Bigger is Not Better: Grid Modernization and the Antiquated Concept of ‘Baseload’

The US electric grid is having its smart phone moment. Will the federal government get in the way? That’s the worry of clean energy groups that are arming themselves with research on grid modernization.

grid modernization

Electronic data processing machine used for making computations by NASA in the 1950s. Credit: NASA

The groups are responding to an April 14 memo where U.S. Energy Secretary Rick Perry questions policy that encourages renewable and distributed energy. He suggests that a decline in use of ‘baseload’ coal-fired plants could lead to electric grid instability. The Department of Energy is preparing a report on the issue with release expected shortly.

While federal agencies typically seek industry comment when contemplating big shifts in energy policy, Perry did not, saying that the DOE is “uniquely qualified for the task.”

Concerned about the lack of outside input, the Advanced Energy Economy (AEE), the American Wind Energy Association (AWEA) and the Natural Resources Defense Council (NRDC) recently commissioned a response from two often-cited energy research firms, the Brattle Group and Analysis Group. The reports look at the role baseload plants — nuclear and coal — play on the new grid.

The bottom line? Renewables are not jeopardizing reliability and the very idea of ‘baseload’ — power plants that run almost all the time — may be antiquated, given today’s mix of flexible, software-driven power resources.

Coal, mainframe computers and buggy whips

To those on the forefront of grid modernization, what Perry is suggesting is analogous to swapping out today’s palm-size smart phones for a return to room-size mainframe computers of 50 years ago that did far less.

“The perceived need for ‘baseload’ resources is in many cases counterproductive to meeting America’s electricity system needs and public policy objectives at the lowest cost. As policy efforts seek to reduce the environmental impact of generating power, coupling variable wind or solar energy with a more flexible resource mix often does the job far more economically,” says John Moore, director of the Sustainable FERC Project housed within NRDC.

The debate goes beyond the old battle line between renewable energy and fossil fuels and highlights the value of of nimble power sources, like microgrids and distributed energy resources.

Flexibility is the key on the new grid, according to the report, “Advancing Past ‘Baseload’ to a Flexible Grid,” prepared by the Brattle Group and issued by NRDC.

It’s expensive to turn most big coal-fired and nuclear plants on and off, so they cannot be responsive to minute-by-minute changes in price and conditions on the grid, as newer technologies can.

There was a time when bigger was better on the grid, when large nuclear and coal-fired plants offered economies of scale, says the NRDC report. But several factors have changed grid economics, among them the falling price of both natural gas and renewable energy (fuels that are often used in microgrids), environmental rules and declining use of electricity in the U.S.

grid modernizationGrid modernization  makes ‘baseload’ a dated concept

These factors are leading to the retirement of older coal and nuclear plants, based on their economic performance. Those still operating are experiencing steep revenue losses in some parts of the country during times of day when power prices drop, says the report. They are unable to compete against other resources, particularly solar and natural gas.

The NRDC cites the “2016 State of the Market” report by PJM, the largest grid operator in North America, as showing that “new entrant natural gas-fired combined cycle plants, combustion turbine plants, and solar are economical, but that new coal and nuclear plants are not.”

The environmental organization does not advocate doing away with centralized resources, but does suggest that it’s outdated to describe them as ‘baseload’ – the underlying platform that ensures the flow of electricity. Instead, grid modernization is creating a carefully managed mix of various resources – each best during different times – that makes for reliable and low-cost electric supply.

Software intelligence manages these complex electric systems for maximum efficiency and reliability. For example, NRDC notes that a 2017 study by the ISO/RTO Council found benefit in use of monitoring equipment and data analysis.

“This is particularly important when customers own or use distributed generation that traditionally are not visible to wholesale market administrators. The report indicates that technologies that improve situational awareness at all levels of the bulk power system, and those that collect data on distributed resources will be more valuable going forward,” says NRDC.

