This is part 1 of a 4-part series — in the coming days, we’ll also publish on: Myth #2: Excess renewables must be curtailed or stored, Myth #3: Clean energy increases consumer costs via higher rates, and Myth #4: Natural gas is the main reason for decreased emissions.
America’s electric system is at a stark inflection point: coal power plants are operating at all-time lows with growing retirements, natural gas prices are at historical lows while power generation is rising, electricity sales are flattening, extreme weather events are forcing more resilient infrastructure, and plunging renewable energy prices have made low- or zero-carbon sources cost-competitive with conventional fuel sources.
Rapidly reducing greenhouse gas emissions from the electricity sector is now possible without radically disrupting grid operations, costs, or reliability. But the grid will require a more substantial transformation as we rely on higher shares of variable renewable generation. Some critics argue technological, financial, and institutional barriers will prevent significant decarbonization in the electricity sector, or will drive up the costs at the very least. But four common clean energy myths are easily debunked by facts and experience that show a low-carbon energy future is possible without sacrificing affordable, reliable service.
Myth #1: The “Duck Curve” Puts a Ceiling On Renewables Integration
Reality: Electric loads can be managed dynamically to reduce ramping requirements
Unlike fuel-based generation, renewable sources like wind and solar cannot depend on stored fuel to generate electricity whenever they are called upon. Solar power is particularly concentrated during the day, whereas wind is more variable; however, both resources come and go with the weather. This necessitates a new way of thinking for grid managers who are used to exclusively dispatching electricity to meet demand.
Thankfully, myriad solutions can compensate for the variability created by increasing shares of renewables. Fears about a “duck curve,” when large shares of solar and wind during the day create ramping problems in the late afternoon (when demand goes up, but the sun goes down), are overblown. It is not necessary, for example, to retain a seldom-used, expensive backup fossil-fuel-based system sized for 100% backup to solar and wind. When the sun sets and the wind blows less, demand-side flexibility, smart rate design, storage integration, and increased regional coordination are promising low-cost, low-carbon alternatives to “make the duck fly.”
One option, demand response (DR), can eliminate the need for peaking generation resources that are turned on only a handful of times a year, and can do so at a much lower cost than natural gas peakers or chemical storage. DR refers to a suite of demand-side options for balancing and reducing electricity load, including customer responses to time-varying prices and “emergency” demand response where customers are paid directly for reducing consumption in real time.
Utilizing DR for even a very small amount of time can yield enormous benefits. For example, the image below demonstrates how adding 5 gigawatts (GW) of DR capacity in California by 2050 could effectively displace fossil-fueled power plants used just a few hours each year (red line). Further, if we assume technology-enabled devices like smart thermostats or parked electric vehicles could allow aggregated DR to be called on 40 or 50 times a year by 2050, then another 5 GW of capacity need could be eliminated (grey line). That’s 10 GW of expensive, minimally-run peaking capacity avoided by DR.
While 10 GW of DR may sound like a lot, some markets are already procuring DR on a similar scale. For example, PJM Interconnection, a wholesale market serving the US Mid-Atlantic region, already has 12.3 GW of committed DR for 2017/2018. That’s almost 8% of its peak load.
DR is also extremely cost-effective: since DR was introduced to PJM, capacity market prices have dropped dramatically, and PJM estimates DR participation saves $275 million per year. PJM relied heavily on DR to manage fuel shortages and demand spikes during the 2013–2014 polar vortex, which also greatly improved the system’s reliability. It’s no surprise that, by 2020, the DR industry is expected to be worth nearly $60 billion.
Of course DR is just one of the many options available to grid operators and planners to manage renewable energy variability. Battery technology holds major promise as well. Lithium-ion battery costs have already dropped 65 percent since 2010, and by 2050 these new load-modifying resources will provide an even greater potential to displace carbon-based generation, particularly dirty peaker plants.
Pulling It All Together
Accurately estimating the cost of electricity sector decarbonization is undoubtedly a difficult endeavor because of rapid cost declines, myriad technologies, market operations, and other nuances. Institutional inertia favoring an outdated system further clouds this picture.
Nevertheless, it is increasingly clear that today’s available technologies and options can successfully decarbonize the electric sector. In order to cost-effectively achieve the goals many states and countries have laid out, policymakers must have the best available information, and use it to guide policymaking.
Moreover, today’s economy is extraordinarily favorable for investment in renewable resources to make the leap policymakers know is necessary to avoid catastrophic climate effects. Low natural gas prices and the proliferation of energy efficiency technologies mean that utility bills will be kept low, providing a cushion for early investment in renewable resources. The cost of money is at an historic low, encouraging renewable developers to invest. And finally, federal tax incentives for solar and wind power are at peak levels.
Avoiding these four common myths about decarbonizing the power sector can help guide analysts and policymakers toward the solutions needed to reach an affordable, reliable, clean energy future.