Renewable incentives destabilize, harm electric grid

Wald, Matthew L.   7 Oct 2014. How Grid Efficiency Went South. New York times.


1) society would be better off if homeowners faced their rooftop solar panels westward, the peak time more energy is needed, but they won’t because they won’t make as much money as south-facing panels

2) coal, natural gas and especially nuclear plants keep the grid stable by selling energy around the clock.  wind and solar energy can flood the market with power and push down the prices received by coal, natural gas, and nuclear power plants (low ghg).  Nuclear power plants can’t stop running (unlike natural gas), and are going out of business because wind is incentivized – they get money for generating (too much) power, but nuclear isn’t rewarded for providing grid stability and contribution of low ghg emissions.

3) Natural gas plants can cycle up and down, so capitalists would say this is great, we’ll build even more natural gas plants.  But this brief time of fracked natural gas will go downhill fast once the peak is reached sometime between 2015 and 2020, since fracked gas wells decline 60% after the first year.  Natural gas truck fleets are far more valuable than electricity given the role trucks play in our society (When trucks stop, America Stops).

Excerpts from article:

Almost every rooftop solar panel in the United States faces south, the direction that will catch the maximum energy when the sun rises in the southeast and sets in the southwest.  This was probably a mistake.  The panels are pointed that way because under the rules that govern the electric grid, panel owners are paid by the amount of energy they make. But they are not making the most energy at the hours when it is most needed.  Solar panels thus illustrate how the rules add cost and reduce environmental effectiveness, critics say, because they are out of step with what the power grid actually needs from intermittent renewables like wind and sun, and from zero-carbon nuclear power.

With the existing price structure, “we incentivize maximum power generation,” said James Tong, the vice president for strategy and government affairs at Clean Power Finance, an investment firm. But in most parts of the country, there is plenty of electricity available from other sources in the morning and midday. Crunch time is late afternoon, when temperatures are higher and air-conditioners are working hard, and inefficient plants running on natural gas or even coal are cranked up to the maximum.

“The needs of the grid may mean that they should be pointed west,” more toward the setting sun, said Mr. Tong. That way, a bigger portion of their production would come at the hours when electricity was most needed. But their total production would be a bit lower, and that would hurt panel owners, at least under current rules.

The debate is over how to pay contributors to the grid so the system has an adequate amount of both energy and power, crucial to maintaining the stability of the system.

Solar panels and especially wind turbines produce vast amounts of energy, but on their own schedule, when the sun is shining or the wind is blowing. The more conventional installations — coal, natural gas and especially nuclear plants — earn their keep by selling energy around the clock. Put enough wind and solar units on the grid during the hours when they are running and they flood the market and push down the hourly auction price of a megawatt-hour of energy.

Sometimes the price goes to zero. Oddly, it can go even lower. When demand is very low in the middle of the night and the wind is blowing hard, there may be too much electricity on the system and grid operators will charge generators that want to add more. Nuclear plants cannot quickly modulate their output so they are, in effect, fined for production.

But wind farms still make money because they earn a tax credit for each kilowatt-hour they generate.

The problem is especially acute for nuclear reactors because their costs for fuel are roughly the same whether they are running or not. They are refueled on a fixed schedule, not when the uranium is used up. Their labor costs, mortgage costs and maintenance costs are roughly the same, too. But if the hourly price for energy is suppressed by wind and sun, suddenly the nuclear plants can’t make enough money to keep running.

Thus some have already closed and more are threatened, even though carbon dioxide limits are unlikely to be met without them.

Even relatively clean natural gas plants are hurt; they are generally on the margin, the first to shut when new solar comes on line.

“We’ve moved to a system focused on resources that provide energy when they want to.

A system that must compensate for rising and falling wind and solar generation makes the flexible plants, like those using natural gas, more valuable

The homeowner with panels on the roof may think he or she is disconnected from the system, when in fact the connection has become stronger, making the household a supplier as well as a consumer of energy, and a consumer of all the grid’s other functions, like capacity, transmission and distribution.


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