Assessment of the energy needs of a community -- on whatever scale -- needs to take into account not only the comparative economics of appropriate sources, but environmental and social factors such as jobs and supply security, as well. This may complicate decision making, but the world's demand for energy in all forms is so diverse that it makes sense to focus on the technology best suited for the purpose. Windless tropical desert regions are clearly a prime candidate for solar applications, whereas less sunny regions without rural electrification, yet with sufficient wind, are best suited to wind energy.
Broadly speaking, the different renewable sources have particular roles and are not usually in competition (see table). But this is not always fully appreciated when framing energy funding policies. Perceptions of the extent of each renewable resource and timing of their contributions differ, both from country to country and within national boundaries. To complicate matters further, public perceptions are not always consistent with government policies -- nuclear being a case in point.
Britain is a prime example of the general confusion on spending priorities. Recently, central government allocated $1.6 million to assist schools to install PV panels. Yet the budget for PV's research and development (R&D) programme is only a modest $0.3 million. What's more, a recent remark by the Labour Party's energy spokesman, John Battle, reveals a clear mixing of signals. He envisages PV making "substantial cuts in carbon dioxide emissions."
The technical and economic facts of PV in Britain suggest this would be unlikely, despite the statements of a government report which again muddies the waters. It gathered the views of some 10,000 scientists who were asked to take part in a "technology foresight" initiative. "Photovoltaic technology will become an important method of electric power generation if costs can be brought down . . . by a factor of three or more," states the report. It fails to mention, though, that efficiencies (the ratio of electricity delivered to solar energy incident on the modules) must also double if energy costs are to even approach those of wind, let alone natural gas. The report acknowledges that use in buildings may increase, but instead of pursuing this eminently sensible use of PV, it is (confusingly) less enthusiastic about it.
PV undoubtedly has enormous potential, but in western Europe, in the short to medium term, it seems unlikely that it will make any substantial contribution to electricity generation on the grid, simply because the benefit/cost ratio is so much lower than that of wind energy. The time scales on which its contributions to carbon dioxide reductions become significant in western Europe need to be questioned, given that the most optimistic cost projections indicate that it remains more expensive than most other renewable technologies for many years to come (Fig 1).
The problem with integrating PV power onto electricity grids in northern Europe is that the energy comes at the wrong time and hence has less value. A comparison of monthly revenues from typical wind and solar plant (Fig 2) using recent prices from the UK electricity pool illustrates this point nicely. This simple, but valid calculation shows that the value of wind -- which generally rises and falls with demand -- is around five times greater than that of solar. This is partly due to its higher productivity and partly due to the better match with demand.
Wind, as a result, benefits from capacity credit payments. The capacity credit of renewable sources -- or any sources -- is related to the output at the time of the winter peak demand. In most of Europe this occurs at around 17.30 on weekdays in December or January. Wind is generally above average on these occasions, whereas there is no doubt that the capacity credit of PV is zero, simply because it is dark at the time. Since the cost of PV is roughly three to four times the cost of wind, it follows that the benefit/cost ratio of wind is around 20 times better.
In other areas of the world, though, solar has a potentially valuable role to play in electricity supply. In California, where peak demand for electricity for air conditioning coincides with high levels of sunshine, the capacity credit of PV soars. Here its further development for local or regional electricity supplies makes more sense, as it does in countries all around the equator.
Although PV may not be an attractive proposition for centralised electricity generation in mainland Europe, that does not preclude its use for a wide variety of decentralised commercial applications -- including integration into buildings. Once it, or any renewable, is no longer competing with mains electricity, the economics are completely different. Again in Britain, the county of West Sussex has recently replaced 60 mechanical parking meters with PV-powered models. At $4800 each, fully installed, this was a cheaper option than digging up the roads to connect them to the mains. Similar logic has led to other decentralised applications throughout Europe, from powering remote telephone boxes to supplying electricity to a restaurant in the German mountains near Freiburg using a hybrid wind/solar/diesel system. This particular project also illustrates the point that the renewables often complement each other. Wind and solar, in particular, are well matched in many regions, as is the combination of wind and hydro.
In the Third World these remote use options are multiplied many times over. The American Wind Energy Association has recently observed that half the world's population has either unreliable electricity or none at all. This presents a tremendous market opportunity for small wind turbines and hybrid systems. Applications for PV and solar thermal range from solar cookers, desalination plants, telecommunications, domestic electricity, provision of electricity supplies to hospitals and cooling for medicines. But spending on renewables in developed countries only half-heartedly acknowledges the seemingly limitless horizons of this market.
