Intermittent Renewables and Electricity Markets

How frequent are the cases of negative prices in the United States due to high wind output at night?

Also, just for clarification the negative price is associated with the ramping limits of other generators in the system and limited tranmission in the balancing area.

Coal is a necessary rescue of the European economy, as you say. Hundreds of millions of people can’t live on unpredictable voltage any more than they can live on music. People need food, shelter, industry, and fuel.

The lucky thing for Europe is their durable infrastructure and being surrounded and embedded by water. The world’s CO2 will knock on your door and grow your food and fuel at unprecedented rates. Carbon Capture is your game. A transition from coal to durable biofuel based economies is already well begun. The Japanese would be brilliant partners.

The energy advice you followed didn’t work. You have a right to think for yourself and your survival. And you have the skills to teach the rest of us what might work.

BTW, there is a large article in today’s Minneapolis (MN US) Startribune newspaper describing enormous investments in coal power generation in the upper midwest. Europe is not alone seeing a need for a new direction. Nobody disputes the CO2 problem. And nobody seems to have a good solution. The urgency and skills seem to be most pronounced in Japan and Europe, however.

More than half the new electric power in 2009 and 2010 came from renewable energy. The more clean energy we build, the more reliable it gets. http://clmtr.lt/cb/wfi0bJd

Schalk,

The electricity market that you describe is one attempt to optimize the economics of the power industry, but it is not the only one.  In particular, it seems to favor independent producer with mostly fossil fuel fired power plants.

My local utility resisted the de-regulation booms a few years ago, long enough for the boom to die out.  It is still fully regulated, and it owns most of the thermal power plants that it uses to make electricity.  We are in the windy central US plains, so they have a large and growing wind power program.  They own about a quarter of the wind farms they use, and have long term power purchase agreements for the rest.

This makes the economic analysis so simple, a Public Utilities Commission could understand it.  The variable renewables have to be cheaper than the variable cost of fossil fuel power they displace (not the levelized cost of fossil fuel power).  Fossil fuel power plants have to be available to carry the load when the wind is not blowing, and rate-payers must pay for the capital amortization of those fossil fuel plants.

We don’t have any utility scale solar power (or nuclear) on our grid, but when we do get it, I hope that it will be utility owned, since that is the only way that rate-payers can capture the benefits of the cheap power that these long-lived capital-intensive clean technologies produce after they have been amortized. (Note that the cheap power from older plants is not a factor with wind farms, since they are not expected to last more than 25 years, due to mechanical wearout.  We have not yet had to deal with the regulatory implications of a boom in roof-top PV, and may not for quite a while, due to the frequent incidence of hail storms.)

Excellent post. Please keep writing. For once someone who understands the implications of intermittent renewables to the power systems. 

Please note that while I support your analysis, I don’t think it means intermittent renewables can’t be done. It’s just going to be a lot more difficult and a lot more expensive than commonly thought. 

You can also look at it in the other context and say the more renewables we build the more flexible we need our grid to be in order to handle system flucutations.  Unless we overbuilt renewables to 3 or 4 times our annual peak demand we will always rely on thermal plants to provide grid flexibility.

The economics are interesting and surely should be taken into account.  However, they are calculated for a market in which there are not externalities.  In earlier posts you have acknowledged externalities but tend to utilize the smallest in the rather wide spectrum of studies. 

It appears that your thesis is that until we can precisely quantify the externalities, it is OK to ignor them.  That is very troubling.  If it were meerly a matter of money then I would support that or a similar position.  However, of grave concern to me is that there are vast natural resources being irreplacably damaged or destroyed.  For example massive watershed damage in the Appalachians from mountain top removal.  How do we monetize the permanent loss of aquifers and habitat?  http://en.wikipedia.org/wiki/Martin_County_coal_slurry_spill    And the human cost is quite high as well, some of it is directly quantified – http://ilovemountains.org/the-human-cost 

And none of this takes into account the fact that the slurry ponds become unusable land pretty much forever.  And that is in no way monetized.  This is not a car that when it becomes nearly worthless you take it to the junk yard and the recycle it.  This is land taken out of service PERMANENTLY.  That is not being monetized. 

So taking climate change off the table altogether there are large unaccounted for externalities.  So yes, until we figure out how to monetize this, I am all for government getting involved with subsides, carbon tax etc., as long as those mechanisms are used to build the grid, depoly more renewables, suport peaking power plants etc.

This report from the US gov’s Lawrence Berkely National Labs says that 88% of US windfarm capacity is owned by Independent Power Producers (p.26), and 80% of wind farm output went directly to utilities, mostly via long term contracts (Power Purchase Agreements or PPAs).

I have not read any PPAs, but we can be sure that the contracted MWh rate is enough to cover the predicted levelized cost of the wind energy (including government incentives), plus profit for the power producer.  The cost of the wind energy would be averaged into the costs that get passed on to the ratepayers, the same as fuel.

