Cheap Renewable Energy is Here. Why Doesn’t The Grid Plan For It?

, senior energy analyst, Climate & Energy Program | August 20, 2015, 12:31 pm EDT
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Wind farms and solar arrays are setting new records for low energy prices, with wind under 2 ½ cents and solar under 4 cents when conditions are right. These are cheap prices, given electricity from new natural gas plants is in the 5-7 cents range, coal at 6-10 cents, and nuclear somewhere between 13 and 15 cents, according to one fleet owner (nuclear can be unpredictable). So why aren’t more electric grid operators incorporating this energy as they plan to meet grid needs?

Wind blowing on summer  morning across wide areas of central and eastern US. Credit: http://hint.fm/wind/

Wind blowing on summer morning across wide areas of central and eastern US. Credit: http://hint.fm/wind/

Wind and solar are cheap

Wind energy is getting cheaper because new wind turbines make more energy during more hours with taller towers and longer blades. Solar has become MUCH cheaper because the growing size of the market allows more efficient manufacturing of solar panels. Both of these trends mean more energy is produced from wind and solar. Wind tends to be more productive in winter and night time, while solar, unsurprisingly, is more abundant in summer and day time. As these can be complimentary, renewables are a solid contributor to needs, when viewed together.

Wind and solar are helping

Even though most engineering analyses look at wind and solar separately, there is still a significant contribution to meeting grid needs from each. PJM, serving the power system in 13 states, released a study with industry leader General Electric that showed how wind and solar contribute to times of greatest need. That report gave the portion of a wind generator contributing to PJM meeting demand at 15% and a narrow range for solar around 60% of each installation. The wind value will go up with the larger turbines deployed after 2012 (when the study began).

The higher production for new wind farms, which is measured as an annual capacity factor, will improve wind’s contribution to meeting demand. We are beginning to see windfarms with an annual capacity factor over 50% appear in the 2014 dataset used by LBNL in the Wind Technology Report. The U.S. Department of Energy Wind Program provides an interactive map to see how each state can build windfarms with existing and new wind turbine designs. For example, this shows Indiana and Ohio each have 5 million acres of windy land capable of windfarms with capacity factors of 50% and 45%  using today’s technology. “Near-future” turbine designs with 140 meter hub heights are expected to offer capacity factors over 50% in Ohio, and over 60% in Indiana and Illinois, when the average has been 35-40%.

So what do grid rules expect from renewables?

How does grid operator PJM treat wind and solar when it estimates how much power the grid will need, and where it will come from? Mostly, they don’t count it. And the new rules taking effect this week mean they will count even less.

Here’s how we pay for fossil-fueled power plants

To secure a priority place on the grid as a “capacity” resource, power plant owners contract with the PJM for the capacity to meet total demand. In exchange for $7.5 billion per year, the fleet of generators commit to be available to run. This means that on days when demand is hardest to satisfy, everyone is assured an adequate supply will be available. PJM includes some probabilities regarding power plant outages and severe weather in this calculation, but they do not include the probability that solar energy may be available in summer, or wind energy in winter. With the growth in renewables, this could be an important omission.

Not entirely discriminating against wind and solar

The PJM process allows for solar and wind to enter the contractual commitments, share in the payments, and bear the risks on non-performance, which PJM has sharply raised going forward this week. The economic logic used by PJM is that a year-round commitment is required from other types of generators, and wind or solar owners can partner with each other, or any other supply, if that makes them better able to take the risk of the new year-round performance requirement.

But you might not like how this is done

If the owner of a wind farm or solar array does not enter into PJM’s capacity contract, they can still make and sell energy, and generally work to meet their other obligations and objectives. And the majority of wind and solar generation in PJM is already in this category. When the wind blows heavy in winter, or the solar is producing in summer, their contribution to meeting demand are welcome, but they are not included in the plans.

So, this is bad

Maybe consumers are going to pay hundreds of millions of dollars more each year under the new PJM rules and with the omission of renewable energy contributions. As PJM sets the size of its procurement, and holds auctions to purchase capacity commitments, it does not recognize the contributions from wind and solar that have not entered the capacity market.  Debating the exact number depends on slopes of supply curves and auction results, as well as the growth of solar in the next few years. That debate should begin now.

And it gets worse

The stakes are higher with PJM’s new capacity rules—PJM estimated the auction results would be $2 billion higher than past years. Also, developers of wind and solar are queuing up to build in PJM states to meet policy goals, on the scale of 10x increase in solar, and 2x increase in wind.

