# Renewable Energy Consumed to Excess

From Dan Shearer CV

Unfinished Article | |
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This page isn't finished yet. The presentation file listed gives a flavour of my current investigations | |

The Levelised Cost of Electricity (LCOE) formula is a handy and simplified view of electricity generation, often used for comparing different ways of making electricity. I find that there are some interesting implications within it. The formula is:

**I**_{t}: investment expenditures in the year *t***M**_{t}: operations and maintenance expenditures in the year *t***F**_{t}: fuel expenditures in the year *t***E**_{t}: electrical energy generated in the year *t***r**: discount rate **n**: expected lifetime of system or power station

My observations are:

- there are circumstances where the numerator (top half of the fraction) grows very little even as the denominator (bottom half of the fraction) grows strongly. This is great, because it means electricity is available cheap or free, and there are some non-obvious things that can be done with it.
- one of the two particular cases I am interested in is where the marginal cost of producing "too much" electricity is very low. This will typically be in smaller and/or isolated communities whose needs can be met by a relatively small amount of turbines/PV and storage, say a few megawatts, or a community of less than 5000 people. This is much easier to model, and there are thousands of these in Europe, where I live.
- the second case is where grid transmission capacity is insufficient, and the grid manager pays wind/solar farms to idle. Physically near the point of generation, electricity is therefore available at negative cost for period of idling. (This is about transmission capacity, not the similar-looking problem of grid balancing, which is why companies offer negative electricity costs to consumers at certain points during the day.)

The following thoughts were written in 2021, and despite containing a few errors and being a bit dated I believe the basic argument is still valid.

Slides containing sketch notes on this topic: Renew-renewables-0.4.pdf