EMISSION REDUCTIONS: REPLACING FOSSIL-FUELED PEAKER (AND MAYBE BASELOAD?) PLANTS

“I can’t see a reason why we should ever build a gas peaker again in the U.S. after, say, 2025. If you think about how energy storage starts to take over the world, peaking is kind of your first big market.” Shayle Kann, senior adviser to GTM Research and Wood Mackenzie¹

Storage could replace existing and new, uneconomic fossil fuel peaker plants, especially in congested urban areas, in the coming years. Over the long term, whether renewables backed by battery storage could operate as an economic, baseload firm resource is a critical and contentious issue in clean energy policy. Both of these opportunities call for more systematic work on storage—to understand how market-based, declining cost and longer duration discharge trends impact whether storage and renewables could significantly reduce fossil fuel emissions from the power system by mid-century, a key decarbonization target.

Updated December 2018.

Issues

Today’s electric power system is built on a foundation of baseload power, largely coal, nuclear, and gas, supported by more flexible, predominately natural gas-powered plants to provide flexibility and meet peak demand, known as peaker plants. Recent market trends suggest some combination of renewables and battery storage could economically compete to replace some or all our existing fossil-fueled fleet in at least two ways.

First, today there are economic opportunities for storage to compete directly with high-cost, infrequently utilized peaker plants, especially in heavily congested sections of the grid. In that market—consisting of more than 1,000 combustion turbine and internal combustion engine peaking units in operation across the country—storage could start to replace and retire this fossil-fueled fleet now and over the next several years (2). Because system peaks are often short duration events, typically lasting no longer than two to eight hours, batteries are well-suited to meet peak demand needs. But no coordinated analytical and advocacy strategy is now in place to support and accelerate that transition.

Second, and this is a much more debatable and long-term proposition, current market activity suggests that renewables and storage could start to operate like firm power and displace or cause the retirement of a high percentage of existing baseload, carbon-based generation. That prospect—and the role of storage—is subject to a highly contentious debate over whether renewables can fully replace fossil-fueled electricity generation in the long-term energy future. In turn, that renewables debate depends on whether storage costs can realistically decline and also deliver power over a longer duration to the point it and renewables can viably replace baseload power plants. Some advocates and analysts even argue that there will be no need for what has traditionally been known as baseload power as the world transitions to a cleaner, more dynamic energy system (3).

This section addresses the near-term peaker replacement opportunity in some depth. The long-term baseload discussion is largely outside the scope of this report, but it is summarized enough to frame the options going forward—mainly to argue for smarter analytical rigor on the question of how innovation and cost declines will shape the role of storage in the future, and why models need to reflect current market activity on those issues.

As to the nearer-term opportunity, peaker plants are more expensive to run than baseload generation and are typically less efficient, so they tend to emit multiple pollutants at a higher rate than other conventional gas plants. Even worse, peakers are often located in or near densely populated disadvantaged communities and called upon to run on days already experiencing poor air quality conditions (4). A California study found that more than 80 percent of the state’s existing peaker plants are located in the state’s more disadvantaged communities (5). (See Figure 10.)

Recent analysis from the national laboratories suggests that storage “could replace peaking capacity in urban areas” (6). Researchers at the National Renewable Energy Laboratory (NREL) found that, in some cases, storage could be a viable cost-effective alternative to a natural gas peaker plant. While batteries typically have a higher up-front capital cost, they have lower operating costs due to avoided fuel costs and avoided power plant start-up costs, and they deliver additional benefits to the grid by performing other valuable services (7).

Other researchers have confirmed this market trend of peaker replacements with storage in the near future, though all pick slightly different near-term dates for when storage could reach competitive cost parity.

Some analysts say peakers are at risk from storage in the next five years:

“Beyond the early 2020s, as the cost structure of storage systems declines to levels that make them cost-competitive with gas peakers, there is the likelihood of an exponential increase in storage deployment. This will have the effect of reducing the need for gas peakers, putting at risk a sizable portion of [that fossil fleet]” (8).

GTM Research and Wood Mackenzie estimate that declining battery prices will result in natural gas peaker development becoming increasingly rare over the next few years, possibly ending altogether within 10 years (9). (See Figure 11.) Of the 20 gigawatts of peaking capacity expected to be added to the U.S. power system over the next decade, the consulting firms predict that storage could account for at least half of the new additions, possibly more if batteries costs decline faster than expected (10).

Bain & Company agrees, estimating that, by 2025, battery storage could be cost-competitive with peaker plants, and that’s without even considering the many additional values streams that storage could access (11).

Similarly, according to analysts at the investment company Raymond James & Associates, there is likely to be an exponential increase in energy storage deployment in the early 2020s as cost declines make batteries an economic alternative to gas peakers (12).

Finally, other researchers from the University of Texas stated, with some reservations about whether storage cost reductions will occur in time, that “going after peaker plants will likely be the first major play (besides infrastructure deferments) that batteries make into the markets” (13).

And to confirm the popular economics of this trend, the Wall Street Journal in early 2018 gave this replacement opportunity a comprehensive press treatment. A lead piece stated that, “giant batteries charged by renewable energy are beginning to nibble away at a large market: the power plants that generate extra surges of electricity during peak hours” (14).

