Will the power grid still need base load in the future?

By Mark Dyson, Director, Rocky Mountain Institute

Amory Lovins, Chief Scientist and Co-Founder, Rocky Mountain Institute

We can’t stifle innovation by pushing outdated concepts of “baseload” power

In April, U.S. Energy Secretary Rick Perry announced a 60-day study of electricity market design and grid stability to assess the extent to which current market design fails to adequately compensate “base load” (such as coal and nuclear) power plants.

The memo presents as “fact” the salient argument that “baseload power is necessary for a well-functioning grid.” However, this notion was thoroughly discredited years ago by a wide range of parties, including utilities, system operators, economists, and other experts in the field.

To those in these fields, the argument is as if President Eisenhower, instead of ordering the construction of the interstate highway system, had revisited the virtues of the horse-drawn carriage.

Today’s grid needs different power resources to provide system flexibility, not baseload power plants. Market forces can help us choose the best among different options, avoiding blindly investing in outdated technologies from the last century that would cause trillions of dollars in losses and billions of tons of carbon emissions.

Modern power grids do not require base load

With the development of lower-cost renewable energy, U.S. power companies have begun to gradually reduce the proportion of base load electricity in grid operations over the past decade and have maintained good operating performance.

Meanwhile, across the Atlantic, Europe has achieved higher levels of grid stability and renewable energy than the United States; especially in England, where the UK grid recently achieved a full day of zero coal-fired electricity supply for the first time since 1882, which undoubtedly builds confidence in its plan to completely shut down coal-fired power plants by 2025.

From a research perspective, scientists at the U.S. Department of Energy’s (DOE) national laboratories have consistently concluded that if the grid connects a medium to high percentage of renewable energy (30%-80%) and reduces base load power by the same percentage, it can still achieve stability and system flexibility comparable to fossil fuel power systems, while also achieving lower operating costs and risks.

At the same time, utility executives are increasingly aware of the fact that baseload power is not only not necessary for grid stability, but is also increasingly uneconomical to adapt to today's rapidly changing energy system.

The CEO of National Grid said in 2015: "The concept of baseload power is outdated," and consumers now prefer to choose closer and cheaper power resources to meet their needs.

An executive at PG&E, one of the largest electric utilities in the United States, said: "Large baseload power plants that run most of the time are not suitable for the future grid market conditions we expect."

Even in Tennessee, where the legislature recently passed a bill to halt wind development in the state, the chief financial officer of the Tennessee Valley Authority acknowledged that the changing structure of the grid “makes us too concerned to make a long-term bet on large, expensive new plants.”

It is therefore puzzling that the NEA’s research plan chose to ignore the practical evidence, rigorous analysis, and economic facts that have refuted the baseload power theory over the past decade.

Although the physical conditions of electricity supply have not changed substantially since the days of Westinghouse and Edison, the economic means of meeting those physical conditions have changed dramatically.

Stability is a system indicator, not an individual indicator

No one denies that our economy needs a reliable grid to ensure that electricity supply matches demand at every moment, but this does not mean that we need individual power plants running all the time. In fact, such plants are impossible.

Baseload power plants have outage rates ranging from 2% (nuclear) to 10% (coal), and when they do experience unexpected outages, they are expensive to restore, and these unexpected events often occur when electricity is most needed, such as during extreme heat and cold.

This is true even if the plant has “plenty of reserve fuel,” a confusing concept because it applies more to renewable energy plants like solar and wind than to coal plants, which don’t rely on fuel from far away—they don’t need fuel at all.

Therefore, throughout the history of the grid, a diverse energy mix has always been the lowest-cost way to ensure grid reliability. In the past, that mix included baseload power plants as well as cheaper-to-build and more flexible plants, such as gas turbines. This mix allows the grid to adapt to changes in power load, which are often more unpredictable than wind and solar generation.

Today, the default low-cost energy options are wind and solar, whose long-term fixed costs are competitive with those of new nuclear, coal, and gas plants, and even comparable to the operating costs of existing plants.

With renewable energy costs already very low and still falling, grid flexibility is even more important than in the past—but fortunately, the ways to achieve grid flexibility are also cheaper, cleaner, and more abundant than in the past.

System flexibility is the most important attribute of the new era power grid

System flexibility to reliably integrate clean energy resources into grid operations can take many forms and span a variety of time scales. Corresponding to the need for stable grid operation, we mainly need to consider three time scales:

1. "Seconds-minutes" time scale. In these shorter time periods, the power grid needs "ancillary services" to maintain stability and ensure that demand and supply are matched. In the past, fossil fuel or hydropower reserve capacity could provide these services, but gradually, the use of distributed energy and other new and clean energy to provide ancillary services has begun to have stronger economic advantages.

For example, a large centralized photovoltaic power plant in California said that photovoltaic inverters, a reliable electronic technology device that helps renewable electricity to achieve current conversion and integrate into the main grid, can also provide this type of ancillary services without paying extra fees. The PJM grid operator controls these power imbalances in seconds by controlling a large number of water heaters.

Importantly, these and other clean energy sources often provide better ancillary services than the fossil fuel plants they replace (e.g., responding to signals more quickly and accurately), so they can receive more subsidies through FERC’s “pay for performance” rules.

Other resources, including electric vehicles and specialized batteries, are also increasingly participating in this market, and these types of resources can recover their hardware costs through the primary services they provide (such as driving for cars or backup power for batteries), while also providing many valuable ancillary services to the grid.

2. "Hour-day" time scale. In the medium time scale, due to the large fluctuations in terminal power service demand and solar and wind power generation, the power grid needs different resources to maintain a balance between energy supply and demand within a few hours of the day. Clean energy has an advantage in providing such services; at the same time, they are also an important foundation for the multi-billion dollar US power demand response market.

For example, the total amount of demand response projects operated by retail utilities and wholesale market operators is about 60 GW. In the competition for peak capacity, demand response is often the lowest-cost source of electricity, easily beating new gas-fired generation facilities.

In addition, the same technology is increasingly being used to provide intelligent load shifting, rather than just load reduction, thereby balancing supply and demand over a period of hours.

Smart air conditioners, water heaters, and electric vehicles are the most promising technologies, but at least 30% of U.S. electricity demand has a certain degree of flexibility and can be used to provide value to the grid.

If heat storage technology (such as ice storage air conditioning) can be fully adopted, the development prospects of this field will be even more promising.

For example, by controlling the ability of building materials to store heat and cold, a home's HVAC usage could be matched to the supply of renewable energy.

3. Weekly-monthly time scale. In a specific geographic area, the amount of electricity generated by renewable energy sources such as wind and solar power does not always accurately match the energy demand in each season. How should we meet the demand for electricity when there is no wind or it is cloudy? This poses a considerable challenge to the operation of a low-carbon power grid.

Although this is not a pressing problem at present, or even for decades, so the market has not yet sent out signals to encourage innovative solutions in this regard, there is a lot of evidence that once the market sends out the need for such solutions, a large number of advanced technologies will emerge.

General Eisenhower once provided inspiration for a promising idea: “If a problem cannot be solved, enlarge it.” In other words, expand the boundaries of the problem until they encompass the solution.

For example, it is easier to solve heat and electricity problems together than to solve them separately. Coupling electric heating equipment with a combined heat and power plant can replace gas heating with "surplus" electricity on windy and sunny days. This system is more economical than an "overcapacity" renewable energy system that can also provide enough electricity on calm and cloudy days.

The problem can also be amplified from a geographic perspective: Wind and solar power often require different weather conditions and timings, so they can complement each other to achieve optimal performance, especially if the interconnected system covers a large enough geographic area.