Many perspectives on solar generation undervalue or devalue the technology because utilities can’t depend on it to provide steady,
predictable amounts of power as they can on traditional fossil-fueled or
(dare I mention) nuclear-powered generators. The thought process is so-lar-generation facilities produce only during daylight hours and, under
best conditions, they lie dormant for half of every day.
PAR for the course
This perspective ignores several conditions under which grid power
generation and distribution resources operate: Grid utilization is highly time-of-day dependent, exhibiting large and mostly growing peak
to average ratios (PARs) with peaks tending to occur during afternoon
For example, in 1993, New England peak power demand exceeded
the average by 52 percent (table 1). By 2012, the most recent year for
which data is available, that figure had grown to 78 percent, down from
the previous year’s topper of 89 percent.
In Southern California, the 20-year worst-case PAR was 1.96 in 2010,
meaning that electric power generation and distribution capacities had
to accommodate roughly twice their average load even before padding
for safety, reserve capacity, load power factor, and growth.
Grid and bear it
Market conditions have changed — in some cases dramatically —
altering the economic context in which we judge solar technologies. Currently, generating plants are facing significant challenges.
For example, in September this year, the US Energy Information
Administration (USEIA) reported that electric-power-sector coal inventories had fallen 22 percent from last year, reaching eight-year lows.
Of the 4.1 PWh of electric energy generated in the US during 2013, 39
percent was fueled by coal.
In the south, where electric-power generation relies heavily on coal,
inventories are down 29 percent. Utilities in the midwest, another
region highly dependent on coal-fired power generators, also report
issues with low coal inventories after coal-car loadings recently fell for
eight out of nine weeks. One Wisconsin utility reports it may have to
limit or cease operations while a generator in Minnesota has already
reduced output power to conserve fuel.
Natural-gas-fired power generation facilities, responsible for 27 per-
cent of the US total, are also under pressure with double-digit percent
price increases in the most
recent year: July to July pric-
es to electric utilities have in-
creased 23. 7 percent between
2013 and 2014, according
to US Department of Energy
(DOE) data. The price increase
to independent power pro-
ducers over the same interval is even greater at 30. 8 percent.
The aggregate stress in US electric power-generating operations
reflect in power pricing, set to spike in some regions between now
and the end of the year. For example, UK-based National Grid — one
of New England’s top electric-power providers — has announced residential electricity rates will increase 37 percent year over year, starting in November. Nationally, year-to-year residential rate increases
have averaged 3. 2 percent per year for 13 years, according to USEIA
data (figure 1), but industry sources reference this year’s increases in
natural gas prices as well as reduction in nuclear and coal-fired generation capacity in the region. Another major provider of power to the
New England region, NStar, has also issued warnings of higher rates,
though they remain coy about the numbers.
Exacerbating the regional market conditions, the 620 MW Vermont
Yankee reactor will cease operation by the end of this year. According
to DOE data, the average age of commercial nuclear-powered electric
generation facilities is 33 years, so we can expect notable capacity reductions in other regions in the coming years.
Figure 1: Average cost of US residential electric power and year-to-year
price growth rate.( Credit: Energy Information Administration, US Department of Energy)
Table 1: US grid power: average, peak, and PAR data, 1993 through 2012)
One Wisconsin utility reports it may
have to limit or cease operations
while a generator in Minnesota has
already reduced output power to