This movement to replace peaker plants appears to be on strong economic ground and is likely to be an area where storage will be quite active in the coming years.

As to baseload replacement, the future is unclear and is subject to a great deal of dispute, but there is a general consensus forming around the idea that current technologies – wind, solar, and shorter-duration batteries – can enable an economic transition to a much cleaner electricity grid – potentially unlocking a viable path to 80 percent decarbonization of the grid.

Despite some concerns about the reliability of depending on largely intermittent resources, it is hard to ignore current market activity in this space, which suggests that renewables paired with storage is starting to beat out fossil-fuel capacity in some regions of the country, an economic competition unimaginable only a few years ago.

In 2016, PG&E announced plans to replace the 2.3 gigawatts of generation capacity from California’s last nuclear power plant with a mix of renewables, energy storage, and efficiency measures (15).

In 2017, Tucson Electric Power in Arizona set a mainland record for solar paired with storage with a 20-year power purchase agreement rate below 4.5 cents per kilowatt-hour for 100 megawatts of solar and 120 megawatt-hours of storage (16). That rate was beat in 2018 by a 101-megawatt solar project paired with 100 megawatt-hours of battery storage in Nevada, which came in at 3.1 cents per kilowatt-hour (17). Based on data reported by Xcel Energy Colorado, the utility received project bids ranging from 3.0 to 3.2 cents per kilowatt-hour for energy from proposed solar developments paired with storage (18).

In 2018, utilities in Colorado and Indiana proposed plans to replace nearly 2 gigawatts of existing coal plants with a mix of wind, solar, and battery storage. Xcel Energy, parent company of the Colorado utility and serving a territory of more than 3 million customers across eight Western and Midwestern states, committed to 100 percent carbon-free electricity generation by 2050. Xcel’s chairman, president, and chief executive officer, Ben Fowke, noted that reaching the company’s interim goal of cutting carbon emissions 80 percent by 2030 will be “fairly easy and affordable to meet with currently available technologies” (19).

This isn’t to say that batteries aren’t facing opposition as alternatives to traditional power plants. It’s true that, while batteries can meet many of the same peak demand needs as a natural gas peaker plant, they are different types of technologies, and batteries are limited in some ways that gas peakers are not (20). Most notably, batteries can only deliver peak power over a predetermined duration of time, whereas a gas plant with access to fuel supplies can run indefinitely.

However, lithium-ion battery storage projects are already advancing beyond their initially perceived 4-hour duration limitation, with projects in development for 8-hour batteries and proposed projects that could deliver up to 10 hours of peak energy. Limitations to the dispatch duration of current battery storage technologies—a key component to success in baseload disruption—is more of an economic barrier than a technical issue.

As Abe Silverman, vice president for the regulatory affairs group and deputy general counsel at NRG Energy, which operates both traditional and renewable power plants, noted at a conference of natural gas and energy storage industry professionals, “We could replace every gas peaker in the US with batteries right now if we wanted to, but it probably wouldn’t make economic sense everywhere” (21).

That is, with cheaper and cheaper storage, it will be economically possible to cost-effectively deliver stored energy over longer and longer time frames, which makes it possible to firm up more and more intermittent renewable power and replace more fossil fuel power plants.

Batteries also have some distinct advantages over traditional plants, such as the ability to avoid a single point of failure through smaller distributed storage resources; they can be sited closer to loads, which avoids interruptions due to transmission line failures; and they avoid the price volatility of fuels like natural gas, particularly when batteries are charged by renewable energy.

Opportunities and Challenges

The benefit of replacing fossil-fuel power plants, both peakers in the near-term and baseload generation further down the road, with renewables paired with storage are clear—no greenhouse gases and no local toxic emissions. Additionally, batteries can be deployed more quickly than traditional resources, can be sited in many more locations, and have the flexibility to provide many more services than traditional power plants.

This is more than theory, as energy storage stepped in to reliably deliver peak capacity after a major gas leak at California’s Aliso Canyon natural gas storage facility. The state deployed 100 megawatts of storage across several sites in a matter of months, avoiding feared blackouts during the summer peak season in 2016 (22).

That success may have been just the beginning for California.

Efforts to build a new gas plant in Oxnard, California were derailed in 2017 when the CAISO determined that storage and distributed generation could do the job just as well (23). The balance in favor of the plant shifted when analysis showed that solar+storage could deliver the same reliability and grid stability as a gas plant, but without the unwanted emissions. Solar+storage could also be deployed more quickly than a traditional power plant, and the resource could be dispersed throughout the community, allowing local residents and businesses to see direct economic benefits from the development.

In early 2018, the California Public Utilities Commission (CPUC) approved a resolution requiring the utility Pacific Gas and Electric (PG&E) to look for battery and clean energy based alternatives to three existing gas-fired power plants. The resolution directed PG&E to deploy a combination of batteries and other non-fossil fuel resources to meet peak demand going forward instead of continuing to operate the plants under costly must-run contracts. However, the Federal Energy Regulatory Commission then stepped in at the request of Calpine, owner of the three gas plants, and the California Independent System Operator (CAISO) to approve new reliability must-run contracts for the facilities.

