Energy transition paradox: Solar and wind growth can hinder decarbonization

The decarbonization of energy systems requires the deployment of intermittent renewables (wind and solar) with increasingly low costs. The growth of these renewables impacts power prices, which may influence hydropower investments and the adoption of fossil-fuel options for baseload electricity. It thus remains unclear whether deploying more intermittent renewables would reduce the net carbon emissions across energy systems in the absence of well-designed policy. This study first developed a techno-economic optimization model to explore the impacts of future projections of intermittent renewables on long-run electricity prices and the subsequent hydropower investments, using Hubei Province of China as a case study. The carbon emissions associated with the change in hydropower investment were then quantified. Results indicate that the new policy-driven renewables deployment reduces the electricity prices by 36 % on average over 2021–2100, compared to the case with the policy specified in the prior (13th) National Five-Year Plan. Without intervention, the lower electricity price could result in a 42 % reduction in hydropower investments by 2050. With increased intermittent renewables and decreased investments in hydropower, the energy system is expected to deploy more backup fossil-fuel options, which could increase carbon emissions by 45 %. Therefore, deploying more renewable energy would depress the investments in hydropower plants and further hinder decarbonization unexpectedly, suggesting a possible paradox in the energy transition. This possible paradox calls for a new, and robust policy to ensure the benefits of decarbonization are realized regardless of potential changes electricity prices.