Benefits Outweigh Costs of Massive Renewable Energy Deployment

March 15, 2014

The power grid is a massively complicated network of generators, power converters, and transmission lines controlled through the cooperation of numerous private corporations and local and international agencies. Grid operators rely on long and short-term “to-the-minute” weather predictions and other inputs to predict demand and prevent disruption. Government policies and economic constraints of the coming decades require the grid in the United States (and elsewhere) to become even more intelligent, interconnected, and efficient. Decreasing transmission losses, increasing reliability, and accommodating an increasingly diverse generation mix have become the central goals for this over $300 billion/year industryOne of the challenges for grid operators in the 21st Century will be to accommodate an increasing fraction of generation from intermittent (non-constant output) renewable sources, such as wind and solar. A multi-agency multi-year study led by researchers from the National Renewable Energy Labs (NREL) has confirmed that, while costs per kW/hr may increase for fossil-fuel generators in a highly-renewable grid, reduced fuel consumption and emissions outweigh the expense.

NREL’s Western Wind and Solar Integration Study, completed in late 2013, addressed the concerns of grid operators that an increase in intermittent renewable power would put undue strain on the grid and conventional generators. For Phase I of the study, concerns of technical feasibility were put to rest. Phase II examined the detailed economic and environmental impact of five test scenarios ranging from zero renewable energy up to 33% of total grid energy sourcing from wind and solar generation for the Western regional grid, which included all of the Western United States and parts of Canada and Mexico. The researchers modeled operation of these hypothetical power grids using three years of operational data including weather and economic forecasting, with these assumptions monitored by external industry observers.

The study found that operating costs do increase by 2-5% on average for fossil fueled plants, but that these costs are balanced by fuel savings. Because of the intermittent nature of solar and wind generation (cloud cover and wind speeds are never constant), traditional fossil plants - like coal and natural gas burning plants - must throttle or cycle their operation to respond to changes in both the supply and demand of electric power throughout any given day. Because of their faster response, natural gas turbine generators are able to more easily respond to transients in grid supply than are larger coal-burning power plants. The study thus found that adding 4 units of renewable energy into the grid displaced 1 of coal and 3 of natural gas. The cost increase for coal and natural gas generators stems from the decreased average efficiency and extra mechanical wear incurred by down-throttling and cycling these generators more often than would be required with a more stable total grid supply. For the scenarios examined, the report found that total Western Grid costs from these changes for fossil-fuel generators would amount to $35-$157 Million annually. However, the avoided fuel costs from the extra renewable energy decreased total grid operating cost by $7 Billion per year.

While this study only addressed the operating costs (not the capital costs of constructing the power generators), the result is promising for the outlook of a future grid that has a significantly increased energy diversity and sustainability.

[1] Data Summary 2001-2012. U. S. Energy Information Agency.