Natural Gas NOW
Solar and wind energy can be useful supplemental sources of energy but they’re not dispatchable and hurt more than help when they become the main source.
It’s remarkable how few people understand the dynamics of energy; that it’s not enough to be able to produce it but, rather, must be producable when needed to be helpful. It’s analogous to our own activity; we can all make ourselves busy but if we’re not focusing on something productive, it’s pointless.
Energy, likewise, must be dispatchable at a moment’s notice to be useful. If it cannot be generated at a moment’s notice or somehow stored it’s worse than utterly useless. It becomes a cost and hurtful rather than helpful. Such is the case with many renewables such as solar and wind. They help when they’re available as supplemental sources of energy but hurt when they’re not producing or are producing at times when they’re not needed. Moreover, given that the sun shines and wind blows at times out of our control, their potential for hurt grows with the degree to which we depend upon them.
We see the problem vividly in places such as Australia and Germany where political ideology has taken precedence over economics. Both dived headlong into renewables without considering the consequences. They overbuilt solar and wind and ignored the need for dispatchable energy when the sun isn’t shining and the wind isn’t blowing. They invested enormous subsidies in renewables only to produce too much electricity when they isn’t need it, ending up paying others to take it, thereby doubling down on subsidies and doubling up on electric prices. The same thing is happening in California as our good friends at the Institute for Energy Research note:
On 14 different days in March, California produced so much solar power that it needed to pay Arizona, Nevada and other states to take the excess electricity to avoid overloading its power lines. The phenomenon also occurred on eight days in January and nine days in February. As a result, California has ordered some of its solar plants to reduce generation. In fact, solar and wind power production was curtailed by about 3 percent in the first quarter of 2017—more than double the same period last year.
California has an ever-increasing glut of power because of the state legislature’s push for renewable energy and state regulators’ push for natural gas. The California legislature has mandated that half of the state’s electricity come from renewable sources by 2030—about double what it is today. At the same time, state regulators have had utility companies build natural gas power plants to provide reliable power and back-up power to the wind and solar units. Utilities are happy to comply because constructing power plants provides new revenue. Once state regulators approve new plants or transmission lines, the cost is included in users’ electricity bills—no matter how much or how little is used. This two-track approach has created the glut and has proved costly for California electricity consumers. Electricity prices in California have increased faster than in the rest of the United States and they are over 40 percent higher than the national average.
Because no one can be sure if the sun will shine or the wind will blow, natural gas generation is needed to ensure electricity is available on demand. And when a glut exists, solar production is often reduced first if it cannot be exported because starting and stopping natural gas plants is costlier than shutting down solar plants. California has so much surplus electricity that existing power plants run, on average, at slightly less than one-third of capacity. And some plants are being shuttered earlier than planned.
While natural gas plant construction has slowed, it is unclear if and when California will be able to rely on renewable power for most or all of its needs, which many of its legislators are striving to achieve. In order to be heavily dependent on wind and solar power, battery storage technology must improve, become more reasonably priced, and store power closer to customers for use when renewable energy is not available. That breakthrough in storage power is probably decades away.
In 2010, California generated about 15 percent of its central station electricity from non-hydroelectric renewable sources—mostly wind and geothermal power. Today, renewable energy generates 27 percent, with solar power accounting for 10 percent. Disbursed rooftop solar produces an additional 4 percentage points of power. The rapid expansion of solar power in California is a result of substantial subsidies, improved efficiencies and its declining cost. Southern California Edison produces or buys over 7 percent of its electricity from solar generators, Pacific Gas & Electric 13 percent and San Diego Gas & Electric 22 percent. When a glut occurs, these utilities must either export power or curtail production.
In 2015, solar and wind production was curtailed about 15 percent of the time, on average, during a 24-hour period. In 2016, the curtailment increased to 21 percent, and in the first few months of this year to 31 percent. Heavy rainfall increased hydroelectric power production in California this year, adding to the surplus of electricity. Either too much electricity generation or too little generation can doom the transmission system and result in power outages. Further complicating the situation, the California Independent System Operator has no control over the state’s solar rooftop installations.
If the neighboring states need excess power from California, they pay California for that power. However, if they do not need the power, California pays them to take it because they must curtail their own sources of electricity, which can cost money. In the first two months of this year, the California Independent System Operator paid to send excess power to other states seven times more often than during the same period in 2014. The phenomena of “negative pricing” occurred in an average of 18 percent of all sales for the first two months of this year, versus about 2.5 percent during the same period in 2014. California has paid as much as $25 per megawatt-hour for other states to take the excess power.
IER’s explanation offers an excellent education in energy economics and a superb explanation of why dispatchable energy from natural gas is a necessary corollary to renewables and must be the primary, not the backup source, of energy. Energy must be dispatchable to be useful in anything other than a supplemental role. Those who suppose it’s the reverse or that natural gas can simply be replaced by renewables are not dealing with reality. Rather, they’re inviting a future of increasingly bigger and more unaffordable subsidies and exploding electric prices. As with all things in life balance is essential.