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Future Energy Economics

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This paper will describe the basic underlying technologies and associated economics that support wind, photovoltaic (PV) and battery energy storage, and how currently evolving technologies might take a few pages out of their play-book.

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John Benson's picture

Thank John for the Post!

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Bob Meinetz's picture
Bob Meinetz on Apr 16, 2019 7:59 pm GMT

John, from your Bloomberg source:

"Former U.S. Energy Secretary Ernest Moniz, in a February interview with Bloomberg, said that kind of short-term energy storage won’t help integrate large amounts of renewable power. 'It’s not going to handle a day, a week, a month, a season,' said Moniz."

The idea "storage" will ever help renewables overcome their fatal flaw of intermittency has no adherents among physicists - the people who understand the dynamics of energy. If renewables + storage aren't going to handle one cloudy, windless day, what good are they?

Your chart for lithium-ion battery prices includes those for cars, flashlights, and watches. As of last year, long-duration grid-scale batteries, with installation, were two orders of magnitude more expensive. To be able to both power the grid and charge batteries, we would need to double generation capacity, and batteries would need to be replaced every decade. A non-starter.

"'Renewables plus storage' is so disappointing...the idea we can just generate electricity on our rooftops is more of a block to solving climate change than denial." - Bill Gates

John Benson's picture
John Benson on Apr 16, 2019 8:01 pm GMT

Hi Bob:

Several things:

1. A large majority of Wind and PV plus storage contracts are sold is via power purchase agreements (PPAs), and these are the purest economic metric. I'm sure the power costs that Mr. Robo is forecasting is are  what he believes that NextEra will enter into PPAs in the early 2020s, and they have plenty of experience in Wind, PV and Storage, so these would seem to be credible estimates.

2. Cloudy days? I generally write about energy issues as they apply to California (these are complicated enough). I believe you are also from CA. During our official peak demand period (May 1 through October 31, a.k.a. "Summer"), I would guess that 95% to 98% of our days are largely cloudless in all of the state except the northernmost section (which has few people). On the days that are cloudy there are plenty of dispatchable resources to fill in for diminished PV resources.

3. My post next week will be on changes to California's Resource Adequacy process. Like all CPUC and CAISO processes it's excruciatingly complex, but the good news is that they perform detailed simulations out to (at least) five years to determine whether all of the Load Serving Entities and Metered Subsystems have sufficient resources, plus reserves, plus backstops. If there is some point ten years from now where California will be in trouble, all of the energy infrastructure organizations will know about it five years from now, and will fix it.


Joe Deely's picture
Joe Deely on Apr 16, 2019 9:08 pm GMT

CAISO fuel share yesterday - a weekday - shown below. Storage will "shave" both that early morning and evening bump for NG by 2024.  

Meanwhile here are corresponding fuel share numbers for yesterday. Note:  these numbers are pretty close to totals for April  2019 so far... so not a one day cherry pick.

  • Renewables - 37.4%
  • Natural Gas - 18.4%
  • Imports - 17.9%
  • Hydro - 16.2
  • Nuclear - 10.0%

Note: if behind-the-meter solar were included renewables number would be substantially higher.

Matt Chester's picture
Matt Chester on Apr 17, 2019 12:16 am GMT

I must say, I get so excited when seeing your new publications on Energy CEntral, John!

One part that jumped out to me in this piece was the graph on battery prices on page 6, dropping from $1200/kWh in 2010 to $200/kWh in 2018. That's an impressively precipitous plunge! You note they could further drop below $100/kWh by 2024, which gets me wondering where the asymptote is. What's the theoretical low price point the market is moving towards, and how much of a difference will the energy storage market in utilities feel once we hit close to that point?

John Benson's picture
John Benson on Apr 17, 2019 11:04 pm GMT

Thanks for the comments Joe and Matt.

If you look at a paper I posted last June (linked below) it has a pie chart in section 2.1 that lists the total energy production by fuel source in 2017. It is from the CEC and has a reference with a link. I looked earlier this week, and they do not have 2018 numbers yet. When they do I will regenerate the chart for 2018 and post it.


Joe Deely's picture
Joe Deely on Apr 19, 2019 9:16 pm GMT


Thanks. I like the CEC data becuase it shows at least a partial breakdwon for imports.

I believe the 2018 numbers frm CEC will come out in June/July.  By the way, the author Michael Nyberg - whose email address is on report - is responsive if you have any questions.

