Updating: Will Gas Break Wind? Will Wind Pass Gas?

April 2, 2018

aep

American Electric Power, a major Utility in the Southeastern US, is heavily weighting it’s capital expenditures toward wind and solar energy. (click for larger)

Sniffing out the answers.

Bloomberg New Energy Finance:

London and New York, March 28, 2018 – Coal and gas are facing a mounting threat to their position in the world’s electricity generation mix, as a result of the spectacular reductions in cost not just for wind and solar technologies, but also for batteries – according to research from Bloomberg New Energy Finance (BNEF).

In bulk generation, the threat comes from wind and solar photovoltaics, both of which have reduced their LCOEs further in the last year, thanks to falling capital costs, improving efficiency and the spread of competitive auctions around the world.

In dispatchable power – the ability to respond to grid requests to ramp electricity generation up or down at any time of day – the challenge to new coal and gas is coming from the pairing of battery storage with wind and solar, enabling the latter two ‘variable’ sources to smooth output, and if necessary, shift the timing of supply.

In flexibility – the ability to switch on and off in response to grid electricity shortfalls and surpluses over periods of hours – stand-alone batteries are increasingly cost-effective and are starting to compete on price with open-cycle gas plants, and with other options such as pumped hydro.

Elena Giannakopoulou, head of energy economics at BNEF, said: “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.

“Some existing coal and gas power stations, with sunk capital costs, will continue to have a role for many years, doing a combination of bulk generation and balancing, as wind and solar penetration increase. But the 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.”

BNEF calculates LCOEs for each technology, taking into account everything from equipment, construction and financing costs to operating and maintenance expenses and average running hours. It found that in the first half of 2018, the benchmark global LCOE for onshore wind is $55 per megawatt-hour, down 18% from the first six months of last year, while the equivalent for solar PV without tracking systems is $70 per MWh, also down 18%.[1] Offshore wind’s LCOE is $118 per MWh in 1H 2018, down 5%.

New York Times:

As environmental concerns drive power companies away from using coal, natural gas has emerged as the nation’s No. 1 power source. Plentiful and relatively inexpensive as a result of the nation’s fracking boom, it has been portrayed as a bridge to an era in which alternative energy would take primacy.

But technology and economics have carved a different, shorter pathway that has bypassed the broad need for some fossil-fuel plants. And that has put proponents of natural gas on the defensive.

Some utility companies have scrapped plans for new natural-gas plants in favor of wind and solar sources that have become cheaper and easier to install. Existing gas plants are being shut because their economics are no longer attractive. And regulators are increasingly challenging the plans of companies determined to move forward with new natural-gas plants.

“It’s a very different world that we’re arriving at very quickly,” said Robert McCullough, an energy consultant in Portland, Ore. “That wind farm can literally be put on a train and brought online within a year. It is moving so fast that even critics of the old path like myself have been taken by surprise.”

The Arizona Corporation Commission, which regulates the state’s investor-owned utilities, recently refused to endorse plans by three power companies that included more natural-gas facilities. Commissioners directed them to make greater use of energy storage and plants that produce zero emissions.

“It’s very erratic what we’re now doing with power,” said Andrew M. Tobin, an Arizona commissioner who led efforts to block new gas plants. “I am so nervous that we will end up building a lot of capital plant that doesn’t stand the test of time.”

Some feel the push to get beyond natural gas may be too much, too soon. Officials at Arizona Public Service, the largest utility in the state, said they needed to include new natural-gas development as part of an overall mix, partly because of the state’s round-the-clock air-conditioning demands.

“Our needs are different than other utilities,” said Greg Bernosky, the utility’s director of state regulation and compliance. “We need resources that can have a long duration when our load is high, well after the sun has set. Natural gas resources provide that flexibility.”

Natural gas isn’t likely to be unseated as the country’s primary source of electricity generation anytime soon. In fact, utility companies plan to add more natural-gas plants than any other source, including all alternative energy sources, like solar, wind and hydropower, combined.

But the calculus is rapidly shifting as the prices of wind and solar power continue to fall. According to the Department of Energy, power generated by natural gas declined 7.7 percent in 2017.

And the latest report by Lazard, the financial advisory and management firm, found that the cost of power from utility-scale solar farms was now on a par with natural-gas generation — and that wind farms were less expensive still.

