IEA says renewables cost-competitive with new-build fossil fuel plants in OECD nations

Solar and wind energy can play major roles in transforming and decarbonising the world’s electricity grids, and at little extra cost, according to the International Energy Agency.

The IEA, a conservative group founded after the 1970s oil crisis to help guarantee supply to OECD nations, said that solar and wind could reach 45 per cent penetration levels in existing grids, with only marginal system cost increase of 7 per cent if managed properly.

The attraction of solar and wind, noted the IEA was that it was cost competitive with new build fossil fuels, without the emissions.

It notes that up to 5-10 per cent of variable renewable energy (solar and wind) could be accommodated in existing grids with no economic or technical problems at all. In reality, very few markets boast more than 10 per cent solar and wind at the moment.

Around 30 per cent penetration could be accommodated with little addition in costs. More importantly, the countries with the biggest growth profiles for electricity consumption, the emerging economies, were likely to be able to accommodate more and at least cost because they were not burdened by legacy assets.

These “dynamic” economies are well placed to employ transformed and renewable energy driven electricity systems. “This can leap-frog to a 21st century power system – and they should reap the benefits,” said IEA Executive Director van der Hoeven.

Forecasting of renewable energy production was identified as being vitally important in the design of a transformed electricity system. Storage will also play an important role in a transformed system, with batteries providing voltage regulation and other grid services while pumped hydro providing large volume storage. The IEA panel observed that pumped hydro capacity currently available in Europe is under-utilised.

Top image credit: Nádvorník via Wikipedia.

© 2014 Solar Choice Pty Ltd

Giles Parkinson

Giles Parkinson regularly contributes unique content to Solar Choice News. Giles is the founder and editor of clean energy industry news service RenewEconomy. He is a journalist of 30 years experience, a former Business Editor and Deputy Editor of the Financial Review, a columnist for The Bulletin magazine and The Australian, and the founding editor of Climate Spectator.
Giles Parkinson