The potential contribution from biomass to world energy needs is substantial, but possibly also misunderstood. Although combustion of wood and animal wastes has long been a method of energy production, attention is now focused on the potential of "energy crops" such as coppice, wood and rape seed, and on more efficient ways of realising the energy potential by gasification or liquefaction. The term "biomass" is used to cover most of these options. This research runs parallel with efforts to develop more efficient thermal plant for gas and coal-fired applications. However, in the developed world, the economics of energy crops only make sense for grid-connected electricity generation in areas where the economics of farming are poor. Income from farm land varies enormously, but $200-300 per hectare is typical in western Europe. This puts the fuel cost alone at around $0.04/kWh, before transport costs, operation and maintenance and capital charges are taken into account.
What distinguishes energy crops from PV and wind is that electricity production cost declines dramatically in the Third World. Expectations of monetary yield from the land are much lower, so energy costs are also lower. Furthermore, yields from energy crops increase with proximity to the equator -- provided there is sufficient moisture available to enable them to flourish (perhaps with wind pumps for irrigation).
If the resulting energy is not in competition with cheap fossil sources, it stands a good chance of being competitive. However, unlike PV and wind, biomass from energy crops is probably not best suited to very small-scale applications. The near term future for biomass may therefore lie in medium and large scale projects in developing countries. This, though, is not a clearly defined aim in most energy policies.
Distorted perceptions of the potential of the renewables also surface when land use is discussed. Critics of renewables point to their diffuse nature and the consequent need for a greater use of land than is the case with conventional thermal technologies. Land use by energy crops is a good example. Energy crops clearly have a relatively low yield per unit of land area used, a disadvantage in populated regions, but land is generally plentiful in the Third World. Even in the industrialised world, intensive farming methods have led to over-production of food with farmers now seeking other ways of gaining income from their land.
macro economic matching
When needs are matched to possible methods of supply, it therefore seems, on closer analysis, that the land requirements of renewables are not such a drawback. What is needed, though, is careful selection of technologies to achieve the best macro economic match between overall demand and resource availability. The Australian and New Zealand Solar Energy Society has pointed out that installation of a solar PV panel in every house would be sufficient to meet all of Australia's electricity demands.
In measuring yield per land unit, wind does well among the renewables. Its yield is considerably greater than biomass or PV, though only about a third of that from nuclear (table). But wind energy installations must be sensitively sited, which means urban areas are ruled out on technical grounds and highly sensitive areas of scenic beauty ruled out on environmental grounds. However, there are large tracts of countryside, even in densely populated northern Europe, where the scenic qualities of the land are not outstanding. What is more, offshore wind, once seen as a remote "insurance" technology is now moving closer to economic viability.
Government perceptions of the potential of the various renewable energies are expressed -- in a very tangible way -- by the size of their research budgets. The global message here is crystal clear. Since 1982, PV has accounted for the highest spending in the OECD countries of all the renewables and by 1993 it was absorbing more funds annually than the remaining technologies put together. Governments, it seems, believe PV to be the winning renewable technology and have picked it for greatest spending.
Yet its technical and economic achievements pale beside those of wind. The investment in PV has been rewarded by a fall in the price of PV modules by a factor of four since 1980. Wind prices, however, fell by a factor of at least ten during the same period, with far less spending. Furthermore, as argued here, wind's overall potential for centralised electricity production is greater, once the environmental and social factors are weighed in the economic balance together with geographical considerations.
It is partly true that market forces -- brought into play by market support mechanisms -- have had more to do with bringing down wind's cost than investment in R&D. But that does not detract from the importance of R&D funding. For every failed R&D project, at least one well targeted R&D initiative has borne fruit. The difficulty arises in identifying definite "cause and effect" links between research spending and successful technologies.
Finding such links is difficult because spending decisions are often clouded by interests not directly related with advancing a particular technology. R&D budgets are also targeted at export markets -- and a technology's success is often weighed by its ability to boost national trade balances rather than its technical achievement.
In PV it is possible to discern a correlation between funding and exports. The three big spenders on PV R&D, the United States, Japan and Germany, are also the top exporters, with US exports running at about three times R&D funding levels. The picture is less clear for wind. Denmark, at the top of the export league, recoups its research spending many times over. It has had relatively few problems in eliciting cash from the public purse. But elsewhere the ratios between spending and income from exports are more modest. Politics is largely to blame, though, not the technology itself.
Administering R&D budgets will never be an easy task. There will always be a debate on the relative weightings -- and risks -- to be attached to near and long term potential. Fusion has high risk and high cost, but enormous potential -- and so attracts funding. Wind has low risk, low cost, good near and long term potential, but attracts relatively little funding. It would seem that what is lacking in the administration process are clear guidelines on the realistic potential of each energy technology -- be it based on a renewable, nuclear or fossil fuel resource -- given the prevailing geographic and social conditions.