https://theconversation.com/are-solar-and-wind-really-killing-coal-nuclear-and-grid-reliability-76741
[links and images in on-line article]
Are solar and wind really killing coal, nuclear and grid reliability?
May 11, 2017 9.20pm EDT
U.S. Secretary of Energy Rick Perry in April requested a study to assess
the effect of renewable energy policies on nuclear and coal-fired power
plants.
Some energy analysts responded with confusion, as the subject has been
extensively studied by grid operators and the Department of Energy’s own
national labs. Others were more critical, saying the intent of the
review is to favor the use of nuclear and coal over renewable sources.
So, are wind and solar killing coal and nuclear? Yes, but not by
themselves and not for the reasons most people think. Are wind and solar
killing grid reliability? No, not where the grid’s technology and
regulations have been modernized. In those places, overall grid
operation has improved, not worsened.
To understand why, we need to trace the path of electrons from the wall
socket back to power generators and the markets and policies that
dictate that flow. As energy scholars based in Texas – the national
leader in wind – we’ve seen these dynamics play out over the past
decade, including when Perry was governor.
Wrong question
There has been a lot of ink spilled on why coal is in trouble. A quick
recap: Natural gas is plentiful and cheap. Our coal fleet is old and
depreciated. Energy use in the U.S. has flatlined, so there’s less
financial incentive to build big new power plants.
Part of Perry’s review is aimed at establishing how wind and solar,
which are variable sources of power, are affecting so-called baseload
sources – the power plants that provide the steady flow of electricity
needed to meet the minimum demand.
Posing the question whether wind and solar are killing baseload
generators, including coal plants, reveals an antiquated mindset about
power markets that hasn’t been relevant in many places for at least a
decade. It would be similar to asking in the late 1990s whether email
was killing fax machines and snail mail. The answer would have been an
unequivocal “yes” followed by cheers of “hallelujah” and “it’s about
time” because both had bumped into the limits of their utility. How
quickly 1990s consumers leaped to something faster, less impactful and
cheaper than the older approach was a sign that they were ready for it.
Something similar is happening in today’s power markets, as customers
again choose faster, less impactful, cheaper options – namely wind,
solar and natural gas plants that quickly boost or cut their output – as
opposed to clinging to the outdated, lumbering options developed decades
before. Even the Department of Energy’s own analysis states that “many
of the old paradigms that govern the (electricity) sector are also
evolving.”
Wind and solar are making older generators less viable because their
low, stable prices and emissions-free operation are desirable. And they
aren’t hurting grid reliability the way critics had assumed because
other innovations have happened simultaneously.
Texas pioneer
Let’s use the case study of Texas to illustrate. Since Texas has its own
grid, known as the Electricity Reliability Council of Texas or ERCOT,
and has installed more wind capacity than the next three wind-leading
states combined, the Texas experience shows what variable renewables
like wind power do to the grid.
In competitive markets like ERCOT, companies that run power plants place
bids into an auction to provide electricity at a certain time for a
certain price. A bid stack is jargon for “a stack of bids” – or the
collection of all these bids lined up in order by price – in
auction-based markets (such as Texas).
Markets use bid stacks to make sure that the lowest-cost power plants
are dispatched first and the most expensive power plants are dispatched
last. This market-based system is designed to deliver the lowest-cost
electricity to consumers while also keeping power plant owners from
operating at a loss. Throughout the day, the market price for
electricity (in $/Megawatt-hour) changes as demand changes.
The cost of natural gas also affects the price of electricity. As the
price of natural gas drops, each of the natural gas power plants drop in
price. That’s no surprise: When it costs less for them to operate, they
can bid a lower price into the market and move earlier in the line.
When gas drops into to the range of US$3 to $3.50 (per million BTU) and
lower, it begins to displace coal as a less expensive source of
electricity. This scenario reflects today’s reality: gas is cheap so
grids are using it for more of our electricity than coal.
How do renewables affect the bid stack? Renewable sources such as wind,
solar and hydro have no fuel costs – sunlight, wind and flowing water
are free. That means their marginal operational cost is near zero; the
cost is essentially the same to operate one megawatt of wind as compared
to the cost of operating 10 megawatts of wind since generators don’t
need to buy fuel. That means as more wind and solar farms are installed,
more capacity is inserted at the cheapest end of the bid stack.
