The lifecycle cost of renewable energy technologies with a focus on end-of-life and rare-earth elements

Abstract

In the first part of this report, a life-cycle assessment of renewable energy technologies is conducted, with a focus on the end-of-life stage. In the second part, rare-earth elements and other critical elements are investigated to assess their impact on renewable energy. In the first chapter, the levelized cost of energy is found to be of 68 €/MWh for onshore wind energy, 88 €/MWh for offshore wind and 59 €/MWh for utility scale photovoltaics. In comparison with non-renewable energy, combined-cycle gas turbines have a levelized cost of energy of 48 €/MWh wen operating close to optimal capacity. However, combined-cycle gas turbines have significantly higher carbon emissions and, when adding the social cost carbon emissions, the levelized cost of energy increases to 73 €/MWh. As a result, onshore wind energy and utility scale photovoltaics could be considered as cheaper, when taking the cost to society into account. In practice, combined-cycle gas turbines operate at a lower capacity since they are used as a back-up energy source for times at which the supply of other energy sources is lower than demand. When using the actual capacity in Germany, the levelized cost of energy increases to 71 €/MWh and 95 €/MWh when the social cost of carbon is included. For onshore wind, offshore wind and solar energy, the levelized cost of energy is split up in 3 stages. The installed costs are incurred at the beginning of the project, the operating and maintenance expenses are incurred from year 1 until the end of the lifetime, and finally there are the end-of-life costs. For each of these 3 technologies, the installed cost makes up the biggest part, ranging between 72% and 76%. Of the other costs, almost all costs are made up out of operating and maintenance expenses. End-of-life costs are negligible for onshore wind energy, since almost all decommissioning costs are offset by the salvage value of scrap materials. For offshore wind-energy, the decommissioning costs are substantial, at 412.060 €/MW in the base case, after subtracting salvage value. These decommissioning costs make up 3,34% of the total LCOE for offshore wind energy. For solar energy, the manufacturers of solar panels are legally obliged to bear the end-of-life costs in Europe. Because of this, the end-of-life costs are included in the installed costs. Most materials in wind turbines are recycled. For wind turbines, these include mainly steel and copper. The bottleneck in recycling for wind turbines are the blades, which are made mainly of fiberglass reinforced plastic. At the moment, most turbine blades are landfilled or incinerated. Reusing the entire blade is the best option, but this is limited to smaller blades because of transport issues. Recycling currently leads to a reduction of the quality of the material, but technology and legislation improvements might result in increasing recycling rates. Some wind turbines use permanent magnets, which include rare-earth elements. These could also be recycled without significant reductions in quality, but with substantial losses of iron in the process. For solar energy, recycling rates are also high. Silicon panels and thin-film panels are, respectively, made for 90% and 95% of glass, polymer an aluminium. Together, these 2 technologies make up 95% of installed solar capacity worldwide. There are established recycling industries for glass, aluminium and polymers and they can be easily recycled and reused. However, silicon panels contain small amounts of silicon, silver and some other elements that present recycling difficulties. Thin-film panels also contains small amounts of copper, zinc and trace amounts of other elements that are not recycled, and some are potentially hazardous. Some companies (First Solar) have dedicated recycling facilities that recover most of the valuable materials from panels and in France, a dedicated solar recycling facility is opened that can recycle all of the components, which is not possible with traditional recycling plants. The carbon footprint of wind energy is the lowest, at around 10 gCO2/kWh, followed by solar energy at around 48 gCO2/kWh. This is very low. For example, combined cycle gas turbines have 490 gCO2/kWh and it is around 820 gCO2/kWh for coal. For batteries, there is no a general method to calculate the levelized cost. We found that economic viability of battery storage is highly case dependent and varies according to the technology used, the region and revenue streams. Revenue streams include energy arbitrage and bill management. We found that batteries are economically viable in Germany and California for residential PV+storage applications, however, it is dependent on government subsidies and incentives. Battery applications for utility scale PV+storage, wholesale, commercial and transmission and distribution are economically viable but highly dependent on different revenue streams (such as energy arbitrage, bill management etc.) for geographies the study conducted. Additionally, cost of batteries is expected to decrease further, specifically for the case of li-ion