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  • Dr. A. Cannara

    As a former long-time supporter iof UCS, it’s become increasingly clear
    that politics, not science, now leads the rhetoric at UCS.

    Any
    group that claims scientific standing yet promotes the least efficient,
    most environmentally damaging form of non-combustion power — wind —
    has discredited itself.

    Actually, I misstated — wind is a combustion-energy source. It’s capacity factor is universally below 50% and its backup must be quick, thus meaning gas-turbine or other guaranteed combustion source.

    California is mentioned here, and as a Californian, I’d far prefer us to stop burning gas (and burning people along its plumbing) and give windmills their deserved recycling
    — into materials for better purposes.

    One windmill requires ~2000 tons of raw materials (coal, iron ore, rock…) per average MW ever delivered. And, that ~2000 tons is all processed via fossil fuels. And that’s just the beginning of the environmental damages created by prop-generators that can’t even harvest half the ~600 Watts per square meter of wind incident at 25mph.

    In the graphic below, German citizens paid for the upper red line of windmill ‘nameplates’, got the bottom blue spikes, and had to buy/burn to fill in the rest.

    Actually, what the German citizens and their descendants got was even more… http://tinyurl.com/nhhzotu

    The wind died along with their tourist industry.

    It should be no wonder that Germans are happy buy actually-green nuclear power marketed by MaxAtom, etc.
    ;]
    http://www.thelocal.de/20141212/german-consumers-still-hot-for-nuclear-power

    Too bad the UCS has decided to avoid its old “S”.

    Too bad propaganda came so easily along with the Internet.
    ;]
    Dr. A. Cannara
    650 400 3071

    Some refs…
    http://tinyurl.com/nrvp48b (true costs)
    https://www.youtube.com/watch?v=y7Ca72-WxuI (Vice Chancellor)
    http://tinyurl.com/kyq6ddr (note Fig. 25 Interventions)
    http://tinyurl.com/jwofrtx
    http://tinyurl.com/qd3pswl
    http://tinyurl.com/ko4u2m8
    http://www.handelsblatt.com/politik/deutschland/ex-bundeswirtschaftsminister-clement-energiewende-voellig-aus-den-fugen-geraten/9479290.html
    (in German)
    http://tinyurl.com/q7y6pfy
    In 2014, “…Germany’s
    wind turbines as a whole ran at between 0 to 10% of their rated capacity
    45.5% of the time (3986.75 hrs)! The turbines, which the German
    government says will become the “workhorse” of the German power
    industry, ran at over 50% of their rated capacity only for 461 hours, or
    just 5.2% of the time.”

    • Sparafucile

      They are, and always have been, a left-wing activist group — presently staffed by rejects from EDF and EarthFirst! (Just read their resumes, posted online.)

      • Dr. A. Cannara

        Actually, “left wing” doesn’t matter. Their rejection of fact, thus science, matters, inexcusably.

      • Sparafucile

        It’s always been a left-wing agenda, that they’ve tried to justify with eco-radicalism. The left-wing part is a sine-qua-non for their motivations.

  • WhatTheFlux

    Mike – As I understand it, a large penetration of intermittent energy from renewables will wreak havoc on grid stability. How do the wind and solar industries in America plan to circumvent the kind of disruptions the Germans are grappling with?

    • Mike Jacobs

      WTF-
      Your understanding has not been shared by the IEEE Power Engineering Society, the American Public Power Association, the Edison Electric Institute, the National Rural Electric Cooperative Association, or the power grid operators PJM, NYISO, Midcontinent ISO, Southwest Power Pool, California ISO, or ISO-New England. In the blog is a PJM document, or try as a basic overview this http://www.uwig.org/IntegrationStateoftheArt.htm.

      Still, the manufacturers and owners of wind turbines and solar technology have added low-voltage ride-through, frequency response as well as
      numerous control functions to contribute to grid reliability.

      • John Wright

        From Public Power:

        “It is not only difficult to back up wind, but also to back it down. “Unlike other power generators, wind cannot be backed down to reflect pricing signals,” the report said.

        Just because these organizations support wind, does not mean they don’t recognize the inherent instability caused by penetration of non-dispatchable generation limited to about ~18% – 20% without fast ramping backup – aka gas turbines.

        Though there are strategies such as demand forecasting, weather forecasting, control functions to play with these margins a bit, eventually wind and solar will need significant infrastructure accommodations that the utilities and hence the rate payers will have to pay for. That is the point WTF is making and I’m sure all the groups you mentioned would agree with despite your appeal to authority.

