Excerpt from David Roberts article Solar and wind are coming. And the power sector isn’t ready. By
The LBNL team (Joachim Seel, Andrew Mills, and Ryan Wiser) notes that “many long-lasting decisions for supply- and demand-side electricity infrastructure and programs are based on historical observations or assume a business-as-usual future with low shares of VRE.”
But what if VRE takes off? What if it hits 40 or 50 percent of national electricity supply by 2030? (Climate hawks would prefer an entirely decarbonized power sector by then; neither goal will be possible without a serious national policy push.) Would high VRE penetrations substantially change the decisions that energy regulators, policymakers, and investors need to make?
In a word, yes. They would.
The team modeled the effects of high (40 percent) VRE and found several notable changes relevant to the operation of wholesale energy markets
Note that average prices fall the most under the high-solar scenario, in every market but ERCOT. Unlike the other states, Texas is a bit isolated, running its own grid with few interconnections to other grids through which it can import or export power. It has to deal with all that solar on its own (more on that later).
Lower prices are good for consumers but bad for owners of big, uneconomic coal and nuclear plants, who rely on high prices to keep running. (Yes, it is a peculiar market in which most of the people responsible, including the president, view low prices as a threat.)
1) VRE reduces average wholesale power prices.
2) VRE bumps fossil fuels off the grid.
3) VRE makes periods of very low prices and very low emissions more frequent.
4) VRE changes the shape of demand and 5) pushes demand peaks later in the day. The duck effect is most pronounced in ERCOT, which has the least ability to export excess solar power
6) VRE makes prices more volatile. Power prices in high-VRE scenarios are lower on average, but they move around more. Solar scenarios are more volatile overall, though prices in high-wind scenarios swing over a wider range. In spring in California under a high-wind scenario, “energy prices in the morning may be at zero on some days while prices may reach up to $55/MWh on other days.”
7) VRE makes the services that support it much more valuable.
High shares of solar can depress prices during the day and shift peak times to the early evening. This indicates that traditional on-peak measures, like commercial office building air conditioning programs, may become less valuable while traditional off-peak measures, like street and residential lighting, may increase in value.
VRE will make it more important to electrify everything, The more water heaters and electric vehicles are connected to the grid, providing storage and controllable demand, the more stable a high-VRE grid will be.If nuclear plants are to survive in a high-VRE scenario (and climate hawks should want them to), they must become must more flexible, capable of ramping up and down in response to swings in VRE. That means “increasing R&D on flexible nuclear plant design and operations, addressing technical regulations on nuclear plant operations, or considering the size of the required incentive (if at all) to either keep nuclear plants operating in a low or high VRE future despite output curtailment, or to increase operational flexibility via plant retrofits.”
This is just a small selection of the kinds of decisions that will need to be made differently if the US is actually going to ramp up renewable energy fast enough to hit its midcentury carbon target.
Right now, the habits and patterns of decision-making shaped by low VRE penetration still have inertia, exacerbated by the lingering doubt Trump has imposed on power markets. But there are many reasons to believe that, Trump or no Trump, VRE numbers are going to keep rising at or faster than their current, already dizzying rates.
The renewable energy future is rapidly becoming the present. Everyone in and around the power sector needs to snap to and get ready for it.