batteries in the future, of which the price is expected to decline 28% by 2022 with a CAGR of 8%. In the second chapter, we found that 71% of rare-earth elements originated from China in 2018. This is already substantially lower compared to 2010, when 95% came from there. Other countries were concerned when China reduced its exports with 40% in 2010, so they increased rare-earth element production. Other big producers are Australia and the United states, with 12% and 9% of production respectively. The production in China of 71% of the world production is still compared to China’s reserves, which make up 37% of the world reserves of rare-earth elements. The total reserves in the world are over 700 times larger than the world’s rare-earth element production in 2018. In China, rare-earth mining and processing industry has undergone significant consolidation, driven by the Chinese government. Chinese rare-earth production is now dominated by 6 companies: the big six. Outside China, production is dominated by Lynas in Australia and MP materials In the United States. Wind turbines could contain over 200kg of rare-earth elements per MW. This is because some turbines contain permanent magnets, which contain neodymium, dysprosium and praseodymium. These are called NdFeB magnets. These magnets were originally invented by a US company and a Japanese company. Today, the Japanese company, Hitachi, has over 600 patents over these magnets. However, the production is also dominated by China. It is estimated that over 80% of permanent magnets are manufactured in China and, of the 13 Hitachi licensees, 8 are located in China. At the moment, most wind turbines don’t contain rare-earth elements and use a different technology. However, as wind turbines become bigger and more wind turbines are located offshore, the use of rare-earth elements is expected to increase. When the amount of rare-earth elements used increases, there could be shortages in supply. Studies project that demand for neodymium in 2030 could be 7 times higher than the supply of 2017, and this is only the demand from wind turbines. In 2010, only 1% of neodymium produced was used for wind turbines. While it is clear that there are enough reserves, concerns exist about the ability to increase production fast enough. Opening new mines could take over 10 years and the supply by recycling of wind turbines lags behind over 20 years. However, as already mentioned, there is a trend to open mines outside China, and some could already be opened as of 2020. Even in case of shortages of supply, there are sufficient substitutes. Most turbines today don’t use permanent magnets but use doubly-fed induction generators which don’t contain rare-earth elements. Another option in the future is superconducting wind turbines, which also don’t use rare-earth elements. Furthermore, there is the option to reduce rare-earth element content, for example by using hybrid wind turbines. We estimate that the cost of rare-earth elements in the total levelized cost of energy is less than 1% for onshore wind and even lower for offshore wind. However, if the prices of rare-earths increases to the peak prices in 2011, they could make up over 5% of the levelized cost of energy. The carbon footprint of rare-earth elements used in wind turbines is 0,69 gCO2/kWh, which is around 7% of the total carbon footprint of onshore wind and 0,084% of the carbon footprint of coal. However, on a normalized scale, human toxicity, aquatic ecotoxicity, eutrophication of fresh water and particulate matter are found to have a bigger environmental impact. Rare-earth mining in China appears to be much more environmental damaging than elsewhere, as it is estimated that the environmental impact of a rare-earth mine would be 60-80% lower in Europe compared to China. We looked at critical elements for solar PV at element level and technology level using the weighted average of different risk criteria and indicators. Thin-film technologies are chosen because of the overall criticality of the elements used. Technologies considered are CdTe and CIGS panels. As a result, we found that, on element level, indium is the element with the highest risk, while copper has the lowest risk. On technology level, CdTe panels have consistently lower supply chain risk that CIGS panels using different weighting methods. Additionally, in order to implement Paris agreement, production of some elements need to rise severalfold by 2050. For example, production of indium needs to rise more than 12 times and this figure is more than 7 times for neodymium. We identified cobalt, lithium, manganese and graphite as critical elements for batteries. For these elements, there is supply risk to the EU, particularly due high concentration risk. For example, 64% of cobalt comes from the Democratic Republic of Congo and 69 % of graphite comes from China. It is expected that cobalt and lithium demand will be 3 and 3.5 times higher respectively by 2025 for rechargeable batteries. Lithium reserves itself worldwide are enough to meet the worldwide demand in the coming decades, but there currently are only few high-grade lithium processors for high grade lithium for batteries.