New Study Finds Traditional Concept of “Baseload” Power Becoming Increasingly Problematic as Wind, Solar Boom

On June 14, the U.S. Energy Information Administration (EIA) reported a landmark development in U.S. power markets: “For the first time, monthly electricity generation from wind and solar (including utility-scale plants and small-scale systems) exceeded 10% of total electricity generation in the United States.” As you can see from the graphic below, this isn’t a fluke; to the contrary, wind and solar have been growing inexorably for years now, and there’s certainly no sign that this will stop any time soon.

Given the rapid penetration of solar and wind power onto the U.S. power grid, questions have been raised regarding how high a percentage so-called “variable renewable energy” sources can constitute without harming power grid reliability. For more on that, check out Greentech Media’s most recent Energy Gang podcast, which has a fascinating, informative discussion regarding “a new study countering Mark Jacobson’s 2015 report showing that we can source 100 percent of America’s energy from wind, solar and water.” The bottom line, though, is that the debate is mostly about how close to 100% clean energy we can get, not whether this is the right way to go for a host of economic and environmental reasons.

Of course, as the shares of solar and wind power increase, the shares of traditional, “baseload” (e.g., highly reliable) power sources like coal are declining. The question is whether this a problem in any way. Here are some key points from a new study by the Brattle Group for NRDC, entitled “Advancing Past ‘Baseload’ to a Flexible Grid,” which argues that far from being a problem, a higher share of clean energy is actually a great opportunity for a wide variety of reasons.

  • The traditional concept of “baseload” power is rapidly becoming obsolete. “In today’s electricity system with low natural gas prices, negligible demand growth, and the proliferation of efficient natural gas-fired generation and renewable generation, ‘baseload’ power plants like coal and nuclear are earning less market revenue than before.”
  • In fact, not changing the way we think about what constitutes “baseload” power can actually be problematic. In general, “the term ‘baseload’ generation is no longer helpful for purposes of planning and operating today’s electricity system,” in part because “the cost advantages once enjoyed by coal and nuclear plants have declined,” and also because thinking in terms of “baseload” generation “may even distract regulators’, planners’, and markets administrators’ attention from meeting emerging system and public policy needs in the most cost-effective manner.”
  • Increasingly, environmental and public health considerations are coming to the fore. “At the time when many fossil resources were developed, environmental and public health protections were less stringent or nonexistent,” with “no internalization of the greenhouse gas (GHG) emissions, nor was the cost of GHG and other emissions ‘internalized’ or incorporated in the price of wholesale electricity markets.” In contrast, in recent years, “policy makers have increasingly recognized the environmental and public health consequences of unchecked emissions, placing more stringent limits on emissions of particulates, sulfur dioxide, oxides of nitrogen, and heavy metals.”
  • “Baseload” does not inherently imply coal or nuclear power. The qualities traditionally associated with the concept of “baseload” power — “low-cost generation,” “the ability to provide available capacity during system peaks, system outages, or emergencies;” “maintain[ing] fuel diversity” – are “not uniquely linked to the need or use of coal or nuclear generation.”
  • Keeping old, dirty, expensive power plants going is making less and less sense. “Reduced growth in electricity consumption, in part due to changing economic conditions, customers’ conservation efforts, more efficient buildings and appliances from stronger codes and standards, and utilities’ efficiency and load management programs, has tempered the need to maintain or extend the lives of aging generators.”
  • Customers want clean energy. “Increased customer preferences for and access to conservation and clean energy—such as through voluntary green energy programs or rooftop solar generation—has further reduced the need for power supply from ‘baseload’ generation.”
  • Clean energy costs have been falling fast. Meanwhile, clean energy costs have been declining and “are now cost competitive with conventional generation technologies in many regions of the country,” while “onshore wind capacity factors can reach as high as 55%.”
  • Several more problems for traditional “baseload” power plants: 1) they require major “capital expenditures to comply with environmental regulations” and 2) “much of the coal and nuclear fleet is over 40 years old and requires major maintenance and investments to continue operations”; 3) “many utilities are recognizing the likelihood of GHG regulations in the future by assuming future prices for carbon emissions in their resource plans”; and 4) many electricity customers, ” large and small, are shifting their procurement to reflect their preference for clean-energy resources.”
  • Clean energy can increasingly be integrated into the grid without any reduction in reliability. “Efficient and operationally-flexible resources, combined with low-cost wind and solar generation, provide planners and operators with the opportunity to build a reliable and cost-effective supply mix for meeting modern system and environmental needs…Over the past decade, much of the operational needs associated with variable wind and solar generation have been addressed by technological, operational, and market innovations.” Those innovations include “improving wind and solar forecasts,” “fast-acting grid-scale battery storage technologies” and “[i]nnovations in wholesale power market design by the regional grid operator…As more renewable resources are added to the regional systems, better inter-regional coordination in planning and system operations can help to address wind and solar variability. Coordinated operations over a larger geographic footprint can reduce variability through natural geographic resource diversity. “
  • In sum: “technologies, market fundamentals, policy priorities, and customer preferences are changing rapidly—all pointing to an increasingly broad range of different supply and demand resources; a more dynamic and versatile grid that can operationally integrate these resources and new technologies; and wholesale power markets that will increasingly reward both supply and demand resources for providing well-defined services and attributes such as energy, capacity, flexibility, and emissions reductions. How well traditional ‘baseload’ generation will fare in this new environment will depend on the combination of cost effectiveness and operational and public policy attributes these resources bring to the market compared with other existing and new resources.”

 
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