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Fact check: LA Times has faulty analysis on costs of integrating renewables

Fact check: LA Times has faulty analysis on costs of integrating renewables

A recent LA Time article misunderstands how renewables are integrated onto the electric grid. While the topic is admittedly complicated, this recent article gets almost everything incorrect. Here is a point-by-point correction of the errors in the LA Times piece along with an overview of recent analysis from the grid operator in California (the California Independent System Operator, or CAISO)

The LA Times article makes several incorrect and unsupported assertions, addressed below:

Fact #1: It is unlikely that the state will experience a shortage of flexible power by 2017.
Last year, the California Public Utilities Commission required the grid operator to examine the need for flexible reserve needs in four scenarios in which renewable energy provides 33% of California’s electricity, and in all four cases it found zero additional need for flexible reserves to accommodate 33% renewables. This finding was documented in a 2011 regulatory filing that was endorsed by the California grid operator and all major utilities in California.[1]

Fact #2: Nuclear and fossil fuel power plants can go offline much more rapidly than renewable energy
In California, nuclear and fossil-fired power plants can take 2800 MW of generation offline in 1/60th of a second, which is a far greater challenge for grid operators and at a far greater cost for the power system. The 1000 MW change in wind output can be forecast using weather modeling; the failure of a fossil or nuclear plant cannot.

Fact #3: Adding renewable energy will not increase the use of fossil fuels
As explained above, the addition of renewables has no major impact on the need for reserves in the state, far less than the effect of fossil and nuclear generators on reserve needs. Regardless, even if renewables did cause a significantly increased need for reserve capacity, that would not increase the use of fossil fuels. There is no fuel use or emissions associated with a power plant that is providing capacity or reserves, as any output that it provides directly offsets an equivalent amount of fuel and use and emissions that would have come from another source.

Fact #4: Integrating renewable energy will not affect California’s reserve margin
California’s planning reserve margin (power back up plan) has always been held at 15%.

Fact #5: The California Public Utility Commission does not expect a sharp rise in electricity prices in the coming years
The PUC's Energy Division has been working on a five-year rate forecasting project and found that, overall, utility rates are expected to increase by just 2 to 3 percent a year over the next five years. "This tracks inflation," said Terrie Prosper, a spokesperson for the PUC. "The drivers of the rate increase are the general need for infrastructure improvements, most of which would be needed even if there was not a (renewable energy) mandate."

Fact #6: Renewable energy output does not change significantly on a second-to-second time-frame, while the output of nuclear and fossil plants does.

Wind and solar output do not change significantly on a second-to-second time-frame, more on the hour-to-hour timescale. However, nuclear and fossil plants do.

Dozens of wind integration studies, including many conducted in California, have confirmed that adding wind and solar to the grid only results in modest increases in total system variability. This is partly because changes in wind and solar output occur slowly, as it takes hours for a weather system to move the hundreds of miles necessary to affect a large share of a region’s renewable energy capacity. In addition, changes in wind or solar output are often canceled out by opposite changes at other wind or solar plants, or by opposite changes in other sources of electricity supply or demand. Moreover, changes in wind and solar output can be forecast by using advanced weather models, allowing grid operators to plan ahead and even more readily accommodate their output. Any incremental variability that is not accommodated through these factors can then be addressed by using slightly more of the same type of reserves that are already used to accommodate the variability and uncertainty that has always been on the power system.

In contrast, failures at large fossil and nuclear power plants occur instantaneously and without warning, requiring grid operators to keep large quantities of expensive, fast-acting reserves on hand 24/7/365 to be ready in case an outage occurs. For example, in February of last year, dozens of fossil-fired power plants failed in a cold snap in Texas, causing rolling blackouts. In another example, earlier this year, a nuclear power plant in California had to be taken offline after jellyfish clogged its water intake equipment.

Fact #7: “Spinning reserves” are gradually added into the grid to accommodate changes in demand, regardless of the mix of electricity generation.

Spinning reserves are power plants that are producing but at less than their maximum output so that they have room to ramp up their output if needed. Power plants can provide spinning reserve with virtually no decline in efficiency. Spinning reserves are used to accommodate all changes on the power system, not just changes in renewables, and the CAISO analysis discussed below indicates that renewables are a very small contributor to spinning reserve needs.

Reserve plants do not activate just in time to avoid blackouts; rather, there is and always has been a continual adjustment process to accommodate constant fluctuations in supply and demand.

Overview of recent CAISO integration analysis

Analysis conducted for the CAISO earlier this year further documents that the reserve needs in a 33% renewable energy future are only slightly higher than in the status quo, and that large fossil and nuclear power plants impose a reserve requirement that is a dozen times larger.