      • Mike Jacobs

        John- I appreciate the greater detail you offer. Adding infrastructure is needed, and would be true with any change in supply. The overstated “wreak havoc” rhetoric is not supported.
        Also, every grid operator I’ve worked with has routine dispatch-down control on windfarms. The eastern and midwest ISOs have made these controls based on price signals.

      • Dr. A. Cannara

        As a former long-time supporter iof UCS, it’s become increasingly clear that politics, not science, now leads the rhetoric at UCS.

        Any group that claims scientific standing yet promotes the least efficient, most environmentally damaging form of non-combustion power — wind — has discredited itself.

        Actually, I misstated — wind is a combustion-energy source. It’s capacity factor is universally below 50% and its backup must be quick, thus meaning gas-turbine or other guaranteed combustion source.

        California is mentioned here, and as a Californian, I’d far prefer us to stop burning gas (and burning people along its plumbing) and give windmills their deserved recycling — into materials for better purposes.

        One windmill requires ~2000 tons of raw materials (coal, iron ore, rock…) per average MW ever delivered. And, that ~2000 tons is all processed via fossil fuels. And that’s just the beginning of the environmental damages created by prop-generators that can’t even harvest half the ~600 Watts per square meter of wind incident at 25mph.

        In the graphic below, German citizens paid for the upper red line of windmill ‘nameplates’, got the bottom blue spikes, and had to buy/burn to fill in the rest.

        Actually, what the Germn citizens and their descendants got was even more… http://tinyurl.com/nhhzotu

        The wind died along with their tourist industry.

        It should be no wonder that Germans are happy buy actually-green nuclear power marketed by MaxAtom, etc.
        ;]
        http://www.thelocal.de/20141212/german-consumers-still-hot-for-nuclear-power

        Too bad the UCS has decided to avoid its old “S”.

        Too bad propaganda came so easily along with the Internet.
        ;]
        Dr. A. Cannara
        650 400 3071

        Some refs…
        http://tinyurl.com/nrvp48b (true costs)
        https://www.youtube.com/watch?v=y7Ca72-WxuI (Vice Chancellor)
        http://tinyurl.com/kyq6ddr (note Fig. 25 Interventions)
        http://tinyurl.com/jwofrtx
        http://tinyurl.com/qd3pswl
        http://tinyurl.com/ko4u2m8
        http://www.handelsblatt.com/politik/deutschland/ex-bundeswirtschaftsminister-clement-energiewende-voellig-aus-den-fugen-geraten/9479290.html (in German)
        http://tinyurl.com/q7y6pfy
        In 2014, “…Germany’s wind turbines as a whole ran at between 0 to 10% of their rated capacity 45.5% of the time (3986.75 hrs)! The turbines, which the German government says will become the “workhorse” of the German power industry, ran at over 50% of their rated capacity only for 461 hours, or just 5.2% of the time.”

      • WhatTheFlux

        Mark – The link you gave me helped make my point: “… we don’t see any fundamental technical barriers at the present time to wind penetrations of up to 20 percent of system peak demand, which is far beyond where we are today.”

        I was talking large. 20% penetration isn’t large; the 100% that Hawaii is shooting for is large. The corollary of the above quote is the we can expect problems to manifest over 20%. Havoc would indeed be wreaked well below 100%. Germany is experiencing a strong uptrend in load-balancing problems even now.

        So barring some whiz bang form of artificial inertia, some new means of mass (and massively cheap) storage, or an entirely new, parallel DC grid, wind (and solar) will never do more than augment the rotating power of the grid.

        Since hydro is fairly well built out, that means that either carbon fuel or nuclear fuel will have to carry the load (no pun intended.)

        We can all agree that carbon fuel needs to be phased out forthwith. That leaves nuclear.

      • John Wright

        I pretty much agree. but can nuclear match load at the rate wind goes on and off the grid? I thought only hydro and gas could do that?

      • Mark Henry

        Nuclear power is the only rational answer for baseline power, but it does have an issue as far as ramping to meet variable demand. So, in order to maximize the effect of renewables some use of natural gas will probably be required to fill in thegaps, but using it will require some tightening up on the associated climatic and environmental issues.

        I am also an activist with left-leaning ideals, but I am also an advocate for rationality and much against the emotional and reactionary tactics employed by my compatriots. I care even less for “stewards of the environment” who achieve income and status instilling irrational fear into others, such as fear of nuclear power, and I sincerely hope that UCS is not one of them. I care about the climate and the environment and other people including Republicans (for they know not what they do), so I feel it is my responsibility to learn the facts as best I can before inking out my protest signs…Mark

  • DocScience

    Until there is an incredibly cheap, incredibly safe, incredibly long life, incredibly fast, incredibly large scale means to store absolutely staggering amounts of electricity, solar and wind will NOT be able to do much more than drive up costs enormously in all but a few areas and lower reliability.