Lazard calculated the unsubsidized cost of wind power at 3 cents a kilowatt-hour, while natural gas and solar energy were a little more than 4 cents. The typical American household pays 12.5 cents a kilowatt-hour for electricity, according to the United States Energy Information Administration. (The cost beyond generation reflects transmission, taxes, and other utility expenses and profits.)

New York Times:

Two years ago, Kansas repealed a law requiring that 20 percent of the state’s electric power come from renewable sources by 2020, seemingly a step backward on energy in a deeply conservative state.

Yet by the time the law was scrapped, it had become largely irrelevant. Kansas blew past that 20 percent target in 2014, and last year generated more than 30 percent of its power from wind. The state may be the first in the country to hit 50 percent wind generation in a year or two, unless Iowa gets there first.

Some of the fastest progress on clean energy is occurring in states led by Republican governors and legislators, and states carried by Donald J. Trump in the presidential election.

The five states that get the largest percentage of their power from wind turbines — Iowa, Kansas, South Dakota, Oklahoma and North Dakota — all voted for Mr. Trump. So did Texas, which produces the most wind power in absolute terms. In fact, 69 percent of the wind power produced in the country comes from states that Mr. Trump carried in November.

These red states are not motivated by a sudden desire to reduce greenhouse gas emissions. Nor are they joining solidly Democratic New York, Washington and California in defending the Paris climate agreement that President Trump walked away from last week. Instead, their leaders see tapping the wind, and to a lesser degree the sun, as an economic strategy.

The clean energy push allows their utilities to lock in low power prices for decades, creates manufacturing jobs, puts steady money in the hands of farmers who host wind turbines and lures big employers who want renewable power.

“We export lots of things, and in our future, I want us to export a lot of wind power,” Kansas’ conservative Republican governor, Sam Brownback, said in a speech in 2011. “We need more of it, and we need more of it now.”

Mr. Brownback got what he wanted: Since he spoke, wind power production in Kansas has nearly tripled, and the state is now an exporter of clean electricity.

Whatever the motives, the push in the red states does help to lower emissions, which means their goals tacitly align with those of blue states worried about climate change.

GreenTechMedia:

When Charles Patton joined American Electric Power in 2000, around 90 percent of the company’s electricity production came from coal. Since then, AEP’s executive vice president of external affairs says things have changed dramatically.

“I will confess, there was a time I wouldn’t have publicly stated — although in the last few years I have publicly stated that I was wrong — that you would be able to [interconnect] renewables to the extent that we’ve been able to,” said Patton, speaking Tuesday at Greentech Media’s inaugural Power & Renewables Summit in Austin, Texas. “If you were a utility guy…that wasn’t something you necessarily believed was possible to the degree it is today.”

AEP isn’t traditionally thought of as the most environmentally friendly utility, but that reputation is changing — marking arguably one of the most significant endorsements of clean energy technologies to date.

In 2005, coal made up 70 percent of AEP’s generation capacity — which is how the utility measures its electricity mix today. Since then, coal’s share of capacity has dropped to 47 percent. At the same time, AEP’s natural gas capacity increased from 19 percent in 2005 to 27 percent today, and renewables entered the scene in a meaningful way, growing from 4 percent in 2005 to 13 percent today.

Renewable energy is now slated to make up the vast majority of AEP’s planned generation additions over the next decade. In AEP’s third-quarter 2017 earnings report, the utility said it plans to add another 8,360 megawatts of wind andsolarthrough 2030 across its regulated and deregulated businesses — and that doesn’t even include the 2,000-megawatt Wind Catcher project, which could become the largest wind project in North America.

AEP currently operates more than 224,000 miles of distribution lines in 11 states that deliver power to nearly 5.4 million regulated customers. It has approximately 33 gigawatts of generating capacity, 4.2 gigawatts of which is renewable energy.

Bloomberg New Energy again:

Taking India as an example, BNEF is now showing benchmark LCOEs for onshore wind of just $39 per MWh, down 46% on a year ago, and for solar PV at $41, down 45%. By comparison, coal comes in at $68 per MWh, and combined-cycle gas at $93. Wind-plus-battery and solar-plus-battery systems in India have wide cost ranges, of $34-208 per MWh and $47-308 per MWh respectively, depending on project characteristics, but the center of those ranges is falling fast.

Seb Henbest, head of Europe, Middle East and Africa for BNEF, said: “Competitive auctions for new renewable energy capacity have forced developers, equipment providers and financiers to bear down on all the different costs of establishing wind and solar projects.