PG&E and the CPUC have opposed the new contracts, stating that there are cleaner, less expensive alternatives, such as battery storage. The CPUC has now approved four new battery storage projects, totaling more than 2.2 gigawatt-hours of capacity, with the intent to replace the gas plants (24). The systems include one project that will be the largest utility-owned battery installation in the world, a 182.5-megawatt / 730-megawatt-hour system from Tesla, and another that will be the largest third-party-owned installation in the world, a 300-megawatt / 1,200 megawatt-hour system being developed by Vistra Energy. If successful, these installations would be the first instance where battery storage has replaced existing natural gas plants in the country. There is no guarantee that development of these projects will result in closure of any, much less all, of the three gas plants, but PG&E aims to do so by calling on the systems to address reliability concerns that resulted in the reliability must-run designations and payments for the otherwise uneconomic plants.

In fact, a wave seems to be building to close these aging gas peakers—and to reconsider new ones—in California. In early March 2018, NRG announced it would retire three peakers in that state, while four other gas plant proposals were put on hold as state regulators consider clean energy alternatives (25). This trend is likely to build over the coming years. According to report from the National Renewable Energy Laboratory, at California’s current level of 11 percent solar penetration, battery storage could replace up to 3 gigawatts of peaker plants in the state. At 17 percent solar penetration, battery storage could replace up to 7 gigawatts of peakers. That would continue the movement to replace the 272 natural gas combustion turbines currently active in the state that represent 20.6 gigawatts of peaking capacity (26). While California is leading the way, this power plant replacement trend isn’t limited to the Golden State.

In its 2018 energy storage roadmap, New York identifies over 3,000 megawatts of fossil-fuel peaker plants in New York City and Long Island that could be prime candidates for replacement by battery storage. On average, these plants are nearly 50 years old and rarely used. Many of the plants burn oil or kerosene during winter months due to natural gas system constraints, exacerbating local air quality issues and public health concerns (27).

Two Arizona utilities have now entered agreements with large battery storage projects designed to meet peak energy needs.

The first occurred in early 2018, when solar paired with battery storage directly beat out bids from natural gas peaker plants in response to a request for proposals (RFP) from Arizona Public Service Electric Company. The RFP, which was open to any technology, was looking for solutions capable of delivering power during the utility’s peak demand period between 3 p.m. and 8 p.m.

The winning bid was submitted by First Solar for a 65-megawatt solar installation combined with 50 megawatts/135 megawatt-hours of battery storage. A spokesperson for First Solar commented that the company expects this type of solar+ storage project model to become “very common in many of our markets” (28).

The second happened just a few months later. The Salt River Project entered into a 20-year power-purchase agreement with AES for a 100-megawatt/400-megawatt-hour battery storage system. The project will deliver peak power to the Phoenix metropolitan area (29).

Taking the case even further, in an unprecedented move, the Arizona Public Service Commission in March 2018 placed “a temporary moratorium on new natural gas infrastructure” pending a case by case review. In that new project-level review, the Commission indicated it wanted “an independent analysis comparing the present and future costs between the specific natural gas procurement and alternative energy storage options.”

Needless to say, this kind of regulatory action could completely change the game for consideration of how storage should compete against gas plant development, if such actions become common in other jurisdictions (30). And there is a lot of room from storage to grow in this sector, as the Energy Information Administration reports that just thirteen battery storage projects are now operating as peaker plants across the country (31).

So, apart from its growing building-level and utility applications, renewables with battery storage could assume the role of reliable, on-demand power — replacing dirty peaker plants where storage costs today are economically competitive (32).

But there is a longer-term opportunity that might or might not come to pass: whether renewables and storage can begin to operate like a baseload plant. Some believe they could start to replace our existing coal and nuclear plants, as well as replace new natural gas plants that are often viewed as the default option to bridge the gap left by coal plant retirements.

Research by Bloomberg New Energy Finance (BNEF) found that the drastic reductions in the cost of wind, solar, and battery technologies over the past decade are beginning to threaten the position of coal and gas in the global energy mix. BNEF found this to be true across all sectors of the electric power system, with renewables and storage challenging the role of fossil fuels in flexible generation, dispatchable generation, and even baseload, bulk generation. According to BNEF head of energy economics, Elena Giannakopoulou:

“Our team has looked closely at the impact of the 79% decrease seen in lithium-ion battery costs since 2010 on the economics of this storage technology in different parts of the electricity system. The conclusions are chilling for the fossil fuel sector. [T]he economic case for building new coal and gas capacity is crumbling, as batteries start to encroach on the flexibility and peaking revenues enjoyed by fossil fuel plants (33).”

BNEF estimates that falling battery prices will enable the world to source half of its electricity from solar and wind by 2050 (34).

Research published by the Rocky Mountain Institute also argues that portfolios of clean energy generation, battery storage, and demand response could cost-competitively compete with future baseload gas generation in addition to peaker plants, potentially avoiding $1 trillion in costs for new gas power plants in the U.S. (35). According to the report’s author, Mark Dyson, “Renewables and demand response and batteries are about to do to gas what gas has done to coal” (36).

Indeed, a recent international study found that the cheapest and most effective way to achieve a 100 percent global clean decarbonized energy transition by 2050 is through a mix of renewable power backed by battery storage (37). It is the first emissions study to incorporate real-world cost reduction trends in battery technologies, leading to a newly optimistic case for decarbonization of the current fossil fuel energy system.

