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by Brendan Pierpont June 22, 2017
Every region has a different climate and demand profile, but with the right mix of wind and solar, up to 80 percent of the variable renewable power produced could be used in the same hour, without accounting for transmission interconnections. Still, a reliable grid needs fast-responding flexible resources to satisfy the remaining 20 percent of demand. But what will that flexibility cost?
The answer is surprising: By 2030, an 80 percent renewable energy system including needed flexibility could cost roughly the same as one relying solely on natural gas. As Climate Policy Initiative (CPI) demonstrated in our recent report, Flexibility: The Path to Low-Carbon, Low-Cost Electricity Grids, if renewable generation and battery storage prices continue to fall in line with forecasts, meeting demand in each hour of a year with 80 percent of electricity coming from wind and solar could cost as little as $70 per megawatt-hour — even when accounting for required short-term reserves, flexibility and backup generation. Finding cheap, reliable and carbon-free ways to shift energy for long periods emerges as the key decarbonization challenge.
Of course, this analysis makes some simplifying assumptions. It represents the new-build cost of generation and flexibility to meet demand in every hour using historical weather profiles from Germany, without factoring in transmission connectivity or existing baseload power plant constraints. But it also leaves out the significant potential for cheaper flexibility from regional interconnections, existing hydroelectricity and the demand side.
CPI’s analysis helps us understand what kinds of flexibility we will need and what they will cost. The promise of a low-cost grid based on wind and solar is so compelling, it’s worth digging into what we’d need to do to realize this vision.
A power system has a wide variety of flexibility needs with time scales ranging from seconds to seasons, and a range of different technology options can be used to meet those needs, depending on the time scale.
Fast-responding resources are needed to keep the grid in balance and compensate for uncertain renewables and demand forecasts on very short time frames from seconds to minutes. These needs should grow only modestly as shares of renewables climb to high levels, and they could be accommodated cheaply using existing hydro generation (where it exists), fast-responding demand response, cheap batteries or even smart solar and wind power plants.
Solar and wind output can also change rapidly on a predictable, hourly basis, requiring flexible resources that can quickly pick up the slack. One feature of California’s now-infamous “duck curve” is the need for fast-ramping resources to meet the evening decline in solar production. California has devised innovative market mechanisms to ensure flexible gas and hydro generators are available to meet these ramping needs.
On a daily basis, the profile of renewables production doesn’t neatly match demand, requiring resources that can store or shift energy, or otherwise fill in the gaps across the day. Today, daily imbalances are met primarily by dispatching fossil-fuel-fired power plants. But a number of solutions are gaining momentum, such as automatically shifting when consumers use energy and building large batteries.
At even longer time frames, multi-day and seasonal mismatches can exist between when renewable energy is produced and consumed. But the promising solutions for daily storage may not solve seasonal storage needs. In fact, using lithium-ion batteries for seasonal storage, cycling once per year, would cost tens of thousands of dollars for each megawatt-hour shifted.
The challenge of power grid decarbonization hinges on this ability to store or shift energy. But how much energy would the power grid really need to shift, and over how long?
A power system that relies primarily on solar would have abundant power in the middle of each day and experience a scarcity of power during the night. Trying to exclusively power the grid with solar, with no ability to store or shift energy, would mean more than half of demand would go unmet. But with enough daily storage to shift solar energy to any time in each day, solar could meet nearly 90 percent of California’s electricity demand (but only 70 percent in Germany, because of different seasonal patterns).
Wind, on the other hand, is a better match with demand hour-by-hour. But daily storage has little value for wind, improving this match only by a few percentage points. For wind, the biggest gains come from shifting energy by up to a week. In both California and Germany, the ability to shift energy by up to a week could allow nearly 90 percent of energy demand to be met with wind.
Beyond a week, seasonal storage needs depend on regional demand and renewable resource profiles, and, critically, what mix of renewable resources the region has installed. For instance, a mix of 70 percent wind and 30 percent solar in Germany could meet 90 percent of demand on a daily basis, reducing the need for longer-term storage.
Many technologies are well suited to shifting energy within a day. Today, hydro and thermal power plants are used to meet changing demand. Advanced batteries promise multiple hours of storage and shifting capability. Thermal energy can be stored in buildings, shifting when electricity is used for heating or cooling. And as electric vehicles become more widespread, ubiquitous charging infrastructure, electricity pricing and automated charging could shift when drivers charge their vehicles.
But far fewer technology options allow for long-term energy shifting. Consumers can’t go for a week without heating, cooling or charging vehicles, and long-term storage technologies like hydrogen need cost and efficiency improvements. The default option for long-term storage is a familiar one: fuel-burning power plants that provide flexibility to today’s power systems. Finding cheap, reliable and carbon-free ways to shift energy seasonally may be the final piece to the deep decarbonization puzzle.
Storage Gap for 100 Percent Wind or 100 Percent Solar in California and Germany
Storage Gap for a Wind and Solar Mix That Minimizes Long-Term Storage Needs in California and Germany
Policymakers and planners have several strategies they can use to bridge the storage gap.
A low-carbon grid is the linchpin of any serious plan to avoid the dangerous impacts of climate change. And with solar, wind, and energy storage costs dropping year over year, the vision of a low-cost, flexible grid driven by renewable energy seems tantalizingly within reach. But to fully decarbonize the grid, the long-term storage gap is one of the biggest challenges that lies ahead.
We have many of the technologies and tools we need for this shift, but our electricity policies and markets need to evolve for a new generation of technologies with different cost and risk profiles. If we start laying the groundwork today, we’ll be ready to keep pace with the rapid transition ahead.