Solar Energy vs. Gas Part II

This article is a continuation of the article, Solar Energy vs. Gas Part I. We’ll continue to explore the latest happenings of solar energy clashing with fossil fuel. An increasing number of states in the country are choosing  solar energy over gas.

Moving Parts (Continuation from Part I)

RMI says that solar is working through the duck curve. Despite this, the ultimate need continues to fulfill peak demand in mid-day, through solar energy.  For most of the country, peak electric demand is still during the daytime in the summer.  Another important variable to whether solar energy can outcompete gas plants, is the type of gas plant it’s competing with. Plants have two categories, based on the turbine: combined cycle gas turbines (CCGT) and combustion turbines (CT).

CCGT plants are pricey to build, burn gas more efficiently, but has a slower ramp up time. CT plants are more economical to build yet less efficient and ramp up quicker. CCGT is more deployed and what what’s scheduled for in the near future. Two of the plants in RMI’s analysis were CT and CCGT. CT plants were less competitive and could be replaced with demand response and energy efficiency since both sources are more economical. The competition is more of a close call between the clean energy portfolios and CCGT.

Policy Behind the Scenes

Although geography plays a role, policy is definitive. Clean energy portfolios won’t be picked for their economic advantages if they aren’t properly valued or aren’t allowed to compete with gas plants. For instance, the Michigan Public Service Commission (MPSC) provided DTE Energy approval to build a 1.1 GW gas plant regardless of the Union of Concerned Scientists (UCS) analysis. It noted that solar energy completes the same needs for only two thirds of the cost. One commissioner says that MPSC didn’t consider alternatives to DTE’s request.

Where clean energy projects and portfolios are permitted o compete, the area of valuation is crucial, especially for energy storage. Batteries and other forms of energy storage provide value streams from various uses, yet it still can’t compete since grids have different market structures.

This is expected to change due to the Federal Energy Regulatory Commission’s Order 841 finalized this year. It mandates grid operators to customize rules so energy storage can participate in markets. However, it will years for grid operators to customize new market structures. “Different ISOs are in different stages of that, but we are all headed in that direction,” notes Janice Lin, Executive Director of the California Energy Storage Association and CEO of Strategen. The concerns of valuation have an impact on other resources. RMI assumed to procure energy efficiency and demand response in its clean energy portfolios. The valuation and their ability to participate in meeting capacity needs depends from grid to grid.  

It is important to note that RMI’s analysis has shown clean energy as competitive under current policies. When $7.50 per ton price on carbon was added, clean energy won every time. So when climate change is considered, it is unlikely that there is a credible rationale to build another gas plant anywhere in the United States. But the story of clean energy outcompeting gas does not end there. It is important to note that in California clean energy is not only replacing new gas plants, but existing ones as well.

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