This insertion pushes out other generators such as nuclear, natural gas
and coal, causing some of them to no longer be dispatched into the grid
– that is, they don’t supply power into the grid (or get paid). So as
more renewables are installed, power markets dispatch fewer conventional
options. And, because the marginal cost of these new sources is almost
free, they substantially lower the cost for electricity. This is great
news for consumers (all of us) as our bills decrease, but bad news for
competitors (such as coal plant owners) who operate their plants less
often and are paid less when the plants do operate.
What does all this mean? Natural gas and renewables are affecting coal
in two ways. Natural gas is a direct competitor with coal because both
can be dispatched – turned on – when a grid operator needs more power.
That is helpful for grid reliability. But, as the cost of natural gas
has fallen, coal has become less competitive because it is cheaper to
operate a natural gas power plant.
The effect of renewables is slightly different: Wind and solar power are
not dispatchable, so they cannot be turned on at a moment’s notice. But,
when they do turn on, during windy evenings or sunny days in Texas, they
operate at very low marginal cost and thus operate very competitively.
Research at UT Austin shows that while installing significant amounts of
solar power would increase annual grid management costs by $10 million
in ERCOT, it would reduce annual wholesale electricity costs by $900
million. The result of all this is that renewables compete with
conventional sources of power, but they do not displace nearly as much
coal as cheap natural gas. In fact, cheap gas displaces, on average,
more than twice as much coal than renewables have in ERCOT.
What about nuclear?
Nuclear’s problems are largely self-inflicted. In short: The price to
build nuclear is high, so we don’t build many nuclear plants these days.
Since we don’t build, we don’t have the manufacturing capability. Since
we don’t have the manufacturing capability, the price to build nuclear
is high. Since the price to build nuclear is high, we don’t build
nuclear these days…so on and so forth.
Today, cheap gas, having already beaten up on coal, is a threat to new
nuclear power plants and less efficient, older plants. New natural gas
combined cycle power plants can be built for about one-sixth the cost of
a new nuclear plant, is almost twice as efficient and you can build them
in smaller increments, making them easier to finance.
Market innovation and IT can fix reliability
Because wind energy comes and goes with the weather, it makes grid
operators nervous. But wind forecasting has improved dramatically,
giving more confidence to those who need to keep the lights on.
And, interestingly enough, the requirements for reserve capacity (backup
power for when wind power dips) to manage the grid smoothly went down,
not up, over the past few years in Texas, despite rapid growth in wind
during Governor Perry’s tenure. That is, the costs for managing
variability in the grid decreased.
Why has there been little disruption to the reliability of the Texas
grid? Because alongside rapid growth in wind installations was a market
transformation in ERCOT. While Secretary Perry was governor, the Texas
market went from a coarse, slow market to a fine-tuned, fast market.
Innovating the market to one that is dynamic and fully functioning made
it easy to include more wind into the system. It’s also a sign of how
advanced technologies enable us to reinvent the grid toward one that is
cheaper, cleaner and more reliable.
But there is still more to do – information technology coupled with
integrated hardware can help. Consider this: There are 7.7 million smart
meters in Texas, most of them residential. We’ve estimated that
installing 7 million controllable thermostats for just the households in
Texas would cost $2 billion. Residential air conditioning is responsible
for about 50 percent of peak demand in Texas in the summer. That means
about 30 gigawatts of peak demand in Texas is just from residential air
conditioners.
By dynamically managing our air conditioning loads – that is, adjusting
thermostats to lower overall demand without impacting people’s comfort –
we could reduce peak demand by 10 to 15 GW. That means we might not need
$10 billion to $15 billion worth of power plants. Spending $2 billion to
avoid $15 billion is a good deal for consumers. In fact, you could give
the thermostat away for free and pay each household $700 for their
trouble and it would still be cheaper than any power plant we can build.
In the end, Secretary Perry has posed good questions. Thankfully,
because of lessons learned while he was governor of Texas, we already
have answers: despite concerns to the contrary, incorporating wind and
solar into the grid along with fast-ramping natural gas, smart market
designs and integrated load control systems will lead to a cleaner,
cheaper, more reliable grid.