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Technology Collaboration Programme by IEA

The Role of Low Emissions Dispatchable Power in the Lowest Cost Net Zero System

Members Only Technical Report

20 September 2024

Costs of CCUS

Andy Boston, Brent Cutts, Chris Brown, Geoff Bongers, Joshua Humphreys, Nathan Bongers

Citation: IEAGHG, “The Role of Low Emissions Dispatchable Power Generation in the Lowest Cost Net Zero System”, 2024-07, September 2024, doi.org/10.62849/2024-07

The Role of Low Emissions Dispatchable Power in the Lowest Cost Net Zero System

Overview

This study explores the interdependencies of different power generation technologies in a highly decarbonised future. Most modern electricity grids around the world are now progressing along the decarbonisation journey to deliver reliable, affordable and low carbon power – and with that transformation comes attendant challenges. While there are differing views on the roles particular technologies might play in the grid of the future, interdependencies between technologies are particularly influential in achieving the mix of technologies that maintains grid reliability while meeting net-zero emissions at lowest total system cost.

Finding the generation mix with the lowest total system cost (TSC) for deep levels of decarbonisation is critical for electricity consumers and taxpayers, who together need to cover the costs of the entire electricity system. A future system must maintain system security and “keep the lights on”. The modelling, based on the model “Modelling Energy Grid Systems” (or MEGS), ensured that the technical constraints of a secure and competent grid were met. As well as meeting demand at each sequential time step, MEGS models grid services, such as firm capacity, inertia, and frequency response, ensuring that there are sufficient volumes of these balancing mechanisms available to the grid operator.

Via three case studies, the analysis sought to demonstrate what opportunities the Australian and Japanese stakeholders would have to achieve a net zero power system at lowest cost by 2050. While focusing on the lowest TSC opportunities, the analysis showed that all decarbonisation solutions for transitioning to a decarbonised grid were more expensive than maintaining today’s high‑carbon grid. Constraining some of the technology options for this radical transformation increased the overall decarbonisation costs and, in some circumstances, limited the ability to reach net zero at all. It also showed that while all technologies would need to be available for decarbonisation, CCS was central to the optimum solutions available. Without CCS, especially in conjunction with BECCS to create negative emissions, it was difficult to approach full decarbonisation at a reasonable cost.

The modelling exhibited a clear lowest cost frontier that, as it approached net zero, became increasingly expensive. All efforts to reduce carbon emissions in a power grid of the future would come at an increased cost. Hence a major driver for managing this transition will be working towards the best outcome whilst keeping the cost increases as low as practicable. The work demonstrated clearly that, from a technical standpoint, renewables alone cannot be used to achieve net zero. It also demonstrated that a lowest cost solution without BECCS would be very expensive.

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