So almost of the wind power going into the US grids will bypass the day-ahead and hourly bidding systems described in the article. 

In the case of utilities like mine that own their own thermal generation, again, the bidding process does not apply, but a cost-based dispatch order is used, which is based on the actual variable cost.  So initially, wind will displace expensive gas generators, then as net load on the thermal plants decrease, it will cut in to the cheaper coal.

My town has a large oil and gas industry which enjoys considerable puplic support.  We have no desire to phase out fossil fuels, so I’m sure that we’ll halt the growth of our wind power program the minute it stops being cost effective (i.e. we won’t install so much wind that we’ll need a lot of ramping from our coal plants, but we recent load growth has been met with new gas plants, not coal).

That would be great.  I was thinking of doing one but don’t think I will have time soon and you are good at mining sources, interested to see what you come up with. 

I will point out that I intentionally left climate change off of the table to emphasize that it is not the only externality that is significant.

Non-intermittent renewables are on the horizon. An engine has been invented that needs no fuel. It is expecte to run 24/7 and could trigger a perpetual commotion. See NO FUEL ENGINE on the AESOP Institute website. Since these engines will not get hot, after a prototype is validated by an independent lab, small plastic desktop piston engines are planned that will run a radio and recharge cell phones. Metal versions are expected to power homes 24/7 and replace diesel generators. They also may provide emergency generators and an on-board recharge for electric cars. They appear scalable to very large sizes. It appears they could replace wind turbines and wind farms.

” substantial added costs can be expected from the premature transition from a dispatchable power fleet predominantly running baseload plants to one running only load-following plants. Baseload plants must be retired early, new load-following plants must be constructed and the overall capacity factor and efficiency of dispatchable power generation will drop substantially. “

I guess this bureaucrat should also cover hereunder listed points in his article, to illustrate why yhis article is not realistic……

1. Germany is massively subsidising lignite coal extraction if the lignite is extracted from inside Germany, rendering this lignite the cheapest fuel available on the market, cheaper than free wind, sun and water…. Then it taxes CO2 emissions coming out of it’s indigenous coal plants, who are burning this subsidised German lignite. And all this subsidy circus gets paid by the electricity consumers. No wonder your EnergieWende is such a failure, and electricity prices are going through the roof in Germany. No wonder solar roof PV is such a success in Germany, it is the only way to avoid this government insanity, and avoid paying a lot for your consumed home/office/plant electricity.

2. Germany didn’t close out it’s nuclear plants because they were not compatible with intermittent renewable energy. It was a political decision after German voters pressure demands occuring after the Fukushima accident in Japan.

3. Nuclear can be baseload and load following. Canadian CANDU6 720MW nuke plants easily can ramp up and down according to grid demand, being able to operate as low as 50% of their nominal power setting. That is why China has so many of them. They are flexible enough to accomodate any intermittent renewables on demand, if the total power park capacity is not consisting of more than 50% of such plants. A shame they are so expensive and the newest evolutions are avaiiable only once you need 1000MW plus in nameplate capacity.

4. Germany has built many new load-following natural gas powered plants in the last five years. I almost worked on the construction of one of them near Koln. A humonguous amount of them were built. German utilities like RWE and Eon are now in financial difficulties because of them, since they are mostly not used. They are now losing money to their owners, because they produce electricity at too expensive rates, due to the high imported natural gas prices. They can not compete with wind, hydro and biomass/biogas.

5. Denmark has more than 25% in wind nameplate capacity in it’s total power generation park. They have no issues whatsoever with load following. They simply export their surplus wind to Norway when it’s own grid is wind saturated and baseload power plants have to be curtailed. Norway then simply shuts down some hydropower dams, until the Danish wind exports starts decreasing. Once Danish wind production is too low, they import hydro power generated in Norway. The same approach is now slowiy being put in place all over Europe, with interconnectors linking all countries, allowing load balancing on a continental basis. Yes it costs money. But it is far cheaper than depending on imported Russian or Qatari or Algerian natural gas, and sending spare euro to those countries. After all, building this grid sends the money to our own people, instead of sending it overseas….

6. New coal power plant now achieve 50% plus in energy efficiency. That means that 50% of the energy contained in the coal fuel is going through the chimney. That is why decentralised smaller scale combined heat and power plants are far better. They achieve a 85% energy efficiency without a problem, since most of the heat is recuperated, and can displace imported natural gas used for space heating…

7. Greenpeace warns water pollution from German coal mining on the rise. The scenic waterways of the Spreewald eastern German natural area could remained choked with iron sludge from lignite coal mining for decades  iron oxide content in the water showed to be more than 100 milligrams per liter — 3 milligrams per liter are considered harmful to the environment. Vattenfall, moving to meet rising electricity demand in Germany, has announced plans to develop 5 brown lignite coal strip mines in Lausitz, beginning with the Welzow-Sud II mine. The company is intending to mine 204 million tons of brown coal at the site through 2050.

http://www.energy-daily.com/reports/Greenpeace_warns_water_pollution_fro...

