Natural Gas Killed Coal – Now Renewables And Batteries Are Taking Over

The Guardian - Dana Nuccitelli

To avoid dangerous climate change, we can’t rely on natural gas replacing coal

Over the past decade, coal has been increasingly replaced by cheaper, cleaner energy sources. US coal power production has dropped by 44% (866 terawatt-hours [TWh]). It’s been replaced by natural gas (up 45%, or 400 TWh), renewables (up 260%, or 200 TWh), and increased efficiency (the US uses 9%, or 371 TWh less electricity than a decade ago).

Evolution of the American power grid mix since 1960. Illustration: Carbon Brief

In other words, of the 866 TWh of lost coal power production, 46% was picked up by natural gas, 43% by increased efficiency, and 23% by renewables.

Natural gas is an unstable ‘bridge fuel’
While the shift away from coal is a positive development in slowing global warming by cutting carbon pollution, as Joe Romm has detailed for Climate Progress, research indicates that shifting to natural gas squanders most of those gains. For example, a 2014 study published in Environmental Research Letters found that when natural gas production is abundant, it crowds out both coal and renewables, resulting in little if any climate benefit. Part of the problem is significant methane leakage from natural gas drilling.

...abundant gas consistently results in both less coal and renewable energy use […] the quantity of methane leaked may ultimately determine whether the overall effect is to slightly reduce or actually increase cumulative emissions […] only climate policies bring about a significant reduction in future emissions from US electricity generation … We conclude that increased natural gas use for electricity will not substantially reduce US GHG emissions, and by delaying deployment of renewable energy technologies, may actually exacerbate the climate change problem in the long term.

Similarly, another 2014 study found that based on the latest estimates of methane leakage rates from natural gas drilling, replacing coal with natural gas provides little in the way of climate benefits. Though it’s been touted as a ‘bridge fuel’ to span the gap between coal and renewables, this research suggests natural gas isn’t significantly better than coal in terms of global warming effects, and thus may not be suitable for that purpose. The ‘bridge’ doesn’t appear to achieve its goal of steadily cutting our greenhouse gas emissions.

Renewables and batteries are starting to beat natural gas

California has been a national leader in clean energy. The state generates very little of its electricity from coal, but natural gas does supply more than a third of the state’s power. A quarter is generated by renewable sources like wind, solar, and geothermal plants, and another 10% comes from hydroelectric dams, on average. In 2017, renewables’ share increased by about 10%, displacing natural gas in the process.

In fact, California has an excess of natural gas power generation capabilities. Some natural gas plants are still essential for ensuring local grid reliability, but in many cases, clean energy resources like a combination of solar and storage can meet reliability needs.
In one recent example, the California Public Utilities Commission (CPUC) ordered Pacific Gas & Electric (PG&E) to procure energy storage (batteries) or “preferred resources” (renewables or increased efficiency and conservation) to meet a local reliability need in northern California. The order stemmed from an issue with a “peaker” natural gas plant (so-called because they switch on to meet high, peak electricity demand) operated in northern California. The operator (Calpine) was concerned that the plant was no longer economical, because it’s too infrequently used due largely to an abundance of renewable power. The contract they could receive for providing generation capacity to ensure grid reliability would not be high enough to cover costs to maintain the plant.
Instead of bidding their plant into the program overseen by the CPUC to ensure local reliability, Calpine went directly to the California Independent System Operator (CAISO) and requested a “reliability must-run resource” contract, which is a much higher payment than they would have received through the CPUC program. CPUC decided instead to require PG&E to fill the local reliability need with cleaner alternatives. The costs of renewable energy and battery storage have fallen so fast that the clean alternatives might now be cheaper than gas.
In another example, a proposed natural gas peaker plant in Oxnard, California was rejected when it was shown that the CAISO was using outdated battery storage costs from 2014. Given how quickly those prices have fallen, they could now potentially be competitive with natural gas peaker costs.
The redundancy and potential replacement of natural gas with cleaner alternatives extends far beyond these examples. Most electrical service providers in California are now required to develop integrated resource plans. These are electric grid planning documents that outline how the utilities will meet a number of California’s goals, including a 40% reduction in carbon pollution below 1990 levels and 50% electricity production from renewable sources by 2030. Meeting these goals will require replacing non-critical natural gas plants with renewable power.
And California is already installing battery storage systems at record pace. Tesla, AES Energy Storage, and Greensmith Energy Partners have all installed large battery storage facilities in California within the past year. Within 4 years, batteries are projected to be as cheap as natural gas “peakers,” and consistently cheaper with 10 years.

We need a fast transition
It’s important to bear in mind that power plants built today can continue to operate for decades to come. The decisions we make for today’s grid are long-lasting. That’s why there are similar pushes from groups in Michigan, Oregon, Connecticut, North Carolina, and South Carolina for utilities to scrap plans for new natural gas plants and instead consider cleaner and potentially cheaper renewable alternatives. Renewables also don’t face the uncertainty associated with fluctuating natural gas prices.
Of course, were there a national price on carbon pollution, renewables and battery storage would win in the marketplace even sooner. As it stands, natural gas prices don’t reflect the costs that we incur from the climate change caused by their greenhouse gas emissions. Nevertheless, as Union of Concerned Scientists senior energy analyst Laura Wisland put it,

Fortunately, rapidly falling costs are already making renewables and battery storage cost-competitive with natural gas, and cheaper than coal. If we’re going to succeed in avoiding the most dangerous climate change consequences, that transition away from all fossil fuels and towards clean energy can’t happen soon enough.

