Thread by @AukeHoekstra

Brilliant video pointing out 2 flaws in major energy models that make us invest too little in renewables and too much in fossil fuels:
1) Underestimating renewable price drops
2) Assuming fossil capacity factors stay the same

🧵

ht @EastCoastEVGuy

About underestimating renewable price drops: after studying 200 other studies @MichaelGrubb9 et al. come to a simple conclusion: almost all models (e.g. DICE) ignore that more deployment means faster price reductions.
iopscience.iop.org/article/10.108…
onlinelibrary.wiley.com/doi/epdf/10.10…

Many (e.g. I: hindawi.com/journals/compl…) have pointed out this is how you should model but Grubb et al prove that adding it to DICE means DICE will tell you to invest 2-5x more in clean stuff right away.

That means: stop investing in fossil fuels if you love your money!

The second flaw is courtesy of @rethink_x
They point out most models assume a fixed LCOE (=$/kWh) of energy for fossil assets, largely based on how much it costs to build them. But that ignores the decreasing capacity factor of fossil fuels!
rethinkx.com/energy-lcoe

Look at the capacity factor of coal in the US and the UK. They are increasingly turned off due to cheaper wind and solar. This in turn makes the remaining electricity they sell more expensive: the LCOE goes up. So cheap solar and wind make coal a worse investment than assumed.

And we are not even going into undervaluing of extreme scenarios in DICE (Is a 10% chance that civilization ends a reason to invest more? I think so!) low discount rates (Should future generation clean up our mess?) and underestimation of renewable innovation in general.

So you should make models realistic in two ways:
1) Make cleantech costs decrease faster if you deploy it faster.
2) Increase costs of coal fired power plants per kWh if wind and solar make them produce less.

Result: not investing in fossil and more in renewables is cheapest.