‘Peaker’ Gas Plants May Have Peaked After All
California’s three investor-owned utilities have released the results of a study called for by the California Public Utilities Commission to assess the “effective load carrying capability” of various energy technologies—in other words, how much of a wind or solar plant’s total theoretical capacity can be counted on when the grid needs it most.
The findings are striking and significant for California’s future electricity mix, and really for the future of any grid aiming for, say, 100% carbon-free electricity by 2035. The study determined that wind energy will have a 19% effective load carrying capability in 2022, a wonky way of understanding how much wind power can get from plant to the grid in moments when the grid needs it most. A 100-megawatt wind power plant, in other words, would be capable of supplying 19 megawatts of energy.
That value is fairly stable out to 2030. Add four hours’ worth of energy storage in the form of a battery and it performs better. But that’s still far from a natural gas-fired power plant that can almost always be relied on to generate its peak capacity if needed.
Solar is not wind. Industrial-scale installations are close to useless at managing electrical load when the risk of blackouts is highest, and it gets even worse at residential-scale, with an effective load carrying capability of just 4% in 2022.
But add four hours of energy storage and solar’s capabilities change dramatically. A solar project with four hours of storage in 2022 will have a 99.8% effective load carrying capability—essentially a total ability to ensure the grid remains reliably supplied with power. That value declines slightly over time, as more solar comes on line, but by not much.
There’s a reason for the wind and solar disparity here. According to the California utility study, solar can be better counted on to charge a battery so that it’s ready when needed. Wind isn’t as consistent, and thus doesn’t have the same reliability.
Equally important is what this study implies for any other technologies meant to keep the grid operating with a very high percentage of renewable energy—and for natural gas in particular. As I wrote a few weeks ago, the future of gas plant development looks like a lot of small “peaker” plants meant to meet relatively brief periods of high electricity demand, or times when renewable energy generation declines significantly.
But if solar-plus-storage is highly predictable and highly reliable, that’s likely to change the demand for peaker gas plants. California, for instance, has 52 peaker plants, the majority of which typically run in stretches of less than four hours. That means that solar with four hours of storage will compete with those existing peaker plants, challenging the business case for building more of them.
The California utilities’ study isn’t a death knell for gas plants in competitive power markets, where gas-fired power generators are still able to earn high prices at times of peak demand or production shortfall. In Texas, for instance, on-peak average wholesale prices near Houston spiked to $1,858 per megawatt-hour last summer. (As of this writing, the price was $19.83.)
What I expect we’ll see in the future is more and more developers building solar power projects with energy storage attached, and potentially fewer developers willing to take the other side of that bet by building peaker plants. High reliability can now be a feature of renewable-plus-storage operators’ business proposal. It’s also still a feature for peaker gas plants, but with fewer operational hours per year in which to recoup investment, the business case becomes more challenging to make.
Nathaniel Bullard is a BloombergNEF analyst who writes the Sparklines newsletter about the global transition to renewable energy.
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