Storage is important for emissions reductions because it could be the flexible, enabling technology that can overcome the intermittency issues that plague renewable wind and solar. For the truth is that wind and solar do face significant barriers due to their variable and time-constrained nature.

Energy storage is the essential enabling technology that can shape and firm energy production by these intermittent renewable resources for integration onto the grid.

Lightsource, which is the largest solar developer in Europe and largely backed by the oil and gas giant BP, stated that the company is not proposing any utility-scale solar projects “west of the Colorado” without a storage component. The company tracks the retirement of traditional power plants and looks for opportunities to fill the resource needs with solar and storage (38).

To give a sense of how quickly and widespread this transition to incorporate energy storage could be, currently some utility executives are the leaders behind this pro-renewables and storage argument.

Jim Ketchum, the chief financial officer for NextEra which manages utilities such as Florida’s largest electricity provider, Florida Power and Light, estimates that incorporating battery storage only added about 1.5 cents to the per kilowatt-hour cost of recent solar and wind projects developed by the company. Ketchum expects that added cost to drop to around half a cent per kilowatt-hour by the middle of the next decade.

According to Ketchum, “As battery cost declines and efficiency gains are realized during the four-year start of construction period, we continue to expect that in the next decade new nearly firm wind and solar, without incentives, will be cheaper than the operating costs of traditional inefficient generation resources, creating significant opportunities for new renewables growth going forward” (39).

This reality is already playing out in unexpected parts of the country, like Indiana and Colorado.

Northern Indiana Public Service Company (NIPSCO), Indiana’s second largest utility, presented an aggressive coal to clean energy transition proposal in its 2018 Integrated Resource Plan. The plan calls for the retirement of at least 1.35 gigawatts of coal generation by 2023 and another 400 megawatts by 2028. NIPSCO plans to replace that coal generation with 1.5 gigawatts of solar and energy storage, along with 150 megawatts of wind and 125 megawatts of demand side management (40). In preparing this proposal, NIPSCO analyzed scenarios exploring the buildout of new natural gas plants or converting coal facilities to gas and found that development of renewables and storage offered the least-cost option for replacement of the coal generation. According to its analysis, the transition to storage-backed renewables will save NIPSCO customers $4.3 billion versus keeping the coal plants online through 2035 (41).

As noted earlier, Xcel Energy Colorado made headlines at the end of 2017 with the release of results from an all source solicitation that included astoundingly low bids for solar, wind, and battery storage projects. Based on those results, Xcel submitted a plan in June to boost wind, solar, and storage and phase out a third of its coal generation. That plan has now been approved by the Colorado Public Utilities Commission.

The plan calls for the retirement of 660 megawatts of coal generation and the addition of 1,100 megawatts of wind, 700 megawatts of solar, and 275 megawatts of battery storage. These will result in increasing renewables to 55 percent of Xcel’s Colorado generation mix by 2026. Xcel estimates that the plan will save its customers more than $200 million (42).

Some climate advocates have a less optimistic view of whether renewables with storage ever could fully serve as a baseload resource (43). However, an important study released in early 2018 by noted climate experts at Caltech and other institutions described a future scenario where wind and solar backed by battery storage could technically power at least 80 percent of the electric system with high reliability—assuming storage costs continue to decline significantly:

In particular, our results highlight the need for cheap energy storage and/or dispatchable electric generation. Determination of the most cost-effective strategic combination depends on future costs that are not well-characterized at present. Regardless of the levelized cost of electricity from solar or wind power alone or in combination, our examination of 36 years of weather variability indicates that the primary challenge is to cost-effectively satisfy electricity demand when the sun is not shining, and the wind is not blowing anywhere in the U.S. (44).

Local studies of this sort are also now emerging. A March 2018 study by Synapse Energy Economics indicated that the Los Angeles Department of Water and Power could repower its electric system with 100 percent renewables by 2030. That conclusion depends on a significant, parallel investment in energy storage—in the 2-3 gigawatt-hour range—especially for a largely distributed renewables strategy (45).

These reports are part of the ongoing debate about whether renewables uptake can be reliably and cost-effectively deployed to reduce emissions and replace fossil fuel plants in the next few decades. Some models, as can be expected, predict excessively high future costs for storage deployment based on current costs, therefore pricing out the potential for storage and renewables to compete against baseload plants. The Caltech study importantly focused on the future storage cost reduction needs, once it established the technical case for renewable generation.

As a general matter important to recognize limitations of many such models. A recent article concluded that such climate models “systematically underestimate” the role of solar—and enabling storage—in climate emissions reductions as compared to the cost reductions seen through innovation and actual deployment experience (46).

In this regard, it also seems important that the recent market data in the past year showing extraordinarily significant cost reductions for solar+storage capacity in utility procurement solicitations alone must play a role in future modeling. If it does not, there will be situations where the models ignore the markets, which is not a good result for smart advocacy and policymaking.

It is important to recognize that modeling the technology trajectory for energy in three or four decades is tricky territory. Predicting technology innovation trends has proved to be a parlor game filled with historic examples of silly and wrong statements about why cars, phones, computers and the internet would never achieve market entry, or not become cheap enough to compete against former incumbent technologies.

We must be cautious with ironclad predictions about how storage innovation and costs will play out into the 2050 time frame, a key period for climate stabilization, especially given the rapid cost-decline trends for storage now appearing for the first time in energy markets. And relying on such prognostications to develop current policies is even more complicated.

In all cases, it seems a good idea to be humble about this technology prediction enterprise. It might be wise to avoid a premature conclusion that energy storage technology innovation in the decades to come will “never” compete with existing, incumbent technologies.

Instead, it might be a better use of time for advocates to focus on accelerating the adoption of key storage technologies now, so that needed cost reductions come about in time to make renewables more reliable and cost-effective.

Put another way, we need to be wary of a professed certainty about how storage technology cost and adoption curves will or will not evolve, especially as storage is subject to manufacturing cost efficiencies new to the energy space. As a 2016 Santa Fe Institute meeting about technology noted, “predicting the future of technology even five to ten years out is often little more than a guessing game” (47).

Despite all this uncertainty and the prevalence of dueling energy system models, what is certainly clear is the need for more analytical work in this space that is based on current and future economic data on energy storage markets. Not having definitive answers to these key questions about the future technical and economic role of storage in clean energy policy—especially around the opportunity to reduce or replace peaker and baseload plants—is a critical missing link in the current debate over which technology combination can lead to a decarbonized future.

While storage policy advocacy is needed, advocates on both sides of the replacement debate also need access to independent and deep analytical work to develop a solid economic and technical foundation about the role energy storage could play in our long-term energy future. Developing consensus on unbiased analyses regarding the economic and environmental benefits of battery storage going forward should be an important goal for advocates who care about a defensible climate emissions strategy.

Competing views about the future energy system are what makes battery storage advocacy so important to launch now. Resolving these questions could be a key to developing effective climate policies.

Actions

With battery technology prices continuing to decline, the biggest hurdle for widespread power plant replacement with storage and renewables is determining a systematic program of policy and market design. Policymakers need to acknowledge their responsibility to plan for renewables paired with storage as a key replacement strategy for existing power plants. To date, these replacement efforts have been driven largely by local opposition, not policy.

States should follow California’s lead on power plant replacement by prioritizing storage policy with legislation that requires utilities to evaluate storage, efficiency, and distributed generation when considering resources to meet peak demand power needs (48).

Regulators in other states, such as Washington, have also directed utilities to incorporate energy storage into their future planning processes (49). States like Massachusetts have imposed mandatory greenhouse gas emissions reductions for the power sector, which should be used as a tool to require the development of renewables paired with storage to reduce emissions to meet future reductions requirements. Massachusetts is also implementing a “Clean Peak Standard” that would mandate a portion of system peak demand be served by zero emission resources (50). More states will need to adopt similar policies to encourage utilities to explore battery storage alternatives to traditional power plants.

Analysis also needs to be done to evaluate the costs and capability of storage-backed renewables to replace individual power plants — especially developing a peaker plant model that can be used in utility resource decisions. This was done at a high level in the case of the Oxnard, California plant, and obviously drives several recent utility solicitations. But no standard methodology has been developed to replicate the process in a meaningful way for other proposed and existing power plants.

In most parts of the country, it will take detailed, regionally-focused analysis to convince utilities, companies, and regulators that renewables and storage can serve as a viable and cost-effective alternative to fossil-fueled power plants. Policymakers should require that utilities use up-to-date data on renewables and battery storage costs and performance metrics in any resource planning process or replacement analysis to reflect accurate economic and market conditions. These analyses should consider the total lifetime costs and benefits of a system, not just a comparison of upfront capital investments.

Ultimately, utilities should be encouraged to meet resource adequacy needs through an open solicitation process that allows battery storage and renewables to compete directly with traditional power plants.

Advocates opposing existing traditional power plants need access to the right economic and technical tools to make the case for replacement technologies in fights over peaker and other power plant replacement strategies.

Climate advocates, whether proponents of renewables, nuclear energy, or carbon capture and storage, should agree on a common position regarding the role of battery storage and future battery storage analysis in any climate mitigation scenario. Whether a 100 percent renewables scenario or some other hybrid technology combination, such as nuclear or carbon capture and storage, comes into play to combat climate change, battery storage is likely to play a significant role. Foundations and policymakers need to understand the stakes at play in the modeling debate, and how well it does or does not reflect market trends in the storage space. Agreeing on a sound economic and technical game plan for storage analysis—and what role it will play in numerous energy scenarios of the future — is in everyone’s interest.

Works Cited

(1) Foehringer Merchant, Emma, “Have We Reached Peak Peaker? ‘I Can’t See Why We Should Build a Gas Peaker After 2025’,” Greentech Media, December 12, 2017, www.greentechmedia.com/articles/read/battery-storage-is-threatening-natural-gas-peaker-plants.

(2) The number of power plants with operational combustion turbines or internal combustion engines is based on data from Form EIA-923 Schedule 3B for 2016, https://www.eia.gov/electricity/data/eia923.

