Daily perspective - heat pumps powered by renewables
It's all about thinking differently about how we use electricity
As the percentage of renewables on our girds grows, we need to think differently about how we use and store electricity - part of the answer is better matching supply & demand
Credit: Matthew Henry on unsplash
Much of the analysis of our future electricity system that we read assumes that just building lots of renewables (wind & solar) will "fix" the decarbonisation challenge. The other apparent assumption we see a lot is that the electricity system of the future will operate pretty much as it does now. So, a focus on supply. But one way that the system will be different is the ability to think more about how sources of demand can be set up in a way that they align with periods when cheap (nearly free) renewable electricity is available.
I discuss the outlook for the electricity grid of the future in a blog for The Sustainable Investor, as part of the series on the different ways we need to change how we think about electricity use in a renewable world.
A recent research paper from the Institution of Engineering & Technology, examines the role of system flexibility in accommodating more renewables. As our electricity systems transition towards higher shares of renewables, especially wind and solar, the need for additional levels of system flexibility increases. Some of this can come from energy consuming sectors, such as transport and heating as they shift to electricity power and away from fossil fuels.
This report really raises two questions - first, can some electricity demand be better aligned with periods of excess (cheap) renewable electricity, and second, can we use and store the cheap surplus electricity and reuse it later ? And this is where offshore wind has a potential role - as often periods of high wind generation match periods of high heat demand (ie the winter).
Let's start with industrial heat (which we also discussed in a recent blog). Here, the cost benefit ratio from using heat pumps was very positive, ranging between 3.7x and 6.2x. So put simply an investment in industrial heat electrification would have a positive payback, and this excludes any benefits to the wider society.
But, for building heating, the cost benefit was less than 1x, so in the absence of government support on installation costs, the economics for a building owner often do not stack up.
But, before we dismiss heat pumps for building heating, there is also the issue of system flexibility and ways that using demand management can actually lead to lower system costs, so savings for everyone. This is an area where we need to think differently about the electricity system, being more holistic.
As the percentage of renewable electricity generation on the grid increases, the way we think about and use electricity will change. Unlike fossil fuels, wind and solar have a very low marginal cost of supply. This is both a blessing and a curse. It's a blessing as we will have periods of very cheap electricity. It's a curse because this can make it harder for investors in renewables to earn their target rate of return. There is a massive opportunity for investors to use technology and innovative approaches to overcome this challenge.