Wind Power and the Grid

The Wall Street Journal wrote a front page article titled “Natural Gas Tilts at Windmills in Power-Generation Feud“. This article was well written and describes a controversy in Texas related to wind energy and their (inherent) inability to deliver reliable power.

Texas is unique in that it is “walled off” from the rest of the USA on its own grid called ERCOT. To be technically correct, the Texas grid doesn’t include El Paso (I used to consult out at El Paso Electric) but that part of the state really is more like New Mexico, anyways.

Texas has a large percentage of wind power – 6% for 2009. The other sources of generation are about 20% for nuclear, 30% for coal, and 45% for natural gas. Per the article:

Texas… has 9,400 megawatts of wind-power generation capacity – more than all the power plants in Utah. Texas has more wind power than any other state… more than three times as much as California.

Power is generally dispatched in the following manner:

1) the grid control operator makes a request for how many megawatts of power that it needs for the next day
2) the various owners of generating capacity (wind, gas, coal and nuclear) submit their available power for the next day
3) the wind power is always taken because it has the lowest incremental cost, along with the nuclear power available as well as coal. Then natural gas is selected until demand is equal to supply, with older less-efficient “peak” gas plants turned off if there isn’t enough demand

The issue is that wind power can’t guarantee its available capacity. In general, if a generation owner “commits” to a certain amount of supply capacity and can’t provide the electricity, then that generation company is charged a penalty for failing to deliver.

In the case of wind power, the generation owners are not penalized if their promised power is not available. All of the other power providers (nuclear, coal and gas) face penalties for failing to deliver.

Coal, nuclear and gas operators must pay for their own backup if an operational or maintenance problem prevents them from delivering power as promised. But if wind generators fail to deliver promised power because the wind doesn’t blow, the cost of backing up wind power companies is spread among all the generators, state officials say. This puts an unfair burden on non-wind generators, says the gas faction.

This issue, the useful capacity of wind power (not its “rated” capacity), and who pays for backup capacity since the wind may or may not be blowing reliably on any given day, is a critical question. Wind in a way is “free riding” on the grid; wind is paid as if it is reliable, when in fact it isn’t, and then the other electricity providers de-facto subsidize wind (again, they already receive Federal and State subsidies) by not charging them for failing to deliver AND taking on their pro-rata share of the power needed when the wind farms don’t deliver.

Not only does wind power get a “free ride” on backup capacity, which hurts the gas generators, but the gas generators that DO run are also getting a lower per-unit reimbursement because the revenues are set based upon the highest “marginal” cost for electricity; on a given day when there is more wind only nuclear, coal and the most efficient gas plants will be online (along with the wind, which always is in the stack, depending on weather conditions) if there isn’t much demand, so not only do gas plants lose money from NOT being on but the gas plants that ARE on receive a lower price for their power. This concept wasn’t really touched upon in the WSJ article (it was better than most of their articles, but still had some holes).

This article is key to an understanding of wind’s impact on the grid; either wind operators should need to estimate their available power more cautiously (to ensure that they meet their commitments), or they should pay to have alternate power (in some reliable form, like natural gas) online.

It is interesting to see more and more articles such as this in mainstream papers such as the WSJ and the New York Times. They are starting to have some journalists that seem to know something about their topic, too.

Cross posted at LITGM

23 thoughts on “Wind Power and the Grid”

  1. Phil, Physics is not Bourgeois, humans are. Physical laws and their resulting theories have done quite a lot and along with economics have a great determinate of what can be done within their own spheres.

  2. The fact that everyone sharing the grid has to play nice, or the whole grid goes down, makes me wonder about the wisdom of breaking up ownership and control amongst so many firms using such disparate technologies. Sorting out everyone’s responsibilities is non-trivial.

    It obviously makes sense to use wind power when the wind’s blowing and you’ve already got windmills — the fuel cost is zero, after all — and it doesn’t make much sense to punish a wind generator when the wind’s not blowing — because it’s not negligence that’s causing the unreliability — but the natural gas generator, which is quick to fire up and available on demand, is what’s keeping the whole system from crashing. That would imply that the natural gas generator shouldn’t be paid so much based on how much natural gas gets burned but more on how much capacity it can provide, as insurance.

    If the wind and natural gas generators were owned by the same firm, I think the problem would resolve itself — and we’d more clearly see that a kW of “backup” natural gas capacity combined with a kW of intermittent wind capacity has very high capital costs for its sometimes-low, sometimes-high variable costs. Right now, as Carl points out, the wind folks are free-riding on the security provided by the natural-gas folks.

    (Another option would be to tie the wind power in with hydro power, which could serve as storage.)

