[[{“value”:”
ENB Pub Note: This is an outstanding post on LinkedIn from Doug Sheridan, and I have invited him to be on the Energy News Beat podcast several times, but he is having way too much fun writing on LinkedIn. This also ties in with my Substack article today: “Has the solar market seen better days? Economic Headwinds Threaten Solar Industry’s Bright Future”
I would have to say that Doug is right yet again.
A few weeks ago, in the wake of the blackout on the Iberian Peninsula, we posted our belief that European countries betting on wind and solar to power their economies were in store for unnaturally high electricity costs going forward.
We were then challenged by a person knowledgeable about global energy markets to demonstrate what better options European countries have than leaning so heavily on renewables. It was a fair question.
In the weeks since, we’ve done some research and analysis on the issue. Since solar is the energy source we’ve modeled the most, and is argued by many to be the most economic form of renewable energy, we decided to work backwards from the solar capacity factors in ten European countries that generate considerable amounts of solar energy.
Below are the annual solar capacity factors by country, as well as the necessary price of natural gas per MMBtu at plant inlet for the cost of gas-fired generation to equal the cost of solar generation in the country given the capacity factor:
20%: Portugal = $9.91 per MMBtu
17%: Spain = $10.76
15%: Italy = $12.21
14%: France, Hungary = $13.10
12%: Belgium = $15.31
11%: Germany, Netherlands, Denmark = $16.71
10%: UK = $18.40
As a reminder, our model: a) is based on a generalized and hypothetical demand profile in which two thirds of power is consumed in daylight hours, b) uses 2024 newbuild construction and operating costs for both solar and gas-fired generation breakeven calcs, and c) gives the benefit of the doubt to solar energy in most cases.
We then estimated the average price at which US LNG could be procured and delivered to inlets of gas-fired plants in Europe as follows:
Gas cost at inlet of US LNG plant: $4.00 per MMBtu
+ Cost to liquify the gas: $3.00
+ Cost to ship by LNG tanker: $1.50
+ Cost to regasify: $1.00
= Landed price of gas in Europe: $9.50
+ Cost to transport to plant inlet: $1.50
= Plant-inlet cost in Europe: $11 per MMBtu
Conclusions…
1) Based on a conservative set of assumptions and calculations, and the relatively low solar capacity factors across Europe, we estimate that Portugal and Spain are the only countries in Europe that could come close to economically justifying generating power from solar rather from than gas-fired plants fed by US LNG;
2) But it’s also pretty clear that any generating cost advantages for Spain and Portugal surely disappear after accounting for the massive costs for extra transmission, inverters and other capital investment needed to accommodate solar energy;
3) Furthermore, the average *blended price* of inlet gas could be even lower than what we’ve assumed if European countries were more willing to develop and produce domestic reserves of natural gas.
Bottom Line: After putting pencil to pad, we honestly don’t see why most—if not all—European nations wouldn’t be better off, from a cost and reliability standpoint, relying on gas-fired generation.
Are we wrong?
The post Spain – the aftermath by Doug Sheridan – Wind and Solar are infact more expensive appeared first on Energy News Beat.
“}]]
Energy News Beat