The rapid expansion of renewables into the energy market in recent years has led to cheaper electricity for utilities, greater savings for consumers, and reduced emissions. The growth in wind output in particular has been staggering; wind capacity stood around 40 Gigawatts in the U.S. in 2010, and by late 2016 it had nearly doubled to more than 75 Gigawatts, transforming the way utility companies produce and manage power supply.
However, the dramatic rise in renewable energy production has also created challenges as utilities, power planners, and grid operators consider new factors impacting their business models and the bottom lines.
Decreases in Traditional Power Plant Revenues
The decrease in traditional power plant revenues due to the increase in energy coming from renewable sources is one such challenge. Instead of producing all of the electricity for a community, coal plant operators now generate less energy to make room for the influx of solar- and wind-generated power. This means less average load and less operating hours for power facilities, and since energy plants in the U.S. traditionally bid and sell power on open electricity markets, it also means a potential decline in profits.
At the same time, wind and solar energy production depend on fluctuating weather conditions—whether or not the sun is shining or the wind is blowing. This variability forces power plant operators to continuously adapt their coal or gas output in order to meet demand. Inflexible thermal power plants, like coal and Combine Cycle Gas Turbine (CCGT) facilities, are now required to stop and start frequently to accommodate the flow of renewable energy into their systems. But regularly stopping and re-starting is costly, time consuming, technically challenging, and not how these plants were designed to operate.
Weather Patterns Affect Renewable Energy
Facing these challenges, dispatchers and plant operators are forced to monitor weather patterns as frequently as possible—working almost in the capacity of weathermen as they forecast natural conditions in order to predict when wind and solar energy output will be high or low, then calibrate the plant accordingly. For this reason, accurately forecasting the weather has become an essential job for plant operating teams—particularly when managing inflexible power plants that aren’t designed for an easy start and stop.
The continual ramp-up and ramp-down depending on the weather has thus made plant operators’ jobs more difficult than in the past when renewables played a more marginal role in power production. In the words of one energy journalist: “Grid operators don’t control variable renewable energy (VRE), they accommodate it, which requires some agility.”
Inflexibility of Current Utility Systems
The problem is therefore two-fold. A key factor limiting the more robust expansion of renewables into utility systems is the inability of old-model inflexible power stations to go offline when the sun is shining or the wind is blowing, then quickly come back online once those conditions change. At the same time, uncertainty—the fact that renewable energy producers cannot predict with perfect accuracy how much sun or wind power will be generated at any given time—forces grid operators to produce excess energy from coal or gas to ensure there is enough to meet peak electricity demand. The trick for operators is knowing how to compensate for all the time when renewables aren’t producing their share.
Low Capacity Factor for Renewable Energy Systems
Low capacity factor is another feature that is somewhat hampering the rollout of renewable energy systems. This refers to the actual production from renewable energy sources compared with their potential production. For example, in 2014, according to the Energy Information Administration, utility-scale solar energy production had an actual capacity of about 28% while wind had an actual capacity of 34%. The difference between what renewable energy systems could be producing versus the actual amount of power they generate is still a work in progress. It’s also another reason why conventional coal and gas plants are still required to compensate during low production hours for renewables.
Another challenge facing clean energy producers is over-generation, that is, the production of “too much” power. This can occur at certain times of the day when renewables output is high and consumer demand is low, or likewise when demand is high but the generation from renewable sources is higher. As described by specialists in the California energy market: “Over generation sounds like a non-problem, but when there is more electricity being generated than places to store or export it, it must be turned off or it threatens reliability of the grid.”
Currently around 1,100 Gigawatts of solar and wind capacity exist globally. The boom in renewable sources has coincided with a steep fall in their costs; wind power, for instance, cost nearly $1,500/kW in the 1990s, but only around $900/kW in recent years—a 40% drop. The decrease in solar production costs is even more dramatic: whereas 15 years ago the cost of generating a kilowatt of solar was $4,000, today the price is around $300, a decline of more than 1,000%. But ubiquitous sun and wind power, in themselves, are not enough of a solution.
Finding the right Balance between Clean and Traditional Power
As we are learning, successful renewable energy production is also about finding the right calibration—or one might say collaboration—between clean and conventional forms of power generation. Expanding and improving transmission infrastructure, improving day-ahead and near-term weather forecasting, and using advanced modeling tools to help grid operators understand how much renewable capacity they can integrate into the grid are all part of the solution. Replacing old generation coal plants with new flexible generation technologies, which provide the capacity to easily turn on and off, will help utilities maintain system reliability, increase their value, and operate at the lowest cost.
All of this so long as the system is being built to take on the amount of volatility that comes with renewable energy. This includes accurate foresting tools and models, and the system flexibility that allows for following the intermittency of renewable energy. Since the power grid changes continually and rapidly on any given day, plant operators need the best information available in order to manage intermittency and maximize the generating capacity of their systems. These are challenges that can and will be met as the renewable energy market matures—and meanwhile, wind and sun power are becoming the most reliable and economical forms of power generation across the land.