Optimal strategies for a cost-effective and reliable 100% renewable electric grid
Sammy Houssainya) and William Livingood, 2 November 2021 (Journal of Renewable and Sustainable Energy)
Abstract
This paper explores cost-optimal pathways to 100% renewable power systems for the U.S. building stock. We show that long-duration misalignments of supply and demand, spanning from multi-day to seasonal timescales, present a dominant challenge that must be addressed to meet real-time 100% renewable targets. While long-duration misalignments can be addressed through energy storage, we show that alternative and readily available solutions that are more cost-effective should be considered first. Through a techno-economic analysis, we identify cost-optimal, region-dependent, supply-side, and demand-side strategies that reduce, and in some U.S. regions eliminate, the otherwise substantial capacities and associated costs of long-duration energy storage. Investigated supply-side strategies include optimal mixes of renewable portfolios and oversized generation capacities. Considered demand-side strategies include building load flexibility and building energy efficiency investments. Our results reveal that building energy efficiency measures can reduce long-duration storage requirements at minimum total investment costs. In addition, oversizing and diversifying renewable generation can play a critical role in reducing storage requirements, remaining cost effective even when accounting for curtailed generation. We identify regionally dependent storage cost targets and show that for emerging long-duration energy storage innovations to achieve broad adoption, their costs will need to compete with the decreasing cost of renewables. The findings of this research are particularly important given that most long-duration storage technologies are currently either uneconomical, geologically constrained, or still underdeveloped.
Introduction
Climate change concerns and falling costs of renewable energy technologies are driving increased interest in clean and sustainable sources of energy.1–5 Leveraging these trends, many U.S. states, cities, and municipalities are showing their commitment to reduce their environmental impact by developing plans to shift to 100% renewable energy sources.6–10 Long-term societal benefits of this shift toward sustainability include decreased electricity costs, local job creation, cleaner air, and reduced medical costs related to pollution and other effects of climate change.11 However, the most significant drawback of renewable sources is their inherent variability. Consequently, grid reliability is a major concern in an energy system where most of the electricity produced is from variable generation (VG) sources, such as wind and solar photovoltaics (PV).12
Numerous studies have focused on understanding the role of energy storage in increasing grid reliability and balancing supply and demand in high VG penetration scenarios.13–18 To date, there is no consensus on the required energy storage capacity for operating and maintaining a 100% renewable energy portfolio.19–21 However, there is agreement among researchers that some energy storage is necessary to maintain a continuous power balance between a 100% VG supply and natural demand for electricity.22 Moreover, multiple energy storage solutions are likely to be required, with each system's unique characteristics being leveraged to address a specific grid challenge.22 For example, the fast response time of high-power flywheels and supercapacitors makes them inherently suited for regulating grid frequency. The higher energy densities of electrochemical storage well-position the technology for ramping and operating reserves. In contrast, larger-scale energy storage solutions, such as pumped hydro, compressed air, and hydrogen storage, will likely prove useful in addressing bulk energy management challenges given their economies of scale.23,24
Current studies of VG penetration in power systems mainly focus on identifying strategies that minimize generation curtailment and maximize the economic value of renewable resources.25–30 Denholm et al. investigated storage duration requirements for 55% VG penetration scenarios on the Electric Reliability Council of Texas (ERCOT) grid system and concluded that 4 h of storage reduces curtailment to 8%–10% of variable generation.28 In a separate study, an 80% VG scenario on the ERCOT grid system was investigated, and results showed that storing or moving just 4-h of average system load could enable reliable operations while keeping renewable curtailment below 20%.29 Another study investigated the storage needs for substituting fossil fuel plants with renewables in ERCOT and concluded that above 25%–30% renewable energy penetration, significant energy storage capacity is needed.30 The primary objective function in this study was minimization of storage needs; hence, the minimization of the combined renewable and storage investment costs was not investigated. Moreover, these studies constrained the analysis to predefined curtailment limits; therefore, techno-economic tradeoffs between renewable curtailments and storage capacities were not considered. Finally, these studies do not consider the remaining 20% of renewable penetration needed to reach a 100% renewable target, which we show has the most significant impact on storage requirements and total investment costs to achieve the target.
Several studies have focused on the value of long-duration energy storage in scenarios with high adoption of renewable energy sources.31–35 Shaner et al. investigated U.S. storage needs and concluded that above 80% renewable penetrations, seasonal misalignments in supply and demand would have to be overcome.31 Guerra et al. explored the value of seasonal storage for 83.5% renewable energy penetration in the western U.S. with an emphasis on power system operational benefits.32 The study concludes that 1-week of hydrogen storage could be cost-effective at US$1.8/kWh by 2025 [32]. Similar studies identified cost targets for long-duration energy storage technologies to compete against low-carbon sources, such as nuclear, and natural gas.33,34 Sepulveda et al. conducted an analysis for Texas and New England and concluded that long-duration energy storage costs must be less than $1/kWh to fully displace firm low-carbon generation technologies.34 It is important to note that the solution space in the mentioned studies is limited by their lack of consideration for supply-side strategies, such as excess generation capacity, and demand-side strategies, such as building load flexibility and permanent building energy efficiency investments. In addition, long-duration energy storage cost targets that compete against surplus renewable capacity and curtailment, in 100% renewable constrained formulations, are not identified in these studies.