Meanwhile, the AEE/AWEA report, prepared by Analysis Group, notes that today’s diversification of resources is leading to lower wholesale market costs for electricity. And lower costs are leading to disruption.

Reliability again?

reliability microgridsIt’s not unusual for industries at the losing end of such trends to claim that change may jeopardize electric reliability, says AEE/AWEA’s report, “Electricity Markets, Reliability and the Evolving U.S. Power System.” The report cited similar reliability scares evoked when the industry restructured two decades ago to allow for retail competition, as well when various emissions rules were put in place over the years for sulfur dioxide, mercury and cross-state pollution.  Now it’s distributed energy and renewables.

In truth, the North American Electric Reliability Corporation – the agency charged by the federal government with monitoring grid reliability – has found that today’s changing mix of resources is not degrading the grid, says the report.

“Not only have there been no serious reliability effects to date, but also numerous studies on renewable integration and coal retirements have concluded that regions within the U.S. can continue to add larger percentages of generation coming from natural gas and renewable resources without anticipated reliability concerns,” says the AEE/AWEA report. “In fact, in regions and/or at times when natural gas supply is constrained, renewable generation plays a significant positive reliability role by reducing the amount of gas needed to meet demand, making additional gas supplies available.”

New technology will inevitably usurp some of today’s generation resources. That appears to be what’s happening with coal as North American pursues grid modernization.

New England may offer an example of what’s to come. Following the retirement of several coal-fired plants, the six-state region now uses coal for only two percent of its generation. How has that impacted electric reliability? Apparently not at all, according to a quote by Gordon van Welie included in the AEE/AWEA report.  “…coal is now largely irrelevant in New England…and everyone else says we need coal to maintain resilience? That just doesn’t compute for me.”

What’s your take on the DOE’s call for an inquiry into coal’s decline and elecrtric reliabilty. Let us know by posting on our LinkedIn Group, Distributed Energy Resources.

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Elisa Wood About Elisa Wood

Elisa Wood is the chief editor of MicrogridKnowledge.com. She has been writing about energy for more than two decades for top industry publications. Her work also has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.

Comments

  1. Gene Grindle says:

    The truth of the matter is that “baseload” has never been needed. It has been tolerated. With the load profiles that existed and the limitations and economics of certain types of assets it was simply a practical matter of putting the square pegs in the square holes and the round pegs in the round holes. It was playing the cards you were dealt in the most economic way.

    Flexibility and nimbleness are, and always have been, the preferred quailities of generation assets. The load profile permitted a portion of the assets to be less flexible..but it certainly didn’t require it!!!

    “Baseload” is usually a trade-off. The trade-off is in the inexpensive coal and nuclear assets that are inherently inflexible and sluggish . As much as you could tolerate the downside inflexibity you could have the upside low cost.

    Today there are less square holes. The load profile is less and less amenable to inflexibility and sluggish response. Baseload was never actually needed, –it was permitted and tolerated as a conscious trade-off . We had more of that luxury because of the load profile that existed. The emerging load profile is not so accommodating.

  2. Allen Putnam says:

    You will always need some form of base load when storage becomes economically feasible on a large scale to store enough energy to in effect level demand throughout the day. As more and more renewables come on line they will take the place of some base load since the more renewables there are the more predictable they become. However, base load at some level will always be needed as a safety net for the unpredictable nature of renewables. In addition, at some point the environment will eventually be impacted by renewables (not enough sunlight reaching the earth) and this will be the next evolution of the environmental movement.

  3. Just a short reminder. Many states have not “restructured” to allow for retail access for customer energy sales nor do they rely on wholesale power markets for supply.
    Secondly, it would seem more sensible to wait for the DOE’s report and then provide a critical analysis rather than guess at the content.
    Whatever the final conclusions, it is the FERC and state regulators who will have the final say as to any wholesale power market “reforms” with the states controlling RPS standards, and. It the DOE.

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