Optionality Important for Clean Energy Development
July 2, 2024
Optionality Important to Be Positioned for New Clean Energy Technology But Electricity Reliability Still Remains First Task
Electric utilities are continuing to develop optionality in their power resource plans so they are positioned to take advantage of new clean capacity generation technology when it becomes available. Optionality remains critical to ensure the reliability of the power grid is maintained.
Optionality while remaining reliable
Problematic to maintaining reliability are new federal regulations to accelerate the end of fossil fuel- fired electric generation, the current inability to finance new nuclear generation, the slowness of advancements in battery and carbon capture and other technologies, the problems with the sourcing of lithium, and probably the not-in-my-backyard opposition to new transmission lines. This as renewable energy becomes more dominant on the grid. But at risk is the reliability of electricity flow to homes and businesses. With electricity demand rising due to the electrification of the transportation and building sectors and expansion of AI and data centers, demand will create even more of a power grid imbalance. These and other major questions face the US electric industry in its path to 100% clean energy.
While the role of solar and wind energy is indisputable as part of a cleaner resource mix, their intermittency and the low-capacity factors, requires the development of clean dispatchable capacity to balance the flow of electricity, so supply meets demand. It is not well understood that electricity has to flow continuously through transmission lines. On a cloudy day when solar production is lower, something must be in place to balance the flow, so demand is met on a reliable basis. That has in the past been met substantially by nuclear or fossil fuel-fired generation, including flexible natural gas fired units that can be on the grid in a moment’s notice. But with the federal mandate to shut down fossil fueled fired generation and the disinvestment in nuclear generation, the power grid is staring at glaring imbalances that could impact public safety during weather extremes and other situations.
For example, the ongoing disinvestment in the maintenance of operating coal-fired generating facilities has begun to impair their performance which in turn requires greater replacement energy and capacity. A resource mix that is diverse and can ensure reliability in the transition period is critical.
Recently the Supreme Court delayed further compliance with EPA regulations that would have resulted in hastening the shutdown of coal-fired power plants. Also, the Supreme Court’s rejection in the Chevron decision sets aside EPA enforcement of clean air regulations that do not have specific congressional authorization. This delay may provide time for further development of clean dispatchable and economic capacity and energy. But strong political opposition to fossil fuel fired power generation will make policies challenging.
Possibly for some owners of coal-fired generation units there is more breathing room to establish strategic plans that include optionality and reliability but also better economics of not having to shut down power plants before their useful life ends. The following table is a list of the largest US public power coal-fired power plants that still have useful lives into the 2050s.
The Inflation Reduction Act has $396 billion of federal funds to move the needle to solve the problem of the development of new clean capacity. But each potential new generation source has its issues. For example, new geothermal technologies could become a favored technology except for the potential to cause earthquakes. Is lithium mining needed for expansion of batteries to store solar power energy and for EVs, the next sites of serious pollution?
Picking your poison or fossil fuels will remain dominant in fueling electric generation as electrification of the economy continues.
If the question is not if, but when, fossil fuel fired generation is replaced, here are some of the leading candidates among many projects:
Geo-thermal-The heat and energy captured by geothermal systems would provide renewable energy and nearly zero emissions. Capturing geothermal production, while it has vast potential, its recovery is complicated. A major new development is a project by FERVO to sell 320MW to Southern California Edison. With the Inflation Reduction Act incentives numerous projects are under development.
Significant new transmission to bring renewables to load centers-In 2024, the Federal Energy Regulatory Commission (FERC) approved a plan to modernize the nation’s long-distance transmission policies which could strengthen the ability of developers to site new transmission to bring renewable resources to the load centers.
Grid scale Battery deployment with solar-Batteries are being deployed with solar farms to better integrate the intermittency and low capacity into the grid. The development of longer-duration grid scale batteries would be a positive development to manage transition of resource mix.
Green Hydrogen – Intermountain Power Project (IPP) will be the first gas turbine in the world being built to run on 100% carbon free green hydrogen. Built at the site of Utah’s largest coal-fired power plant, it will be operational in 2025 whereby 30% of fuel will be green hydrogen and 70% natural gas and by 2045, 100% green hydrogen. Significant IRA incentives are being awarded to the project.
Small modular nuclear reactors-Over the next five years the Nuclear Regulatory Commission (NRC) expects to review twenty-five licensing applications for small modular reactors. The new “Generation III and IV” reactor designs incorporate decades of advancements in nuclear physics, materials science, systems engineering and digital controls. The DOE has $11 billion in loan-making authority for advanced and SMR development and supply chain issues.
A fifth Vogtle unit or lessons learned applied elsewhere-Now that Vogtle 3 and 4 are operational, there has been some comments about another Vogtle unit. But more likely would-be application of the lessons learned from Vogtle construction elsewhere including the strengths of the new nuclear technology used at Vogtle.
Carbon capture on gas plants- By EPA regulation, new natural gas plants must meet a 90% capture of emissions by 2032. The regulation does not impact existing natural gas fired generating units. The rule is controversial in the industry because the technology is not yet fully commercial. Carbon capture and storage would scrub the CO2 from emission sources and permanently store underground. Only one utility scale plant is operational and the other, Kemper, was abandoned before coming online.
Much of the development of new generation technology remains uncertain as to timetable for commercialization so utilities need to push back to ensure reliability is the number one priority. Significant attention is being given to strengthening the ability to balance the system through, for example storage facilities that use batteries or use natural gas fired generators that can quickly be online to balance flows. But optionality should not take the pressure off of new clean energy technology development and implementation.
Dan Aschenbach
Managing Partner
MFS Associates
AGVP Advisory
agvpadvisory.net