New report: Adding renewables keeps the lights on and money in America’s pockets

New report: Adding renewables keeps the lights on and money in America’s pockets
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Do you remember when cell phones were about a foot long, not counting the antenna? Or the squawks that a modem made when it connected to the Internet?

A quick glance at our surroundings offers plenty of proof that technological progress marches on, though we don’t always realize it. And America’s electricity mix and national grid are no exception – in the past few years, the ways we keep the lights on have changed substantially.

While some observers have questioned what this means for the health of the system, the reality is today’s electricity grid is more reliable, affordable and cleaner.

This week, a new report from Analysis Group looked at how these changes have affected electric grid reliability and power markets. The top takeaways: adding renewables creates a more diverse, reliable system, and low natural gas prices, not renewables, are causing the coal and nuclear retirements we’re seeing.

Let’s start with reliability. Analysis Group concludes:

Although some commentators have raised concerns that the declining financial viability of certain conventional power plant technologies…may be jeopardizing electric system reliability, there is no evidence supporting that conclusion.

Many advanced energy technologies can and do provide reliability benefits by increasing the diversity of the system. The addition of newer, more technologically advanced and more efficient natural gas and renewable technologies is rendering the power systems in this country more, rather than less, diverse.

The men and women charged with keeping America’s lights on have reached the same conclusion.

“By replacing a portion of the higher-cost fuel we used to burn in our plants, we have been able to add renewables and invest in making the power grid even more reliable, all while keeping electricity affordable,” said Ben Fowke, CEO of Xcel Energy, in the past week.

“Ten years ago we thought hitting even a 25 percent wind-penetration level would be extremely challenging, and any more than that would pose serious threats to reliability,” Bruce Rew, SPP’s vice president of operations, said in February. “Now we have the ability to reliably manage greater than 50 percent. It’s not even our ceiling.”

Why does adding wind and solar make the system more reliable? They’re now widespread, they change slowly and predictably, they can be flexibly managed, and a diverse system is the most reliable system. That way, if one generation source fails, others can pick up the slack.

This was on full display during the 2014 Polar Vortex. Extreme cold caused over 20 percent of conventional power plants across the Great Lakes and Mid-Atlantic to fail, while severely constraining natural gas supplies. However, wind turbines kept reliably turning, preserving power for millions of households and saving Midwest consumers a billion dollars in just two days.

A similar event occurred in Texas in February 2011, when many coal plants broke down due to extreme cold. Wind output remained high throughout that event, earning accolades from the grid operator for helping to keep the lights on. Because all energy sources, whether coal, natural gas, wind, or nuclear, are subject to interruptions, diversity makes the power system reliable.

Wind and solar also increase system reliability because they have advanced power electronics. Blackouts, like the one that hit Washington, D.C. in July 2015, are often caused by voltage and frequency disturbances. Wind and solar can be fine-tuned to help smooth out these disturbances, making blackouts less likely in the first place and allowing for quicker system recovery.

Moving on to electricity markets, Analysis Group finds that it's America’s glut of cheap natural gas and sluggish demand driving most of the system’s changes:

Fundamental market forces – the addition of highly efficient new gas-fired resources, low natural gas prices, and flat demand for electricity – are primarily responsible for altering the profitability of many older merchant generating assets in the parts of the country.

A simple glance at where coal and nuclear plants are being retired offers evidence: It’s mostly in the Northeast and Southeast, areas with comparatively few wind turbines. Meanwhile, there have been few coal and nuclear retirements across the Wind Belt, where states like Iowa, Oklahoma, Kansas and the Dakotas are all now generating more than 20 percent of their electricity using wind.

PJM, the country’s largest electricity market, highlights these dynamics. As Analysis Group finds:

In the PJM regional market, which accounts for a large share of the nation’s coal plant retirements, decreases in natural gas prices have had a much larger impact on the profitability of conventional generators than the growth of renewable energy.

Change sometimes feels uncomfortable. But the facts show the changes in the electricity mix are saving American families and businesses on their electric bills, while making the grid more reliable, not less. Analysis Group researchers find “the ongoing diversification of generation supply has lowered wholesale electricity costs in most parts of the U.S. and has contributed to recent declines in consumers’ overall cost of living.”

Keeping more money in consumers’ pockets while ensuring the lights stay on? That sounds like a win-win to me.

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