Is renewable energy efficient?

28 September 2017
Louisa Jane Di Felice

Renewable energy and efficiency are both essential to meet the EU’s sustainability goals, but synergies and trade-offs between the two measures are under-studied.

The EU 2050 Energy Strategy, released in 2011, identified four pillars needed to reach a sustainable energy system: energy efficiency, renewable energy, nuclear energy and carbon capture and storage. Across other EU strategies and communications, energy efficiency and renewable energy are predominant: on one hand, similar targets are set for both – see, for example, the 2020 Energy Strategy, calling for a 20% increase in both renewable energy and efficiency; on the other, they are both seen as measures needed to reach similar goals: namely, the reduction of greenhouse gases, with a 2020 target of 20%, and 30% by 2030.  However, the reduction of greenhouse gases isn’t the only motive behind renewables and efficiency, with renewable energy also increasing local production and security, and efficiency lowering energy bills.

With both measures dominating EU energy strategies, as well as national and regional energy plans, a question arises: do they contradict each other? While many studies focus on the importance of either one of the two, it is becoming apparent that, if the EU is to meet its ambitious targets, cross-checks among policies (both in the same realm, such as energy, and across different areas) are essential. The question, however, isn’t simple. An initial search on the synergies and trade-offs between renewables and efficiency yields diametrically different opinions.  Renewable energy supporters claim that renewable energy systems are vastly more efficient than their fossil-fuelled counterpart. They are not wrong: losses in the transformation from renewable energy sources to electricity are almost negligible, while thermal combustion plants have an inevitable heat loss, dictated by Carnot’s principle, limiting their conversion efficiency to a theoretical maximum, dependent on the maximum temperature at which the conversion process can operate. This is called thermal power generation efficiency. Coal plants, for example, have an average thermal efficiency ranging between 32% and 42%. Those who are more sceptical of renewable energy systems, however, argue that they are clearly less efficient than conventional power plants. Again, they are not wrong: wind turbines and solar panels operate at their full potential no more than 40% of the time, at best. Moreover, for the same electricity output, renewable energy generally requires more land, labour and investment.

So, who is right? To help untangle this mess, the first step is being able to compare renewable and non-renewable plants, and this in itself is not an easy task. Energy systems are composed of various phases, from extraction and transport of primary energy sources, to their conversion into fuels or electricity, to the transport of the former and the transmission and distribution of the latter leading, finally, to consumption. Each of these steps can be characterized by its own efficiency, and they are not easily comparable: an efficient coal plant is not the same as an efficient toaster. By harnessing primary energy sources when they are readily available, renewable energy systems avoid the steps of extraction and transportation of primary energy sources. Moreover, by relying on the conversion of renewable elements such as the sun and the wind, no resource is wasted in the process.  However, by comparing energy systems based on their structure, and not on their differences in output, only part of the picture is visible.

One of the main issues with renewable energy is intermittency. This means that while a wind turbine and a natural gas turbine may both produce a certain output of electricity, these two outputs are not the same: one can be controlled and used when needed during peak demand, while the other is produced randomly, regardless of demand curves. So to compare renewable and non-renewable systems, one has to start by assuming that they are producing the same output, and this means factoring storage into the equation. Only by considering the combined system of “renewable energy plant plus storage” can it then be compared to a conventional power plant, as both produce the same kind of electricity (the useful kind).

Quantifying the efficiency of energy storage, however, isn’t trivial. Similar to energy conversion, the efficiency of storage can be considered from different angles: one could, for example, check how much energy is lost in the storage cycle. Pumped hydro storage (PHS), where water is pumped to a high basin when electricity demand is low and then released during high demand, loses on average 25% of electricity over one cycle (also known as round-trip energy efficiency). But this isn’t really a loss, or we’d be mad to go through the cycle in the first place – the electricity pumped up-hill, and the portion that is lost in the process, is cheap electricity, generated at low demand times, while the one produced at a later stage is expensive, covering a much needed peak. They may both be electricity, but one is more valuable than the other. Lithium-ion batteries, another popular storage technology, have a higher round-trip energy efficiency of up to 90%. However, round-trip energy efficiency isn’t the only way to describe the efficiency of storage technologies. In 2014, researchers at Stanford University introduced the concept of “energy stored on investment” (ESOI), quantifying the storage potential of a technology against the storage capacity over its lifetime. In this case, PHS fares much better than chemical storage, with an ESOI of 210, over twenty times higher than that of lithium-ion batteries.

Quantifying the efficiency of renewable energy systems is no simple task. When it comes to discussing renewable and non-renewable energy systems, it is essential that they are compared against the same output. This means that storage cannot be left out of the equation. However, the question of what efficiency means in terms of storage is still under-explored, and better tools to assess storage technologies are needed, as renewable energy plays a greater role both in energy systems and in energy policies. It’s unclear whether renewable energy is more or less efficient, but accepting that there may not be exact answers to these kinds of questions, and that different framings and definitions of efficiency lead to different results, may be a necessary step forward in shaping comprehensive policies in times of uncertainty.