8.Legacy of 1986 Chernobyl disaster seen in impact on region’s forests. While the worst effects in surrounding forests were recorded in the “first few years” after the accident, surviving trees were left vulnerable to environmental stress such as drought with young trees particularly affected. “Many of the trees show highly abnormal growth forms reflecting the effects of mutations and cell death resulting from radiation exposure,” he said.

http://www.terradaily.com/reports/Legacy_of_1986_Chernobyl_disaster_seen...

9. The operator of the crippled Japanese Fukushima Daiichi nuclear plant has started pumping out radioactive groundwater to reduce leakage into the Pacific ocean. The embattled utility — kept afloat by a government bailout — last month admitted for the first time that radioactive groundwater had been leaking outside the plant. It has since said tainted water has been escaping into the Pacific for more than two years since the atomic crisis triggered by a huge quake and tsunami in March 2011. An official at Japan’s industry ministry said this week that Tokyo estimates 300 tonnes of contaminated groundwater may be seeping into the ocean every day.

http://www.terradaily.com/reports/Fukushima_operator_pumps_out_toxic_gro...

10. S. Korea facing power crisis. “We are facing potentially our worst power crisis,” Trade, Industry and Energy Minister Yoon Sang-Jick said Sunday. “We may have to carry out a rolling blackout… if one single power plant goes out of operation,” Yoon said, appealing to factories, households and shops to curb consumption over the next three days. The timing could hardly be worse, with South Korea in the grip of an extended heatwave and a lengthy disruption in its nuclear power sector.  South Korea’s nuclear industry is struggling to emerge from a mini crisis which has forced the shutdown of numerous reactors — either for repair or as the result of a scandal over forged safety certificates. The country has 23 reactors which are meant to meet more than 30 percent of electricity needs. Currently six reactors are out of operation.

http://www.energy-daily.com/reports/S_Korea_facing_power_crisis_999.html

11. Price of Wind Energy in the United States Is Near an All-Time Low. The prices offered by wind projects to utility purchasers averaged $40/MWh for projects negotiating contracts 2011 and 2012, spurring demand for wind energy. Wind power comprised 43% of all new U.S. electric capacity additions in 2012 and represented $25 billion in new investment. Wind power currently contributes more than 12% of total electricity generation in nine states (with three of these states above 20%). Turbine scaling is boosting wind project performance. Since 1998-99, the average nameplate capacity of wind turbines installed in the U.S. has increased by 170% (to 1.94 MW in 2012), the average turbine hub height has increased by 50% (to 84 meters), and the average rotor diameter has increased by 96% (to 94 meters). Wind turbine prices have fallen 20 to 35% from their highs back in 2008, and these declines are pushing project-level costs down. At the same time, even with a short-term extension of federal tax incentives now in place, the wind power industry is facing uncertain times, in part due to low natural gas prices and continued policy uncertainty.

http://www.winddaily.com/reports/Price_of_Wind_Energy_in_the_United_Stat...

To help make Renewables like Wind and Solar more steady we can use WWW.V2G-101.COM Vehicle to GRID with the millions of new Plugin Vehicles coming out each day. Univerisity of Delaware and google have been doing this and it really works.

As mentioned in remarks on this page there are times when there is too much and others when there is to little. Millions of vehicles can regulate this and still have plenty of charge to replaace dirty imported OIL. My EV goes about 50-80 miles on 10 kWH $1 of energy vs a gallon of gas. Interesting fact, it take as much electricity to regine a gallon of gas as it does to drive that far in an electric vehicle! no OIL, no transmission or exhast !

Great companied like Tesla are 100% American, their vehicles are the highest rated of any vehicle regardless of fuel! They are placing SuperCharger locations all across the USA and World that are free for life and 110% Renewable energy powered., With a range of 300 miles and most drives only go 30-50 a day it’s a great way to keep $1 Billion a day from imported OIL in this country. 

http://www.udel.edu/V2G/

There is simply no way that 2/3 or our wind power is closer to loads than fossil/nuclear.  Our wind power is “distributed” over an enormous amount of agricultural land, our fossil/nuclear plants are located near or in cities.  The development of wind power in Texas and Oklahoma for example, has been limited by the roll-out of new power transmission to the windy but sparcely populated western parts of those states.

I suspect that the low PPA pricing has more to do with the lower interest rates.  Perhaps once the PPA are signed, the developers are able to borrow money at the extra low rates that utilities normally get.

