Step 4

Instructions

Make adjustments to the pie diagram that shows the percentages of different renewable energy sources — think of this as your renewable energy portfolio. The model default shows the current percentages, but you should feel free to change this, with a few restrictions, which you can see by clicking on the button to the upper right of this pie diagram.

f hydro should not exceed 46% — we just don't have that many more good dams to build;
f geothermal should not exceed 10% — the really good locations are far from where people live, so we cannot rely too much on this
f solar, f wind, and f nuclear could each theoretically be 1.0, which is 100%

The percentages you choose also determine the initial unit cost of renewable energy — each form of energy has a different unit cost, and the percentages you choose are combined in the model to give you the overall average, which is shown in the blue box to the upper left of the pie diagram. The estimated costs of each type of energy can be seen by clicking on the Energy Costs button, which shows:

**Levelized Costs 1e9$/EJ**
Wind	3.6 (drops by 15%/yr)
Geothermal	11.9
Hydro	5.5
Solar PV	6 (drops by 20%/year)
Nuclear	31
Oil	24
Coal	17
Natural Gas	10

The model assumes that the costs of geothermal, nuclear, and hydro are all constant over time, but the costs of wind and solar decrease over time, following an exponential function that is based on the recent history. These costs are the levelized (life-cycle) costs that we covered in Unit 2.

The key thing for us is the difference in cost between the various renewables and the fossil fuels. For example, if we wanted to switch 500 EJ of energy generation from fossil fuels to nuclear, this would cost us 31-18=12 $billion per EJ, which is $6 trillion more. Of course, money spent doing this would reduce the money spent on climate damages, so it might be a good thing -- and you can see if it is good thing by running the model several times with varying use of renewables.

If you study the energy costs, you might notice that many of the renewables are actually cheaper than fossil fuels in terms of energy generation — so why haven’t we already switched? The answer is largely related to the challenges in switching our energy infrastructure around — it will take some bold government leadership and our collective support to take the leap here. In addition, there are significant start-up costs — although with government backing, these costs can be spread out over a long time. We’ll assume that there is a cost to the switch that amounts to $0.02/kWh, which is $5.5e9/EJ in 2020. This cost related to switching energy sources is automatically added on to the cost of generating the renewable energy.

See the video, Capstone Step Four Instructions for some guidance on how to do this.

Video: Capstone Project Step 4 Instructions (4:22)

Capstone Project Step 4 Instructions

Click here for a video transcript.

PRESENTER: For Step 4 in the Capstone Project, we're going to focus on the renewable energy sector up here. So, we're going to make some changes here. Or not, you can do it either way. But this is where you determine which of the different renewables, how much the total renewable energy portfolio they make up. So, this is what we currently have, so 45% of our renewable energy is hydro, right now, 28 nuclear, wind is 14, geothermal 7, solar 6. So, the idea is to change these and that mix along with the cost of these different energy sources, which you can see here. That determines the initial renewable energy unit cost. So, it's 12.63 billion dollars per exajoule of energy right now.

So, there are some limits here to these renewable fractions. You can find out about these. F hydro shouldn't exceed 46%. That's because there just aren't that many more big, highly productive dams that we can build. We've already dammed up the rivers in the best places, in general. So, it can grow a little bit, but not much. The geothermal shouldn't exceed 10%. It's geographically so limited that it's not going to be a huge player in the future. But solar, wind, and nuclear could each theoretically supply a 100%. But then, you know, whether or not you want to do that sort of depends on the costs.

So, look at the costs. Do you... nuclear is pretty expensive, 31 billion dollars per exajoule. Do you really want to have that much nuclear energy in your portfolio? Well, there might be some reasons have some, but it is expensive. So, how to make those changes? You just move these little white circles around. So, I'm going to reduce my nuclear here, just to show you this, I'm going to reduce that to maybe 6%. And geothermal, I can't have it be more than ten. But I kind of like geothermal, it is pretty inexpensive, so I'm going to keep that at ten. That's a good sort of constant steady supply. I'm going to keep hydro pretty much where it is. And then I'm going to split the remainder in terms of solar and wind. And I get those kind of close to each other. They're roughly about there. And the reason for doing that is that they complement each other, in general, so that during times of the day when you generate a lot of wind power, you don't generate a lot of solar power, and vice versa. So, it makes sense to have those be kind of balanced.

Now you notice I've made those changes. Here's my new renewable portfolio. This initial cost doesn't change until I hit the Run button and we see what happens. So, I've dropped that way down now. So that's 7.17. And so, then when you run the model and you look at things like the energy costs now, those energy costs are going to reflect this initial renewable energy here. If we're going to go way back here, if I go backwards and look at 15, This shows the energy costs changing over time. Fossil fuel energy up here and this is the renewable energy cost. So, it starts off at seven, but it drops to five billion per exajoule over time, just because the model assumes that the cost of wind and solar energy will continue to decrease following an exponential function. So that this is just matching what's happened in recent history in terms of price declines there. So, that's why that price continues to drop in the early stages of this scenario.

So that's, that's what it is. That's sort of the rundown on Step 4.

Credit: Dutton Institute. Capstone Project Step 4 Instructions(link is external). YouTube. August 26, 2022.

Step 4 Deliverables

NOTE: Skip these deliverables until you've cycled through Steps 1-6 and found your ideal scenario. Then produce the following:

A brief statement of what you came up with for a unit cost of renewable energy, including what percentages of the different sources you used to come up with this number. Take a screen shot of the pie diagram of renewable percentages to accompany your statement.

Graphs showing your total energy costs, the renewable energy costs, and the carbon energy costs (page 3 of graph pad), and the unit energy costs (page 15 of graph pad). These graphs and the statement above will be included in your summary poster.