DOE Grid Report Reasonable, But Words Matter – A Lot

The U.S. Department of Energy (DOE) has released their Staff Report to the Secretary on Electricity Markets and Reliability. This statement reviews the report’s conclusions, focus areas, and shortcomings and is attributable to Energy Innovation Power Sector Transformation Expert Michael O’Boyle.

“Overall, the report’s conclusions are reasonable, and don’t represent major deviations from the leaked staff draft.  The main change is an orientation toward resilience, away from flexibility as the key focus for developing America’s power system moving forward. It turns out these words matter, a lot.”

“DOE’s report focuses a great deal on a need to study and value resilience attributes provided by baseload coal and nuclear units, but it speaks far less about valuing flexibility, which helps compensate for missing baseload generation.  Flexibility is the ability to shift demand or supply quickly in reaction to system needs along different timescales, and many sources of flexibility already simultaneously provide resilience.  Consider batteries, demand response, hydro, and thermal storage (smart water heaters and HVAC systems) as examples.  Severe weather events won’t affect the availability of these resources, most of which aren’t even fuel-based, and many of them can help the system recover.”

“Of course natural gas, which is rightly identified as one of the key resilience risks, will provide the bulk of flexibility services in the near future, but many other flexibility sources are widely available including hydro, batteries, demand response, and thermal storage.  The last three are particularly exciting in terms of their potential to provide new, low-cost flexibility as technology improves and regulation catches up to it.  A glut of natural gas supply and infrastructure may develop as we decarbonize, making that source of flexibility particularly cheap and less of a resilience risk.”

“The resilience benefits of a baseload and fuel-based system versus one that relies more on variable renewables is arguable as well.  The report admits that coal piles froze during the polar vortex, as gas prices spiked and ultimately become undeliverable in many areas (even though the lights stayed on).  Nuclear did its part, but those plants are often down for maintenance and refueling outside of summer peak hours.  They also have trouble restarting, as summarized in Amory Lovins’ Forbes piece rebutting the Perry memo.”

NOAA’s study of 80% carbon reduction in the U.S. grid by 2030 showed we can balance supply and demand in five-minute increments with over 50% wind and solar at the same cost as today’s power system, while reducing our reliance on natural gas.  The key there was a HVDC transmission network connecting diverse wind and solar resources and demand centers, and NOAA’s study didn’t even consider batteries or demand response as additional flexibility sources.  A system that never fails with wind and sun as its primary source of electricity is a more resilient system than one that requires constant extraction and delivery of fuel for 70% of its power.”

“To be fair, the report is far from silent on flexibility, and does recommend valuing this key attribute in the following recommendation:”

‘Focus R&D on improving VRE integration through grid modernization technologies that can increase grid operational flexibility and reliability through a variety of innovations in sensors and controls, storage technology, grid integration, and advanced power electronics. The Grid Modernization Initiative should also consider additional applications of high-performance computing for grid modeling to advance grid resilience.’

“The report rightly focuses on essential reliability services as a key element to be valued in markets, and that will go missing as more and more baseload generation retires.  It is also correct that “with no mass, moving parts, or inertia, increasing amounts of inverter-based resources (such as solar photovoltaic) present new risks to reliability, such as managing faster fault-clearing times, reduced oscillation dampening, and unexpected inverter action.”  R&D into inverter-based generation providing these services will be essential to maintaining a reliable system.”

“But we already know that wind, solar, and batteries can already provide this with smart inverters.  Wind is already providing frequency regulation in MISO, and solar was shown in NREL pilots to be capable of providing the same service.  More significant, batteries and grid connected devices present a huge untapped resource to balance short-term imbalances between supply and demand virtually instantaneously, and retired plants can often be converted to synchronous condensers.”

“In other words, we have many of the pieces and plenty of run-time to figure this out.  But we must figure out how to value these services, rather than assuming they will be there as they have been with a baseload-heavy system.”