[firmbeliever]

Thanks. Does this mean that Google is essentially subsidizing the cost of producing renewable energy, and if so, does that then mean that the consumers of the renewable energy end up paying less because of said subsidy? I'm just trying to follow where that money is actually going and how it's actually shifting overall usage from fossil fuels to renewable.

[philipkglass]

Renewable project developers want long term power purchase agreements (PPAs) so they have predictable revenue for projects they plan to develop. These are agreements that go something like "for the next 15 years, we agree to buy up to X megawatt hours per year from your project for Y dollars per megawatt hour." There are other ways to sell output from renewables (like bidding output directly into the electricity spot market) but developers overwhelmingly prefer PPAs. Google has signed a bunch of PPAs: https://cleantechnica.com/2016/01/29/google-signs-225-mw-win...

Once the developer has signed PPAs they can finance the up-front construction cost. PPAs enable the construction and operation of new renewable energy projects. Of course the output of large scale renewable facilities is mixed with other sources of electricity in a transmission system; it doesn't directly replace coal. (But this is true of any electricity project in a competitive market: when a company builds a new natural gas plant, they don't detach the transmission wires from a competitor's older coal plant and attach them to the new gas turbine.)

Instead it's pricing effects that indirectly decrease use of dirtier fossils when a grid adds renewable capacity. Solar and wind plants have very low variable costs; they'll supply every MWh they can to the grid, and get paid for every one of them via the previously signed PPAs. But fossil generators have significant variable costs for fuel and for labor[1], so when renewables are producing high output there may not be enough demand to cover the marginal costs of production. Fossil plants reduce or stop production when that happens, so they burn less fuel and produce less emissions. Fossil plants with high enough marginal costs may shut down for extended periods, like some plants that are only used for e.g. meeting peak demand during the winter heating season. Costs rise over time as aging equipment needs additional maintenance or full replacement. Fossil plants with high enough costs eventually can't turn a profit even serving the peak-demand-season niche and are completely retired and scrapped. Even if an old coal plant is replaced by a new coal plant, it's still an environmental win to get the old ones shut down, because (even under the new president) a coal plant that starts construction in 2017 won't get the weaker grandfathered pollution standards of one constructed in 1957, and the newer plant will produce more electricity per ton of fuel due to technical advances.

[1] At least coal plants have significant labor costs. Modern CCGT natural gas plants are quite labor-thrifty too.

[martinald]

You are missing one point though, that the cost of non-renewable energy goes up when there is no renewable energy in the grid often very significantly.

Effectively renewables have an externality cost of their own: they make "reliable" sources of power much more expensive.

Imagine that wind/solar power supplies 25% of the grid's needs - this means 75% of the time you need a gas power station to fill in the lulls in production. Fine.

Then imagine you triple the amount of renewable energy on the grid to 75%. The gas plant is now only operational 25% of the time, but still requires capital cost of construction and maintenance to be ready to go. Ok, it doesn't need as much fuel but apart from that you have tripled the cost of the plant.

So the problem is that it becomes uneconomic to build the electricity generation that stabilises the grid and makes it possible to have any renewables in the first place.

We're now seeing huge premiums being paid to companies by the various electricity grid operators to cover this problem. This then goes on ratepayers bills to cover "distribution" or "grid reliability". And it then turns out your $0.03/kWh wind is not actually that at all and gets more distorted as more wind gets generated.

We need better energy storage options before renewables really will fulfill their promise.

[philipkglass]

I didn't mention effects of 75% grid supply from wind + solar because no major grid is operating at that level. Most grids are significantly below 25%. The US as a whole is currently at 5-6% of all electricity consumption from wind + solar. (I know there's not a single unified grid across the US, but still.) I expect that storage is going to be significantly more mature by the time the US reaches even 25%.