Sunday Train: The Solar Fight, Is Going Right, Deep in the Heart of Texas ...
Well, what do you know? I look around, and see a story saying Solar power gains momentum after long struggle in Texas. And not in "Grist" or "Solar Energy News!" or any such ... but in the Dallas Morning News Business section from Wed, 4 June 2014.
According to the story,
Recurrent announced plans last month to build a 150-megawatt solar farm in West Texas after signing a 20-year power purchase deal with Austin Energy. That comes just months after First Solar, one of the world’s largest solar companies, began construction on a 22-megawatt farm near Fort Stockton with plans of eventually expanding to 150 megawatts.
And an even more dramatic acceleration could be ahead. Solar developers have been flooding the state’s grid operators with applications for more solar farms, close to 2,000 megawatts worth, said Warren Lasher, director of system planning for the Electric Reliability Council of Texas. “It’s hard to say how much will actually get built,” he said. “It’s been this way for more than a year. But it’s a significant increase from before.”
Join me for utility scale solar PV, utility scale solar thermal, onshore wind, offshore wind, and grid integration ... below the fold.
The Texas Tipping Point for Utility Scale Solar Photovoltaic
Part of this is driven by municipal (not state) pro-sustainable energy policy ... but not all of it:
Driving the recent interest are environmental mandates from Austin’s and San Antonio’s city-owned utilities to vastly expand how much electricity they get from solar in the decade ahead. At the same time the cost of solar has come down dramatically over the last two years — Harris estimated between 60 and 70 percent.
Recurrent is reportedly selling power at the rate of around 5 cents per kilowatt hour, roughly 25 percent above the current wholesale rate in Texas.
But considering the 20-year contract and that power prices are prone to rise in the decades ahead, solar seems close to winning contracts on pricing alone.
“On the surface it looks like a very attractive deal,” John Fainter, president of the Association of Electric Companies of Texas, said of the Recurrent contract. “With all this coal being retired, you’re probably going to replace it with gas [plants]. And that will probably move the price of gas up and the price of power here. … If the price of the equipment keeps coming down, solar is going to be more and more attractive.”
We are, in other words, very close to utility scale solar photovoltaic facilities being at wholesale market rates. And wholesale market rates during the day, when the sun is shining, are strongly determined by natural gas prices, since natural gas power plants are the "swing producers" during peak demand period, coming online when the wholesale price is high enough to cover the cost of the fuel, and going offline when the wholesale price drops below the amount require to cover the cost of the fuel.
This 25% premium is substantially lower than it was even this time last year. Part of that is the falling cost of photovoltaic solar panels. But another part is the recent upwsing in in the price of natural gas.
Part of the fracking boom has involved producers chasing production of "wet" fracking gas fields that produce the natural gas liquids (NGL) which are more lucrative than methane production. This has allowed production to continue even as the prices for methane itself drops below the level that would drive more drilling on its own.
And when you are bumping along with part of your production below the sustainable price for free-standing production, there is often a lot more room for the price to go up than for the price to go down. Which we got a taste of over this winter with the extended polar vortex parked over the eastern US for extended periods, driving up demand for natural gas, and with it the spot price for natural gas.
Add on top of that warnings that Natural Gas Production Growth Is Slowing (HiddenValueInvestor at financial investment news and analysis site Seeking Alpha ~ free member login required to read full article), as consumption increases and natural gas storage has dropped, it would not be surprising to see natural gas prices rise even further over time. The argument in that analysis is that widespread expectations of production growth do not line up with what we know about declines in existing natural gas fields. Nor does it line up with rates of investment in facilities to get natural gas from new producing fields to market ~ indicating that the production expectations of the producers themselves do not add up to as much natural gas as the expectations of outside observers.
Now, low natural gas prices are a big part of what has been driving coal fired power plants into closure. But a big part of the cost of coal-fired power is the cost of the power plant. A price that is just enough to keep a coal plant in operation is, therefore, well below the price required to get a new coal fired power plant built.
