Grid stabilization or enabling renewables?

The DOE’s recent Notice of Proposed Rulemaking (NOPR), advertised as “Grid Stabilization”, was immediately demonized by the Renewables Community as a subsidy for Coal and Nuclear Power Generation.

The Federal Energy Regulatory Commission (FERC) quickly voted down the initiative.

The DOE really blew the “product positioning” on this, with its “Stabilization” labeling. I see their stabilization effort as the key enabling technology to allow further penetration of wind and solar, but that argument never surfaced.

The NOPR, under whatever name, was a legitimate attempt to create a market and associated compensation for the backup services essential to the continued growth of renewables.

The growth of renewables has been both impressive and important, and we continue to hear that renewables are now competitive with conventional generation. This is only true if the system integration costs for those renewables are not charged to their account. For the most part, these system Integration costs have fallen to the utility in residence, but without identified compensation.

To say that the grid has been taken for granted is an understatement.

It is more like “the tragedy of the commons” where the grid is the proverbial “common” and conventional generation backing it up, is the “depleted resource”, i.e., the decommissioning of conventional generation as uncompetitive.

From Wikipedia:

The tragedy of the commons is an economic theory of a situation within a shared-resource system where individual users acting independently according to their own self-interest behave contrary to the common good of all users by depleting or spoiling that resource through their collective action.

I published a blog in November of 2015 with this graphic:

The original work was authored and presented Ueckerdt, Falko and Hirth, Lion and Luderer, Gunnar and Edenhofer, Ottmar, System LCOE: What are the Costs of Variable Renewables? (January 14, 2013).

The Clean Power Plan (CPP), or whatever remains of it, includes assumptions of ~30% renewables embedded in the identified state goals. At 30% penetration, the integration cost is equal to the generation costs, but are for the most part, uncompensated.

The DOE NOPR was an attempt to provide that compensation.

With the elimination of the NOPR, it should be no surprise that this issue has surfaced again in the form of “Emergency Aid for Some Coal Plants”, apparently available as an “emergency authorization” from DOE.

For reference, the Lazard “Projected LCOE by 2020”: