Solar and Wind Will Have Little Effect on Electric Grid’s Reliability, Report Says

Tom Johnson | March 17, 2014 | Energy & Environment
But grid operator pegs cost of upgrading transmission system at $14 billion, not counting new capacity to keep lights on during peak demand

solar farms on farmland solar arrays
With many states pursuing aggressive policies to develop renewable energy, questions are being raised about what the intermittent nature of solar and wind power will have on the reliability of the electric grid.

Not that much, according to a new study by PJM Interconnection, the operator of the nation’s largest power grid, as long as the transmission system is expanded and new generating units to provide reserve capacity are developed.

The study’s main conclusion is that the PJM system, which stretches from the Eastern Seaboard (including New Jersey) to Illinois, would “not have any significant reliability issues ‘’ operating with up to 30 percent of its energy provided by wind and solar. The caveat is that the study does not address capacity, which ensures that there is enough power to keep the lights on at times of high demand.

The finding, however, does not minimize the cost of upgrading the transmission system, projected to be $13.7 billion, nor the need to develop an additional 1,500 megawatts of reserve capacity to assure grid reliability.

New Jersey, too, has ambitious goals to develop cleaner sources of power, like wind power and solar energy. By 2020, its target is to have 22.5 percent of its electricity produced by renewable sources. A bill (S-1475) recently introduced in the Legislature by Sen. Linda Greenstein (D-Mercer) would up that requirement to 30 percent.

The state, however, appears to be falling short of even more modest goals. An Energy Master Plan adopted by the Christie administration recommends 1,500 megawatts of offshore wind capacity be developed by 2020, a target most observers believe is unlikely to be met. No offshore wind farms have yet to be approved the by New Jersey Board of Public Utilities, which is overseeing the effort.

In its study, PJM projected that under any scenario — from a business-as-usual case with renewable resources at 2011 levels to one in which 30 percent of the energy is provided by the renewable sources — consumers might benefit. Electric prices would drop in areas with congestion on the power grid, a particular problem affecting northern New Jersey, and fuel prices would drop for power suppliers, resulting in lower costs for consumers.

But power suppliers would see lower revenues from their conventional generating units, the study said. To remain economically viable, “these plants would either need to receive a larger share of their revenues from a capacity market or perhaps increase energy prices to cover fixed costs.’’

The study’s recommendation to significantly expand the transmission system to accommodate new cleaner sources of electricity could also prove contentious, since state regulators have expressed concerns about the rising cost to consumers attributed to such projects.

The state’s commitment to renewable energy also has sparked concern. Both solar and wind are far more expensive than conventional ways of producing electricity. That is especially true with the steep drop in natural gas prices, which have helped lower energy bills for consumers and businesses.

With some of the highest energy costs in the nation, many business interests question the state’s goals to aggressively promote renewable energy. At the same time, the state’s efforts to encourage the building of conventional power plants through ratepayers’ subsidies have been stymied by a series of adverse court decisions.

The recommendations and suggestions in the PJM study will be presented to stakeholders for their review and consideration.