And that 25% premium over wholesale prices for solar photovoltaic in Texas paints a picture where price spikes for natural gas drive a substantial amount of investment in new solar photovoltaic production.
Indeed, its not even necessary to bridge the entire 25% to drive substantial new investment. Without a fuel cost to cover, electrical utilities can contract long term contracts with utility scale solar power producers which reduce their exposure to natural gas price spikes. So part of the gap in price is covered the insurance value of the long term stable wholesale price from a given solar farm.
Indeed, if we consider the environmental costs of burning natural gas, then combined with the self-insurance effect of stable long term contracts its likely that utility scale solar photovoltaic in Texas is in reality effectively cheaper than natural gas power today ... with the 25% market premium a measure of the fiction that we can use the atmosphere as a CO2 and fugitive methane emissions dump "for free" just because we decide to not charge the real costs of those emissions.
Of course, not everywhere in Texas adheres to support for this fiction, which is the cause of the municipal renewable energy standards which are driving some of this investment. But there is substantial faith in Texas in the value of keeping on lying to natural gas consumers about the real cost of their natural gas so long as they can get away with it.
So if utility scale solar photovoltaic is approaching the tipping point for Texas ... well, that's worth paying attention to.
Solar and Wind: Renewable Energy Transmission Is Cheaper For Portfolio
Now, the whole point about the cost of solar farms in Texas is the cost of optioning land from West Texas ranchers. Not a lot of Texans live in West Texas, which is why that land is inexpensive to option. But since not a lot of Texans live in West Texas, you have to get the power to where they do.
Except, while there is a solar energy boom coming, there is a Windpower boom already here in West Texas. West Texas already has substantial windpower capacity. Back in the summer of 2011, when Texas was for the third time in that year setting a new record in electrical power consumption of 68 GW, 2 GW (~3%) of that was being supplied by wind ... and with an afternoon / early evening summer peak, that was during a time of day that windpower production is lower than at night.
Indeed, this last March, windpower generation exceeded 10 GW, at times providing 1/3 of Texas's consumption of electricity. Part of that increase came from the addition of a transmission line project to connect West Texas and Panhandle windpower to consumers in East and Central Texas.
Which gives us part of the natural complementarity between solar photovoltaic and onshore wind. As reported in the article in the Dallas Morning News that launched this week's Sunday Train, the transmission capacity being put in place to allow West Texas windpower to get to market can also be used by West Texas utility scale solar power, because the greatest generation of windpower is in the evening ... after the sun has gone down.
Now, there is quite often a bit of a gap in there, since the peak demand period extends past sunset, and in summer the same daytime heat that drives Air Conditioning demand is also a large part of the lower average amount of onshore windpower.
But there are two notable renewable energy sources for filling in that gap. The first is solar power that keeps producing electricity after the sun has gone down. As highlighted in a recent Dept. of Energy report, 2014: The Year of Concentrating Solar Power (pdf), and reported SolarServer:
... 87% of the volume of funds loaned under the [DOE's Loan Guarantee] program went to power generation projects, including these five [Concentrated Solar Thermal] plants and large solar photovoltaic (PV) projects. These projects all had power purchase agreements as a prerequisite, making them highly secure investments.
Two of the five plants employ thermal energy storage, which allows them to produce power on demand when the sun is not shining. This includes the 100 MW Crescent Dunes CSP project in the state of Nevada, which combines solar power tower technology with thermal energy storage.
Of the five projects, three – the Solana, Genesis and Ivanpah projects – are operational, and the remaining two – Crescent Dunes and Mojave – are scheduled to come online in 2014. All are located in deserts in the states of California, Nevada and Arizona.
