The Case For More California Energy Storage
- Mar 24, 2020 1:27 pm GMT
We have seen dramatic changes in the California “Duck Curve” over recent years. So what is the “Duck Curve”? Essentially, it shows the amount of non-solar, non-wind energy generation that is required by gas and nuclear power stations each hour of the day to satisfy demand. Unfortunately, with growing solar production, base load power plants designed to run continuously and efficiently for long production runs are being asked by the market to ramp-up and ramp-down during each day.
Graph 1 shows the predictions in 2013 for the impact of solar during the day for the California Independent System Operator (CAISO) followed by the updated version for 2019 in Graph 2.
In 2013, the projection was that the over-generation risk from more and more solar would be above 12,000 megawatts (MW).
Graph 1: CAISO Actual and Projected Net Load At March 31 for 2012-2020 As Of 2013
However, in 2019 the actual projection of the over-generation risk from more and more solar is really about 7,000 MWs, a full 5,000 MW lower than just 6 years earlier. This phenomenon is due primarily to utility-scale solar projects coming online for California utilities, and is about 40% lower than the minimum net load originally forecasted for March 2020.
Graph 2: CAISO Lowest March Daytime Net Load 2011-2019
So what does this eroding of the “base load” required MW energy supply mean to ratepayers and taxpayers of California?
- Current reliable and safe base load (i.e. dispatchable) generation stations may experience difficulty remaining financially-viable as their energy is only dispatched for a portion of the day (i.e. not run continuously and economically as originally designed)
- Increasing solar energy production during the 10 AM – 5 PM hours is flooding the market, incurring more renewable curtailments
- Excess energy supply to the market manifests itself in low or even negative energy prices during certain hours of the day. Low prices discourage energy from base load plants that find it very difficult to compete (i.e. not profitable)
- Solar and energy projects experiencing curtailments are not producing the renewable energy credits as expected, nor are they generating projected earnings from energy sales to validate the anticipated project economics
- Wind energy projects experiencing curtailments are not generating the production tax credit of $0.023 per kilowatt-hour (kwh) so important in renewable energy project economics
- Solar curtailments cost federal taxpayers in under-productive investment tax credits (ITC) extended by the federal government (and all of us as taxpayers)
- Increased operational cost and risk to ramp-up/ramp-down (or cycling) is incurred in conventional generation not designed for this service. Cycling of generation could potentially reduce the service interval or time period between maintenance shutdowns for these plants, exacerbating the energy supply problem in the non-peak periods
- Increased solar installations accelerate the steepness of base load plant ramp-up, causing more stress on existing generators
Graph 3 details the growing CAISO monthly curtailments from April 2015 through June 2019.
Graph 3: CAISO Growing Renewable Energy Curtailments April 2015 Through June 2019
So what is the cost of these solar and wind energy curtailments? Assuming a 25% capacity factor for solar installations, a 30% ITC, a cost of capital of 8%, and a 20-year project life, each kwh of solar carries with it a levelized cost for the ITC for federal taxpayers of $0.0246 per kwh.
For the projected 2019 renewable energy curtailment of 891,065 megawatt-hours (MWh), curtailments in California alone amounted to a cost to federal taxpayers of $21.92 million in 2019. As more utility-scale solar projects are added to the state energy mix, curtailments will occur more frequently, thus increasing the cost to taxpayers. A logical question is: Why should California build more solar power plants at a rapid pace in order to meet the state’s environment goals, if so much power is now being curtailed and will be curtailed in the future?
From the ScottMadden research cited earlier, “…the most extreme daytime net load low (i.e., the lowest point in the year) dropped 61% from 18,531 MW in 2011 to 7,206 MW in 2018 indicating a persistent low net load throughout the year. But it was not just the lowest points. More than 80% of the days in 2018 had a minimum net load below the lowest point recorded in 2011. Key observations concerning the late-day three hour ramp-up include: - Growing ramp-up needs: The most extreme late-day three-hour ramp-up (i.e., the highest point in the year) increased 129% from 6,245 MW in 2011 to 14,304 MW in 2018. - One-third of peak: The maximum 2018 ramp up was roughly one-third of system-peak served that year.”
What are some of the solutions?
- Build more energy storage facilities which can absorb excess solar and wind energy during the peak production periods of the day, while providing energy during the off-peak periods after 5 PM each day
- Offer tax incentives to capture/store energy vs. curtailments and non-production of renewable energy while reducing incidences of negative peak energy prices
- Incent consumer behavior to better align energy demand with renewable energy supply production to utilize relatively-cheap energy and to minimize curtailments
- Implement Time of Use (TOU) electricity rates
Copyright © March 2020 Ronald L. Miller All Rights Reserved
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