The hidden costs of renewables can be offset

Come 2050, if current projections hold up, half of all electricity worldwide will be met by solar and wind. And that will be the case despite an estimated 62% increase in global power demand.

Falling costs for renewables are making them increasingly competitive with fossil fuels along with continued improvements to battery technologies. Since 2010 the price of onshore wind has dropped by around 23% while the prices of solar photovoltaic electricity have plummeted by 73%.

“Other renewables have followed this pattern, which is expected to continue,” an online publication dedicated to clean technology notes. “Without doubt, renewable energy is disrupting the entire energy sector, and with the expectation for them to finally be more cost-effective than fossil fuels, the adoption of these energy sources will continue to grow.”

So far so good. Yet reality is a bit more complicated as renewables come with hidden costs that are often overlooked. New renewable capacity on a large scale can be a capital-intensive endeavor. More importantly, however, renewable output is dependent on weather conditions, which makes them highly variable.

This variability increases the costs of integrating renewables technologies into policy frameworks and electricity systems. These so-called “system costs” can add up in the long run. All thing considered, nuclear energy, another form of low-carbon electricity, is actually a cheaper power source, stresses William D. Magwood, director-general of the Nuclear Energy Agency at the OECD.

“We do know how to assess system-level costs. These come from, among other things, the fact that renewables are simply not available all the time,” Magwood explains. “In order to have access to the continuous electricity that renewables are not producing, something else needs to pick up the slack.”

That increases the costs of renewables. To cite one example: in California, the state with the highest share of renewables in the U.S. electricity fees are well above the national average.

“You have to pay more for electricity because of profile costs, balancing costs, and transmission and distribution costs. Renewables are very rarely located directly where the energy is being produced — these costs have to be accounted for,” Magwood elucidates.

Staffan Qvist, a Swedish engineer and clean energy consultant, elaborates on this “trap”: namely that relatively low initial investment costs for renewables hide the true degree of system costs down the line. That is why renewables should be complemented by nuclear power, he argues.

“If you have achieved the low-cost capital of the investments, the model still keeps choosing to build a lot of new nuclear power, but that’s if you include the system cost and not just a kind of myopic view of how you do this,” Qvist says.

That said, renewables are important tools to combat manmade climate change and also come with considerable health benefits as they can reduce chronic air pollution. Pro-nuclear experts stress that nuclear and renewables should be complementary and not mutually exclusive sources of clean energy.