(3) Some have used the term “deconstructing baseload” to refer to how integrating more renewables into the power system will require less conventional baseload and new planning regimes that incorporate more and more dispatchable resources such as storage. This would potentially diminish, if not end, a rigid construct we have used for baseload power. REN21, “Renewables 2017 Global Status Report, Chapter 8: Deconstructing Baseload,” June 2017, http://www.ren21.net/gsr-2017/chapters/chapter_08/chapter_08. See Change, Judy W. et al, “Advancing Past ‘Baseload’ to a Flexible Grid,” The Brattle Group, June 26, 2017, http://files.brattle.com/system/publications/pdfs/000/005/456/original/advancing_past_baseload_to_a_flexible_grid.pdf?1498482432.

(4) Mullendore, Seth, “Energy Storage for Public Health: A Smarter Way to Deploy Resources,” Clean Energy Group, August 22, 2016, www.cleanegroup.org/energy-storage-public-health-smarter-waydeploy-resources.

(5) Ibid.

(6) Denholm, Paul et al, “Evaluating the Technical and Economic Performance of PV Plus Storage Power Plants,” National Renewable Energy Laboratory, August 2017, p. 22, https://www.nrel.gov/docs/fy17osti/68737.pdf.

(7) Denholm et al, “The Relative Economic Merits of Storage and Combustion Turbines for Meeting Peak Capacity Requirements Under Increased Penetration of Solar Photovoltaics,” National Renewable Energy Laboratory, September 2015, p.2, https://www.nrel.gov/docs/fy15osti/64841.pdf

(8) Davis, Carolyn, “Grid-Scale Storage to Wrest Share from Natural Gas in 2020s, Says Raymond James,” Natural Gas Intelligence (NGI), February 5, 2018, www.naturalgasintel.com/articles/113280-grid-scale-storage-to-wrest-share-from-natural-gas-in-2020s-saysraymond-james.

(9) Wood Mackenzie, “Energy Storage for Peaker Plant Replacement: Economics and Opportunity in the U.S.,” April 2018

(10) Fitzgerald Weaver, John, “Solar + Batteries Prepping to Take Over 10GW of US Natural Gas Peaker Power Plant Market,” Electrek, December 13, 2017, https://electrek.co/2017/12/13/solarbatteries-to-take-10gw-natural-gas.

(11) Critchlow, Julian and Aaron Denman, “Embracing the Next Energy Revolution: Electricity Storage,” Bain & Company, October 18, 2017, www.bain.com/publications/articles/embracing-the-next-energyrevolution-electricity-storage.aspx.

(12) Ibid, n. 9.

(13) Rhodes, Joshua, “Energy Storage Is Coming, But Big Price Declines Still Needed,” Forbes, February 18, 2018, www.forbes.com/sites/joshuarhodes/2018/02/18/energy-storage-coming-but-big-pricedeclines-still-needed/#21b7ef8e5e1d.

(14) Gold, Russell, “Big Batteries Are Taking a Bite Out of the Power Market,” Wall Street Journal, February 12, 2018, www.wsj.com/articles/big-batteries-are-taking-a-bite-out-of-the-powermarket-1518431400.

(15) St. John, Jeff, “PG&E to Replace Diablo Canyon Nuclear Plant With 100% Carbon-Free Resources,” Greentech Media, June 21, 2016, www.greentechmedia.com/articles/read/pge-to-replace-diablocanyon-nuclear-plant-with-100-carbon-free-resources.

(16) Maloney, Peter, “How Can Tucson Electric Get Solar + Storage for 4.5¢/kWh?” Utility Dive, May 30, 2017, www.utilitydive.com/news/how-can-tucson-electric-get-solar-storage-for-45kwh/443715.

(17) Spector, Julian, “Breaking Down the Numbers for Nevada’s Super-Cheap Solar-Plus-Storage,” Greentech Media, June 15, 2018, www.greentechmedia.com/squared/read/breaking-down-the-numbers-for-nevadas-super-cheap-solar-plus-storage.

(18) Pyper, Julia, “Xcel CEO Says Retiring the US Coal Fleet ‘Just a Matter of When’,” Greentech Media, June 8, 2018, www.greentechmedia.com/articles/read/xcel-ceo-retiring-coal-fleet.

(19) Pyper, Julia, “Xcel Energy Commits to 100% Carbon-Free Electricity by 2050,” Greentech Media, 12/4/2018 https://www.greentechmedia.com/articles/read/xcel-commits-to-100-carbon-free-electricity-by-20501#gs.SBZc2mw

(20) Spector, Julian, “Storage Is Displacing Peakers. Is That Any Cause for Concern?” Greentech Media, January 19, 2018, www.greentechmedia.com/squared/read/storage-displacing-peakersshould-we-be-worried.

(21) “Battery Energy Storage on Verge of Competing with Natural Gas, but Questions Remain” North American Clean Energy, May 22, 2018, www.nacleanenergy.com/articles/31107/battery-energy-storage-on-verge-of-competing-with-natural-gas-but-questions-remain.

(22) Wagman, David, “Energy Storage Rose from California Crisis,” IEEE Spectrum, May 8, 2017, https://spectrum.ieee.org/energywise/energy/the-smarter-grid/california-crisis-tests-energy-storage-supplychain.

