Imagine you’re the energy czar of a large, economically developed country and (gasp) you want to move off of fossil fuels to avoid the worst impacts of climate change. How do you do it?
Wind and solar are the cheapest form of electricity in many parts of the U.S., but as the share of variable renewables increases, how to balance supply and demand every minute of every day, at a competitive cost, becomes a key issue.
A new report from Climate Policy Initiative (CPI) provides a clear answer to that question: focus on flexibility.
The ironclad rule of electricity systems is that supply and demand must remain in perfect balance. A flexible system adapts to changes in supply availability or demand conditions rapidly, and ideally cost-effectively, to preserve that balance. Think of this in terms of surpluses and deficits: Flexibility means system operators can easily and efficiently fill a supply deficit with a surplus that occurs at another time.
High-renewables grid at same flexibility cost of high-gas grid
Like a well-seasoned yogi, a power system needs to be flexible in several different ways. CPI’s report estimates flexibility needs on different timescales to quantify the cost of balancing a high-renewables system on scales from minutes, hours, days, and even seasons. This analysis adds in missing details to the debate over a high-renewables future in two ways: First, it seriously undermines the idea that baseload power (like coal, natural gas, or nuclear) is the only way to maintain a reliable electricity system. Second, it identifies a key gap in current technologies’ ability to balance a high-renewables system – long-term energy storage.
The report addresses baseload concerns by modeling a system built from scratch with 80% renewable generation where supply and demand are in balance every hour of the year, using Germany’s wind and solar resources and electric demand patterns as examples. Assuming continued cost declines in wind, solar, and batteries, and with natural gas and batteries filling the other 20% of the resource mix, CPI finds this theoretical system has sufficient flexibility to match supply and demand in each hour of the year—at the same price ($70/MWh) as a system supplied by 100% natural gas.
On deeper decarbonization, the report also quantifies the flexibility needs of a system where enough wind and solar power are generated to meet 100% of electricity demand. The report finds that a smart mix of wind and solar can meet electricity demand in 80% of the hours of the year, leaving the other 20% to be met with flexible resources. From this analysis a key gap in fuel-less flexibility options emerged—when they removed the natural gas from the system there was a substantial need for seasonal storage, with few existing technologies available to provide it at a reasonable cost.
Existing technologies can shift demand to match variable renewables
The report found existing technology such as batteries, hydropower, demand response, and smart inverters could shift enough demand to match minute-to-minute fluctuations in wind and solar output caused by cloud cover and momentary changes in wind strength. Similarly, existing resources including increased energy trading with neighboring systems, water-heater and industrial thermal storage, and time-varying pricing could produce all of the hourly shifting needed to keep the system in balance. However, the options for shifting supply seasonally (over periods of a week or more), exemplified by a cloudy, windless winter day with high electric heating demand, remain limited:
Of all available technologies, only hydrogen production and zero-carbon fuel-based generation (think full carbon capture) registered as a great fit for zero-carbon seasonal shifting, but neither technology is currently scalable or cost-effective. Long-term shifts in industrial production and consumer demand could alleviate some of the pressure on long-term storage, but established storage technologies like batteries, most pumped hydro plants, and compressed air don’t provide the scale of shift needed to compensate for seasonal variations.
Three areas of agreement on gird flexibility
This means policymakers must redouble research and development to come up with scalable, cost-effective seasonal storage technologies. Whether this capability will come from hydrogen production, thermal storage, flexible gas-fired plants with CCS, or some other scalable but unknown solution need not be decided today. Rather than limiting our thinking about deep decarbonization to hinge on unknowable technological developments, the CPI report reinforces key areas of agreement between feuding energy system experts:
- At 8% of current U.S. generation, wind and solar can clearly be scaled up by an order of magnitude (80%) before hitting flexibility constraints that we do not currently have tools to solve. Current wind and solar costs mean this won’t increase rates and may save money.
- We can avoid running into flexibility constraints on shorter timescales by ramping up well-established and cost-effective technologies – in particular, expanding interregional transmission, connecting electrified heating and cooling devices to grid operations, implementing time-varying rates and building automation, and working with industries to create business models for more flexible demand.
- A balanced portfolio of renewables matters. Long-term planning to meet decarbonization goals should take seasonal variations into account and build the optimal diverse mix of zero-carbon energy. Myopic reliance on wind or solar is likely to increase costs at higher shares of generation.
By Mike O’Boyle
Mike O’Boyle is the Power Sector Transformation Expert for Energy Innovation, and works on the America’s Power Planproject.