And as solar photovoltaic technology is improving, so is CSP (concentrated thermal solar power), with the Australian CSIRO achieving a research milestone this past week in my old stomping grounds of Newcastle, NSW (and home to one of the largest coal export ports in the world) that:
In what it is claiming as a world record and breakthrough for solar thermal energy, researchers at Australia's CSIRO have used solar energy to generate "supercritical" steam at its solar thermal test plant in Newcastle, Australia. ...
"It's like breaking the sound barrier; this step change proves solar has the potential to compete with the peak performance capabilities of fossil fuel sources," Dr Wonhas said. "Instead of relying on burning fossil fuels to produce supercritical steam, this breakthrough demonstrates that the power plants of the future could instead be using the free, zero emission energy of the sun to achieve the same result."
Super-critical steam is steam produced by boiling water under a combination of pressure and temperature so that it produces steam directly, without the "bubbling" of the water which reduces the efficiency of the steam generation process. This super-critical steam was produced at the same temperature as current CSP plants, but with higher pressure.
While this is at the "research" phase of research and development, if the technology can be developed and delivered in the field, it would increase the efficiency of CSP plants and so reduce the cost of their power. And the ability of CSP plants to store heat and produce power after the sun has gone down means that their power is most valuable precisely when there is spare transmission capacity to connect West Texas and the Pandhandle to the large urban centers in the Eastern and Central parts of the state.
The other complement to onshore wind and solar photovoltaic is offshore wind. In the wind speed map, that band of light pink offshore of Galveston is average wind speed of 17.8 to 18.9mph. The bright pink in sections off of the southern half of the Texas coast is 17.9 to 19.0 mph. And that splotch of darker purple-pink offshore of Corpus Christie through to Harlingen is 19.0mph to 20.1 mph.
Now, there is some even higher wind speed areas in West Texas and the western Panhandle ... and some higher wind speed areas in some other coastal areas in the US. But what I am focusing on here is offshore wind as a complement for solar and onshore wind. And to get an idea of how effective a complement it can be, consider the following average output estimate for off the shore of Long Island, New York. This chart, below right, is based on measured wind speeds during 16 days of peak demand in the summer. The vertical axis measure "capacity factor", which is the fraction of maximum possible capacity available at the different times of day. And because of the fact that land and water warms and then cools at different rates, offshore wind has its own distinctive power generating profile on hot summer days.
So, blue is the load and black is the offshore wind. For a Texas application, you can ignore the green line, which are New York State capacity factors for summertime onshore wind. Focus on the shape of the offshore wind, and consider the challenge of the gap between solar PV dropping generation rapidly as dusk falls. At the exact same time that solar PV production will be dropping off ... offshore wind production is likely to be picking up.
Now, this is not a complete sustainable energy portfolio by any means, but you can see that by combining two different types of solar and two different types of wind, it is possible to narrow the gap between the average profile of energy demand and the average profile of grid scale sustainable energy production.
Wait, Am I Missing Anything?
Wait a minute ... am I missing something here? Well, yes I am. The leading edge of the solar fight, where utility companies are not signing long term contracts to insure against natural gas price spikes but are facing the scary move into an entirely new approach to being an electrical utility ... is in rooftop solar.
And that is the biggest political fight of them all, which the Sunday Train will be picking up in another week or two.
Conclusions and Conversations
I guess this is yet another Sunday Train in which I've brought the topic right up to what some people would think of as the beginning. However, its important to get a feel for sustainable power generation on the wholesale side of the market before launching into the various opportunities and challenges presented by sustainable power generation, and sustainable demand management, on the retail side of the grid.
And in any event, the Sunday Train does not end at the end of the essay. Rather, the end of the essay is just the beginning of the conversation.
As always, any topic in sustainable transport is on-topic in the Sunday Train. So feel free to talk about CO2 emissions reduction, energy independence, suburban retrofit and reversing the cancer of sprawl over our diverse ecosystems, or the latest iPhone or Android app to map you bike ride. Whatever.
On this particular topic, what is your vision of an ideal sustainable, renewable energy portfolio?