“Thanks to this and to progressively more efficient technology, we are seeing record-low prices being set for wind and solar, and then those records being broken again and again on a regular basis. This is having a powerful effect – it is changing perceptions.”

BNEF has been analyzing the numbers on levelized costs of electricity for the different technologies since 2009, based on its database of project financings and work by its analyst teams on the cost dynamics in different sectors.

In that nine-year period, the global benchmark LCOE for solar PV without tracking has tumbled by 77%, and that for onshore wind by 38%. LCOEs for older established sources, such as coal, gas, nuclear and large hydro, have seen only very modest reductions, at best, in that time – and in some countries, they have actually increased. BNEF’s lithium-ion battery price index shows a fall from $1,000 per kWh in 2010 to $209 per kWh in 2017.

Advertisements

28 Responses to “Updating: Will Gas Break Wind? Will Wind Pass Gas?”

  1. Gingerbaker Says:

    Best headline and caption ever! 😀

    • dumboldguy Says:

      Ditto on best ever! (Especially if you’re feeling sophomoric).

      A few “farts in church” in this piece, however, if one reads closely—-like:

      “Natural gas isn’t likely to be unseated as the country’s primary source of electricity generation anytime soon. In fact, utility companies plan to add more natural-gas plants than any other source, including all alternative energy sources, like solar, wind and hydropower, combined”.

      “Taking India as an example, BNEF is now showing benchmark LCOEs for onshore wind of just $39 per MWh, down 46% on a year ago, and for solar PV at $41, down 45%. By comparison, coal comes in at $68 per MWh, and combined-cycle gas at $93. Wind-plus-battery and solar-plus-battery systems in India have wide cost ranges, of $34-208 per MWh and $47-308 per MWh respectively, depending on project characteristics, but the center of those ranges is falling fast”.

  2. Sir Charles Says:

    The graph at the top refers to total capacity and not total generation. Wind has a capacity factor of about 30% onshore and 40-60% offshore. Solar has a capacity factor 90%. We would get a better picture when getting presented the overall power generation in a year. Because at the end what counts is this:

    and that:

  3. redskylite Says:

    An astonishing project kicks off in Saudi Arabia: (reuters report);

    The project is expected to have the capacity to produce up to 200 gigawatts (GW) by 2030, SoftBank Chief Executive Masayoshi Son told reporters in New York. That would add to around 400 GW of globally installed solar power capacity and is comparable to the world’s total nuclear power capacity of around 390 GW as of the end of 2016.

    https://uk.reuters.com/article/uk-saudi-softbank-group/softbank-vision-fund-saudi-arabia-to-create-worlds-biggest-solar-power-firm-idUKKBN1H40L2


  4. There are other factors in play for the Oil and Gas producers.
    From my investment advisory service

    Here’s the story…

    Much has been written about the huge increase in oil and gas production from the shale basins in the US, especially in Texas.

    It’s been a massive boom for the country, and has kept oil and natural gas prices very low. You know this, I’m sure.

    What’s less discussed is that many of these shale companies are not profitable.

    For years, they’ve been consuming huge amounts of capital to produce this oil and gas. But their actual investors haven’t seen much benefit from it.

    In December, the Wall Street Journal cited a report that said US energy companies had spent US$280 BILLION more than they generated from operations over a 10-year period.

    They made up for this massive deficit originally by raising money in the equity market. When investors got fed up with the poor profitability of these companies, the shale operators started raising money in the bond market.

    One quirk of this business is that the management running these companies often has incentives to increase production rather than make money.

    Big investors in these firms spent 2017 pressing for the shale companies to change this.

    If the shale companies spend less on rigs and drilling, they can begin to pay down their debt and start paying dividends or undertaking stock buybacks.

    This is very important to watch…

    If shale companies produce less oil over the next 12 months than the US government forecasts, it could put upward pressure on the price of oil.

    Of course, there’s no guarantee here that shale companies will honour this idea of prioritising profits over production.

    Some may have no choice to bring in whatever cash they can — to pay debt for example — or because of the leases they’re operating under.

    But it’s no given that US shale will produce oil at the rate many firms and forecasters are assuming will keep oil around the US$50–60 mark, as is the case now.

    We also have very good demand numbers coming in…

    • Sir Charles Says:

      Brilliant! We have been forecasting for years that this shale gas and oil fracking is nothing but a big bubble.

      2013: Shale gas speculative bubble?

