IEEE Power & Energy Magazine - July/August 2015 - 112

in my view

William W. Hogan

a cleaner energy system
renewable energy and electricity market design

The RAPID GROWTH RATES FOR
renewable energy are part of a larger policy agenda to promote a cleaner energy
system. The health and environmental
impacts of emissions from traditional fossil fuel technologies provide a substantial
reason for changing the energy system.
For the greatest part, these emission impacts are externalities that provide a justification for policy to supplement natural market forces. The idealized example
of a tax on harmful emissions provides a
benchmark for comparing the efficacy of
various policies.
An emissions tax would work through
the market to affect production, consumption, and investment. Not everything that
could be done would be, but supply and
demand choices would alter the energy
system to balance overall costs and benefits. The role of renewable energy technologies in this mix would be uncertain.
Without an adequate emissions tax,
some or all of the emission externality
would remain, and markets alone would
not adopt the right mix of cleaner technologies. Furthermore, the cost situation
in the United States illustrates a larger
worldwide problem. With the exception
of a few places close to high-quality wind
sources or isolated locations like Hawaii
where fossil generation technologies are
expensive, abundant renewable technologies such as wind and solar are simply
too expensive. Even with an appropriate
set of emissions taxes, calculations with
U.S. Energy Information Administration estimates imply levelized costs on
an equivalent basis for wind and solar for
Digital Object Identifier 10.1109/MPE.2015.2419952
Date of publication: 25 June 2015

112

ieee power & energy magazine

2019 entry would be 40 and 90%, respectively, more expensive than an advanced
gas combined cycle pant. Hence, existing
renewable technologies would not, and
probably should not, be deployed yet.
Nevertheless, the policy
response has included a
search for other means to encourage the adoption of renewable technologies. There
are now direct subsidies (e.g.,
production tax credits), indirect subsidies (e.g., mandated
transmission investments),
and purchase mandates (e.g.,
renewable portfolio standards). These policies have
been effective, particularly
in places like California.
The growing penetration of
renewables has created a number of collateral impacts on electricity markets.
Wind and solar energy are intermittent supply sources. This produces a
common concern. When the wind and
solar insolation vary, the resulting instability of supply creates a potential for
operational problems of maintaining the
required nearly instantaneous balance
with aggregate demand. Over relative
short time horizons of seconds to a few
five-minute dispatch intervals, the problem seems quite manageable for three
reasons. With small penetrations, intermittency is de minimis. With large penetrations, geographic diversity will help
average out the effects. And the tools and
techniques for forecasting are improving
enough to meet the challenges of anticipating the movements in renewable supply for these shorter time frames.

The more serious problem is over periods of an hour or two when the wind
can drop off across a very large region,
the sun is setting, or clouds are gathering. The problem here is
not so much unpredictable
intermittency but a need
for unusually high but predictable levels of ramping
capability. This challenge
is the point of the now
famous California "duck
curve" that shows the potential dramatic change
in the ramping requirements that somehow must
be provided. The current
configuration of the nonrenewable generation fleet
in California is not up
to the task, but there are
many options available to meet the need.
The main tasks are to make the appropriate investments in time and to find a way
to pay for them.
In principle, battery storage would
provide a tool for balancing the temporal variations in renewable supply. Once
again, California is in the lead with its
storage mandate directed at the regulated
utilities. However, inexpensive storage,
such as from large-scale hydro, is largely
unavailable for other environmental
reasons. Calculations for existing and
known battery technologies consistently
indicate that batteries are too expensive
to deploy on a large scale and would have
a hard time competing with dispatchable natural gas plants. Barring almost a
complete elimination of natural gas, the

The policy
response has
included a
search for
other means
to encourage
the adoption
of renewable
technologies.

(continued on p. 109)
july/august 2015

Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - July/August 2015