If you set aside environmental harm associated with getting fossil fuels out of the ground and the CO2 released when they are burned, fossil-fuelled generation is the gold standard of all generation because: (a) the capital costs of the generation equipment are relatively low, (b) the marginal costs per kWh of electricity generated are very low and (c) the generation is extremely flexible because you can control the output power very well. The flexibility of fossil-fuelled generation is achieved through energy storage – but the energy is stored before it has been converted to electricity.
As the world has begun its journey towards decarbonised electricity supply, it has focused mainly on achieving low capital costs of renewable energy generation. This has been exactly the right emphasis to get up to, say, 20% of electricity from renewables because virtually every kWh of electricity generated from the renewables has displaced 1 kWh of electricity that would have had to be generated by burning fossil fuels. In effect, the renewables supplied the energy but the fossil-fuelled generation supplied the flexibility required to accept that energy.
The journey towards decarbonisation is changing right now as we move into the second part of the decarbonisation journey. The penetration of renewable energy generation is already sufficiently high in many places that it is not possible to accommodate all of this low-carbon (but inflexible) generation by simply flexing fossil-fuelled generation. It is simple to illustrate this point. Most onshore windfarms achieve a capacity-factor of something like 30%. That means in every 100 hours, each 1MW(rated) of wind turbine generates on average 30MWh. If some region wishes to satisfy 45% of its total electricity demand from wind, then the overall rated capacity of wind turbines for that region would be 150% of the average demand. Clearly, the supply of electrical power would very often exceed total demand – even if you could shut down all of the other generators completely.
Many countries are on the way to having so much renewable energy harvesting that reconciling the supply of electricity with the demand for it will be difficult. It is no longer good enough to think about the cost of renewable energy simply in terms of $/kWh: it is necessary now to think about ensuring that the electrical energy delivered from the renewable energy sources can arrive at the time required for consumption.