Integrating renewable resources into the grid involves various issues, from comparing costs with natural gas to the role of energy storage, according to panelists on TransmissionHub’s Nov. 28 webinar.
Natural gas affects transmission build
The price of natural gas at current levels limits the amount of economic activity between regions in the eastern United States, and the same situation is expected to occur in the West, Dale Osborn, consulting advisor, Policy and Economic Studies Department at the Midwest ISO (MISO) said during the webinar.
“When the price of natural gas is lower than the price of coal energy, natural gas is on the margin … so there’s [a] very little driver to the exchange [of] energy,” he said. “Therefore, there’s a very low driver to build transmission. You can’t economically develop transmission unless you have revenue based on the price of energy difference.”
Osborn noted that the low price of natural gas by comparison makes the price of wind look higher, leading to arguments that natural gas should be built instead of wind.
David Olsen, managing director of the Western Grid Group, said that many state regulatory commissions are taking a longer view of gas prices, noting that many factors indicate that gas prices can only go higher.
“There are a lot of upward price pressures, not only exports, but if gas were to replace any appreciable amount of coal-generated electricity, that would require construction of a substantial pipeline in gas storage system,” he said. “It would be very expensive and would add to the cost of gas substantially.”
There are also questions concerning the certainty of gas supply given that “fracking” is still in the early stages. “There have been concerns on every aspect of fracking through the supply chain,” he added.
Renewables still remain a good hedge against rising gas prices. “Today, and maybe for the next few years, gas prices may continue to be low and renewables have a hard time competing with that, but looking out to, say, the end of the decade, getting more renewables on top of existing state renewable energy standards could be wise strategically,” Olsen added. “I think that certainly some of the state commissions are thinking that way.”
Building on what Olsen said on renewable portfolio standards (RPS), Eric Fullerton, HVDC business development manager with Siemens Energy, said, “That’s exactly what we see from our clients who are developing bulk transmission systems – they’re looking forward to that end-of-the decade pricing with the RPS and meeting those renewable standards, as well as gas prices in order to take them away from a localized resource.”
New handbook in the West
Olsen discussed a new Western Governors’ Association handbook detailing nine approaches to facilitate integration of renewables, including establishing an energy imbalance market in the West. This would be a market only for “imbalanced” energy, he said, adding, “So, when generation is less or more than scheduled, as is common in virtually every hour in most systems, it would be a way to trade those imbalances more efficiently.”
Almost all western states have some renewable energy standard or target, so integrating renewables is a major focus of work across the West, he said.
“As we add wind and solar, this changing net load does increase the need for system flexibility,” he said. “We have to look to all resources on the system and we want to pay flexible resources more and inflexible ones less to meet this need for greater flexibility in a least-cost way.”
He also said it is important to focus on balancing the system, he said, adding: “If we focus on balancing the system, that will lead us to cost savings and reliability improvements. We have many tools available … to do that.”
He noted that the real challenge, especially in the West, is modernizing the grid. “To take advantage of new clean resources, so energy efficiency, demand resources, renewables, you really have to automate dispatch in transmission system operation and that’s the major challenge that we’re addressing.”
Energy storage’s ‘major role’
Olsen said storage can play a major role in integrating renewables, but is the most expensive way to integrate renewables now.
“We need storage costs to come down in order to make that economic, whether it’s hydroelectric pumped storage or compressed air energy storage or flywheels or some of the larger … batteries,” he said. “All of those technologies are much more expensive than doing things like consolidating balancing areas, going to faster scheduling [or] improving forecasting.”
As penetrations of renewables increase to the 50% range, for instance, then storage will become more economic.
“Demand resources have tremendous potential to add operational flexibility to keep systems balanced,” he said.
One example is charging and discharging batteries in electric vehicles, he said, adding that PJM Interconnection is doing that on a pilot basis.
Osborn noted that MISO did a storage system, adding: “We find the most economical, of course, is Manitoba [Hydro] because they don’t have to add any cost to do storage, they just need transmission. We’re working on transmission increases to them because they have additional generation that they would like to sell in the MISO footprint, so rather than pumping, per se, they just delay their generation, so there’s no losses in the process and it’s a superior way of storing energy.”
Renewable integration will be discussed at TransmissionHub’s upcoming TransForum East.