  3. Why not use the wind-based electricity to electrolize water and store H2 to burn when the wind isn’t blowing?

  4. Isegoria, Windmills are a totally different technology than gas. To imagine such a conglomerate of energy technologies as a viable option commercially is beyond a challenge. It is practically impossible. Generators of power should be separate to allow them to use their knowledge of technology to its best advantadge and compete with other generators on economic terms. The most government should do is mandate common forms of interfacing to the transmission grid and perhaps control pricing to some extent.

    If I can make a go of wind generated energy at a competitive price I should be allowed to do it within the scope of local laws. I have to accept however the real costs and effects of the power I create.

    As the Texas story showed, no wind at a time when it is needed has costs. That will affect the power companies decision to consider wind for a substantial source of power.

  5. Mark, I was speaking of those who actually set up businesses that generate power. If you ever were in a power plant powered by coal, nuclear, hydro, you would know that. The technologies are completely different. Same goes for plasma gasification, solar and wind. To put together a company that does all that is practically impossible. The generators (businesses) know that and stick to their expertise. The distributors (many time often generators of one or two types of power) handle sucking in the electrons and routing them. Not sure what you were envisioning.

  6. D Kennedy – I brought up exactly that issue in the previous article. I wish you better luck in getting an answer from those who declare that alt energy is inherently unreliable. My understanding is that currently, it is uneconomic to do so and the leading candidate is fuel cell consumption, not H2 burning. Given present research trends, it is projected to start becoming economic in the latter half of the present decade as fuel cells continue their price drop.

    Grid storage is something that is already being done on a limited basis. There’s a lot of research going on to improve batteries, supercapacitors, and hydrogen fuel cells. A breakthrough in any of these would dramatically enhance reliability because you’d stop getting your alt energy ‘raw’ but rather mediated through some sort of cheap grid storage technology which would even out availability. Grid storage would even benefit conventional power generation because you could use the capacity that’s idly ‘spinning’ in case of unexpected outage to generate hydrogen, hydrogen that can either be sold elsewhere or used for fuel cell generation on site.

    The appropriate battleground for the right is to realistically examine the alt energy and embrace it when it’s commercially viable without government subsidy. The sensible greens can be won over at that point because the luddite greens will turn against any commercially viable baseload power, no matter how non-polluting. The greens are just good camouflage for their hostility to modern, high energy use society. But the luddites can’t carry a majority so we need to separate them out from the true greens as fast as possible.

  7. NedLudd,

    Regarding Phil and bourgeois physics, I think maybe you need to get your sarcasm detector recalibrated. :-)

  8. TM and DK. I agree with you that research is being done on the technologies and should continue with the purpose of commercializing them. Episodic power does not connote unreliability but it certainly points to the need for reliable storage. It isn’t there yet and there are companies such as ECD that have been working at that for decades. They just can’t power anything more than a fairly small entity. My concern is that you substitute hope for the unrealized.

    DK I am in agreement with you that the appropriate place to decide power issues is the market without subsidies. The history of power generation is littered with all manner of technologies subsidized not from merit but from political connection.

  9. “Why not use the wind-based electricity to electrolize water and store H2 to burn when the wind isn’t blowing?”

    Because electrolyzers are expensive and need to be in use most of the time to pay for themselves.

    Because the round trip efficiency is on the order of 25%. If you’re going to make hydrogen gas, put it to some proper use like making ammonium nitrate fertilizer or something.

  10. Americans are spoiled because they always get the best-available of everything. Because suppliers compete with each other, the American consumer can always choose the best product at the price he/she wants to pay. And this is true of almost everything the buy.

    Green power asks the question “do we really need this wasteful luxury that comes from only buying the best?” Do we really need to give customers the best on everything just because they will pay for it? Can’t we just take their money and give them what we have? Is competition good? Do customers really need power today right now? Isn’t next week good enough?

    As Isegoria said yesterday we need power when its really hot. But our ancestors did not have electricity which proves that electricity is an unnecessary luxury. So if you’re too hot, take some clothes off. Go swimming. For the sake of the planet cut down on electricity. Alternate power is the future when Man is in harmony with nature. Go Green for a better world through intermittent electricity.

  11. Because electrolyzers are expensive and need to be in use most of the time to pay for themselves.

    Because the round trip efficiency is on the order of 25%. If you’re going to make hydrogen gas, put it to some proper use like making ammonium nitrate fertilizer or something.

    I actually thought about that before, but I don’t really know how much the Haber process could be automated.

    Of course, any ancillary uses you find for wind power don’t really help the grid any; I’m not sure anyone would be building windmills without the illusion that they’re really helping the grid (even if they’re not). The micro-fertilizer plant windmills would actually have to survive in the real world, and not the hothouse environment of the Smart Green Power Grid.

  12. What strike me here is that conventional power producers are treated like adults running a real business while the alternative power producers are treated like children running a lemonade stand.

