Solar Plus Batteries Beat Out Natural Gas In Two US Electricity Markets

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First there was coal. You burned it to make steam, then the steam was used to turn generators to make electricity. For more than a century, coal was the power that made electrical energy possible for most of the world. But coal has a problem. When it burns, it releases massive quantities of carbon dioxide, sulfur, mercury, and lots of other nasty stuff into the atmosphere. But people didn’t care about the damage that comes from burning coal because electricity was cheap and there was lots of it available.

solar power in Arizona

Natural gas burns cleaner than coal, but used to be more expensive than coal. Fracking changed all that. The cost of natural gas plummeted and suddenly utilities began shutting down their coal powered plants and replacing them with natural gas facilities. People don’t care that fracking turns the countryside into a polluted sewer that will take centuries to clean up, because electricity is still cheap and hey, it’s better than coal, right? In a world where unbridled greed is the one and only market force that matters, low cost has always been the beginning and end of any conversation.

But now it may be time for natural gas to move over and make room for solar power. Bloomberg reports that the combination of solar power plants and grid scale battery storage is now cheaper than natural gas and utility companies all across the US are starting to notice. First Solar has recently won a contract to supply Arizona Public Service, the state’s largest utility company, with electricity during the hours of 3 pm and 8 pm when demand for electricity is highest.

Previously, peaker plants powered by natural gas were used for that purpose, but First Solar underbid all other competitors. To fulfill the terms of the contract, it will construct a 65 megawatt solar power plant and supplement it with a 50 megawatt battery capable of supplying the needs of 16,500 homes for up to 3 hours, according to AZCentral, an affiliate of USA Today. The new system is expected to be operation in 2021.

“We had just about every technology you could think of … bid on this (request for proposals),” says Brad Albert, vice president of resource management for APS. “All the way from stand-alone battery storage to natural gas fuel peaking units. This was the winning proposal.” A week ago, NextEra Energy in Florida completed the installation of a grid scale battery system at one of its solar facilities.

The dam is breaking. In January, the International Renewable Energy Association predicted renewable energy prices would be equal to or lower than fossil fuel costs within 2 years. “Electricity from renewables will soon be consistently cheaper than from most fossil fuels,”  said in its latest report. “By 2020, all the renewable power generation technologies that are now in commercial use are expected to fall within the fossil fuel-fired cost range, with most at the lower end or undercutting fossil fuels.”

Low prices drive the market. Natural gas drove out coal and now renewables are beginning to drive out natural gas. Utility companies think in terms of 30 to 50 years from now. The facilities they build today will still be producing power in 2050 and beyond. Assuming renewables are still slightly more expensive than natural gas, what happens if that calculus gets reversed in 2, 3, or 4 years? The price of renewables is expected to remain stable, but the cost of natural gas could rise in the future. Wouldn’t utility companies be wiser to spend a little more for a few years now rather than a lot more over the next 27 years?

Imagine the pressure that renewables will put on fossil fuel producers in the next few years. You can almost hear the fossil fuel lobbyists roaming the halls of Congress begging for handouts to keep their profits flowing. Donald Trump and conservatives reactionaries are always bleating about how government shouldn’t be picking winners and losers in the marketplace. Well, listen up all you fossil-holics. Payback is a bitch. Deal with it.

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Steve Hanley

Steve writes about the interface between technology and sustainability from his home in Florida or anywhere else The Force may lead him. He is proud to be "woke" and doesn't really give a damn why the glass broke. He believes passionately in what Socrates said 3000 years ago: "The secret to change is to focus all of your energy not on fighting the old but on building the new." You can follow him on Substack and LinkedIn but not on Fakebook or any social media platforms controlled by narcissistic yahoos.

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