Renewable energy – what are the problems?

13 March 2012

Successive annual editions of the International Energy Agency’s (IEA) World Energy Outlook have stressed the huge challenge that rising greenhouse gas emissions pose for the world. To limit the rise in worldwide temperature to no more than 2 degrees centigrade, it is believed that carbon emissions must be constrained at no more than 450 parts per million. Given the expected growth in energy demand, the IEA believes that all conceivable ways of using energy more efficiently and switching away from fossil fuels need to be employed. This means that there is an increased use of nuclear energy in many of the IEA scenarios for the future. To rule out nuclear for reasons of public or political acceptance makes it almost impossible to achieve the environmental gains necessary.

In the European Union, however, there appears to be much greater faith in renewable energy than the IEA would recommend. And there are undoubtedly profound acceptance problems for nuclear. The European Commission (EC) has recently released an energy roadmap presenting various scenarios for meeting its target of reducing greenhouse gas emissions by at least 80% below 1990 levels by 2050 ( It says that although nuclear energy will remain an important part of Europe’s power generation mix, it will play a somewhat limited role. This role is certainly less than what the nuclear sector would wish for, and is also way below what should be possible for a mature and well-proven technology.

The commission suggests that almost all of Europe’s energy production will need to become carbon-free in order to achieve its goal. The analysis is based on seven illustrative scenarios, created by combining in different ways the four main decarbonisation routes for the energy sector: energy efficiency, renewables, nuclear and carbon capture and storage (CCS). There are several common elements in all decarbonisation scenarios: a growing demand for renewable energy, a crucial role for energy savings, an increasing role of electricity, increasing capital investments, and decreasing fossil fuel use. The roadmap notes, “All scenarios show electricity will have to play a much greater role than now (almost doubling its share in final energy demand to 36-39% in 2050) and will have to contribute to the decarbonisation of transport and heating/cooling.”

The share of renewable energy rises substantially in all seven scenarios, achieving at least 55% in gross final energy consumption in 2050, up from the current level of some 10%. Nuclear power will still be needed to provide a significant contribution in the energy transformation process in those member states where it is pursued. The EC said that while it remains neutral on the question whether or not member states should use nuclear power, it “remains a key source of low carbon electricity generation.” Under the scenarios, the highest penetration of nuclear is seen as 18% of primary energy consumption, slightly up from the current 14%. In the lowest case, where reactors currently under construction today are still in operation in 2050, while existing ones and decommissioned are not replaced, nuclear would only contribute a paltry 3% of primary energy.

There are a large number of potential problems with the Commission’s renewables-heavy vision of the energy future. As a starting point, it is heavily dependent on a significant degree of energy-saving: the scenarios show reductions in absolute energy use in Europe ranging from 32% to 41% by 2050 compared with 2005-2006. On the assumption that there is still going to be substantial economic growth in Europe over this period (once the problems of the current recession are overcome) this implies a huge reduction in energy intensity. Although there will undoubtedly be some reductions in energy intensity of the EU economies over this period, stemming from changes in the pattern of production, more energy efficient appliances, better insulation of buildings and the like, the magnitude of the drop seems highly unlikely on the strength of current policies. 2050 is still quite a long way off, but the transformation required will need many new policy measures that are still a long way from being introduced. It is highly unlikely that Europe will withdraw totally from energy-intensive manufacturing industries by 2050, and most people will still be living in major urban areas which tend to use energy intensively. A vision of people moving back towards a rural idyll with low energy use is indeed a superficially attractive one, but not grounded on any realistic analysis of trends to date. One is left with the impression that the roadmap is essentially assuming the outcome, or at the very least effectively requesting substantial new policies to be brought in to make it more likely.

There must indeed be substantial doubts about whether such a dramatic shift to renewable sources of energy is realistic. As things stand today, only hydro and wind power contribute any clean energy to Europe, beyond nuclear. The roadmap assumes rapid development of other renewable technologies (notably solar) and also the development of electricity transmission and distribution networks to cope with a very different pattern of power production and consumption. The biggest problem with renewables is that they run counter to modern society’s energy use patterns; although they tend to produce energy extensively, that is, relatively little per unit area, we tend to use energy intensively. Unless there is a huge transformation in the way people live, it is unlikely that renewables can fit the bill.

