Renewables research collaboration in Chile

Ross Baldick Electricity ConsultingIn May I had the pleasure of visiting colleagues at the Pontificia Universidad Catolica de Chile and the Universidad de Chile, in Santiago, Chile. Like Texas, Chile is moving toward ever higher levels of renewable power, ours in wind, theirs in solar.

Universidad Catolica colleagues and I have been jointly awarded seed funding to investigate models of flexibility in power systems that are needed to accommodate higher levels of renewable integration.

Over the coming months we will work toward a larger proposal on flexibility aimed at cost-effectively facilitating the integration of increasing levels of renewables. Unlike in California and Germany, where renewable integration seems to proceed without any regard to cost or without any attention to the endowment of resources, we aim to make high levels of renewable integration cost-effective in the locations where the resources are abundant.

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While in Santiago I met with the local electricity industry and presented a summary of UT research relating to the flexibility and integration of renewable enery. (Click here to download that presentation.)

It was a great experience to meet colleagues in Chile, including old friends Hugh Rudnick and Rodrigo Palma, and my collaborators Matias Negrete-Pincetic (pictured, at left) and Daniel Olivares Quero (pictured, in center). Later this year, a Universidad Catolica student will be visiting The University of Texas at Austin to work with me, and one of my students will be visiting Universidad Catolica.

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Does decentralization make sense?

Ross Baldick Electricity ConsultingI attended The Sixth Annual Austin Electricity Conference last month, which included panels on decentralization (which I moderated), electricity business models, future grid design, and Mexican electricity market restructuring.

My panel asked: Does decentralization made sense? We had  discussions about proposed “distribution system operators,” grid cost parity for renewables, increased demand response, and the increasing fraction of transmission and distribution costs.

I questioned the timeliness of distribution system operators (DSO) in the absence of nodal transmission-level pricing applied to loads and load-serving entities. Various US protagonists have proposed, or are implementing, DSOs. In the long term, this might make sense, but in most jurisdictions currently, loads and load-serving entities are charged zonal average prices, thus putting the horse before the cart. Instead, I would propose that the better scheme is to go with the low-hanging fruit first: Price load at nodal prices, getting the economic efficiencies, and then discuss a DSO at a later point.

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How global-friendly are western energy solutions?

Ross Baldick ConsultingI recently presented a seminar, “Meeting Worldwide Demand for Electricity,” at the IEEE Innovators, Engineers & Entrepreneurs workshop in Austin. My point: we can’t just export approaches that work in the west to the rest of the world, because these approaches are often too expensive. So we need to ask: What would be a cost-effective way to satisfy increasing demand for electricity without increasing emissions in the newly industrializing world?

As a first step to an answer, I wanted to rule out what is not cost-effective. For example, solar energy is often put forth as a way to produce affordable, low-emissions electricity. In some contexts, it certainly is; however, cost-effectiveness depends upon carefully keeping costs down and tailoring utilization to specific applications.

To analyze, then, the potential for deploying solar energy solutions, I used the University of Texas at Austin campus solar charging stations as a case study, supported by a “back-of-the-envelope” calculation.

My conclusion: this particular solar solution would be cost-prohibitive for newly industrialized applications.

For details, download the full presentation.

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Why America’s power grid needs natural gas now more than ever | Ross Baldick ConsultingThis week on, an article I wrote with David Spence:

Now that the Obama administration has finalized its Clean Power Plan regulating greenhouse gas (GHG) emissions from the power sector, the focus of attention turns to the states, which must now find a way to reduce emissions consistent with the Plan. One question states face as they envision a lower carbon future is how much to rely on natural gas-fired generation.

The Environmental Protection Agency Plan encourages states to use existing gas-fired generators more and coal-fired generators less, and to build new zero-emission generators (wind, solar and nuclear). The Plan neither encourages nor discourages construction of new gas-fired generators, but some environmental groups oppose additional natural gas plants, fearing they will slow the advance toward a carbon-free grid. Owners of competing technologies also prefer fewer new gas-fired generators, recognizing that inexpensive natural gas has been a key driver of lower electricity prices that cuts into their profits.

As more renewable energy comes online, the reliability and environmental benefits of gas-fired power become more important.

But there are solid reasons why the electric grid needs gas more than ever as more renewable power comes on line.

First, in most electricity markets gas competes most directly with coal, not renewables. The reason is that electricity is dispatched on a marginal cost basis (that is, based on the operating cost of the next available increment of energy): whenever there is a renewable resource available, it will almost always be dispatched to the grid because its zero fuel price will trump the non-zero fuel price of coal- and gas-fired generators. The question, then, is which technologies will power grid operators use to supplement or back up renewable power when the wind is not blowing and the sun is not shining.

Second, gas-fired generators are better able than coal to accommodate more renewable power on the grid, because they can more efficiently adjust their output in response to the variability of renewables’ production. The Texas grid, for example, has been able to integrate large amounts of new wind power recently, in large part because of its complement of gas-fired generation. If Texas had only coal-fired power to back up wind, it would have dispatched less wind power to the grid, because the limited flexibility of coal-fired power would have reduced the ability to respond to variations in wind generation while keeping the lights on.

Third, modern, ultra-efficient gas-fired combined-cycle power plants produce only about half the carbon dioxide and small fractions of the other pollutants emitted by coal-fired power. Reducing carbon dioxide is a multi-decadal task, one we need to accomplish in a cost-effective manner. The U.S. has the oldest coal-fired generation fleet in the world in part because those dirty, old plants produce inexpensive, reliable power. We will need a combination of renewables and new gas-fired generation to replace the retiring coal-fired generators and maintain system reliability.

Indeed, there are technical characteristics of thermal generators (the nuclear-, coal-, and gas-fired generators) that remain essential to the operation of the grid. We currently have no cost-competitive ways for renewables and electricity storage to provide or simulate those technical characteristics.

Fourth, and perhaps most crucially, the enhanced reliability and environmental benefits of gas-fired power become more important with higher levels of renewable penetration, at least until cost-effective electricity storage options become available. While there have been great strides in reducing the cost of battery storage, it remains an extremely expensive solution to the problem of supporting renewable power generation.

In our capitalist system the future energy mix will continue to be determined in large part by price competition. Regulation affects prices, but decisions about which plants to build are made by the private sector, not by regulatory fiat. Gas is currently the most cost-effective complement to renewables and consequently will predominate in new construction of thermal generation.

We expect the costs of electricity storage to continue to fall, and for storage eventually to replace other generation sources as the primary supporter of renewable generation on the grid. But storage is not yet ready for prime time. In the meantime, we need flexible, efficient gas-fired power to ensure that the transition away from much dirtier, higher-carbon coal-fired power continues apace. It would be a dangerous bet to forgo new gas-fired generation now.

David Spence is Professor of Law, Politics & Regulation at the University of Texas at Austin, where he teaches in both the McCombs School of Business and the School of Law. Ross Baldick, is a Professor in UT Austin’s Department of Electrical & Computer Engineering.

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