. Also included in the constraints are transmission limits and technical details relating to the operation of a small hydroelectric facility and reservoir that can be used to store wind energy if needed. Storage occurs simply when wind power replaces electricity that would otherwise have been produced from hydro sources – the flow of water through the hydroelectric turbines is reduced or shut off. I also included transmission links to British Columbia which also facilitate storage of excess electricity produced in Alberta. For example, Alberta will currently export power to BC at night to avoid the high costs associated with having to reduce output from base-load coal-fired power plants, which cannot ramp output up and down fast enough to track changes in Alberta’s load. BC pays very little for the power, sometimes as little as pennies per MWh, while it sells hydropower to Alberta at times of peak demand when prices exceed $100/MWh; this is a lucrative trade for BC.
I began in my model with the existing generation mix for the Alberta electrical system and the hourly Alberta load, and then used a carbon tax to incentivize removal of coal assets and investment in wind or some other clean energy source, namely, nuclear power. I also conducted some sensitivity analysis on the capacity of the transmission intertie between the two provinces (no transmission, current capacity, double current capacity). As I increase the carbon tax in the model, coal indeed gets driven out of the generating mix; when nuclear power is not allowed to enter the generation mix, massive wind turbine capacity enters, although I limited the number of 2.3 MW turbines that could be installed to 5000, all of which are all installed when carbon taxes reaches $200/tCO2. Wind replaces coal capacity and natural gas output but not necessarily natural gas capacity. Indeed, quite a large amount of natural gas capacity must be brought into the mix to backstop wind, but it does not necessarily have to be fast-responding because of available hydro. Not surprisingly, the amount of natural gas capacity increases with the amount of installed wind capacity and falls somewhat with increases in the capacity of the transmission intertie.
The surprise comes when nuclear energy is no longer prohibited. Even when high construction and environmental costs are considered, nuclear power replaces wind completely, much as in the Fox study. One would think that storage would favor wind, but it also favors nuclear. Nuclear power plants are base-load facilities, so it helps to be able to run them ‘full out’ all the time (except for scheduled maintenance). The transmission link to BC facilitates nuclear power as excess power can be sold or stored behind BC hydro dams, and then drawn upon at times of peak load. However, because nuclear power is less volatile than wind output, much less natural gas capacity needs to be installed to backstop nuclear power. Indeed, if there is no link to BC and at a carbon price of $150/tCO2, 9,700 MW of natural gas needs to be installed if nuclear power is not permitted, but only 3,900 MW if it is; if the transmission intertie to BC has double its current capacity, wind still requires 8,200 MW of natural gas to support it, but nuclear only requires 5,400 MW of installed gas capacity. It is the cost of installing backup natural gas that, as in Fox’s Ontario study, puts wind generation at a disadvantage relative to nuclear power. This result is robust with respect to the capacity of the transmission intertie; even when there is no transmission capability between the provinces, there is some, albeit small, amount of storage capacity in Alberta that can be used strategically to enable nuclear, or backstop some wind volatility. But it is also robust with respect to a broad range of costs for nuclear and wind generated power.
Finally, the results indicate that it is possible to meet the carbon dioxide emission reduction targets set forth by the G8 countries at a 2009 meeting. To maintain temperatures at 2oC, the G8 agreed that global emissions would be reduced by 50% from current levels, with rich countries reducing their emissions by 80% by 2050. Assuming no economic growth and a carbon tax of $200/tCO2, this could not be done by relying solely on wind energy. At best, Alberta could reduce its emissions by 70% if a better transmission intertie was built to British Columbia but by only 55% in the absence of improved trade. However, if nuclear power was permitted, CO2 emissions could be reduced by more than 90 percent in Alberta.