How Realistic is a Carbon-free Power Grid?

July 21, 2022 § Leave a comment

There is a new sheriff in Energy Town. In much of the world, solar and wind are the lowest cost source of power, clean or otherwise. They are effectively the new base load to which all other sources of energy must fit. And fit is needed.

Navigating Dunkelflaute

Dunkelflaute is the German word for periods with no wind and no sunlight. A more fanciful definition is dark doldrums. Navigating doldrums has always been hard for sailing ships. So it is for electricity production in periods of Dunkelflaute, which are substantial year round, because solar and wind utilization peaks out at monthly averages of 25% and 40% respectively, with annual medians at lower figures. The figure shows capacity factors for wind-based generation in the US. Capacity factor is essentially the efficiency of utilization of the nameplate capacity (maximum rated output). Solar energy has similar characteristics in terms of seasonal variation, with annual median capacity factors closer to 20%.

The list is short for clean energy sources for navigating Dunkelflaute: geothermal energy, small modular (nuclear) reactors (SMRs) and innovative storage systems. Sure, pumped hydroelectricity and other forms of gap pluggers exist, and may even be cost effective where available, but they are not scalable.

Seasonal variability of wind in Texas 2001-2013

A feature desired for all gap fillers is the ability to load follow. This means ramping up or down in response to demand on a dynamic basis. Advanced geothermal systems, in late-stage development, can load follow without impairing operations. So can SMRs. One reason that the conventional means for gap filling, natural gas fired generators, are so effective is that gas turbines can spin up or down with minimal energy penalty.

Economics of Gap Filling

There are two types of gaps, diurnal and seasonal. Solar has more diurnal variability than wind, and the most well-known gap is the 4-6 hour one in the evenings. This is filled with batteries and this practice will likely continue. The cost for this in the vicinity of 2 cents per kWh, which effectively doubles the solar based cost in places like Los Angeles. A recent study of several grid systems in the US and Europe by the Rocky Mountain Institute1 has shown that batteries alone will be very costly for the last 50% or so of achieving 24/7 clean power. The numbers go well over 10 cents per kWh on the PJM grid in the northeast US. In estimating the cost of gap fillers, investigators and commentators must resist comparing costs with those of solar and wind. The comparison must be with the conventional gap fillers, and that means aiming for less than 15 cents, and possibly less than 10 cents per kWh.

A frame of reference for this choice is the cost of the most common gap filler, natural gas combined cycle (NGCC). With a relatively low capital cost contribution to the delivered cost (20% as a rough average), the cost of natural gas is the dominant factor. At natural gas cost of USD 5 per MMBTU (which is the energy content of roughly one thousand cubic feet of gas), the dispatched cost from the producer will be about 5 cents per kWh. I am using that figure for natural gas cost because I expect that number to not be exceeded (except in short upset conditions such as the Great Texas Freeze) because of abundant shale gas.

But for comparison with zero carbon power gap fillers, one needs to remove CO2 from the NGCC process. Technology available today, but not yet at scale, ought to remove 90% plus for USD 40 per tonne CO2, with another USD 10 for geologic storage. That adds about 2.4 cents to the NGCC tab, bringing it to 7.4 cents per kWh in the US example above. Note that gas price in Europe has always been over double that in the US, and today it is at 6 times, making the associated dispatched cost that much more expensive. The point is that a global figure for a true zero carbon gap filler could conservatively be 15 cents per kWh, with an aspiration target of 10 cents over time.

How realistic is that? Very, according to leading developers of advanced geothermal systems and SMRs. At least two of the geothermal folks, Fervo Energy and SAGE Geosystems, have near term plans for commercial installations, at a Google data center and Ellington Air Force base, respectively. At least in the case of Fervo, we will know by 2024 whether the claimed costs of well under 10 cents per kWh are realized. In SMRs, NuScale is also claiming numbers well below 10 cents, but the first installation will not be until 2029.

Role of Hydrogen

Load following has one shortcoming. When not needed, the utilization is lower. In Texas, for example, in the period 2012-2019, capacity factors for NGCC varied from 48% to 57% in response to solar and wind-based delivery shortfalls relative to demand. Over 80% of the cost of electricity from an NGCC is variable cost, dominated by the price of natural gas. Lower capacity factors are more tolerable than they would be for conventional nuclear power, where capex dominates the economics.

Both advanced geothermal and SMRs have relatively low fuel costs, especially geothermal. Load following though they may be, the capital is more effectively amortized if the electricity during the idle periods is utilized in some fashion. The obvious option is storage, but that awaits innovation for systems suitable for long periods.  

An option acquiring some currency is production of electrolytic hydrogen. Considered green hydrogen, the value would be high. But the onus of low capacity factors now shifts to the electrolyzer. Here there can be some relief, in that these units can be relatively small and considerable research is ongoing to reduce both capex and opex costs. The low capacity factor piper must be paid, but this seems like the most cost effective stopping point in the toppling dominoes. At scale, the problem of adequate clean water supply for electrolysis becomes an issue. But another variant on the use of idle gap fillers is for enabling desalination plants.

The hydrogen could certainly be stored and used to generate power as a gap filler. But there are higher value uses. One would be to blend into natural gas pipelines to reduce fossil fuel usage. Blends up to 20% are known to be pipeline and end use tolerant and are already being piloted in Europe. Another high value use is in the production of ammonia for several applications, fertilizer being the largest. Transporting ammonia is cheaper than transporting hydrogen, so the ammonia would most profitably be synthesized near the hydrogen production. Recent advances in cost-effective small-scale ammonia synthesis will enable this option.

Carbon-free power grids are certainly in our future. How many, how soon and to what degree, that will depend on technology, policy enablers and appetite for investment. But even this is just one skirmish in the battle against climate change*.

Vikram Rao

*All in all, you’re just another brick in the wall, from Another brick in the wall (1979), performed by Pink Floyd, written by Roger Waters. This is my interpretation of the lyrics, not the standard one.

1 Dyson, M, Shah, S, & Teplin, C, Clean Power by the Hour: Assessing the Costs and Emissions Impacts of Hourly Carbon-Free Energy Procurement Strategies, RMI, 2021,http://www.rmi.org/insight/clean-power-by-the-hour

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