By Arveent Kathirtchelvan
Within the new normal, we must not let up the pressure to decarbonise our energy sources. Climate change is still the greatest existential threat known to man. The greatest contribution to climate change comes from energy generation, hence focusing on this is paramount. However, there is a danger with our environmentalism clouding our judgement of energy sources such that we ignore significant faults with those that we like or completely ignore good options due to prior stigma.
In this regard, we must be careful firstly to analyse what is being sold to us as the silver bullet. Renewable energy. Liberasi has been steadfast in our support for all low-carbon energy options including expanding renewable energy. However, we have not shied away from the problems haranguing some of the more popular options. Particularly with solar power, much has been said about its increasing competitiveness and its obvious advantages over fossil fuel sources. The way solar power is being talked about at the moment seems shrouded by corporate doublespeak and is engineered to increase sales. Below we will touch a little on what problems solar power faces.
To its credit, the cost of solar power has been driven down significantly over the years. According to Lazard’s Levelized Cost of Energy Analysis (LCOE 14.0), we have seen that the cheapest energy source is Thin-Film Solar power which costs $29 – $38 per MWh. Solar power has also very low environmental impacts with zero emissions during operation. Whilst we may point to this as proof that solar power is somehow a no-brainer, we would like to advise caution.
Firstly, the cost of solar power calculated in this report, as for other intermittent energy sources, do not include strategies to overcome its intermittence. For that, we must tie the cost of generating electricity with storage options. If we look at Lazard’s Levelized Cost of Storage Analysis (LCOS 6.0), the corresponding energy storage option is Wholesale – Storage + PV which is consists of batteries that can be paired with solar panels. These cost from $81 – $124 per MWh. To analyse what this means, we must understand how much storage we need. Firstly, we must consider how many hours of the day solar panels can function well. For Malaysia, this is from 4 – 8 hours per day, which we can take a simple average of (6 hours). This means for the other 18 hours of the day energy must come from another source, which we can assume here to be the battery technology. Hence the total cost of solar PV and storage would range from $68 – $103 per MWh.
However, if we take a particular day of 24 hours with 6 hours of generated electricity and 18 hours of stored electricity, the beginning of the next day’s electricity generation would have zero stored energy as a backup. This means if there is any dip in generation in the next day, the potential for the battery system to not have enough power to provide electricity would be worryingly high. This means a functional solar PV + Battery storage system would need much more stored electricity. Usually, for independent residential generators of electricity decoupled from the grid, a few days’ worth of storage is recommended. Taking into consideration rough weather causing multiple days of minimum electricity generation, we can generously estimate a 48-hour storage necessity. The new cost for this system would be $75 – $114 per MWh.
A look at the assumptions made for thin-film solar by Lazard shows an average capacity factor of 29.5%. This is quite a high number that can be achieved usually with specific weather conditions (clear skies with low temperatures). Looking at real-life data in Malaysia, through the study “Assessment of Malaysia’s Large‐Scale Solar Projects: Power System Analysis for Solar PV Grid Integration” by Rehan Khan and Yun Li Go, we can see that the LSS designs simulated for Malaysia hover around 18% capacity factor. Hence, if we lower the assumed capacity factor down to 25% and then 20%, we get a cost profile of $88 – $135 per MWh and $110 – $168 per MWh.
If we compare this to nuclear power, in the LCOE 14.0, the cost of nuclear power is $129 – $198 per MWh. However, this cost is particularly high. Contemporary reports like the “Projected Costs of Generating Electricity” by the International Energy Agency (IEA) and the Nuclear Energy Agency (NEA) which looked at real-life energy generation technologies in 24 countries show lower values. Looking into Lazard’s assumptions, we can see that the lifetime of the projected power plant is particularly short at 40 years. Current nuclear power plants are designed for at least 60 years of operation with some being extended to 80 years, like the recent extensions for both Turkey Point and Peach Bottom nuclear power plants. To their credit, this fact is somewhat reflected in their report under the marginal cost of running existing nuclear power plants at $25 – $32 per MWh.
Plugging in a modest 60-year lifespan, the cost of nuclear power drops to $86 – $132 per MWh, comparable to the cost of Thin-Film solar coupled with 48 hours of battery storage with 25% capacity factor. These costs can further drop if we correct the high capital costs assumed for nuclear power. For example, the lower capital cost for nuclear power plants used was $7675 per MW. This is particularly high when considering Chinese, Russian and Korean nuclear power plants costing less than $5000 per MW.
Hence, we factor $5000 per MW as the lower cost and adding financing costs of the same percentage as Lazard to increase the minimum total capital costs to $5442 per MW. Keeping the higher cost as it is and factoring in the capital cost influencing the final electricity cost by 74% the new electricity cost is $79 – $121 per MWh. This is similar to a Thin-Film solar farm with 48 hours of storage operating at 29.5% capacity factor. The aforementioned IEA and NEA report is similar as the median values of nuclear power costs and utility-scale solar power costs are around $75 per MWh and $50 per MWh respectively even before storage.
These numbers show that solar power is not the silver bullet, but so isn’t nuclear. There is no reason to keep any option as the sole carrier of the decarbonisation burden, there must be harmonisation. This is particularly true as we consider where the money is going. For nuclear power, a huge impact comes from regulatory and insurance costs. This has no discernible material impact other than monetary expenditure. However, the costs for solar farms go into more mining with battery storage and building larger solar farms.
This means the land use and material depletion to sustain solar farms and batteries with lifetimes of around 25 years would be massive. The number of panels needed to ensure the back-up batteries are sufficiently charged would amount to huge mining needs and land use. There is a chance that the land would come from forested areas as well. With all of these considered, we should be wary of how much of one technology we indulge in.
Of course, this is only considering solar power. An underutilised source of energy is biomass combustion. With Malaysia home to massive oil palm plantations, there is a chance to use the biomass from these plants (fronds, empty fruit bunches etc) to generate electricity through boilers or through generating biogas via anaerobic digestion of POME. A study by Hamzah et al. entitled Solid Fuel from Oil Palm Biomass Residues and Municipal Solid Waste by Hydrothermal Treatment for Electrical Power Generation in Malaysia: A Review showed oil palm wastes can contribute an installed capacity of 12,226 MW. The total installed capacity for Malaysia in 2017 was 34,182 MW, so this is around 36% of our total installed capacity.
If we factor in a capacity factor of 55% for the biomass energy that can be extracted from the installed capacity above, with total downtime for the plants estimated at 30 days, we get a generated electricity amount of 54,000 GWh. According to the Malaysia Energy Statistics Handbook 2019, in 2018, Malaysia’s total electricity generation was at 168,897 GWh. Thus, potentially 32% of Malaysia’s electricity may be provided by oil palm biomass alone, almost completely replacing natural gas (39.1%). Even if half of this was realised, we can cut our dependency on coal power (43.4%) by almost half. Liberasi estimates oil palm biomass to be able to provide 25% of Malaysia’s electricity if utilised correctly.
As a final note, we stand with science when it comes to combating climate change. No energy option is the silver bullet, but for Malaysia, a low-carbon mix should include not only solar power, but nuclear and biomass as well. That way we can deeply decarbonise our energy sector and open up possibilities to go further, perhaps through electrification of transportation as well.