      2013: “Shale Gas Revolution” not up to the hype

    • L RACINE Says:

      If you want to educated yourself on the “nitty gritty” of this subject matter, Ron Patterson’s and Dennis Coyne’s site is a good place to start.

      http://peakoilbarrel.com/

      The shale gas boom exist because of low interest rates and lose lending rules on the finance industry….. debts that can’t be paid back will not be paid back….. and if you want an eye opener look at the EROEI of these wells!!!!!!

    • greenman3610 Says:

      see also

      https://www.cnbc.com/2017/07/04/qatar-to-boost-lng-exports-throwing-a-wrench-in-trumps-energy-plans.html

      Qatar Petroleum on Wednesday announced plans to significantly raise natural gas production in the coming years, creating an obstacle to President Donald Trump’s goal of “energy dominance.”

      The move threatens to add to a projected glut of liquefied natural gas, or LNG, as a wave of new projects come online in the coming years, including from the United States.

      The Qatari state energy company said it will double the size of a planned project in the North Field, the massive natural gas reserve in the Persian Gulf that has underwritten the country’s rapid rise to wealth. That will allow the country to hike its total output of LNG from 77 million tons a year to 100 million tons annually some time between 2022 and 2024, according to the company.
      —–

      Joy Reid adds
      That would be the same Qatar that refused to provide the money Jared Kushner needs to bail out his 666 Fifth Avenue boondoggle and then was blockaded by the Saudis and UAE with the Trump administration’s support…

    • J4Zonian Says:

      Frank Speaking,

      I didn’t know what to do with your post: vote up for sharing reasonable information we don’t usually hear, vote down? But why?

      After thinking about it for a while, I started to wonder if you include human traffickers and drug dealers, black market arms dealers, other organized crime and the like in your financial reports. They’re all much more moral businesses than fossil fuel operations, after all. Why not advise people on their investment possibilities? Why not normalize them the way you normalize the corporations and rich people busily destroying civilization and the rest of nature?

      Just ignore cummings and Cockburn.

      pity this busy monster, manunkind,
      not. Progress is a comfortable disease:
      Your victim(death and life safely beyond)
      plays with the bigness of his littleness

      A world of made
      is not a world of born–pity poor flesh
      and trees, poor stars and stones, but never this
      fine specimen of hypermagical
      ultraomnipotence.

      Ancient cord of coexistence
      Hacked by parasitic greedhead scam
      From Sarawak to Amazonas
      Costa Rica to mangy B.C. hills
      Cortege rhythm of falling timber.

      Cut and move on
      Cut and move on
      Take out trees
      Take out wildlife at a rate of species every single day
      Take out people who’ve lived with this for a hundred thousand years

      But this, this is something other.
      Busy monster eats dark holes in the spirit world
      Where wild things have to go
      To disappear
      Forever

  5. J4Zonian Says:

    Much has been made about the Brits cutting emissions 40% since the 90s but while they’re building wind at an OK pace, they’ve largely traded coal for gas, meaning they’ve traded CO2 for methane, a huge increase in short-term emissions (and if they keep burning more gas, it stays high long-term.) It’s a cheat, as all the switches to gas are.

    • Sir Charles Says:

      Yeah. It’s a big cheat. The Tories have almost abandoned solar and also new investments in wind. Meanwhile, they’re fostering domestic shale gas and expensive new nuclear. It’s insane. In particular as they’re ignoring that shale gas has no better carbon footprint than coal.

      • redskylite Says:

        UK Government Confirms Historic Low Emissions As Wind & Solar Become Second Biggest Electricity Source

        The UK Government’s new statistics also highlight the impressive increase in renewable energy generation. The BEIS concluded that low-carbon generation — including wind, solar, hydro, bioenergy, and nuclear — accounted for around 50% of electricity generation in 2017. Specifically, wind and solar generation overtook nuclear generation in the fourth quarter of 2017 to be the country’s second highest source of electricity for the first time, thanks to increased capacity and higher wind speeds.

