Our Take, with Doug Sheridan
“In short, higher seasonal volatility means higher costs—especially on systems laden with renewables. That’s because higher generation and storage capacity are required to meet peak-season demand.”
Our Take, with Doug Sheridan
In our series examining the generation costs of renewables, we started by calculating a breakeven of $47.41 per MWhr for a “highly idealized” PV hybrid grid (ie, only solar + batteries). This highly idealized system operates at 100% daytime utilization and seamlessly services all nighttime demand via a perfectly sized utility-scale battery energy system (BESS). The generation and demand profiles of this "baseline" scenario are shown on the far left of this post’s featured image.
The calculated cost of generation then rose modestly to $48.04 with the introduction of intra-day variability in our post last week. While intra-day variability reduced to 83.3% the daytime utilization of the system’s solar panels, the fall in efficiency was offset by lower capital costs for both solar and battery capacity. This scenario is depicted in the center-column charts.
Today, we introduce a more consequential change to our grid—seasonal variability. Specifically, we add three months of “peak” demand in which both daytime and nighttime load is 15 GW higher than during shoulder months, as well as three months of offsetting off-peak load 15 GW lower than in shoulder months.
The resulting generation and demand profiles for this "+ seasonal variability" scenario are displayed on the far right of the image. Note that—with demand variances in the grid's peak and off-peak seasons offsetting each other, and shoulder months holding steady—total annual system demand remains unchanged from the prior scenario.
With daytime solar utilization falling to 72.5%, plus higher capital outlays needed to the meet peak-season demand, per-unit cost of generation must rise. And rise it does—to $63.82 per MWhr, an increase of $15.78 from the prior scenario. Predictably, the increase in the average cost of power does not spread evenly. Daytime power costs rise by $8.13 to $44.35, while nighttime costs soar $37.87 to $112.48.
To be sure, the intra-day (ie, short term) variability introduced last week showcased a relative strength of BESS. The opposite exists here; the introduction of seasonal (ie, longer term) variability unmasks one of BESS's weaknesses—namely, the extra battery and solar capacity required to service higher loads during peak demand months, including nighttime hours, becomes costly *dead weight* the rest of the year. This fact helped push nighttime battery utilization from 100.0% in the baseline to 69.0% in this scenario.
In short, higher seasonal volatility means higher costs—especially on systems laden with renewables. That’s because higher generation and storage capacity are required to meet peak-season demand. Since the resulting higher capital costs are amortized over steady consumption, unit generation costs must rise. And they do... materially.
Math like this is the Achilles heel of intermittent renewables and BESS. That's been clear all along, right?
Next post, we’ll examine the effects of cloudy, rainy and snowy days on our grid. Stay tuned.
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