Dismantling the Royal Society Large-Scale Electricity Storage Report

By Paul Homewood

 

A new analysis by David Turver dismantles the recent Royal Society report on electricity storage:

 

 

Summary

The Royal Society (RS) has recently released its Large-Scale Electricity Storage report that says we can provide the electricity we need using wind and solar power supported by large-scale hydrogen storage. The report makes some extraordinary claims that are interrogated by this report that also seeks to find the extraordinary evidence required to validate their claims. One positive aspect of the RS report is the painstaking analysis of the variations in wind and solar power we might expect over yearly and decadal timescales that drive the need for a very large energy store. The RS report also effectively rules out batteries as a viable alternative as a large-scale energy store.

However, the positive parts of the report stop there. They begin by assuming that electricity demand will be 570TWh in 2050 that represents roughly halving the energy demand across residential, transport and industrial and commercial categories. The evidence from Our World in Data shows that rich economies require high energy consumption to thrive. There are no rich countries with low energy consumption and those countries that have reduced energy consumption have grown more slowly, or even shrunk. The first extraordinary claim of low energy consumption fails because the evidence shows that if we allow that to happen, we will be much poorer.

The report then goes on to assume that the profile of electricity demand will be the same as today. However, as we move from gas to electricity to heat our homes and offices, the winter surge in electricity demand will be further exaggerated. Moreover, demand will change from year to year such as during the cold winter in 2010 that also coincided with a calm period when we would have generated much less renewable electricity. These variations in demand profile will lead to more generation capacity and an even bigger energy store than RS assumes, pushing up costs.

On the supply-side, the report assumes unrealistic load factors for both onshore and offshore wind. They assume that the installed capacity in 2050 will have load factors far higher than has been achieved so far. Even allowing for some technological improvements, the capacity they need to meet their low generation target will need to increase by at least 20%. This would mean a sizeable increase in the capital costs of generation to deliver their plan, pushing up the costs of wind power very significantly. In fact, the costs they assume for renewable electricity generation are three or four times lower than we pay today through Contracts for Difference (CfDs) and Feed-in-Tariffs (FiTs) and are very much lower than achieved in the latest auction round. Using more realistic assumptions about generation costs would double their weighted average generation cost to around £90/MWh.

The RS report calls for 112GW of offshore wind capacity. As discussed above, this is too low to meet their generation target which is also too low. However, low generation capacity estimate is undeliverable. Extrapolating current offshore development trends shows nearly two thirds of their offshore wind capacity target would remain unbuilt by 2050.

The report then goes on to assume efficiencies and costs for hydrogen electrolysers, storage and generation that do not stand up to scrutiny. The efficiencies are based on high-end projections of what might be achieved by 2050. These would be an enormous stretch to achieve and even if they were, the average of the installed fleet in 2050 is bound to have a lower efficiency. These lower realised efficiencies will push up the costs dramatically. They also assume no leakage of hydrogen stored underground at high pressure for a up to a decade. Assuming some leakage would push up costs further. The individual costings are all based on estimates produced before the latest inflationary surge that has pushed up the costs of everything which means the costs in today’s terms are far too optimistic. Again, even if their costs are achievable by 2050, much of the infrastructure will have to be built using today’s cost base which will push up the average dramatically.

The base-case for their financial assessment assumes a risible 5% cost of capital, lower than the current base rate. Even their sensitivity analysis that uses a 10% cost of capital is probably way too low. Investors are going to require rates of return of 15% or more to invest in immature technologies that will only ever have low load factors. It is likely that using more realistic efficiency estimates and costs of capital will at least double their base case estimates for their proposed hydrogen system.

After all that effort, the system they propose will have a very low energy return on energy invested (EROEI), meaning we will spend more than a quarter of our gross energy to produce the energy we need to live. Throughout human history, we have increased EROEI which has allowed us to thrive. This proposal takes us back to Iron Age times.

Even if their proposed energy system would produce enough to ensure a thriving society and the costs were realistic the report overlooks the human factors that would be required to deliver it. We would need thousands more skilled engineers that would not be available from abroad, because those countries would need them to complete their own projects.

Overall, the report starts with an unrealistically low estimate of future electricity demand which itself is an undesirable outcome. It then goes on to add its own unrealistic claims about the cost and efficiency of hydrogen electrolysers, storage and generation using a risible base case 5% cost of capital. In essence, the report expects us to believe we can deliver lots more renewable energy and a complete hydrogen ecosystem in 2050 for about the same as the cost per MWh of renewables in this year’s renewable auction. It’s a fantasy.

Even if it were deliverable, we would end up with an energy system near the bottom of the energy cliff producing about half the energy we need to run a modern society. It is simply not credible. The extraordinary evidence to support their extraordinary claims simply does not exist. Quite the contrary, there is a plenty of evidence that their claims are a fairy tale. Because the RS report also effectively rules out batteries as the energy storage medium to support intermittent renewables, the entire renewables project should be scrapped.

Full report is here.