Achieving 100% Clean Electricity Reliably and Affordably Is Possible
Posted on June 18, 2021 by Samuel Pastrick
Tags, Energy
Oregon House Bill 2021 would require our state’s major electric utilities and electric service suppliers to serve Oregon customers with 100 percent clean electricity by 2040. This legislation has prompted questions about the scale, location, and primary goal of renewable energy development in Oregon. For instance, some believe that electric utilities should develop a greater share of smaller “community-based” projects, and in certain locations. Others believe that utilities should be required to develop a greater share of larger “utility-scale” projects within Oregon’s boundaries. In this blog post, we provide background info to help answer these questions and outline what it takes to ensure a reliable and affordable electric system, while providing customers with 100 percent clean electricity.
Until recently, CUB’s assessment was that Oregon would have difficulty developing and maintaining a 100 percent clean electric system while keeping it affordable and reliable. It seemed that to ensure system reliability, electric utilities and service suppliers would need to fall back, at least in part, on gas-fired generating capacity to ensure that the lights stay on when demands on the system are at their greatest. While the debate continues on the degree to which natural gas (fossil, renewable, or green hydrogen) may still be used to heat buildings in the future, CUB now believes that Oregon’s major electric utilities can develop and maintain a completely emissions-free system while ensuring affordability and reliability.
Solving for this outcome requires consideration of the following factors:
Cost. Determining the cost effectiveness of an energy resource must consider both the cost of the generation and the cost of transmission to the service territory. Whether built in Oregon or in neighboring states, renewable resources like wind and solar can be and are often cost effective. But determining the cost effectiveness of wind and solar resources must also consider their capacity factor – the percentage of generation achieved versus what would be achieved if the generating units produced at 100 percent capacity 100 percent of the time. Put another way: capacity is “potential” whereas generation is “actual.”
Wind. Wind varies depending on the location. Locations can be compared by the resource’s capacity factor. In Oregon, wind resources generally produce at a capacity factor of around 30 percent. Montana and Wyoming wind resources generally produce at a capacity factor of 40-45 percent. Oregon wind is a good resource, but not a great resource.
Solar. The sun shines during the day everywhere. It’s the presence or lack of cloud cover that determines geographic variation in solar capacity. To determine a location’s solar capacity factor, the question that needs to be answered is: How often is it overcast? (Note that particulate smoke from wildfires can be akin to overcast weather in terms of its solar blocking properties.) Oregon summers are mostly clear and favorable for solar resources, but winters are significantly less so. By comparison, Nevada and the California have better solar conditions in the summer and significantly better conditions in the winter. Depending on its location, Oregon solar is a good resource, but not a great resource.
This means that, in general, the cost of Oregon wind and solar is higher than in some nearby states. Wyoming and Montana wind resources generate more power and have lower generating costs than Oregon wind resources. Nevada and California solar facilities produce lower cost power than Oregon solar projects.
But the generation cost is only part of the equation. Generated power has to then be delivered to customers. The true cost of energy combines both generation and transmission costs. Indeed, Oregon wind and solar projects that are built to serve in-state load, thereby avoiding transmission costs, tend to be more cost effective.
Diversity. Renewable resources are intermittent. Sometimes the wind doesn’t blow. Sometimes it’s overcast. For many years in energy planning proceedings, this intermittency was viewed as an argument for limiting the amount of renewable resources that could be added to the system. But intermittency is not a problem in and of itself. And limiting renewable development doesn’t solve for intermittency. The true problem is resource diversity and, therefore, the solution is to rely on a diversity of resources.
It’s not unusual, even during the summer, for it be overcast in Lakeview, Baker City, and Bend at the same time. These are correlated weather events due to the proximity of these communities. But weather conditions in Central and Southern Oregon are less correlated with weather events in California and Nevada. Battery storage and pumped hydroelectric power can help ensure system reliability in response to diminished solar capacity, but only for a period of hours – not days, and not for a large percentage of a utility’s load. A better solution is to incorporate solar resources in a diversity of locations.
Wind also requires diversity. It’s not uncommon for Oregon wind resources to operate at or near 0 percent capacity for a day or more. Again, battery storage and pumped hydro can’t make up for this resource deficit. And, like solar, the presence or lack of Oregon wind has little if any bearing on the presence or lack of Montana or Wyoming wind.
Reliability. Resource procurement is largely about reliability. Long term utility planning does not emphasize energy production from specific resources. Planning ensures available capacity from a diversity of resources to maintain reliability every hour of the year and, critically, when customer demand is at its highest. Planning evaluates new resources based on their performance alongside existing resources. This evaluation identifies the resources that provide reliability at the least cost.
Reliability is often measured based on the likelihood of a utility being unable to deliver energy to meet its load. But this measurement factors in the utility’s ability to purchase power from the market. When a utility adds resources to the system, those resources should reduce the probability of the utility being unable to meet energy demands. In other words, new resources should increase reliability. The more a new resource operates like an existing resource, the less value the new resource has to the system in terms of reliability. This dynamic gets worse with each additional increment of that new resource.
Put another way: Building more Oregon wind and solar may not cost much more than Wyoming or Montana wind, or California or Nevada solar, but these resources could bring less value to the utility system in terms of improving reliability.
Affordability. With good utility planning and acquisition of a diversity of clean resources, Oregon can replace coal and natural gas generation with energy efficiency and new renewable resources while ensuring an affordable and reliable system. Oregon is already proving this is possible.
Opponents of clean energy legislation are quick to claim that clean equates to costly. This was the claim made in 2007 before Oregon passed the Renewable Portfolio Standard. And again in 2016, when Oregon passed SB 1547, which phases out coal-fired electric generation served to Oregon customers. In response, Oregon’s largest electric utility, Portland General Electric (PGE) has invested billions of dollars in new renewable projects, and has closed the Boardman coal plant. Yet, when adjusted for inflation, the average bill of a PGE residential customer today is 6 percent lower than in 2007.
100 Percent Clean Electricity. CUB believed not long ago that it would be too difficult to develop and maintain a 100 percent emissions free electric system while ensuring affordability and reliability. CUB now believes that this is possible, but requires a diversity of resources across a footprint that extends beyond Oregon. This likely means combining Southwest solar with Northwest hydro, Rocky Mountain wind and, in the future, wind turbines floating off the Oregon coast. This combination should ensure an affordable and reliable regional grid. Passage of HB 2021 is a critical step in building an affordable and reliable electric system that reduces emissions and benefits customers.
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09/05/22 | 1 Comment | Achieving 100% Clean Electricity Reliably and Affordably Is Possible