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Benefits of Different Electric Fuel Sources   arrow

Benefits Of Electric Fuel Sources

Different electric generating technologies have a number of benefits not reflected in their levelized costs of energy (LCOEs). These include grid reliability, job creation, and long-term price stability.

Grid Reliability

Fossil fuel, hydropower, and nuclear plants are much less variable than wind and solar resources. Integrating large amounts of wind and solar into the grid while delivering uninterruptable service to electric customers is a challenge. In a recent study of integrating wind and solar into the Western U.S. electricity grid, the National Renewable Energy Laboratory (2010) found that integrating a 35% penetration of these renewables could be done without significant changes to infrastructure by: increasing the size of the area from which solar and wind could be drawn when balancing electricity supply with demand; decreasing grid scheduling time intervals; incorporating better forecasts of wind and solar into scheduling; and other actions. Above a certain level of penetration by these more variable resources, however, our grid may simply not function as reliably unless there was large-scale storage for wind and solar electricity. And LCOE does not account for any power required to meet electricity demand when intermittent resources are not available.

Job Creation

Another benefit associated with electricity generation is job creation. A comprehensive study conducted by Wei et. al (2010) summarized the range of jobs generated by different energy technologies from previous studies. The average of the range for job-years per gigawatt-hour from solar PV (0.87) and energy efficiency (0.38) were among highest, with coal and natural gas (both at 0.11) the lowest. It should be noted that these estimates do not account for job losses between sectors, as could be the case when replacing large amounts of coal with natural gas or renewable energy for example. The estimates include both utility-scale projects and small-scale distributed generation projects. It is also possible that jobs per gigawatt-hour will decrease as installers gain more experience with a given technology.

Price Stability

A third significant benefit associated with certain fuel sources is long-term price stability. It is important to electric utilities and their consumers that prices for electricity don’t increase substantially from one year to the next. Although LCOE does account for estimates of changing fuel prices over time, it does not capture this inherent value of price stability. Free fuel in the form of wind, water, and solar energy provide a more stable price than fuel such as coal, natural gas, or nuclear which is subject to swings in commodity prices due to numerous variables. The threat of a potential carbon tax also makes clean energy technologies appear more stable in terms of price than carbon-emitting fuels. And although government subsidies provided to renewables like wind and solar have tended to be more volatile than subsidies related to traditional energy technologies, this uncertainty affects a power provider’s decision to invest in certain fuel sources more than it affects utilities and consumers already buying power from a constructed plant. All power plants are subject to maintenance costs which are fairly predictable, especially for mature technologies.

Macroeconomic Impacts

It should also be noted that energy development can have significant macroeconomic impact aside from job creation in forms such as severance taxes, property taxes, and lease and royalty payments. While the oil and gas industry is by far the largest source of energy-related public revenues in Colorado, an apples-to-apples comparison of energy sources according to their macroeconomic impacts by unit of energy produced or delivered is not available at this time.

Last updated: October 18, 2017 at 11:32 am