Indeed, the biggest objections to the renewables scenarios come from the probable economics. The risk is that out of the big world markets only Europe will follow a renewables-heavy energy strategy that will impose huge financial costs and imperil its economic competitiveness. In a nutshell, we know that Europe is currently facing a huge economic challenge from Asia, certainly now from China but also from India in the future. Although these countries are also very concerned about greenhouse gas emissions, they are currently more motivated by achieving high rates of economic growth than following policies that curb them. Given the lack of interest in climate change mitigation from North America as well, Europe is taking on itself the burden of transforming its energy production without much action elsewhere. This, in itself, may confer a substantial economic disadvantage. Also, China and India are likely to invest substantially in nuclear power in the period to 2050, giving them huge quantities of clean, reliable and cheap electricity at a time when Europe is facing huge additional costs in the transformation to renewables.

The fragile economics of renewables are really quite obvious. To achieve the current position of wind power in Europe has required massive subsidies; it is hard to believe that any shift to offshore wind power will be completed without huge additional costs. If the goal is low emissions, it is far more likely to be achieved at low cost by nuclear. This is assuming that new plants can be built with the same degree of efficiency as in China and Korea, which is not unrealistic once the industry moves beyond the first-of-a-kind issues at the initial Generation III reactors. Although there can be a debate on whether the costs of the other renewables will also fall substantially over time, the investment costs per kWh produced in renewables will likely remain way out of line with nuclear and fossil fuels.

Beyond the low overall capacity utilization factors of renewables, which may be at best only 30%, the intermittent nature of wind and solar power create a wider range of problems which add to cost that can sometimes be forgotten. Wind and solar power supply are largely governed by wind speed and the level of sunlight, which are only loosely, if at all, related to periods of power demand. Intermittent renewable power supply results in the imposition of additional costs on the generating system as a whole, implicitly paid for either by other generators, consumers or taxpayers.

Adequacy costs are needed to ensure that the power system has sufficient capacity to meet peak loads, while balancing costs are required to allow it to respond flexibly to demand changes at any given time. Reserve or backup capacity is needed during periods of high demand and lack of wind and solar, for instance on a calm winter’s evening. In such a situation, a high level of backup capacity would be needed to ensure security of supply from a readily-available source such as gas.

Estimates of the wind/solar reserve requirement to date have largely been made on the basis of relatively low levels of renewable penetration (that is, less than 20%). Given the absence of experience with maintaining reliable electricity supply from systems with high renewable penetration in regions of major demand, such results should be treated with caution. The reserve capacity ratio might be expected to increase exponentially in proportion to the reliance of the system on intermittent power generation. Germany is currently planning on increasing renewable power supply to 35% of the total by 2020 and 50% by 2030. The EU as a whole is targeting a 20% renewable contribution to power supply by 2020. The adequacy and balancing capacity requirements for such high levels of renewable penetration can only be estimated theoretically, but are likely to be 20% and upwards of the total renewable capacity level.

The cost of this backup capacity clearly depends on the type of backup capacity envisaged. Pumped storage is often cited as an ideal renewable form of flexible backup, but is relatively expensive. Gas turbines would be generally cheaper, but are still quite expensive because they would be operating only for part of the time and therefore suffer low load factors (probably less than 20%). Gas turbines would also be greenhouse-gas emitting.

Interconnection costs are required to link sources of supply to demand. Wind and solar farms are ideally sited in areas that experience high average wind speeds and high average solar irradiance. These sites are often, even typically, distant from areas of electricity demand. Transmission and distribution networks will often need to be extended to connect sources of supply and demand.

Overall the additional costs of renewable energy are likely to add several cents per kWh to the already high generation costs. And there is a final category of costs that result from the operation of renewables, the external costs borne by other power producers, in particular baseload power producers. During periods of low demand in a market with high renewables penetration, baseload generators such as nuclear will be displaced in the merit order. Large amounts of intermittent, low-cost power will act to reduce the load factors of baseload power generation, and thereby increase unit costs. Given the high capital costs of nuclear, such an impact will significantly reduce its economic potential.

Looking forward, Germany will provide an interesting test case of the costs of moving towards renewables. The major power users in industry are clearly concerned by the economic effect of the sudden shutdown of eight reactors post-Fukushima and the rising dependence on renewables. Those who have voted for shutting down nuclear and relying on renewables are likely unaware of the impact on prices. In the domestic sector, customers may be willing to pay more, but the impact on industrial competitiveness could be severe. The drive to renewables could conceivably slow down economic growth in Europe significantly, itself causing the lower energy demand shown in the roadmap.

Credit: The Unit by Alexey Kovynev
"The solar plant is calling again asking if I can do something about the clouds"

This article was first published in the February 2012 issue of Nuclear Engineering International magazine

Author Info:

Steve Kidd is deputy director general of the World Nuclear Association, where he has worked since 1995 (when it was still the Uranium Institute). Any views expressed are not necessarily those of the World Nuclear Association and/or its members.

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