IEEE Technology and Society Magazine - December 2017 - 33

with renewables at the beginning of
this race, has been drastically re-
duced over the last few years. Today
1 MW of onshore wind capacity barely
exceeds US$1 million, whereas
1 MWp for a turnkey PV project
costs between US$1.3 and 2.2 mil-
lion, depending on the size and lo-
cation. Those CAPEX values lead to
levelized costs of electricity (LCOE)
quickly reaching the grid parity [6],
which is distorting the equilibrium
of ill-designed, day-ahead markets.
According to [7], the electricity in-
dustry is moving from an OPEX into
a CAPEX world, and the market
and regulatory framework should
evolve accordingly.
Auctions are becoming the rule
around the world as the main way
of allocating renewables capacity,
sometimes resulting in rather shock-
ing prices. While in 2010 solar energy
was contracted at a global average
price of almost US$250/MWh, in 2016
the average price approached US$50/
MWh [8]. So far, the lowest winning
bids are in the order of US$30/MWh,
both for PV and wind projects in Chile
and Morocco, respectively, but those
exceptionally low values cannot gen-
erally be projected to other countries
with higher local costs.
Note, however, that 1 GW of re-
newables is approximately equiva-
lent to 0.3 GW of fossil units in terms
of average energy yield. Therefore,
replacing for instance the 700 GW of
fossil generators existing in the U.S.,
will need roughly about 2000 GW
of renewables which, at the cur-
rent pace, would take 100 years to
complete. This is much longer than
required by the ambitious decarbon-
ization goals stated at the COP21 cli-
mate summit. In China, in spite of its
226 GW of wind and solar capacity,
over 65% of all electricity was gener-
ated in 2016 by coal-fired plants. In
fact, additions of coal-based capaci-
ty are still larger than those of renew-
ables in many countries. For this
DECEMBER 2017

reason, many believe that
carbon capture and stor-
age technology (CCS), still
A big unknown in this
in its infancy, must enter the
scene as well.
upcoming paradigm is how much
Yet a big unknown in this
production will be centralized,
upcoming paradigm is how
much production will be
as in the past, and how
centralized, as in the past,
and how much electricity
much electricity will be
will be locally produced, in
locally produced, in a
a distributed manner. Huge
cities clearly lack the space
distributed manner.
for enough renewable facili-
ties to be deployed, capable
of locally producing all the
energy they need. Therefore, trans-
with ubiquitous energy storage sys-
mission systems interconnecting ma-
tems, capable of providing long-
jor load centers with remote energy
term, back-up energy in a flexible
hubs will always be necessary to a
manner when the wind does not
large extent (again, China is a good
blow or the sun does not shine. But
example, with more than 20 HVDC
that is another story....
lines delivering hydro, coal and wind
power from the inner regions to its
Author Information
eastern megacities). However, it is
The author is Professor of Power
now evident that self-production will
Engineering, University of Sevi-
become in a few decades at least as
lle, Spain. Email: age@us.es.
relevant as remote generation, forc-
ing distribution grids to be able to
References
[1] I. Pérez-Arriaga, H. Rudnick, and M. Rivi-
cope with bidirectional flows. Both
er, "Electric Energy Systems: an overview,"
kinds of generation will have to
in Electric Energy Systems: Analysis and
compete for an increasingly more ef-
Operation. CRC, 2009, ch. 1.
[2] The Association for Decentralized Energy,
ficient demand, capable of respond-
London, 2017; http://www.theade.co.uk.
ing to spot price signals.
[3] Global Wind Energy Council, "Global statis-
Be that as it may, very few peo-
tics," GWEC; http://www.gwec.net/global-
figures/graphs/, accessed Oct. 2017.
ple today question that renewables
[4] Fraunhofer Institute, "Recent Facts about
will constitute the bulk of electric-
Photovoltaics in Germany," 2016; https://
ity production at the turn of the
www.ise.fraunhofer.de/en/publications/
veroef fentlichungen-pdf-da teien-en/
next century. This does not mean,
studien-und-konzeptpapiere/recent-facts-
though, that the pathway to elec-
about-photovoltaics-in-germany.pdf.
tricity decarbonization is free from
[5] Frankfurt School, Global Trends in Renew-
able Energy Investment, 2017; http://fs-unep-
big challenges and hurdles, the
centre.org/sites/default/files/publications/
most important surely being the
globaltrendsinrenewableenergyinvestment
seasonal variability of renewable
2017.pdf.
[6] LAZARD, "Levelized Cost of Energy Analy-
energy, for which no solution is yet
sis 10.0," Dec. 2016; https://www.lazard
envisioned. If future electricity sys-
.com/perspective/levelized-cost-of-energy-
tems are to be massively based on
analysis-90/.
[7] F. Roques, "European electricity markets
renewables, they must rely upon
in crisis: Diagnostic and way forward," Mis-
resilient, high-tech AC&DC grids,
sion du Commissariat Général à la Stratégie et à
must be supervised from smarter
la Prospective, 2013.
[8] IRENA, Renewable energy auctions: anal-
energy management systems and,
ysis, 2016.
most important, must be endowed
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