Myth: Cost of solar and wind power can be directly compared to fossil fuel power
The levelized cost of electricity (LCOE) metric is commonly used to compare the electricity costs from these technologies. Such comparisons are widely used to argue that the electricity generated from solar and wind has lower cost than that from fossil fuels. As discussed below, this is scientifically incorrect.
Solar and wind technologies provide electricity on an intermittent basis, i.e., they lack the functionality to meet 24X7 electricity demand. On the other hand, fossil fuel and nuclear power plants provide 24X7 electricity. The U.S. Energy Information Administration lists solar and wind in a separate category because of this important distinction . Solar and wind are listed as resource-constrained technologies, while nuclear and fossil fuel power plants are listed as dispatchable technologies.
The intermittency challenge of solar and wind causes imbalance between electricity production and demand [2,3]. Electricity is only generated during certain hours of the day in case of solar and wind. But electricity demand exists around-the-clock, which causes an imbalance. The imbalance is addressed by lowering or increasing the output from the dispatchable power plants [4,5].
Essentially, the dispatchable power plants are forced to sacrifice their performance to accommodate solar and wind power. This forced inefficient use of the dispatchable power plants causes an overall sub-optimization of the electrical grid . This increases the overall electricity cost .
The forced curtailing (i.e., restricting) of electricity production from solar or wind is another instance of sub-optimization . For example, California was forced to curtail 1,500,000,000 kWh of electricity production from solar in 2020 because of the imbalance between production and demand . How much is 1,500,000,000 kWh? The global average consumption of electricity per person in 2020 was about 3300 kWh . Thus, in 2020, California was forced to curtail the amount of electricity that would have met the needs of over 400,000 individuals.
The share of electricity generation from solar in California was only about 15% in 2020 . Despite these low levels, California was forced to curtail about 5% of its utility-scale solar electricity production in 2020. These forced curtailments are expected to increase significantly with increasing solar deployment [12,13].
Sub-optimization of the electrical grid has a negative impact on the economics . The extent of sub-optimization increases with increasing deployment of solar and wind power in the grid . Consequently, wide-scale deployment of solar and wind is costly.
The Organization for Economic Cooperation and Development (OECD) recently co-published a comprehensive report on this topic . The report provides an example estimate for the cost penalty resulting from the sub-optimization caused by solar and wind. A 10% deployment of solar and wind was found to add a 5% cost penalty to the total electricity cost. Notably, a 50% deployment of solar and wind was found to penalize the total electricity cost by over 40%.
The penalty results from the extra costs related to the deficiencies of solar and wind . These additional costs arise from the variability of power output, uncertainty in power generation and increase in costs for transmission and distribution associated with solar and wind power .
The costs that are routinely reported in media do not include the cost penalties. Thus, the reported costs do not reflect the true costs for solar and wind power. Only partial costs of solar and wind power are widely reported in media. Consequently, the reported costs cannot be directly compared with dispatchable technologies.
Media is flooded with articles advertising that solar and wind power is cost competitive with fossil fuel power. Such cost comparisons are misleading unless the shortcomings and related implications are also highlighted. Unfortunately, valid cost comparisons are not discussed in media. By excluding crucial information, these media reports provide an incorrect perception about the true cost of a low-carbon transition.
Summary: Solar and wind cannot generate 24X7 electricity on a standalone basis. Therefore, their costs cannot be directly compared with technologies that can generate 24X7 electricity. The effect of intermittency must be included in a realistic cost comparison. When the intermittency deficiency is included in the cost estimate, the costs for solar and wind power increase significantly. The cost increase is directly proportional to the extent of deployment. Higher solar and wind power in the electrical grid equals higher cost penalty. Unfortunately, most publications focus only on the partial costs of solar and wind power, i.e., they exclude costs related to the intermittency deficiency of solar and wind power .
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