The Power of Transformation is not in new IEA report

The International Energy Agency has released a new report titled: The Power of Transformation: Wind, Sun and the Economics of Flexible Power Systems.  I've read opinions/overviews of it at the German Energy Blog and at the Financial Post.

After scanning the Executive Summary of the IEA report, the only surprise was how vacant of new ideas it is.

From the summary:

A co-ordinated transformation of the entire system reduces additional costs. A different scenario of the test system considers a more transformative approach. The installed power plant mix is reoptimised in the presence of 45% VRE and additional flexibility options are deployed (Transformed case). Compared to the Legacy case, the power plant mix shows a structural shift:

• a strong decrease in the number of power plants that are designed to operate around the clock and that cannot change their output dynamically (referred to as baseload technologies)

• an increase in the number of flexible power plants that are designed for part-time operation (referred to as mid-merit and peaking generation).

In addition, a better strategy for managing grid infrastructure is assumed. In this case, total system costs increase only by USD 11/MWh. This is two-thirds less than in the Legacy scenario. At a share of 30% of VRE in power generation, the increase in total system costs stands at USD 6/MWh.

This adds nothing to the thinking on energy.

In 2011 I wrote an article beginning with a quote from German politician Sigmar Gabriel - now the Minister in charge of energy and the economy in Germany as a leader in the coalition government's junior partner party (the one championing coal).

If someone declares publicly that nuclear power would be needed in the baseload because of fluctuating energy from wind or sun in the grid, he has either not understood how an electricity grid or a nuclear power plant operates, or he consciously lies to the public. Nuclear energy and renewable energies cannot be combined.”—Siegmar Gabriel, then-Federal Environment Minister of Germany

The conclusions of the latest IEA report are the starting point for introducing vRES - to displace baseload power ... but not baseload from fossil fuels, but baseload from nuclear (and often hydro too - if not intentionally, by harming the high-capital cost requirements of low-emission generating sources).

There remains, stubbornly, a fallacy that markets don't properly price electricity generation: the data is clear that as VRE (or vRES) capacity grows in a system, the value of the output declines.  That has nothing to do with pricing externalities or any market failure.  It has to do with the low value of VRE production.

The IEA report's executive summary concludes:

...while analysis has shown significant room to improve short-term markets, there remains the more fundamental issue of how to achieve a market design consistent with long-term decarbonisation, in particular in the context of stable power systems. On the one hand, VRE generators need to be exposed to price signals that reflect the different value of electricity (depending on the time and location of generation), so as to facilitate system integration. On the other hand, VRE requires capitalintensive technology and, as such, is highly sensitive to investment risk, a risk that is increased by short-term price exposure. An appropriate market design will need to strike a delicate balance between these two objectives.

I believe evidence suggests pricing carbon would harm, by itself, VRE penetration.
I don't believe there is any evidence a 40%, or 40%, VRE system would be a particularly low-emission system.

Markets value intermittency far less than reliability; that isn't inappropriate.