Renewable growth challenges US power markets, new technologies bring solutions

As the renewable generation build out picks up momentum, the change that US wholesale power markets are going through is dramatic and wide reaching, but without new technology and flexibility the challenges faced by the industry, such as extreme weather events, will not find solutions.

Renewables have been around long enough that new technology, such as battery storage, is being developed to address existing solutions and how to fill in for intermittent resources, panelists said April 19 at the Platts Global Power Markets Conference in Las Vegas.

"In order to enable the integration, you need the transmission," Guillermo Bautista Alderete, director of market analysis and forecasting with the California Independent System Operator, said about procuring capacity to meet demand.

CAISO's 2022-2023 Transmission Plan, which was developed with the California Public Utilities Commission and the California Energy Commission, identified 46 transmission projects at an estimated cost of $9.3 billion that are needed to move the more than 40 GW of new resources that the state will need to add over the next decade. The transmission plan will go before the CAISO Board of Governors in May for a vote.

In contrast, the Electric Reliability Council of Texas is an electrical island, said Kenan Ögelman, vice president of commercial operations at ERCOT. It is not connected to the Eastern or Western Interconnection. It does have a handful of DC ties with Mexico and the Southwest Power Pool which total to about 1.1 GW of its roughly 80 GW system.

ERCOT load has been growing steadily for the last 20 years.

"We are not at a place where the peak cannot be met with the dispatchable fleet alone," Ögelman said. "That is very distressing to a grid operator."

The dispatchable fleet is aging out of operation.

Renewables growth

In 2005, renewables accounted for 0% of Midcontinent Independent System Operator's market share, said Marc Keyser, director of seams coordination, membership services and customer coordination with MISO. That has grown to 13% and is expected to climb to 30% or 40% in the next 20 years.

Renewables will impact the transmission system differently than conventional resources.

"If we don't have the right system, then the operators in the room won't be able to balance the system," Keyser said about how important it was to get it right now. "We're building the next generation of highway system because the resources are going to be built in another location than load."

Renewables also come with challenges. There is an oversupply of solar in the middle of the day when the sun is at its strongest, Alderete said.

There can be times when wind resources are available, but the transmission system is not available to move that wind generation, Ögelman said.

Extreme weather

During the September 2022 heatwave that led CAISO to break a 16-year-old peakload record, CAISO "barely got by", Alderete said. However, lessons learned during the 2020 summer peak season, which brought the first rotating outages since 2001, helped the grid during the 2022 situation, which he called a one in 25-year event.

"We need to have sufficient capacity," Alderete said. "There is nothing simpler than that."

Summer ends up being a stressful timeframe, but winter is becoming a bigger and bigger problem, Ögelman said.

In late December, a windy Canadian cold front blew down to Texas. The weather system drove up wind generation output to around 24,000 MW, but then the wind suddenly stopped and wind output plunged to 4 GW.

"It's a huge challenge to manage," Ögelman said managing the swings in wind generation to keep the lights on.

Similarly, during Winter Storm Uri, MISO experienced eight days with very little wind which made the grid operator struggle to keep the lights on, but during December 2022 the opposite situation occurred with wind, Keyser said. Winter Storm Elliott brought surplus of wind to MISO, which was then able to help out neighboring regions.

Battery storage

CAISO has been very aggressive with renewable generation. With a 10-year history with renewables, CAISO is seeing new technologies come online, such as battery storage. CAISO went from 300 MW to 3.5 GW of battery storage capacity within six months, Alderete said.

Battery storage naturally compliments renewables, storing excess renewables when the weather brings more wind or sun, Alderete said.

"It's capacity that comes on the system that you can schedule," Alderete said. "We continue to see they're making a significant difference. They're finding the best way to operate in the market."

However, most resources have a four-hour battery.

"You have to be very efficient when you dispatch these resources," Alderete said. "If you dispatch them too early, you miss the window when you need them the most."

Batteries are a different product that ERCOT is trying to integrate onto its system, Ögelman said.

Batteries are great to fill in when wind generation suddenly drops or when weather events cause forced outages, Keyser said.