100% renewable electricity: the cheapest option for South America

LUT wind mill. Photo Teemu Leinonen

A study undertaken by the Lappeenranta University of Technology (LUT) and the VTT Technical Research Centre of Finland Ltd has shown that an electrical system based 100% on renewable energy is the best option, from the economic point of view, to produce electricity in South America. Moreover, such a system can be achieved by 2030 with no need for high levels of energy storage capacity.

South America is one of the most promising regions in the world to complete a transition to a electrical system based 100% on renewables. The region possesses a unique renewable energy resource base and is home to one of the best sites for wind power potential in the world, Patagonia, and the best solar power site, the Atacama Desert, with a very high level of sustainable biomass and a significant capacity for hydropower, which is already in operation.

For these reasons, the cost of the electricity produced by a 100% renewables-based system varies between 47 and 62 €/MWh depending on the assumptions applied. In comparison, other options including new nuclear installations and natural gas plants with carbon capture and storage offer costs that are 75-150% higher than the energy generated by renewables.

The 100% renewable system would comprise 415 GW solar PV, 144 GW hydropower, 69 GW wind power, 39 GW hydro run-of-river plants, 17 GW biogas thermoelectric plants and 4 GW biomass thermoelectric plants. The abundance of wind and solar power potential as well as the high level of hydropower capacity means that the system does not require energy storage. The hydroelectric dams can be used as batteries to store solar and wind power. By contrast, other regions of the world require power-to-gas technology for long-term energy storage.

The study also reveals that when current demand for natural gas in South America is replaced by power-to-gas technology, the need for energy storage practically disappears. This type of system integration in which power-to-gas technology along with other technologies, increases the flexibility of the electrical system with no need for large energy storage units, reduces the cost of energy yet further. It is estimated that the benefit would be around €13bn.

The study was undertaken as part of the Neo-Carbon Energy research project, sponsored by the Finnish Funding Agency for Innovation (Tekes) in collaboration with the LUT, the VTT Technical Research Centre of Finland Ltd. and the Finland Futures Research Centre at the University of Turku.