A decarbonised energy system in which renewables play the dominant role could ultimately be cheaper than one based around fossil fuels and nuclear power, a prominent academic has claimed.
Doyne Farmer is professor of mathematics and computer science at the University of Oxford and director of the Complexity Economics programme at the Institute for New Economic Thinking.
His team of researchers analysed historical cost data for a range of different technologies across a number of industries to develop a generic model for forecasting future cost trajectories as they mature.
Speaking at an event held by Aurora Energy Research last week, Doyne said conventional generation technologies – coal, gas and nuclear – have all reached full maturity and are not getting any cheaper. They are, if anything, expected to get more expensive over time, he added.
He said renewables, by contrast, are still immature. Costs are falling rapidly and some are already cheaper than conventional generation on a per megawatt hour basis. Although they will eventually plateau, this trend is likely to continue for the foreseeable future.
Doyne said the institute’s model suggests that transitioning to an energy system dominated by renewables would make financial sense even without the need to decarbonise, allowing us to “break out of the pattern that we’ve been in for a very long time, where energy costs have been roughly constant”.
The research also indicates that cost reductions are driven by deployment rather than vice versa. Doyne drew attention to falling cost of tanks as the US economy was mobilised during the Second World War.
“The Americans went from having the 17th largest military before the war started, to producing two-thirds of military equipment for both sides combined,” he remarked. “And Roosevelt didn’t amp up tanks because he saw they were getting cheap ‘Lets buy a lot of them’. He said we’re going to build them at all cost.”
Doyne said the same is true for solar panels, with costs falling by 20 to 30 per cent for every doubling of output.
He said there is an important lesson here for policy-makers: “If you want a technology to be cheap you have to invest in it… Too much diversification is a bad strategy…
“You don’t want to spread your eggs across a lot of baskets. You want to put a few eggs in a few baskets and make very clear energy bets to drive yourself down these curves.”
He added: “But, you have to make the right bets. Because if you bet on the wrong technologies like fossil fuels or nuclear, you don’t get any progress going down these curves.”