Cheap as chips! 'Negligible' cost of integrating big solar into UK grid

| 4th October 2016
Wall to wall solar panels on industrial buildings in Birmingham, UK, where the Aurora report was published this week. Photo: h080 via Flickr (CC BY-SA).
Wall to wall solar panels on industrial buildings in Birmingham, UK, where the Aurora report was published this week. Photo: h080 via Flickr (CC BY-SA).
A new study shows that the cost of 'integrating' the variable power output of large scale solar PV is surprisingly affordable, writes Oliver Tickell, at just a few pence per unit. Costs will fall further as more wind power, batteries and ever-cheaper solar drive the transition to a 100% renewable power system.
Integrating large volumes of renewables into the network in a way that provides reliable power to consumers is the 'last frontier' in delivering the power system of tomorrow. Our analysis shows that such integration is surprisingly affordable.

A new report quantifies the cost of integrating solar into the UK power market for the first time - and it's much cheaper than anyone ever throught.

The study, carried out for the Solar Trade Association (STA) by Aurora Energy Research, examines two scenarios - present date, and in a 2030 scenario where solar provides over 10% of annual UK electricity.

According to the Aurora analysis, the cost of integrating solar into the power system, including 'back-up', is "negligible" at only £1.30 per MWh, or less than 2% of the costs of solar today of some £80-100 / MWh.

Dr Benjamin Irons, a Director at Aurora Energy Research and lead author of the report said: "Recent spectacular technological progress in renewable power generation puts the promise of cheap, low carbon power within reach.

"The challenge of integrating large volumes of renewables into the network in a way that provides reliable power to consumers and an attractive market for complementary generation technologies is the 'last frontier' in delivering the power system of tomorrow. Our analysis shows that such integration is possible and surprisingly affordable"

Concerns are frequently expressed by critics of renewable energy about the variable output or 'intermittency' of solar power, which generates according to daylight intensity, and the costs this variability imposes on the system. However there has been uncertainty about the actual scale of these costs - now finally put to rest.

"This welcome research puts numbers and maths behind the variability of solar power", said Angus MacNeil MP, Chair of the Common's Energy and Climate Change Committee. "It gives a concrete understanding of what solar has to offer compared to other technologies. Combined with reducing capital costs solar is going to be as cheap as source of power as you'll find anywhere."

As for the future ...

The research also shows that more than tripling solar capacity to 40GW would increase the costs of managing variability modestly, to a maximum of £6-£7 per MWh - well under 10% of current costs.

By 2030 solar power is expected to be far cheaper than today due to technology advances and larger scale deployment, and may cost as little as a third of today's price. Integration will therefore cost more in percentage terms, however the overall price will be considerably more affordable, says Irons:

"The UK could more than triple the amount of solar power on the system by 2030, with associated costs of integration and backup so low as as to be dwarfed by the enormous cost savings anticipated from falling solar prices over the same period."

40GW of solar capacity would be enough to supply around 100% of UK demand at midday on a sunny June day, effectively requiring all other power sources to be turned off. Over an entire year, it would provide over 10% of annual UK electricity consumption.

"This clarity on the costs of integrating large volumes of solar, together with further expected cost reductions in solar installations, supports the STA's and other analysts' expectation that solar can be the lowest cost form of energy generation in the 2020's", says Barwell.

"Strikingly the modelling shows integrating solar into a more decentralised, flexible, 'smarter' power system, including batteries, actually delivers more benefits than costs to the system.

"High battery penetration combined with high solar penetration reduces the cost of variability by £10.50 per MWh, resulting in a net £3.70 per MWh benefit. This is because solar combined with batteries allows output to match demand requirements exceptionally closely and requires only a small amount of back up."

Interestingly, the variability cost of integrating 40GW of solar is further reduced by 55% to £3.10 per MWh if Hinkley C is not replaced, because the inflexibility of nuclear power also imposes costs and reduces the economics of flexible generation.

The 'portfolio effect' increases benefit

The report also highlights and evaluates the portfolio effort of combining solar and wind in the energy system. The modelled scenario follows the 'High Renewables' pathway set out by the Committee on Climate Change as a generation mix consistent with the UK's 2030 carbon budgets.

This requires 40GW of solar and 45GW of wind, enough to power 55% of the UK's electricity system in 2030. The cost impact of solar on the system falls by 25% in this scenario, due to the complementary generation profiles of solar and wind. Power scenarios for the 5th Carbon Budget Report by Committee on Climate Change predicts solar and wind will beat gas on price in the UK in the 2020s.

Lord Adair Turner, Chair of the Energy Transitions Commission, commented: "Aurora's report for the Solar Trade Association confirms what an increasing number of analyses are now telling us - that we can build electricity systems with high shares of renewables such as solar and wind, using lower cost batteries, other storage technologies and demand management to deal effectively with intermittent supply.

"We should not be holding back from further renewables investment out of fear that we can't keep the lights on!"

Paul Barwell, CEO of the STA, added: "Britain is concerned about its international competitiveness as it exits the EU and moves to ratify the Paris Agreement on climate change. The good news is backing solar power, the UK's most popular energy technology, looks set to enhance UK competitiveness - so there need be no trade-offs.

"The report also shows that solar sits right at the heart of the Smart Power agenda, which overall could save consumers billions every year. Solar is an enabling technology which brings down the cost of integrating wind and battery systems."

NAO: solar 'the most cost-effective technology'  by 2025

"The tremendous growth in local, clean generation has challenged the old power supply model", continued Barwell. "Yet Ministers can be reassured that the rapid expansion in solar power over recent years has been absorbed efficiently and affordably by the system.

"The analysis suggests solar will be exceptionally cost competitive as well as zero carbon. We are on the cusp of an incredibly exciting technological transformation in the power system that the new Department has an exceptional opportunity to drive forwards. If we seize this agenda now, the UK can own the clean energy future."

"National Audit Office future projections of energy costs in 2025 anticipate solar power will be the most cost-effective technology option. However the solar industry requires a stable policy framework to deliver lowest cost solar."

The Aurora analysis was released at the STA's Smart Power event at the Conservative party conference this week.



Oliver Tickell is contributing editor at The Ecologist.

The report: 'Intermittency and the cost of integrating solar in the GB power market' is by Aurora Energy Research and published by the Solar Trade Association.

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