        Wind in particular had a great year, accounting for 15% of the UK’s electricity demand, its highest ever amount, and up from 11% in 2016. Renewables (low-carbon minus nuclear) accounted for 29.4%, up from 25% in 2016. Onshore wind generated 8.5%, up from 6% in 2016, while offshore wind generated 6.2%, up from 5%. The report noted that “falls in the amount of electricity generated by coal and gas were offset by renewables, primarily wind generation.”

        https://cleantechnica.com/2018/04/03/uk-government-confirms-historic-low-emissions-as-wind-solar-become-second-biggest-electricity-source/

        • J4Zonian Says:

          I understand what all 4 articles I’ve read on it this week were saying. But they’re like every other country in the world–not doing it nearly fast enough. It’s impressive until you compare it with what we need to do for civilization to survive another hundred years; then it’s pathetic. They switched to gas and everyone ignores methane emissions and acts like it’s a miracle and a model. Then, as Sir Charles says, they dramatically decrease investment in RE at the time they should be dramatically increasing it. It’s just one more confirmation that civilizationized humans are insane. Unless we can get the political power to start healing that disease, civilization doesn’t deserve to survive. Unfortunately it won’t go without taking most or all of life on Earth with it so we’re left with a horrible dilemma.

  6. Abel Adamski Says:

    One that is not good news
    https://www.nationalobserver.com/2017/07/13/analysis/these-missing-charts-may-change-way-you-think-about-fossil-fuel-addiction

    These ‘missing charts’ may change the way you think about fossil fuel addiction

    Summary

    Even at the relative level, the burning of fossil fuels continues to overwhelmingly dominate global energy consumption. Decades of efforts to shift to safer sources have barely dented fossil fuels’ share, which continues to float north of 85 per cent.

    When we drill down to recent trends in oil and gas it’s even more discouraging. The burning of both those fossil carbon fuels continues to surge dizzyingly upwards, out-running the safer alternatives. Reports show that these twin surges threaten to “lock in” global climate failure.

    The one possible point of hope for our climate and oceans is in the data on recent coal burning. But this data is the most likely to be under-reported. Coal burning has been spectacularly under-reported in the past. Repeatedly. And now, as pressure grows, more and more nations and industries stand to benefit by under-reporting. They face little chance of being caught if they do. That’s because the world lacks any way to verify much of the global coal reporting.

    Meanwhile, construction of coal plants continues to boom around the globe and CO2 levels in our atmosphere continue to accelerate upwards.

    If we want hospitable climate and oceans, the fossil fuel data suggests that our efforts so far are far too little. In the words of California Governor Jerry Brown, “You can’t do too much to sound the alarm because so far the response is not adequate to the challenge.”

    • L RACINE Says:

      It is called propaganda…

      I just finished watching the new movie about Churchill, WW2 and the German forces overrunning Europe.

      What struck me was the speech Churchill made (prior to the “we will fight them on the Beeches speech”) where he in essence lied about Britain’s and France’s ability to fight the German’s back and just how dire the situation was.

      It reminded me very much of the situation we find ourselves with climate change. If the “masses” become informed about just how dire the situation is, will it do any good, will it be counter productive, will it change anything?

      More so when consider that the government (controlled by global corporations and their lobbyist) have absolutely no idea on how to effectively address the situation and maintain their hegemony on the power the currently have.

      • L RACINE Says:

        Does anyone know how to correct typos in comments that have been posted?

        • dumboldguy Says:

          WordPress doesn’t allow for that.

          The only thing that seems to work is to reply to yourself with the correction—-i.e., “Beeches = beaches”

  7. redskylite Says:

    Interesting article on the “paradigm Shift” from a baseload based on coal and traditionals to renewables plus storage in Reneweconomy based on a chapter in a recent report from REN21, the global renewable energy agency.

    “This is how baseload gets replaced by renewables and storage”

    That’s now changing. In this “conceptual progression” from the Baseload Paradigm to a New Paradigm of 100% Renewable Electricity, REN21 outlines the key steps that are taking place and will take place.

    http://reneweconomy.com.au/this-is-how-baseload-gets-replaced-by-renewables-and-storage-47898/

  8. Sir Charles Says:

    The Maine House fell three votes short of overriding Gov. Paul LePage’s veto of a bill on solar energy. The bill would have prohibited utilities from requiring solar energy users to install a second meter to monitor their electricity generation, which solar advocates say allows utilities to charge extra.

    => Maine solar advocates powerless again as House upholds LePage’s veto by 3 votes

    Meanwhile, Kirkbi, the fund that manages the wealth of Denmark’s Lego’s billionaire owner, is planning to step up its investments in renewable energy. It already own stakes in offshore wind farms, and its renewable energy profits more than tripled last year.

    => Lego Billionaires Are Planning Big Investments in Renewable Energy


Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: