Need for Fast Reacting Fossil Fuel Technologies with Renewable Energy

The need for fast reacting fossil technologies with renewable energy (until batteries are less expensive)

Bridging the Gap: Do Fast Reacting Fossil Technologies Facilitate Renewable Energy Diffusion? (NBER Working Paper 22454), Elena Verdolini, Francesco Vona, and David Popp analyze renewable energy diffusion to highlight the importance of backup capacity. They point out that increased development of solar and wind power can increase demand for fast reacting fossil fuel capacity that can be turned on and off quickly. The need for such backup systems will become more burdensome as the penetration of renewables increases. Moving forward, the cost of these needed backup sources of energy has to be factored in for accurate calculations of the cost of transitioning to renewable energy to be made.

The researchers analyze data on the installed capacity of renewable energy, including solar, wind, geothermal, ocean/tide/wave, and biomass, in 26 Organization for Economic Cooperation and Development (OECD) countries between 1990 and 2013. All other things equal, more renewable sources were installed in those countries with fast-reacting fossil fuel plants available to compensate for supply variability. A one percentage point increase in the share of fast-reacting fossil generation capacity in a country is associated, on average, with a 0.88 percentage point increase in the long-run share of renewable energy. The authors note that as the push for clean energy continues, it will be important to recognize the need for—and the costs of—complementary fast-reacting fossil backup technologies.