Those projects have been a little delayed due to the author’s untimely incarceration in William Rankine Prison for the Terminally Inane, convicted of destroying entropy and violating the laws of thermodynamics.

Schalk, large scale new renewables (wind & solar) are badly incompatible with everything, not just nuclear. They are no more compatible with coal than they are with nuclear, load following NPP can be made, the closed German ones were able to do load following more efficiently than coal units (less thermal fatigue).

The biggest problem is economic, if you have built a NPP, you’re better off using it, and not ramping up and down, but it’s exactly the same for a coal plant, where O&M and amortization for recent plans is most of the cost.

On paper, it’s easier with gas plant. But actually the recent combined cycle plant are more and more sophisticated and expensive to build and operate, which means than during the amortization period they need an operation factor between 50 and 60%. Which is why all the ones that don’t get that get closed en masse now in Europe.

And also as GE defends in this recent document http://www.whitehouse.gov/sites/default/files/omb/assets/oira_2060/2060_07232013-1.pdf  at high penetration level renewable will be incompatible in a different way, the fast variations will require open cycle plants for stability of the grid, with higher CO2 emission, which means much reduced emissions gains. As you described, at a penetration of 18%, there will be peaks of 70% which means that at a penetration of 26%, the peaks already reach 100%, So at a stage where 74% of the power is still generated by fossil power and they are real problems getting higher, we already need those less efficient open cycle to follow the variations. How big do the CO2 gains with wind together with gas actually end up ?

Battery prices must drop and endurance must increase but I agree with you.  And progress on both fronts is moving rapidly.  http://cleantechnica.com/2013/07/08/40-drop-in-ev-battery-prices-from-20...

Further, there is a new idea rapidly gaining traction and that is repurposing used EV batteries for dispatchable grid storage.  http://www.sandia.gov/eesat/2011/papers/Tuesday/19_Jaffe_ESSAT_Abstract.pdf

It will be costly to expand the grid but again we get back to the difficult to monetize discussion.  This time (unlike exernalities) the benefits are difficult to monetize.  However to thus wipe them away and pretend that they don’t matter is in service of supporting a point of view rather than moving to the wisest couse of action.  Here are two considerations for grid expansion:

Reliability – Progress has been made since the Northeast blackout but most are saying that it is far from sufficient.  When the West Cost debacle ocurred, in part courtesy of then Wall Street darling Enron, Intel said that they would not build any more fabs in CA unless and until they had confidence in the grid.  That alone is a huge loss.  IC fabrication is not the only industry that benefits from grid stability, or is severely damaged from lack of it, there are many others.  One fab is a huge employer and high value jobs.  How do we monetize the value of a stable grid? 

An upgraded grid is a market facilitator.  It creates a much more transparent market for electric power.  It makes it possible to make something much closer to a real market for electrical generation.  The Transactive Grid concept allows something akin to the Nasdaq exchange for power over the grid – http://theenergycollective.com/ecsjessica/253846/transactive-energy-next... Those who support free markets generally agree that they optimize pricing. 

How do we monetize the value of the Transactive Grid or a truly reliable grid?  Do we just wait until we have it all figured out? 

I say no.  The value is compelling.  Perfection is the enemy of the good particularly given the enormous costs we will incur from sea level rise.

Jim,

I’ve heard/read this argument many times before, and  my impression of it has been very unfavourable.

1) First we have to have those millions of vehecles..we don’t

2) The excess power from renewables must cccur when the vehicles are plugged in and fully charged..what are the chances of relying on that?

3) The increased Charge/dischrge cycles of  car batteries will lessen the longevity of said batteries, and if we tweek the discharge being fed to the grid to a minimum in order to preserve the car batteries, this act will lower their usefulness as grid backup.

Frankly I’d rather not have us rely on renewables in this way at all, except for concenterated solar (CSP), which could be collected from diverse areas (even rooftops?), and fed by fiber optic cables to a central location where molten salt is  held.

For my money, CSP and 4th Generation Nuclear power are the future.

“ I don’t think it will ever be economically viable to balance renewables with nuclear…”

Nonetheless, to the extent that a 100% renewable senario is feasible, a 2:1 nuclear/renewable split is even more feasible.  The exact same technologies could be used to correct the mismatch between supply and demand (whether that be dispatchable biofuel, dispatchable fuel synthesis, or breakthrough energy storage), except that the renewable-induced variability is 3x less.

With today’s technology, I believe ammonia fuel synthesis is our most practical path to a non-fossil energy system. In areas with the best wind resources, off-peak wind-to-ammonia will be almost as cheap as nuclear-ammonia.  But for most of the world, replacing nuclear with wind or solar just makes the economic case look worse.

In countries with powerful anti-nuclear lobbies, fossil fuel with CC&S look like the most likely benneficiaries of the climate crisis.