We might save money if we harnessed solar and wind to displace all our coal and all the gasoline used for light duty vehicles (cars, SUVs, pick-ups). Let’s see how this works.
The US uses about 4000 TWh of electricity, and about half of that comes from coal (about 2000 TWh/yr from about 23 Quads of primary energy).
Our light duty vehicles require 17 Quads of oil, but only 3.4 Quads of it actually gets to the vehicles and moves them (20% efficiency from oil to movement). At ~300 TWh per Quad, this is about 1000 TWh of energy. If we did it with electricity and assumed 25% losses (electricity to batteries to motors to movement), we would need about 1333 TWh to move our light duty vehicles without oil. The total to displace both oil for cars and coal would be 3333 TWh. Let say this takes 25 years, so let’s assume 33% more demand by then (perhaps not warranted, since we may be saving energy, but just to be conservative) – that would be 4444 TWh in 2035. (This should be rounded, but it’s such a charming number, we’ll use it as is.)
So how much would this cost? Let’s do half with solar, half with wind.
Solar output varies by location. So we make the obvious choice to use above-average solar locations instead of Seattle. We might assume a 20% annual capacity factor for solar, or 1750 kWh/kW installed. This means putting most solar in the Southwest and a few other sunny places.
For wind, we can assume about a 30% capacity factor, so annually 2600 kWh/kW.
Installed Solar and Wind (GW) To Make 4444 TWh/yr in 2035 (displacing all coal and the gasoline for light duty vehicles)
|Formula||Cumulative Installed 2035|
|Solar||2222 TWh/(1750 kWh/kW-yr)||1270 GW|
|Wind||2222 TWh/(2600 kWh/kW-yr)||854 GW|
Today solar is about $3/W for very large fields, and First Solar has signed a contract to supply China with 2 GW at about $2.5/W. Meanwhile, wind has risen to about $2/W. Given the history of cost reduction in PV, we can assume that PV will drop to $2/W within the next decade. Let’s assume that all this new power will cost $2/W, so $2540B for the PV and $1708B for the wind, or a total of about $4250B over 25 years.
How much do we save in avoided fuel? After all, we are turning off all the coal we now burn, and all the oil for light duty vehicles. Assuming $3/MMBtu for the coal (including a dollar a MBtu for rail costs), and oil at 100 $/bbl for the oil (including refining and distribution costs), we get:
Avoided Energy Costs per Year (2035)
|Avoided Source||Energy Avoided (2035)||Source Fossil Energy||Annual Avoided Fuel Cost||Avoided CO2 (annual)|
|Electricity from Coal||2666 TWh (33% increase)||27 Quads Coal||$110B @ $4/MMBtu or 4.5 c/kWh (w/transport cost)||2.6 billion MT/yr@95 kg/MBtu|
|Gasoline||22 Quads (17 now + 33% increase)||3.8B bbl oil/yr (@5.9 million Btu/bbl, or 170 million bbl/Q)||$380B @$100/bbl||1.7 billion MT CO2(@3.15 MT CO2/MT oil & 0.141 MT/bbl)|
|Total Avoided (2035)||$490B/yr Avoided (2035)||4.3 billion MT CO2|
Note that almost four times more dollar savings comes from eliminating oil/gasoline than from saving coal. Oil is far more expensive than coal per Btu (about $16/MBtu at $100/bbl). But somewhat more CO2 saving comes from eliminating coal.
Now how do we compare the costs with the savings? We have invested $4250B over a period of 25 years; and in the 25th year (and from then on) we are saving about $500B of fuel and avoiding over 4 GT of CO2.
The following table uses the simplest possible approach. On the left side (column 1) we have the annual outlay in billions to buy the solar and wind. On the far right (last column), we have the savings in avoided fuel costs. The annual fuel savings starts out too small to pay for the annual solar and wind, but catches up in 2024 as the accumulated installations eventually save more fuel than the new additions add to cost.
Outlays and Avoided Costs ($/B) Assuming a
Linear Increase in Deployment
|Annual $B||Annual TWh Added||Cumulative||Fuel Cost|
This can be seen more clearly in the next figure.
What this shows is that after a period of annual losses ending in 2024, we start saving more and more money from avoided fossil fuels. Our savings far outweigh our investment. In fact, by 2030, the avoided fuel costs outweigh the investment by $700B. If we invested no more after this, the savings would increase by about $500B per year, since the systems would still be producing electricity at almost no cost. (There is a small O&M cost, and the wind turbines would have to be replaced every 20 years. The solar PV would last indefinitely, even > 60 years, perhaps degrading a bit (under 0.5%) every year.)
One way to imagine this is that we taxpayers pay for the systems each year through taxes. Meanwhile, we pay less for our electricity and gasoline, without the charge for burning fuel. By 2024, our outlay is smaller than our savings, and we then start making money and have energy self-sufficiency, guaranteed steady energy prices, no energy blackmail from the Middle East, and have avoided the greater part of the CO2 we would otherwise produce.
Why does this look so good versus prior analyses? Are we missing something?
- It looks better because the solar costs are lower – $2/W instead of $4-$8, as in the past, before the recent major progress and drop in prices. It also assumes using solar in sunnier places.
- It looks better because it assumes that we have no finance charges. Interest payments would increase the annual costs. But if we pay as we go, we avoid them.
- How about electric storage? Do we need it? The electric vehicles themselves can partially smooth solar and wind variability. We will need the smart grid for dispatching, and hydro as back up.
- Probably some of the coal plants can be converted to natural gas to add back up flexibility. Compressed air storage can add further responsiveness.
- We need some transmission, but transmission is not that expensive (perhaps 1-2 c/kWh) – it is the access to right-of-way that is hard. With a national mandate, this will not be a problem.
- The crucial missing piece is electric vehicles. How are we going to have these savings, if we cannot avoid oil?
So this analysis is different because it includes the savings from avoided gasoline. It requires that we have electric transport. The solar and wind are ready.