Energy Insider Blog

The Imminent Challenge of Renewable Energy

Posted by Jennifer Chang on Dec 17, 2013 5:19:00 PM

A great deal has been made out of the need to shift away from coal fired power plants and toward renewable energy sources, such as wind and solar in the U.S. While this is certainly a laudable goal, the full impact of a move to renewable power generation has consequences beyond simply reducing emissions and finding alternative power sources. Specifically, determining how to effectively integrate these new power sources, particularly wind and solar, which are highly variable and can go from zero to full production almost instantaneously, pose significant challenges for grid operators.

While there is clearly the challenge of maintaining reliability, it is important to understand the scope of the problem. For instance, California has set a target of meeting 33% of its total energy needs from renewable resource by 2020 (California Energy Commission).  To meet this lofty goal, there will need to be a rapid growth of both wind and solar inputs into the grid. The following graphic shows the magnitude of the projected change:

 Blog 12.17 resized 600

Source: 2013 Special Reliability Assessment: Maintaining Bulk Power System Reliability While Integrating VER, John Moura, Director Reliability Assessment, NERC

Generating capacity from renewable resources is expected to grow from almost nothing in 2013, to over 20 gigawatts (20 million kilowatts) in the next 10 years. This explosion in renewable resources should produce environmental benefits, but because of the intermittent nature of the output from these resources, it could threaten reliability and lead to increased real-time price volatility. This is especially likely if these renewable resources are not generating at times of high peak power demand.

While renewable energy poses grid reliability challenges and could lead to unexpected price spikes, the growth of this resource in the power sector actually compliments efforts to phase out coal fired power plants. According to a 2013 study by the Brattle Group, since natural gas plants are “a fast ramping resource that is relatively easily turned on and off, natural gas fired power plants (in particular combustion turbines) are well suited for backing up and smoothing out intermittent renewables and providing capacity.” (Partnering Natural Gas and Renewables in ERCOT, June 11, 2013 at 2). 

Despite concerns to the contrary, natural gas plants and wind can work together to mitigate reliability concerns, and provide environmental and potential economic benefits to the power system as a whole.

What does this mean for the future?

In short, renewable resources present two challenges:

  1. Traditional fossil-fuel power plants generate planned quantities of electricity; however with renewable resources it is very hard to forecast the supply quantities. Therefore, there will need to be a balance within the generation mix across electricity markets.
  2. The unpredictable and inconsistent nature of solar and wind generation will require Independent System Operators to make significant operational changes to maintain grid reliability as more renewable resources displace traditional large base load generators.

When it comes to power generation, renewable energy resources are likely to become an increasingly important part of the national fuel mix. Real and substantial concerns exist surrounding the impact that integrating these intermittent resources will have on reliability and power costs. Given that renewable resources tend to be highly unreliable, there is real potential that an over dependence on them may result in increased blackout possibilities. This is more likely to occur without infrastructure upgrades and revised operational protocols and better forecasting methodologies, especially if power grid demand spikes at a time when the renewable resources are unavailable (e.g., in the winter in the northeast where solar plants are unlikely to be producing much energy and frigid temperatures could lead to high power demand or during the summer in Texas when power demand peaks due to heat yet the wind is not blowing). 

Coupled with the potential impact on reliability is the latent opportunity for price spikes at times of peak demand. As suggested in the graphic above, as renewables take on a larger role in providing power during the on-peak hours, these variable resources will displace more traditional fossil-fuel units. A challenge for the next few years in the energy industry will be to find the right balance between the benefits, environmental and economic, of increased reliance on renewable resources while minimizing the potential for price spikes.

Topics: system operators, coal, energy risk management, energy sourcing, Acclaim Energy Advisors, risk management, energy, energy procurement, demand response, energy regulations, energy reliability, energy savings, energy costs, power generation, Weekly Energy Insights, natural gas, economic demand response, energy management consultants, strategic energy sourcing, energy price spikes, renewable energy, energy supply, U.S. energy, load generators


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