(23) Los Angeles Times Editorial Board, “The Beginning of the End of Big, Climate-Changing Power Plants in California,” Los Angeles Times, October 24, 2017, www.latimes.com/opinion/editorials/la-ed-puente-gas-power-plant-20171024-story.html.

(24) Bade, Gavin, “Storage will replace 3 California gas plants as PG&E nabs approval for world’s largest batteries,” Utility Dive, 11/9/2018 https://www.utilitydive.com/news/storage-will-replace-3-california-gas-plants-as-pge-nabs-approval-for-worl/541870/

(25) Sierra Club Press Release, “NRG to Close Multiple Gas Plants in California,” Sierra Club, March 9, 2018, www.sierraclub.org/pressreleases/2018/03/nrg-close-multiple-gas-plants-california-0.

(26) Denholm, Paul and Robert Margolis, “The Potential for Energy Storage to Provide Peaking Capacity in California Under Increased Penetration of Solar Photovoltaics,” National Renewable Energy Laboratory, Technical Report, NREL/TP-6A20-70905, March 2018, https://www.nrel.gov/docs/fy18osti/70905.pdf.

(27) New York State Department of Public Service and New York State Energy Research and Development Authority, “New York State Energy Storage Roadmap,” June 21, 2018, http://documents.dps.ny.gov/public/Common/ViewDoc.aspx?DocRefId={2A1BFBC9-85B4-4DAE-BCAE-164B21B0DC3D}.

(28) Spector, Julian, “First Solar Made Good on Its Promise to Beat Out Gas Peakers With Solar and Batteries,” Greentech Media, February 13, 2018, www.greentechmedia.com/articles/read/50-megawattbattery-will-give-arizona-peak-power-from-the-sun.

(29) Spector, Julian, “Arizona Is Getting Its First Standalone Battery Peaker,” Greentech Media, May 30, 2018, www.greentechmedia.com/articles/read/arizona-is-getting-its-first-standalone-battery-peaker.

(30) Walton, Robert, “Arizona Regulators Move to Place Gas Plant Moratorium on Utilities,” Utility Dive, March 15, 2018, https://www.utilitydive.com/news/arizona-regulators-move-to-place-gas-plantmoratorium-on-utilities/519176 (As of this writing, no commission order has been issued, but the quotes are from a public proceeding).

(31) See EIA-923 (Monthly and Annual) Power Operations Report on Schedule 3B, U.S. Energy Information Administration, https://www.eia.gov/electricity/data/eia923.

(32) Ibid, n. 2 and n. 3.

(33) Henze, Veronika, “Tumbling Costs for Wind, Solar, Batteries Are Squeezing Fossil Fuels,” Bloomberg New Energy Finance, March 28, 2018, https://about.bnef.com/blog/tumbling-costs-wind-solar-batteries-squeezing-fossil-fuels/.

(34) Henze, Veronika, “Batteries boom enables world to get half of electricity from wind and solar by 2050, June 19, 2018, https://about.bnef.com/blog/batteries-boom-enables-world-get-half-electricity-wind-solar-2050/.

(35) Dyson, Mark; Engel, Alex; and Farbes, Jamil “The Economics of Clean Energy Portfolios,” Rocky Mountain Institute, May 2018, https://www.rmi.org/insight/the-economics-of-clean-energy-portfolios/.

(36) Storrow, Benjamin, “Is gas the next coal? One think tank says yes,” E&E News, May 23, 2018, https://www.eenews.net/climatewire/2018/05/23/stories/1060082427.

(37) Ram, Manish et al, “Global Energy System Based on 100% Renewable Energy – Power Sector,” Energy Watch Group, November 2017, http://energywatchgroup.org/wp-content/uploads/2017/11/Full-Study-100-Renewable-Energy-Worldwide-Power-Sector.pdf.

(38) Spector, Julian, “Lightsource: No More Solar Bids Without Energy Storage West of the Colorado,” Greentech Media, May 7, 2018, https://www.greentechmedia.com/articles/read/lightsource-solar-bids-energy-storage-west-of-the-colorado.

(39) Roselund, Christian, “NextEra expects storage to add half a cent to solar in mid-2020’s,” PV Magazine, 7/26/2018 https://pv-magazine-usa.com/2018/07/26/nextera-expects-storage-to-add-half-a-cent-to-solar-in-mid-2020s/

(40) Weaver, John, “Solar and energy storage win big in Indiana,” PV Magazine, 9/24/2018 https://pv-magazine-usa.com/2018/09/24/solar-solarstorage-big-winner-in-indiana-bids/

(41) “NIPSCO Integrated Resource Plan: 2018 Update,” NIPSCO, 10/18/2018 https://www.nipsco.com/docs/default-source/about-nipsco-docs/nipsco-irp-public-advisory-meeting-october-18-2018-presentation.pdf

(42) Kohler, Judith, “Colorado regulators green-light Xcel’s plan boosting renewables, cutting coal,” Denver Post, 8/27/2018 https://www.denverpost.com/2018/08/27/xcel-plan-boosting-renewables-greenlighted/

(43) Temple, James, “Relying on Renewables Alone Significantly Inflates the Cost of Overhauling Energy,” MIT Technology Review, February 26, 2018, www.technologyreview.com/s/610366/relying-onrenewables-alone-would-significantly-raise-the-cost-of-overhauling-theenergy.

