Pushing Out Peakers
By Hudson Kuras
Energy storage plays a crucial role in the future replacement of fossil-fuel power stations with carbon-free renewables. Due to the stochastic nature of wind and solar power, it is not only production capacity that will determine whether America can make this change, it is also if that energy can be stored affordably and in large enough quantities to supply the grid at times when electricity demand exceeds electricity production. With the help of batteries, wind and solar facilities will one day be capable of delivering a constant electricity supply to the grid by charging batteries when production exceeds demand. The hope to replace fossil-fuel plants with a tandem of renewable generation and energy storage will not be achieved in the immediate future. However, battery storage had a big year in 2016 and the momentum will continue moving forward. Of today’s storage technologies, lithium-ion batteries are developing the fastest but they aren’t being used to help wind and solar facilities deliver a constant supply. Instead, lithium-ion batteries are being used to add electricity supply to the grid during times of peak demand.
As battery storage improves, it disrupts the traditional electricity supply model and has the potential to replace peaker plants entirely. In the current model, demand for electricity is met by a combination of base load, load following and peaking power plants. Base load plants are power plants, usually coal, combined cycle natural gas or nuclear plants, with low marginal costs that produce electricity at a constant level to meet a region’s continuous energy demand. Load following power plants generate electricity to meet demand that exceeds the production of base load plants. They generally operate during the day responding to increases in demand from the grid and they reduce or shut down output at night. Peaking plants only operate during times of the highest demand. For example, a spike in air-conditioning usage during mid-afternoon hours can increase electricity demand to a level that exceeds the production of base load and load following plants. Peaker plants are most often gas turbines that burn natural gas and generate electricity at a much lower efficiency than other plants. These higher costs are offset by the higher price at which peak electricity fetches as compared to base load prices.
Gas turbine peaker plants and pumped-storage hydroelectricity currently share the market for peak electricity generation. Recent developments have lithium-ion batteries poised to change that. In most cases, it is still less expensive to operate peaker plants, but battery costs are nearly half of what they were in 2014 and are still dropping. Battery storage also has multiple other advantages over traditional peaker plants. They take up less space and have fewer restrictions on where they can be located, they produce no carbon emissions while operating and they can be activated and deactivated within seconds while combustion facilities need a lead time to be fired up. Battery storage is already taking off in California. As these batteries develop and as emissions standards become more stringent, the closer gas turbine peaker plants move towards extinction.
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Hudson Kuras is the New York Energy Week 2017 Fellow. He graduated from Columbia University in February 2017 with a Bachelor’s of Arts in Sustainable Development concentrating on energy and resources. He has worked as a Summer Analyst at Brown Brothers Harriman & Co. and as a non-profit Consultant with Columbia’s Earth Institute.