    Just like every other real adult business, conventional power producers have contractual obligation which they must fulfill or face monetary penalties. By contrast, alternative power producers have no contractual obligations and like a child are told that they must just “try to their best.” If they produce power, well isn’t that sweet but if they can’t well will just have one of the grownups step in and take up the slack.

    We can’t base a significant part of our power grid on generators who can’t even be held to minimum performance standards. How the hell do we even begin to balance the grid? How do non-alternative producers stay in business when they (1) never know how much power they will sell hour-to-hour and (2) never know how much power they will be compelled to sell at a loss hour-to-hour?

    Is this any kind of sustainable business model? Would we even consider running any other kind of business this way?

    Shouldn’t this indicate that the technology is nowhere near ready for primetime?

  13. Soylent,Phil – I am interested in your sources about electrolyzers. Do you have any sources about them. I have time to run the numbers now.

    Sol – I stand in amazement at your post. Realizing the admonishment previously given to me by Kirk, were you supposed to end that post with /sarc ?

    Shannon – I agree with your post in the sense that although the contract language is in place, it is clear from reading the “green energy” programs of DTE Energy that special considerations are given to alternative energy producers that base producers do not get. This is the bow to political pressures I have talked about previously. This has been done before however when the grid was initially set up in this and other countries. I do not have the knowledge or analysis to know whether we would have a grid like this if the considerations given in the early 20th century were not provided to those that became the currently existing power infrastructure. Maybe we would all be in a situation like Sol described.

  14. NedLudd: I think Sol went to some close-to-equator country; it got hot, really-really hot, and the locals have no money to buy the best A/C on the market. Sol, how’s your blood pressure? Vision? Seeing any violet floating shapes in your eyes? Going for a cool swim is actually a good idea…

  15. When I suggested that wind and natural gas should be owned by a single firm, I was not suggesting that they’re similar technologies that should be handled by the same team of engineers and operators.

    My point was that wind is the least responsive of the technologies in the energy portfolio — it generates when the wind blows, period — and natural gas is the most responsive — it fires up quickly, and thus “insures” the grid against gaps between supply and demand. So, if the two are under the same ownership, the wind can’t free ride on the valuable service the natural gas is providing, but the combined firm can still deliver cheap power when the weather cooperates.

    Right now, wind looks cheaper than it really is, because it’s not paying for all that highly responsive natural gas capacity the grid needs to stay up when the wind doesn’t deliver. Worse, it’s actively sucking away revenue from the natural gas generators — which aren’t paid on retainer for the insurance they provide, as I understand it, but by the kilowatt-hour, if and when they supply “peak” power. So the more wind we add, the less natural gas capacity stays financially solvent, so we get more intermittent power and less highly responsive on-demand power, and pretty soon they’re so far out of balance that we can’t keep the grid up and running.

    If the two sources of energy are held by the same owner, such externalities are internalized — and that single owner probably sees that paying for wind capacity, which sometimes delivers free energy, and natural gas capacity, which can quickly deliver relatively expensive energy, is paying for a lot of capacity, only half of which gets used at any one time.

  16. NedLudd – My point is that there is a political one. The engineering doesn’t matter if there is a durable majority that mandates an insane engineering response. So long as that political reality holds, the engineering won’t matter. The key is to break the durable majority.

    The coalition that denies us a secure grid going forward is NIMBY + Green + Luddite. Of the three, I hold that the Green faction is most compatible with a reliable grid. All they want is a non-polluting one. The luddites want no grid and the NIMBY faction wants a magical one.

    If you can send reassurance that clean tech will have a fair shake and displace dirty tech, you can at least split the greens and possibly pry them entirely out of the insecure grid coalition. Disparaging green tech in over-broad ways achieves the opposite effect, confirming their opposition to power and to a free market grid.

  17. Isegoria,

    I do not disagree with some of what you are saying and in part, I have said similar things. Coal, Gas and Hydro Generation have basically similar origins. Burn something and turn it into energy. There is a lot of overlap in that. Nuclear adds an engineering layer to that but has been historically close to the original model. Wind and Solar are episodic and completely divorced from the previous history of power generation as are related alternative technologies. Plasma gasification and other waste to energy technologies are closer to the former. What I see from the information available is that technologies not similar to base generation are correctly handled as a contractual supplier to the base generator. An analogy can be drawn to this and a specialty market that is only able to get a specific item in at a certain time of year (unfortunately, the only example that comes to mind now is Beaujolais wine). This is not what you can plan for when you have to kee the lights and heat on.

    TM, I am in agreement that this is a matter of political will but I do not agree that the fight is strictly that. I look to the technical rather than the political to affect things mote. Politicians can wish for or not wish for many things. Reality many times intrudes. I also believe in the ebb and flow of history and the universal truth of human nature.

  18. TM,

    You write NIMBY + Green + Luddite as if these were three distinct, non-overlapping groups. But are there significant number of Greens who are not alsoNIMBY or Luddite (or perhaps all three)?

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