(44) Shaner, Matthew R, et al, “Geophysical Constraints on the Reliability of Solar and Wind Power in the United States,” Energy Environ. Science, 2018, The Royal Society of Chemistry, February 27, 2018, DOI: 10.1039/c7ee03029k, http://pubs.rsc.org/en/content/articlelanding/2018/ee/c7ee03029k#!divAbstract. The notion that at least 80% of our existing power system could be replaced by a combination of renewables and short-term duration storage is gaining traction. See David Roberts, “Solar Power’s Greatest Challenge was Discovered Ten Years Ago,” Vox, March 20, 2018, https://www.vox.com/energy-andenvironment/2018/3/20/17128478/solar-duck-curve-nrelresearcher. (See quotation from Paul Denholm of NREL: “…the biggest hammer in the toolbox is energy storage… The consensus is emerging that we can probably do 80 percent [renewables] with some combination of spatial diversity and short-duration storage’). See also the same article updated online on March 30, 2018, with another quote from Denholm: “We can deal with diurnal shifts with short-duration storage, and not too much of it. When we did our Renewable Electricity Future study back in 2012, we got up to 80 percent renewables with only about 100 GW of additional storage. It’s not that much.” See https://www.vox.com/energy-andenvironment/2018/3/20/17128478/solar-duck-curve-nrel-researcher.

(45) Knight, Pat et al, “Clean Energy for Los Angeles,” Synapse Energy Economics (prepared for Food and Water Action), March 6, 2018, www.synapse-energy.com/sites/default/files/Clean-Energy-for-LosAngeles-16-072.pdf.

(46) Creutzig, Felix et al, “The Underestimated Potential of Solar Energy to Mitigate Climate Change,” Nature Energy, volume 2, Article number: 17140. August 25, 2017, http://www.nature.com/articles/nenergy2017140?WT.feed_name=subjects_social-sciences. The models are claimed to be flawed because they generally only assume carbon pricing as the driver of solar adoption, rather than what’s happened in the real world. In contrast, the market is showing steep technological learning curves around solar, policy and incentives that are dramatically reducing the actual costs of solar and storage, while competing fossil technologies show little similar cost reduction curves. The authors on this topic wrote this in a paper published in 2017:

Our study has important implications for research and policymaking. First, that models consistently underestimated potential of solar energy—if continued—has implications for the future as decision-makers might treat PV too reluctantly. Specifically, policymakers might fail to address the integration challenge and insufficiently plan for adequate grid and storage infrastructure. As a result, low-carbon energy sources could be under-deployed, imposing economic and societal costs, while instead energy system planning might rely too much on other, possibly more problematic, low-carbon technologies such as CCS and nuclear.

Second, the nature of PV upscaling is changing, with the longterm potential at high penetration rates depending less on technological costs of PV but increasingly on the system integration costs, with storage (and less so demand response) being an important contribution at high PV shares. Hence, realizing high PV scenarios requires not only support policies for fostering technological learning of PV, but also concerted programmes to accommodate large shares of PV in the power grid by modernizing power market regulations, expanding transmission grids, and scaling up storage technologies (emphasis added).

(47) Santa Fe Institute, “Prediction: How Good Can We Get?” August 31, 2016, www.santafe.edu/news-center/news/prediction-how-good-canwe-get.

(48) Bade, Gavin, “California Gov. Brown Signs Bill Directing Utilities to Plan Storage, DERs for Peak Demand,” Utility Dive, October 12, 2017, www.utilitydive.com/news/california-gov-brown-signs-billdirecting-utilities-to-plan-storage-ders/507116.

(49) Maloney, Peter, “Washington Utilities Need to Consider Storage in Resource Planning, Regulators Say,” Utility Dive, October 13, 2017, www.utilitydive.com/news/washington-utilities-need-to-considerstorage-in-resource-planning-regulat/507177. In fact, the entire field of energy planning is now poised to be upset by new market-based approaches that, not surprisingly, are resulting in cleaner, cheaper distributed solutions. Instead of long-term system models and multi-year integrated resource planning processes, as well as complex regulatory proceedings to value solar and distributed resources, some utilities are going back to simple market discovery tools. Rather than rely on models that often fail to capture current, rapidly moving technology and market trends, utilities simply are issuing requests for proposals to solicit up-to-date technology solutions that companies can deliver with real-time market prices. Instead of pretending to mimic the energy market with pseudoscientific models, just ask the real market. See, Bade, Gavin, “Market Based IRPs: A New Paradigm for Grid Planning,” Utility Dive, April 2, 2018, https://www.utilitydive.com/news/market-basedirps-a-new-paradigm-for-grid-planning/520376/ (“If you ask ten engineers in the industry, what’s the price of a battery installation next year, you’re going to get 11 different answers, right?…And then when you actually go into [a request for proposals (RFP)], you’re going to get a 12th answer.”).

(50) Holahan, Carol, “Massachusetts’ New Clean Energy Bill: Heavy On Storage, Light On Solar,” Solar Industry, 8/14/2018 https://solarindustrymag.com/massachusetts-new-clean-energy-bill-heavy-on-storage-light-on-solar/

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