Links

• The war on coal is over. Coal lost
• NASA just made a stunning discovery about how fracking fuels global warming
• By The Time Natural Gas Has A Net Climate Benefit You’ll Likely Be Dead And The Climate Ruined
• California electricity mix in 2017 has involved more renewables, less natural gas
• In Colorado, a glimpse of renewable energy’s insanely cheap future
• Have We Reached Peak Peaker? ‘I Can’t See Why We Should Build a Gas Peaker After 2025’

Plunging Costs Make Solar, Wind And Battery Storage Cheaper Than Coal

RenewEconomy - Giles Parkinson

The plunging cost of storage, along with that of wind and solar power, appears to have crossed a new threshold after a tender conducted by a major US energy utility suggests “firm and dispatchable” renewables are now cheaper than existing coal plants.
The stunning revelation came from Xcel Energy in Colorado, and quietly released over the Christmas/New Year break, although some outlets like Vox and Carbon Tracker were quick to pick up on the significance.
Last year, XCel Energy put out a “request for proposals” (RFP) for how it could replace two coal-fired generators that it is considering shutting down – part of a plan that will take its share of renewables to more than 50 per cent.
The results were described by Vox’s David Roberts as “mind-blowing”. And he’s not wrong.

The median bid price for projects proposing a mix of wind plus battery storage was just $US21/MWh ($A25.80/MWh), while the median price for solar plus battery storage projects was just $US36/MWh ($A44.30/MWh).
(The graph above comes from the XCel documents. The areas blacked out were done by the utility for reasons of commercial in confidence).
And these prices do not represent just a few one-off, left field offers. All told, there were more than 100 bids combining wind and solar, or both, with battery storage, and 20 gigawatts of such capacity.
The “median” means that half the bids were cheaper than the median price cited above.
According to Carbon Tracker, these are the lowest renewables plus battery storage bids in the US to date, and most likely anywhere in the world.
“The median bid for wind plus storage appears to be lower than the operating cost of all coal plants currently in Colorado, while the median solar plus storage bid could be lower than 74 per cent of operating coal capacity,” it noted in a report earlier this month.
(See graph below. This shows that the operating cost of the cheapest coal plants in Colorado is just below $US40/MWh, rising to more than $40/MWh and then soaring beyond $100/MWh for the most expensive units)

The significance of the tender result is the small additional cost of storage – between $US3 and $US7/MWh. This is less than half the $US15/MWh priced in the previous lowest bid – $US45/MWh for solar and storage in a bid accepted by Tucson Energy easier last year.
The cost of wind without storage was $18/MWh, while the cost of solar without storage was $29/MWh – both prices benefit from federal tax incentives, and would likely be around $US25/MWh and $US40/MWh without them.
The significance for Australia is enormous. The battery storage sector has only just commenced, but the potential is clearly huge.
The success of the Tesla big battery in South Australia since its launch in early December has created great interest, and caused many to think how the operations of the electricity grid may be completely rethought and redesigned.
The Tesla big battery will be joined by numerous other battery storage installations in a relatively short time – smaller battery arrays in Alice Springs and near Cooktown in Queensland are due to come on soon, as will another battery at the Wattle Point wind farm in South Australia.
This will be followed by three new battery storage arrays in Victoria, another in the Northern Territory, at least two more in South Australia (Lincoln Gap and Whyalla) and numerous other potential projects in Queensland and NSW.
It was interesting that Franck Woitiez, the head of Neoen Australia which operates the Tesla big battery adjacent to its Hornsdale wind farm, last week spoke of the huge pipeline of solar projects in NSW – more than 2,000MW – that could readily adopt battery storage.
Woitiez noted how quickly the 150MW Coleambally solar project in western NSW will be delivered – less than two years after the project was first conceived – and said large scale solar and storage could be delivered in half the time, and at a much lower cost, than the massive Snowy 2.0 pumped hydro scheme.
The US tender bears that out. Wind, solar and storage costs in the US tend to be cheaper than in Australia, partly due to the lower cost of finance, the lower cost of labour, and the depth of the industry there.
The Xcel tender results are just part of story that illustrates the plunging cost of wind, solar, and battery storage. Bids of below $US20/MWh for solar projects have now been delivered in both Saudi Arabia and Mexico, and storage is matching predictions that its cost profile will be similar to solar.

The Xcel tender elicited bids for stand alone battery storage with a media price of $US11/MWh, with storage ranging from
As Vox’s Roberts notes, a company called ViZn Energy Systems, which uses flow batteries rather than lithium-ion, is promising $US27/MWh solar+storage by 2023.
That is lower than many predictions for solar alone. When the Tucson bid results were announced, it was considered to be a death knell for the market for new gas plants.
As Danny Kennedy, formerly on Sungevity and now head of the California Clean Energy Fund, has noted, both GE and Siemens have taken an axe to their once enormous gas generation units because of the massive slump in orders because renewables and storage are beating out gas plant in tenders.
Now that the cost of wind or solar plus storage is beating out existing coal, that takes the market transition to a whole new dimension.

Links

• In Colorado, a glimpse of renewable energy’s insanely cheap future
• Colorado’s renewables revolution gathers steam
• Tesla big battery moves from show-boating to money-making
• Neoen starts on 150MW solar plant in NSW – just a year from initial “idea”