Coal Zoom | Recognizing the Full Breadth of the Variability Challenge

Recognizing the Full Breadth of the Variability Challenge

February 7, 2024 - As the world begins to use more and more variable renewable energy, we’re learning in real-time just how much more complex and challenging navigating the energy transition will be. A new paper from the International Energy Agency’s International Centre for Sustainable Carbon finds that a potential over-reliance on variable power in trying to maintain a stable, reliable and affordable electricity system is a growing and unnecessary risk as dispatchable generation is pushed aside at an alarming rate.

The paper compellingly highlights that moving to a variable-heavy electricity system requires considerable investment for the upgrading and expansion of the grid to mitigate the vulnerabilities inherent in a system built on the vagaries of the weather.

The report provides a timely reminder that achieving a renewable future isn’t just about adding solar panels to roofs and connecting wind turbines. It requires a radical rethinking – a full transformation – of our current energy system. More precisely, “integration of [renewables] requires energy storage, curtailment, re-dispatch, grid modification, grid forming inverters and synchronous compensation, consumer flexibility, wholesale price volatility and market reform.” The bottom line is, “such investment and expansion are not keeping pace with [renewable] deployment and dispatchable power capacity phase out.”

Today, dispatchable generation – namely coal and natural gas power plants – enable grid security and reliability. And coal capacity, in particular, provides fuel security, an increasingly important dimension of reliability. While dispatchable generation provides power when it’s needed, there’s little correlation between when variable renewables generate power and demand peaks (see the following chart illuminating that stark difference between coal and wind power).

As the paper importantly underscores, the challenges of integrating renewable energy – and building the system and market constructs to serve it – get harder, not easier, the larger the renewable penetration. Solving the variability problem is a colossal undertaking.

Princeton’s own Jesse Jenkins – one of the architects of the Inflation Reduction Act – wrote as much in The New York Times in 2019: “The variability challenge of renewables is greater than is generally appreciated. The problem is not simply the setting sun and the hourly dips in wind generation; the toughest challenge comes from the weeks and months when wind and solar production decline dramatically because of seasonal factors or prolonged weather fronts.” He added, “to get through those lengthy periods, renewables-dominated systems have to be supersized, installing three to eight times more power capacity than peak demand so they can fill the void when solar and wind output is diminished.”

Such a system is remarkably capital intensive, inefficient and simply out of reach at the speed at which we’re adding – or not adding – renewable capacity and the enabling infrastructure it requires.

The entire International Centre for Sustainable Carbon report is worth a read but several of the key findings and recommendations are particularly salient. First, “cost analysis is not sufficiently transparent to identify the total cost impacts of energy and technology options.” In other words, we don’t have the tools – or aren’t using the right tools – to fully understand the system-wide costs associated with moving to a variable renewable electricity system. Second, modelling of system needs should focus more on extreme events, when reliability matters most, not just on business as usual. And finally, and most importantly, “dispatchable power remains a necessity and is critical to ensure system security and reliability.”

Dispatchable, fuel-secure generation is the lynchpin of the electricity system. It’s critical we recognize that before it’s too late. As we navigate the energy transition, maintaining that essential capacity – and the irreplaceable support it provides the grid – will be key to successfully navigating the road ahead.