How hybrid solar+storage resources are accelerating coal retirements
It’s no longer a surprise that solar has seized the energy throne. 2020 was another year of power system transformation - not just for the amount of solar installations across the United States, but also for the continued declines of coal generation. According to Energy Innovation, America has officially entered the “coal cost crossover,” where new renewables are more cost effective than continued use of the existing coal fleet.
But providing low cost clean energy is only part of the energy transition puzzle. The provision of grid services (like capacity, regulation reserves, spinning reserves, etc.) are also critical for maintaining reliability. While solar PV provides high levels of capacity value with early adoption, it quickly saturates, shifting peak load concerns to evening and overnight hours. To not only decrease coal generation, but retire plants altogether, additional resources are necessary to provide replacement capacity. This is achieved by pairing resources together. If solar is the new king of energy, battery storage is the queen.
Early research on this topic by my colleagues and I, along NREL and others, focused on the ability of solar + storage to defer the need for new peaking capacity – typically gas turbine resources that are used sparingly for reliability purposes. However, solar + storage resources are now being utilized to retire existing, baseload coal plants. It’s an emerging trend that shows no sign of slowing down. In the past year, Telos Energy evaluated coal retirements and replacement with solar + storage in three states:
Hawaii: The retirement of the AES coal plant in Hawaii provides a valuable case study to analyze how solar and storage can enable coal plant retirements and maintain system reliability. The coal plant is 180 MW, and while small by North American standards, represents the largest generator in the state by capacity, and the largest single source of generation annually. For Oahu, it represents 10% of the island’s fossil capacity and over 15% of the annual generation. Therefore, the retirement and replacement represent a significant transition for the system as a whole. For reference, on a per unit basis this retirement and replacement would represent 6.7 GW of coal retirements in ERCOT or 14.3 GW in MISO.
Our analysis - which performed a stochastic reliability analysis across 21-years of solar data and over 2.2 million hours of simulated grid operations - showed that the coal plant could be reliably retired and replaced with a portfolio of solar + storage resources. The results indicate that 160 MW of solar + storage is sufficient to replace 180 MW of fossil generation. This is true, even after accounting for charging restrictions based on the investment tax credit – where storage resources cannot be charged directly from the grid, and thus rely on the underlying solar resource.
It is also notable that this study was conducted on an island power system, with no interconnections with neighboring utilities. The isolated grid and limited geographic diversity of renewable resources makes reliability challenges more pronounced. As a result, replicating this in other regions across North America is likely less difficult – due to the ability to exchange energy and capacity with neighbors, increased geographic diversity of solar irradiance, and resource diversity more generally.
New Mexico: Similar results were also found in New Mexico, where I supported a team of power system experts that intervened in the retirement and replacement of the San Juan Coal Generating Facility. For that analysis, I utilized the SERVM model to evaluate Public Service New Mexico’s system reliability after replacing the coal plants with a portfolio consisting largely of solar and storage, as well as wind and demand response. It was another example of baseload coal being replaced with a portfolio of only variable renewables and energy storage. The project was an overwhelming success, with the New Mexico Public Regulation Commission selecting our client’s proposed clean energy portfolio to replace the San Juan Generation Station.
South Carolina: I also provided expert testimony in Dominion Energy South Carolina’s Integrated Resource Planning docket. In that case, our grid modeling and analysis showed that it was more economic to retire two South Carolina coal plants and replace them with solar + storage resources. This alternative portfolio would save ratepayers 14.4M$ avoid a 255 M$ environmental upgrade for aging and polluting infrastructure, and instead allocate investments towards state-of-the-art, highly flexible, and clean energy technologies. This project was also successful, with the South Carolina Public Service Commission requiring the utility to explicitly evaluate future coal retirements and replacement with solar + storage resources.
However, this transition should not be taken for granted. Maintaining reliability remains paramount, and this will require not only technical planning but also prudent implementation. As the example in Hawaii illustrates, timing is critical. In that case, coal burning was recently legislatively banned by September of 2022. In order to maintain reliability, sufficient amounts of solar + storage have to be brought online in a relatively short amount of time. While over 600 MW of solar and storage capacity has been awarded in recent RFPs, it still needs to be constructed and reliably interconnected. This will require expeditious engineering as well as community support.
This transition will also require a rethink for the way we evaluate resource adequacy - or the way we measure reliability risk in power systems. Given that many systems across North America will increasingly rely on storage and energy limited resources for resource adequacy, care should be taken in the metrics used to determine reliability. That is why Telos Energy is supporting ESIG’s Redefining Resource Adequacy initiative, which considers new metrics and methods for reliability planning.