Through recent efforts by Cebulla et al., an extensive synthesis of 17 country-wide storage expansion studies in the literature was conducted for Europe, Germany, and the U.S.35 The study concludes that with increasing variable generation shares, energy storage power capacity requirements increase linearly, and the energy capacity increases exponentially. The study provides a good reference on general trends observed by recent research on the subject; however, their synthesis did not filter for energy storage requirements by imposed curtailment constraints, renewable generation mixes, or demand-side strategies. Moreover, their investigation did not account for U.S. regional implication on cost-effective 100% renewable power systems.
In a recent study, Perez et al. explored the impacts of overbuilding PV generation and concluded that proactive curtailment enables lowest cost solutions;36 however, their analysis was constrained to PV curtailments only. In addition, their investigations are limited to a case study in the state of Minnesota. Through their investigations, they also consider supply side flexibility through a 5% gas generation allowance and show that this leads to major reductions in overbuilding PV.36 However, their investigations do not include load flexibility strategies in strict 100% renewable scenarios.
The objective of this paper is to identify cost-optimal pathways to 100% renewable power systems for the U.S. building stock. Throughout the analysis, we focus on energy storage duration and capacity requirements that are necessary to achieve the target. In contrast to the current body of research, we consider regionally dependent opportunities and solutions that minimize total investment costs. In addition, our analysis removes renewable curtailment constraints that intend to maximize the economic value of VG resources. In doing so, we explore the tradeoffs of excess renewable generation capacity and associated curtailments on storage requirements and total investment costs. Furthermore, we consider readily available supply side and demand-side strategies that minimize total costs. Techno-economic investigations of demand-side strategies include building load flexibility and permanent building energy efficiency impacts. Building energy efficiency investments decrease the necessary renewable capacity, transmission capacity, and storage requirements; therefore, its impacts are threefold. We also consider the techno-economics of supply-side strategies such as oversizing VG sources and the diversification of renewable portfolios.
To summarize, the following list succinctly reiterates the novel elements of this research that have not been explored or identified in the literature:
1- We investigate a U.S. regional analysis of pathways to 100% renewable power at minimum total investment costs. In doing so, we identify cost-optimal and region-dependent strategies to reduce the otherwise dominant long-duration energy storage capacity requirements and associated costs.
2- We identify the optimum regional investment priorities and associated breakdowns by energy resource assets to achieve the target. Our analysis considers readily available supply-side and demand-side strategies, and energy assets.
3- We identify regionally dependent long-duration energy storage cost targets for emerging storage technologies. In contrast to published works, we identify long-duration energy storage cost targets needed to compete with oversizing of increasingly lower-cost renewable generation.
4- We reveal that a combination of (1) optimally mixed renewable resources, (2) oversized generation capacities, and (3) building energy efficiency investments can eliminate the need for long-duration energy storage in some U.S. regions. This is particularly important given that most long-duration storage technologies are either geologically constrained or still underdeveloped.
Our research also intends to demonstrate an overarching calculation methodology that can be leveraged by future site-specific studies of cities, states, municipalities, districts, and communities aiming to achieve cost-optimal 100% renewable status.
We begin our discussions in Sec. II by describing the methods used to develop the baseline model and for modeling generation, energy storage, building energy efficiency, and building load flexibility. Our results are presented in Sec. III, and in Sec. IV we highlight the limitations of our research and discuss opportunities for future work…
Conclusion
The primary focus of this study was to understand cost-optimal pathways to 100% renewable power systems for the U.S. building stock. The U.S. DOE prototype building models and U.S. EIA survey data were used to simulate the demand of a collection of buildings that are representative of the U.S. building stock. Several climate zones spanning the U.S. were investigated to demonstrate regional trends and opportunities. Our analysis shows that the last 75%–100% of renewable penetration results in significant increases in long-duration energy storage capacities and costs. Through the analysis, we identified region-dependent supply-side and demand -side strategies that reduce, and in some cases eliminate, the otherwise dominant long-duration energy storage capacity requirements and associated costs. We show that for each U.S. region, a clear and unique optimum renewable portfolio exists that minimizes storage needs and total costs. The optimum renewable mix generally favors higher wind power allocations in colder climates and higher solar PV allocations in hotter climates. Our results reveal that cost-optimal renewable production factor range from 1.4 to 3.2, and optimal energy efficiency penetrations range from 52% to 68% savings, depending on the climate region. Therefore, the benefits of excess generation capacities and building energy efficiency measures are outweighed by their incremental investments. The cost-optimal renewable production factors and energy efficiency penetrations typically increases from hotter to colder regions.
A long-duration energy storage cost sensitivity analysis was presented which identifies regionally dependent storage cost targets for emerging technologies. In contrast to published works, we identify long-duration energy storage cost targets needed to compete with oversizing of increasingly lower-cost renewable generation. Our results indicate that U.S. regions defined by CZ 2A, CZ 3B, and CZ 5B have long-duration energy storage installed capital cost targets of $43, $30, and $73/kWh, respectively. For CZ 4A and CZ 7, higher costs would still deem multi-day storage economical, given the pronounced misalignment challenges in colder climates. We reveal that a combination of (1) optimally mixed renewable portfolios, (2) oversized generation capacities, and (3) building energy efficiency investments can eliminate the need for long-duration energy storage for U.S. regions defined by CZ 2A, CZ 3B, and CZ 5B. The findings of this research are particularly important given that most long-duration storage technologies are currently either uneconomical, geologically constrained, or still underdeveloped.
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