The often conservative International Energy Agency (IEA) has concluded that integrating large percentages of renewable energy, especially wind and solar, can be achieved by any country at a small increase in overall electricity system costs, compared to present fossil-fuel led electricity generation, RenewEconomy has reported.
Futhermore, in its calculations the IEA used current costs of solar and wind power, when those costs have been decreasing rapidly, and are set to decrease further. Contrary to frequent claims that renewable energy will be too expensive and will destabilize power grids, the IEA has concluded that large scale integration of renewable energy capacity can be achieved at little economic and technical cost. Up to 45% renewable energy could be developed at only 10%-15% more than current fossil-fuel heavy systems.
In order to transform electricity systems cost-effectively, countries need to incorporate high levels of wind and solar in a way that supports the power grid, the IEA suggests, and by improving the operation of electricity markets. In developed countries, this will include deciding who will pay for the stranded fossil fuel assets when fossil fuel-based power plants are phased out, and issues related to that. Fortunately, emerging economies do not have this problem, as electricity demand is on the rise and a lot of new capacity is needed. Electricity demand has been falling in developed countries.
The IEA has emphasized the need to transform electricity grids, or electricity prices could indeed be pushed up by applying large amounts of new renewable energy capacity to outdated systems. The IEA has estimated that total system costs could rise up to 40% in this case. This has happened to a certain degree in Germany, yet renewable energy leaders such as Germany have also helped to drive the price of renewable energy development down significantly in recent years, and is also working to transform its electricity grid in accordance with the 21st century electricity generation it’s quickly developing.