Will Cheap Energy Storage Come to Coal and Nuclear's Rescue?
Everyone knows that the development of low-cost, large-scale electricity storage technologies will be critical to the future of wind and solar energy--or at least everyone who reads The Energy Collective knows that! The ability to cheaply store electricity when the sun is shining or the wind is blowing and use it later when those resources fade away is essential if these intermittent resources are to play a major role in the electrical grid.
Yet, paradoxically, cheap grid-scale energy storage may simultaneously throw a potent lifeline to two of renewable energy's chief competitors: coal and nuclear energy.
Big nuclear and coal-fired power plants can't ramp up our down their electricity output very quickly, a function of their huge steam turbines, which must be spun up or down carefully and kept at the right consistent temperatures to avoid damage. The marginal price of power generation at a coal or nuclear plant also tends to be dominated by the fixed costs of capital equipment, with variable costs like fuel being fairly marginal contributors.
Without affordable electric storage options, it pays then to run these big plants 24-7. Large coal and nuclear power plants are typically dedicated to meet a base level of electricity demand, or "load," that is consistent throughout the day. Hence their jargony electric sector label: "baseload" power plants.
While reliability is a plus, this relative inflexibility can also present challenges for the future of baseload power generators, according to energy industry experts speaking at the MIT Energy Conference Friday. As variable renewable energy sources gain a greater share of the power mix and as cheap natural gas prices make flexible gas-fired generators increasingly competitive, the importance of "baseload" power plants may be diminished in the year's ahead.
Intermittent wind and solar generators essentially act as "negative load," reducing the portion of electric demand that must be met 24-7 by baseload plants. Meanwhile, cheap gas-fired plants are increasingly competitive with existing coal (and to a lesser degree nuclear) power plants, even for baseload power.
Low-cost, grid-scale electric storage could be just the ticket for embattled baseload power plants, according to Dr. Lawrence Makovich, vice president and founder of the power practice at consultancy IHS CERA.
Electric power prices are highest when demand peaks, usually during the late afternoon when factories, office parks, and homes are all gulping power, while demand and prices both fall to rock bottom during the dead of night. So-called "off-peak" prices at night can be as much as 2 to 5 times lower than "peak" power prices. On the warmest and coldest days of the year, when air conditioners and electric heaters are all switched on, spot market power prices can surge to almost absurd heights.
These peak demand periods are a cash cow for flexible generators able to ramp up to meet surging demand, a role typically filled by smaller, flexible gas-fired power plants.
In contrast, baseload plants generally have no ability to take advantage of this spread in power prices. They're running flat-out all the time, and they have to find a buyer for their power whether prices are good or bad. Often that means they are locked into long-term contracts, rather than competing on spot markets. They usually lose out on the big profits when power prices peak.
That all changes if grid-scale energy storage gets cheap. Baseload coal and nuclear plants could continue to run at max capacity and optimal efficiency 24-7. But now, when power prices are lowest, these generators could charge up on-site batteries or sell their power to storage operators and then sell that electricity when demand is highest to take advantage of peak prices.
All of a sudden, big power plants can compete in the electric spot market and provide a source of flexible "peaking" or "load-following" power while increasing their profits.
Cheap energy storage thus changes the very definition of a "baseload" power plant.
Makovich isn't the only energy consultant who has come to this realization. IHS CERA's competitor McKinsey & Co. found the exact same thing in a 2011 study on energy innovation commissioned by Google.org.
According to McKinsey/Google's modeling, "In the short term, much cheaper storage, absent innovations in wind and solar that reduce their cost to below coal, could actually drive an increase in coal consumption. Cheaper storage would enable already cheap coal units to run at peak efficiency 24 hours/day, store energy at night, and dispatch it during the day--reducing demand for load-following following natural gas capacity."
By boosting profits, the flexibility granted by cheap storage would actually make it more attractive to keep older coal or nuclear plants online, even if costly retrofits are required to meet pollution regulations or secure approval from the Nuclear Regulatory Commission to continue operating.
In a modeling scenario in which battery breakthroughs make large-scale grid storage competitive, McKinsey projects that coal's share of the energy mix would actually increase relative to a baseline scenario, driving CO2 emissions up, albeit just slightly, by 0.3 percent.
The electricity system of the 21st century is changing, the panelists at the MIT conference all noted, as new intermittent power sources increase their market penetration, tightening pollution regulations and aging equipment result in the retirement of older coal and nuclear plants, and natural gas-fired plants become the generating source of choice for new plant construction.
New breakthroughs in low-cost energy storage may be precisely what baseload coal and nuclear generators need to stay competitive and flexible in this changing electricity market.
For more exclusive Energy Collective reporting from the MIT Energy Conference, see: "Is Water a Barrier to a Low-Carbon Energy Future?"
Other Posts by Jesse Jenkins
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"The Future of Energy and Utilities: An IBM Point of View."
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