    • Mike Jacobs

      Doctor of Science- Thanks for your view. The evidence says different. From the Midcontinent ISO, operator or the power system from Manitoba to East Texas, ERCOT, the operator of both the market and the transmission system in most of Texas, as well as the buyers of windpower from Maine to Oregon to Albuquerque, the reality is they have lower costs and the same reliability with 5%, 10%, at some hours over 50% of energy coming from wind and solar.

      • Dr. A. Cannara

        Yes, Mark, “The evidence says different.”ly — remember adverbs?

        It says differently from what you misinform folks with here.

        You somehow oddly think that building 1/CF of something with capacity CF << 1 evidences wisdom or environmentalism.

        It doesn't. Data already in on wind 'farms', whether on it's resource consumption, land/species conscription, subsidies from the many to the few, insurance claims, maintenance costs, backup pollution, transmission loss… your statements about windmills are simply unscientific and false.

        But, maybe if you were required to have your name printing vertically in big black letters on every windmill tower, you might think a bit, especially about what your (and our) descendants will think when tearing them down.
        ;]
        I've never met a wind supporter who's a true environmentalist, or even scientist.

        Scientists & engineers know the harsh meaning of low capacity factors, as for wind & solar 'farms'. Local solar PV/hot-water — great, but storage is essential for it.

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  • Mark Henry

    According to the US Energy Information Administration, taking into account capital costs, operating cost, and transmission investment over its life cycle, and assuming an optimistic capacity factor of 25%, the total average system levelized cost for solar PV is $153 per MWh. The levelized cost for coal is $98 per MWh, natural gas $66 per MWh, and advanced nuclear $111 per MWh. Wind power (assuming an optimistic capacity
    of 33%) is $96 per MWh, and offshore wind power at $244 per MWh. So for all that expense you might have solar available 1/4 of the time (but not at peak demand time which is when the sun is setting) and wind power 1/3 of the time, making the chance of having both 1/12.

    • Mike Jacobs

      Mark H- Thanks, this is what I am trying to illustrate. The costs of wind and solar have changed very quickly. EIA is often slow to recognize these changes, and UCS has a full time staff effort to update and operate the models that EIA uses because they miss what other DOE offices are reporting.
      The nuclear power number comes from Entergy, a nuclear plant owner. The wind cost numbers are from actual built projects in the national lab report that I linked. There are numerous existing wind farms with capacity factors over 40%, and 50%, again a reason to keep up with the development of this technology.
      The solar price is a reference to a power contract with Nevada Power, and a large solar project. It was in the news, at 3.87 cents, on July 7, 2015.
      When things change like this, its going to require some new thinking.

      • Mark Henry

        Mike: I am all for
        renewable power, but it does have severe limitations. Comparative costs are often distorted by the fact that the operating life of a PV array or wind farm is about 1/3 that of conventional power plants. But the real issue is intermittency.

        According to data from Platte River Power Authority, a wind
        farm in Medicine Bow Wyoming, one of the windiest places in the US, is capable of generating 6 million kWh per month at full capacity. The actual maximum production was half that, and even that only 6 months in 5 years, or about 10% of the time. In summer the actual output is around 15% and around 40% in the winter when demand is less. The overall monthly average output over 5 years was 1.8 million kWh or 30% of capacity. The limitations of solar power are obvious, and compounded by the limited efficiency of PV panels.

        The intermittency (or reliability) issue must be recognized, or people will get the impression that wind and solar can completely replace conventional baseline power plants, which can lead to serious environmental damage. For example, in my area we have a 2250 MW
        nuclear facility which people want to close down. When it does close its production will be replaced by natural gas and the following will go into the atmosphere every
        year:

        SOx = 199 tons per year
        NOx = 638 tons per year
        Carbon Monoxide = 134 tons per year
        Particulates = 111 tons per year
        Carbon Dioxide = 8,780,805 tons per year
        Fugitive Methane during gas production ????

        Solar and Wind cannot, by any stretch of the imagination, reliably
        replace even a substantial fraction of the production of this nuclear facility. Yet many activists believe it can, based on overly optimistic and unrealistic (or at least incomplete) articles such as yours. As a scientist it is your duty to honestly present the whole picture.
        Otherwise you risk being complicit in the above-mentioned disaster and, like the activists, playing right into the hands of the fossil-fuel
        industry. Think about it…Mark