Renewables for Baseload Generation

Published on 06/01/2012 by Tom Fitzpatrick and Ron Lutwen Renewables for Baseload Generation – Probably Not Industry experts recognize the formidable economic challenges to building new renewable energy projects in the U.S.: federal stimulus money is drying up and private-sector…

Published on 06/01/2012 by Tom Fitzpatrick and Ron Lutwen

Renewables for Baseload Generation – Probably Not

Industry experts recognize the formidable economic challenges to building new renewable energy projects in the U.S.: federal stimulus money is drying up and private-sector capital is hard to come by.

Even if the money started flowing freely tomorrow, it is unlikely that current green energy technologies will generate more than a fraction of our total capacity in the foreseeable future. It is unrealistic to imagine otherwise, considering our total baseload capacity in coal and nuclear energy and the relative costs and capacity factors of these versus renewable technologies.

According to the most recent Energy Information Administration figures, coal and nuclear generating capacity in the U.S. is approximately 415,000 MW. This represents 40.5 percent of net summer generating capacity. However, coal and nuclear provide approximately 65 percent of the annual megawatt-hours generated in the U.S. At the same time, our existing coal and nuclear baseload capacity is diminishing as older plants approach the end of their lifecycle, and expansions and replacements are being shelved due to environmental concerns.

In August, the Federal Energy Regulatory Commission estimated that up to 81,000 MW of coal fired generation is likely or very likely to be retired as a result of proposed EPA regulations. This represents roughly 8 percent of the nation’s installed generating capacity and could have a drastic impact on electric reliability if not replaced with reliable sources.

Many people want to replace existing coal fired units with wind power. However, new wind power plants are not competitive with existing coal fired units based on the relative costs and capacity factors of these technologies.

EIA figures indicate that in 2009 the average operating, maintenance and fuel cost for a fossil fired steam plant was $40.48 per MWh, and the average capacity factor for the country’s coal fleet was 63 percent. Many of the coal-fired units have little or no debt, so the 40.48 $/MWh figure should be close to the total cost of power for those units. EIA also shows the average levelized cost for a new onshore wind facility to be $97 per MWh with a 34 percent capacity factor. Data for existing wind units indicate an average capacity factor closer to 25 percent. A new wind farm is simply not competitive with the existing coal-fired plant in capacity or cost.

A different economic comparison appears when one looks at the cost of new generation. The chart on this page is based on EIA data and presents average national levelized costs for generating technologies to be brought on line in 2016.

The ranges for natural gas and coal are due to the type of technology used, the inclusion/exclusion of carbon capture, and sequestration into the cost. The data shows that new natural gas-fired generation has the lowest forecasted cost and that onshore wind is competitive with both new coal-fired generation and new nuclear generation.

However, the expected 34 percent load factor for onshore wind is substantially less than the 85 percent to 90 percent load factor range for natural gas, combined cycle, coal and nuclear. The levelized cost for solar is substantially higher than all other technologies, except offshore wind, although it’s expected capacity factor is substantially lower.

Given these forecasts, natural gas-fired units can be expected to be the primary technology choice for baseload generation. With the uncertainty of future environmental regulations and the safety concerns for nuclear, renewables will have a place in the portfolio of generation sources but it probably will not be as a baseload resource.

The realistic approach is to build a solid baseload portfolio of coal, nuclear and natural gas plants, and supplement this capacity with green technologies, when and where they make good sense.