Photo: tlindenbaum/Flickr

When Renewable Energy Costs Fall Quickly, How Should Buyers Get Good Information?

, senior energy analyst, Climate & Energy Program | January 31, 2018, 4:30 pm EST
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Now that new wind and solar power plants are cheaper than burning fossil fuel at existing plants, old assumptions and outdated information are hazardous to our health and economy.

Recent news of renewable energy and storage competing to supply electricity is moving so fast, attention now must shift to how energy buyers make comparisons between fossil fuel and up-to-date information about renewable energy.  For years, UCS has pushed slow-moving institutions to keep up with the declining costs and improving performance of renewable energy.

Costs and performance of renewable energy have improved greatly in recent years. Using old information is not helping. Photo from Illinois: tlindenbaum/Flickr

Lowest prices ever!

New renewable energy plants’ success beating fossil fuel keeps spreading, and surprising experts.  The results Xcel found for solar, wind with storage from bids in Colorado made headlines. Median bid prices of 2.1 cents per kilowatt-hour for wind with storage and 3.6 cents per kilowatt-hour for solar plus storage sent shockwaves.  Wind under 2 cents is common in that region.  Corporate energy decisions, at utilities and at Steelcase, IKEA, Amazon, Facebook, Google, Wal-Mart and many more are based on price.  The declining costs of renewable energy seen by these market players are documented in public and industry reports, too.

The falling costs and rising capabilities of renewables are also seen for energy storage. The trajectory of storage replacing power plants demonstrates how zero-fossil fuel alternatives can increase grid reliability.

Reliability can be expensive

Reliability needs in certain areas of the grid, often near population centers, can be especially expensive. But these can drive interest in solutions based on renewables plus storage. In these locations, increased delivery of electricity has a higher value than an average location. Think of the higher value of the electricity in your cellphone or flashlight. The adoption of careful, concentrated efforts to use renewable energy, demand response, and storage in locations where reliability requires an expensive fix was used in northern Wisconsin in 2000.

Now there are policies coming into effect based on the idea that there are more ways to meet reliability.   California recently noted when procurements for meeting reliability needs are open, energy storage has shown an exceptionally high value in bid evaluation. In a new decision last month, the California Public Utility Commission ordered that a proposal to maintain outdated gas-fired peaker plants should be compared with new zero carbon supplies (solar, demand response and storage) in these high value, difficult to reach locations.

In that decision, the CPUC also noted something relevant everywhere: The public needs competition to test the continued support of existing plants.

New ways to meet your needs

This California order opens wide a poorly measured comparison of new energy supplies. Meeting reliability (and adding resiliency), a role previously met by power plants or added wires, is ripe for competition to save money and increase the use of clean energy.

New York City is another place the value of storage and other distributed energy resource such as solar and demand response have been recognized in utility planning.  Five years ago, Con Ed of New York adopted the idea that solar, demand response and storage can be combined as an economic alternative to a large reliability expenditure. The industry is learning in Brooklyn and Queens in New York City to bring these clean distributed resources to the upgrade the grid where the wires alternative was going to be very expensive.   This was a rare break, allowing competition for new technology to be compared to the cost of a wires upgrade.

Watch for non-competitive situations

With all these quickly changing practices in some places, consider how slow the information gathering and decision-making can be. Utilities still consider themselves the best developer and owner of new energy supplies. Utilities will even pretend that there are no alternative suppliers or new technologies capable of meeting their needs. Many oversight agencies (public utility commission and Federal Energy Regulatory Commission) require either planning and evaluation subject to debate and review, or a competition with bidders offering supplies to conform to a Request for Proposals. (UCS is involved in these energy plan reviews in Michigan and Minnesota.)

These approaches can drag out over two years, making information stale and creating a high-stakes, winner-take-all situation dependent on hidden assumptions or analysis.

Not everyone has to hold on to old information or even create a new RFP to learn the present price of power from renewables. For an example of more routine gathering of prices without the cost and complexity of issuing an RFP, look at innovations available. As more supply is available and more places are suitable for electricity generation, new tools will be useful to buyers of all kinds. One firm rolling out an easily-updated database of renewable energy supply is Level 10.  The access to sellers’ offers from this firm accelerate the price comparisons, and purchasing from renewable energy plants in more places.

While regulated utilities need to be supervised to protect consumers and avoid monopoly abuses, how they gather and understand information is not necessarily stuck in the slow lane.  UCS is arguing for a fresh attitude to modeling the different tasks and benefits of energy supplies embedded in the power system. In a world where solar energy can be so common the old thinking calls this “a surplus”, and new wind farms can be the cheapest energy on the grid, information and analysis must keep up.

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