I have created a chart which shows the progression of this data over time. You can see the drop in Natural Gas generation over the last 5 years in CA as solar has grown. 

Bob Meinetz's picture
Bob Meinetz on Apr 19, 2019 6:15 pm GMT

John, I've been listening to glowing projections for renewables, doomed from inception, for the last half century.

Mr. Robo can't have any experience with the economics or viability of "renewables plus storage" because that dynamic does not exist (virtually all of California storage is built next to gas plants).

We can cherry-pick sunny days in California, but why? Over the entire year solar will be unavailable for an average of 70% of every day - that means burning fossil fuel gas. And while solar is charging batteries, gas is powering our grid - a lose-lose.

I'm looking forward to your report next week. As an intervenor for the current Integrated Resource Plan (IRP) under consideration, the only thing I've seen CPUC "fix" is handing business on a gilded plate to California's natural gas industry. Through excruciatingly (and deliberately) complex accounting practices, CPUC will continue to kick the can down the road for renewables - the bright future of which has been 10 years away for the last 50.

John Benson's picture
John Benson on Apr 19, 2019 8:48 pm GMT

Thanks Bob.

What am I thanking you for? Giving me the subject for my next post (after the one on Resource Adequacy, which is basically done).

Your comments are reasonable and correct, from your viewpoint. I understand your viewpoint because in 1980, I believe I was you. Because of your viewpoints I believe that you spent most of your career in the nuclear industry, as I had in 1980. And all I knew about power production, and the economics thereof was baseload. Everything else seemed sort of silly.

Then I moved to a company that made SCADA and energy management systems for electric utilities (a division of Landis & Gyr). Then I learned about the full economics of generating, transmitting and distributing power. Then was before renewables. Not only has it changed much since Y2K, it continues to change at warp-speed, especially the economics.

And so, I'll write a paper about it.


Matt Chester's picture
Matt Chester on Apr 19, 2019 9:32 pm GMT

Ooh, on the edge of my seat for this one!

Bob Meinetz's picture
Bob Meinetz on Apr 22, 2019 1:06 am GMT

John, if you believe I spent most of my life in the nuclear industry you're already wrong, and if you believe baseload demand no longer exists you apparently haven't looked at a demand chart since 1980. Nothing has changed about the fundamentals - especially, with renewables. Because they force utilities to buy non-baseload gas generation at expensive day- and hour-ahead prices when they aren't available, they're still a horrendous waste of money. That's why New York, Illinois, and New Jersey (and soon, Pennsylvania and Ohio) are re-investing in baseload nuclear:

"The Brattle Group found that electricity costs [in New York] would be $1.7 billion a year lower by preserving the at-risk nuclear units, since they would have been replaced by more costly generation. With the cost of the ZEC [zero emission credit] program estimated to be less than $500 million a year in the first two years of the program, the net savings to consumers are expected to be more than $1 billion every year.*

*In competitive wholesale electricity markets, the price paid to all generators is set by the most expensive unit that is needed to serve the demand at a given time. Since nuclear plants run all the time, they act as “price takers” effectively bidding at zero and allowing fossil fuel plants to set the market price. If the nuclear units were removed from the system, fossil plants that would have been too costly to be called upon would now be used to fill the gap left by the nuclear plants, increasing the market price that would be paid by all customers."

The only thing proceeding at warp speed, fortunately, is the realization renewables will never be a solution to climate change. Can't happen soon enough.

Joe Deely's picture
Joe Deely on Apr 21, 2019 8:01 pm GMT

 And while solar is charging batteries, gas is powering our grid - a lose-lose.


Do you actually think that total capacity of storage added will outpace the capacity of solar added?  SImple example - new project gets added in CA with 100MW of solar and 50MW/200Wh of storage. Why would this mean more gas powering the grid?

Yesterday NG provided 62,505 MWh of generation on CAISO. Solar provided 89,027 MWh. 

If there had been an additional 5,000MWh of storage on the grid all of this would have been charged with solar. This would have been discharged in early evening hours and NG total generation would have 5,000 MWh less or 57,505 MWh.

By the way - here's the graph for yesterday on CAISO. Imports went below -2000MW for multiple hours in early afternoon - meaning we were exporting 2,000 MW of solar to Western region. We could have been charging storage to be used later in evening.  How is this graph gonna look in another 3 years.


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