The CAISO February 2012 analysis compared the reserve needs and challenges associated with reliably accommodating two different generation mixes for the state. In one scenario, all of the state’s electricity needs were met from natural gas, while the other scenario 33% of California’s electricity was obtained from renewables plus shutting down many of the state’s conventional power plants with once-through cooling systems.

Analysis of data in the report indicates that moving to a 33% renewable system from an all-gas system causes a 3-4% increase in total system reserve costs.[2] In 2010, all of these reserve costs accounted for less than 1% of the total cost of energy in the California electricity market. Therefore, on an average household’s monthly electric bill of $100, the increase in reserve costs in the renewables case would work out to an increase of around 3-4 cents!

Moreover, it is important to point out that the cost of the contingency reserves needed to accommodate large fossil and nuclear power plants account for around 45% of the total reserve costs for the state, while in the renewables case the incremental reserve need for wind and solar amounted to 3.7% of total reserve costs. Thus, the total reserve costs for large fossil and nuclear plants are therefore a dozen times larger.

Most importantly, adding renewable energy to the power system drives down the energy costs that make up 99% of the electricity market costs in California, yielding consumers significant savings on net. Wind and solar energy have no fuel costs and adding them to the grid displaces the most expensive power plant that is currently operating. A study from earlier this year found that adding wind energy to the grid in the Midwest would save consumers between $5 and $15 per month.

In summary:

CAISO is already implementing a number of market reforms to make its system work more efficiently and better accommodate large amounts of renewable energy. They are also implementing faster transmission scheduling to allow more efficient movement of power within California and between California and its neighbors. By making their market mechanisms work faster and more efficiently, CAISO will help reduce the cost of accommodating all sources of variability on the power system. Finally, CAISO has also been a leader in using wind energy forecasting.

Wind and solar energy have no fuel costs, and adding them to the grid displaces the most expensive power plant that is currently operating. Adding renewable energy to the power system drives down the energy costs, yielding consumers’ significant net savings.
 
To learn more about wind power’s reliability visit Truthaboutwindpower.com
 



[1] The rulemaking found “As requested by the Commission, the CAISO developed a methodology for assessing renewable integration resource needs (the “CAISO methodology”), and applied this methodology with the assistance of the IOUs to assess the need for flexible capacity for the four CPUC-Required Scenarios and one other CPUC scenario analyzed by the CAISO. The results show no need to add capacity for renewable integration purposes above the capacity available in the four scenarios for the planning period addressed in this LTPP cycle (2012-2020). The additional scenario studied by the CAISO did show need.” https://www.pge.com/regulation/LongTermProcure2010-OIR/Pleadings/Joint/2011/LongTermProcure2010-OIR_Plea_Joint_20110803_214989.pdf  
The additional scenario that was not required by the CPUC looked at a large increase in electricity demand in the state, and found that with higher electricity demand there would be an increase in the need for flexible reserves. However, that increase in reserves should not be attributed to the increase in renewables energy use, as the four renewable-only cases did not find any increase in need for flexible reserves. Even under the high load growth assumption, almost half of the needed capacity had to be built anyway to meet local voltage support needs due to conventional power plant retirements.

 

[2] The table on page 12 here presents the results for the 50 hours when the power system needed flexibility the most. http://www.caiso.com/Documents/Presentation_E3_CAISO_Step2NeedAnalysis_Feb10_2012.pdf
 
Contingency reserves are fast-acting, expensive reserves needed to reliably accommodate the unexpected failures of large fossil and nuclear power plants. Regulation reserves are fast-acting, expensive reserves used to accommodate variability in all sources of supply and demand on the power system. Load following reserves are slower, lower-cost reserves used to accommodate slower variability in all sources of supply and demand on the power system. Contingency reserves are provided half by spinning and half by non-spinning reserves. Load following reserves were assumed to be provided by non-spinning reserves.
 
In California in 2010, regulation reserves cost $10.6/MWh, spinning reserves cost $4.1/MWh, and slower-acting non-spin reserves cost $0.6/MWh on average.  Including the costs for these reserves allows for a direct comparison between the reserve cost for the all-gas case versus the renewables case, which shows a 3.7% increase in reserve costs for the 33% renewables case:
 
All Gas = $14,317 per hour
Renewables = $14,850 per hour

 
Even if California had a capacity market like some other regions, rather than an energy-only market, the total cost of the additional 300 MW of reserve capacity needed in the 33% renewable case, at capacity market costs, would add about 17 cents per electric bill, for a total cost of 20 cents per electric bill (see math below).  Of course, the capacity costs for large fossil and nuclear power plants’ contingency reserves would also be a dozen times higher.
 
300 MW x 365 days x PJM capacity cost of $136/MW-day = $14.9 million/year divided by $8.6 billion total CAISO market cost = 17 cents per $100 electric bill

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