The Low-Carbon Energy System Transition Under Alternative Storage And Hydrogen Cost Projections

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As the costs of wind and solar technologies plummet and global climate change consensus grows, wind and solar development pipelines have ballooned. Analyses of future energy systems indicate that wind and solar energy could account for 35-65% of total electricity supply by 2050 and 47-86% of total electricity supply by 2100 if carbon policies are introduced (Luderer et al., 2017). However, the variable and uncertain nature of wind and solar resources makes integrating these resources into the electricity system more complicated than conventional sources of generation such as coal, nuclear, and gas.

The electricity system will have to become more flexible to be able to maintain grid balance with large contributions from wind and solar resources. Storage technologies, such as pumped hydro storage, batteries, and compressed air energy storage, are considered a critical part of providing this flexibility.  However, the future costs of storage technologies are highly uncertain, as reflected by the range of projected costs found in the literature. Future storage technology costs could significantly impact how our electricity systems evolve in the coming decades.

Integrated assessment models are often used to explore global energy-economic-environmental scenarios over multi-decade time periods, particularly to identify energy transformation pathways for climate change mitigation. Such models consider cost and performance trade-offs between alternative energy supply options and end-use technologies to provide insight into energy systems development trends. Typically, integrated assessment models assume a fixed cost trajectory for storage technologies, and analyses ignore the impacts that storage technology costs might have on the energy system transformation and climate change mitigation. This study presents the first use of a globally-integrated assessment model to assess the sensitivity of future wind and solar deployments, and the electricity system more broadly, to uncertainties in the future cost of storage and hydrogen technologies.

In this study, we added techno-economic representations of electric storage and hydrogen technologies, including batteries, pumped hydro storage, compressed air energy storage, and hydrogen electrolysis to the well-cited MESSAGE model. We then ran a range of scenarios with different storage and hydrogen technology cost assumptions and explored the impacts on the electricity system evolution. The results show that large-scale storage deployment only occurs when techno-economic assumptions are optimistic. In a carbon-constrained world with high storage and hydrogen costs, wind and solar resources are integrated via flexible, low-carbon technologies such as hydrogen combustion turbines and concentrating solar power with solar thermal storage. However, this view of the future increases the cost of the energy system transition and carbon mitigation significantly. In the absence of a carbon policy, pessimistic hydrogen and storage techno-economic assumptions reduce VRE deployment and increase coal-based electricity generation.

Low-cost storage and hydrogen technologies are important in a carbon-constrained world to minimize mitigation costs, as well as in a carbon-unconstrained world to facilitate variable renewable energy integration and mitigate coal generation. In either carbon policy case, large-scale storage deployment only occurs when techno-economic assumptions are optimistic. R&D investments that produce cost breakthroughs for storage and hydrogen technologies are an important component of the low-carbon energy transition.

These findings are discussed in the article entitled, The role of electricity storage and hydrogen technologies in enabling global low-carbon energy transitions, recently published in the journal Applied EnergyThis work was conducted by Madeleine McPherson from the University of Toronto and Nils Johnson and Manfred Strubegger from the International Institute for Applied Systems Analysis.

Reference:

  1. Luderer, G., Pietzcker, R. C., Carrara, S., de Boer, H. S., Fujimori, S., Johnson, N., … Arent, D. (2017). Assessment of wind and solar power in global low-carbon energy scenarios: An introduction. Energy Economics, 64, 542–551. https://doi.org/10.1016/j.eneco.2017.03.027
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