Why Renewables Haven't Destroyed the Grid - Yet! - Pennenergy

Why Renewables Haven't Destroyed the Grid - Yet! - Pennenergy

When I talk to groups about renewable energy I start off with a Youtube video which demonstrates testing the compression strength of a concrete block. For 2 minutes and 40 seconds this is the most boring video you could imagine. The block shows absolutely no sign of stress. At 2:41 the concrete block fails and is utterly destroyed.  As far as I am concerned we are at about 2 minutes and 30 seconds with respect to the electrical grid.

In order to understand what I believe to be the serious risks facing the electrical generation and distribution system it is necessary to review the structure of the system as it was before renewables began to be developed in a significant way. The chart below shows hypothetical load profiles for a peak demand day during the spring/fall, winter and summer as well as a line that represents the overall generating capacity in the system.

It can be observed that the system demand/load varies considerably throughout the day and throughout the year. It is also clear that there is a great deal of excess supply available for most hours on most days. In fact, only on the highest peak demand days of the entire year will the demand come close to the supply. That is by design as every well-managed electrical generation system in the world requires a reserve margin of 8-15% above peak demand.

This reserve is meant to provide resiliency for the grid to accommodate scheduled maintenance shut-downs at major facilities such as nuclear plants, natural gas-fired and coal-fired plants as well as unscheduled outages due to storms or switching problems or other operational issues.

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So before we began to develop renewable energy there was plenty of generation capacity within the system.  In fact, many generation facilities were not running at anything close to capacity most of the time.

Because of a public policy decision to reduce the burning of hydro-carbons (and the associated production of CO2 emissions) wind and solar generation sources have been subsidized through a variety of financial instruments including capital grants, tax credits, and feed-in-tariffs.  Renewables have also been given preferential access to the grid in most jurisdictions.

These measures have achieved the stated policy goal.  Wind and solar now make up a significant percentage of generation capacity in a number of jurisdictions and at times provide a large percentage of electrical production.

For example, Germany has developed over 30 GW of solar power and over 30 GW of Wind.  On a blustery spring day in Germany renewables can meet up to 40% of the total electrical demand for a few hours at mid-day.  There are regular announcements of "new records" for both solar and wind generation.  A similar situation exists in Texas with regards to wind and in parts of Hawaii with regards to solar.

Remembering that there was already a surplus of generation capacity in the system before the development of renewables it is obvious that when renewables hit their generation peaks most traditional thermal generation plants are unable to sell electricity.  That would not be a problem if the construction of these plants had not been financed based upon assumptions regarding how often they would be used and what wholesale electricity prices would be.  In fact, the economics of running these plants has deteriorated to the point where many utilities, especially in Europe, are on a "credit watch".

The rational response of companies trying to sell electricity into a market that has a great over-supply would be to decommission some of the oldest and most polluting plants to bring supply and demand into a better balance.  But there is a problem.  Renewable resources cannot be relied upon, particularly at peak demand times. The chart below displays the wind resource available compared to the demand curve for a week in November, 2013 in Texas (this week was not chosen on purpose to make wind look bad. It was literally the first file I found on the ERCOT site when I was starting to write this blog). 

In this situation demand rose throughout the week as a strong high pressure system spread across the state bringing with it colder temperatures while at the same time shorter days required more lighting.  One of the more troublesome realities of meteorology is that large, stable high pressure systems are often responsible for peak electrical demand in both winter and summer because they are associated with clear skies and temperature extremes.  These systems are also commonly characterized by very low winds across a wide area.

As a result while demand continued to climb wind energy faded away to almost nothing.  At this point most of the thermal generation assets available within Texas had to come on-line in order to meet demand.

So it is impossible to decommission even the oldest and least efficient thermal generation plants in the system regardless of how many wind farms have been built and solar panels deployed.  German utility E.on came face-to-face with that reality in the spring of 2013 when they were instructed by the local grid operator to keep an old plant operational even though it would rarely be needed.