Released May 31, 2023 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The much-discussed energy trilemma -- providing electricity that is reliable, affordable, and clean -- carries significant economic implications depending on whether natural gas is determined to be a "clean" electricity fuel. Some states define natural gas as "clean" while others explicitly exclude natural gas from their "clean" electricity fuels.
New York state's mandate for clean electricity -- that 70% of its electricity will come from clean sources by 2030, and 100% by 2040 -- excludes natural gas from the clean fuel category. That exclusion will reduce flexibility for the system, likely sending electricity prices soaring, according to Juan Arteaga, a senior associate for intelligence at Enverus (Austin, Texas). He spoke May 17 at the company's EVOLVE conference.
"When you add one new factor, clean electricity, to reliability and affordability, things get more complicated and the other two factors are affected. If we want a cleaner grid, then reliability and affordability might be affected. It's a co-dependent relationship," he said.
In a session titled "How to Optimize Clean Energy Generation for Reliability and Affordability," Arteaga examined New York's Climate Leadership and Community Protection Act (CLCPA), its clean electricity mandate. The law sets out clean energy milestone goals for 2025, 2030, 2035, and 2040. The 2025 goal is expected to be met largely through distributed solar and energy efficiency. By 2030, thousands of megawatts of new renewable energy and battery energy storage systems will be added.
In 2035, 9 gigawatts (GW) of offshore wind are expected to begin operating, leading to a 100% zero-emissions electricity mix by 2040.
"We found there were two main gaps that were not assessed: costs, which were not publicly discussed, and the emergence of a new technology called dispatchable emission-free resources, which do not exist now," Arteaga told EVOLVE attendees.
Just getting to 2030's mandated level of clean electricity looks like it will be a stretch. "Solar and wind installed capacities would have to increase 10-fold to get to their targeted levels by 2030," he said, noting that the share of electricity generated from nuclear and hydro are projected to decline over the rest of the decade. Those expected changes would leave natural gas with 30% of the electric fuel mix by 2030.
Enverus created a model to determine the optimal fuel mix for New York for 2030. It assumed reliability would be fully met and that the lowest-cost resources would be dispatched each hour of the day. The model sought trade-offs in fuels that would keep the lights on. Their model relied only on proven technologies.
In discussing the model's assumptions, Arteaga said they saw no new nuclear or hydro generation coming online by 2030. "We don't see any plans for the foreseeable future to being online new nuclear or hydro generation by 2030. And if the state wanted to bring new nuclear or hydro generation online by 2030, they wouldn't come online in time. it's already too late."
The Enverus model ran through five scenarios, holding reliability steady while adjusting the percentage of fuels used to generate electricity. The model's output predicted costs in five scenarios. One case included gas-fired generation outfitted with carbon capture, use and sequestration (CCUS) technology.
One takeaway is that as the state moves to an ever-cleaner electricity mix, significantly greater amounts of new renewables need to be built to ensure electric reliability. "There is an unreasonable overbuild (of renewables) to ensure reliability when we get to 100% clean energy during the summer months. But that overbuild results in significant curtailments of solar and wind generation during the winter months," he said. Using natural gas with CCUS would significantly reduce curtailments of renewable energy, he added.
"The most economic approach would rely on gas for 37% of generation in 2030," he said May 17. That would produce a cost of about $21 per megawatt-hour (MWh) in 2030. But successively higher mandated reliance on renewables would push wholesale electric prices up to between $31.50 and $93.70 per MWh. At its highest point, where all electricity comes from renewables in 2040, electricity prices would more than quadruple from 2030 prices.
"There is a huge cost difference in going from 70% by 2030 to 100% renewables by 2040," he said.
Bottom line: The cost of electricity in New York, and around the U.S., is only going to increase as more mandates to clean the grid are passed. Mandating a specific technology mix pushes up electricity prices even more. New York State customers already pay some of the highest prices in the country. Arteaga's optimization results suggest political and regulatory officials need to consider the cost implications as clean energy targets are passed.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
New York state's mandate for clean electricity -- that 70% of its electricity will come from clean sources by 2030, and 100% by 2040 -- excludes natural gas from the clean fuel category. That exclusion will reduce flexibility for the system, likely sending electricity prices soaring, according to Juan Arteaga, a senior associate for intelligence at Enverus (Austin, Texas). He spoke May 17 at the company's EVOLVE conference.
"When you add one new factor, clean electricity, to reliability and affordability, things get more complicated and the other two factors are affected. If we want a cleaner grid, then reliability and affordability might be affected. It's a co-dependent relationship," he said.
In a session titled "How to Optimize Clean Energy Generation for Reliability and Affordability," Arteaga examined New York's Climate Leadership and Community Protection Act (CLCPA), its clean electricity mandate. The law sets out clean energy milestone goals for 2025, 2030, 2035, and 2040. The 2025 goal is expected to be met largely through distributed solar and energy efficiency. By 2030, thousands of megawatts of new renewable energy and battery energy storage systems will be added.
In 2035, 9 gigawatts (GW) of offshore wind are expected to begin operating, leading to a 100% zero-emissions electricity mix by 2040.
"We found there were two main gaps that were not assessed: costs, which were not publicly discussed, and the emergence of a new technology called dispatchable emission-free resources, which do not exist now," Arteaga told EVOLVE attendees.
Just getting to 2030's mandated level of clean electricity looks like it will be a stretch. "Solar and wind installed capacities would have to increase 10-fold to get to their targeted levels by 2030," he said, noting that the share of electricity generated from nuclear and hydro are projected to decline over the rest of the decade. Those expected changes would leave natural gas with 30% of the electric fuel mix by 2030.
Enverus created a model to determine the optimal fuel mix for New York for 2030. It assumed reliability would be fully met and that the lowest-cost resources would be dispatched each hour of the day. The model sought trade-offs in fuels that would keep the lights on. Their model relied only on proven technologies.
In discussing the model's assumptions, Arteaga said they saw no new nuclear or hydro generation coming online by 2030. "We don't see any plans for the foreseeable future to being online new nuclear or hydro generation by 2030. And if the state wanted to bring new nuclear or hydro generation online by 2030, they wouldn't come online in time. it's already too late."
The Enverus model ran through five scenarios, holding reliability steady while adjusting the percentage of fuels used to generate electricity. The model's output predicted costs in five scenarios. One case included gas-fired generation outfitted with carbon capture, use and sequestration (CCUS) technology.
One takeaway is that as the state moves to an ever-cleaner electricity mix, significantly greater amounts of new renewables need to be built to ensure electric reliability. "There is an unreasonable overbuild (of renewables) to ensure reliability when we get to 100% clean energy during the summer months. But that overbuild results in significant curtailments of solar and wind generation during the winter months," he said. Using natural gas with CCUS would significantly reduce curtailments of renewable energy, he added.
"The most economic approach would rely on gas for 37% of generation in 2030," he said May 17. That would produce a cost of about $21 per megawatt-hour (MWh) in 2030. But successively higher mandated reliance on renewables would push wholesale electric prices up to between $31.50 and $93.70 per MWh. At its highest point, where all electricity comes from renewables in 2040, electricity prices would more than quadruple from 2030 prices.
"There is a huge cost difference in going from 70% by 2030 to 100% renewables by 2040," he said.
Bottom line: The cost of electricity in New York, and around the U.S., is only going to increase as more mandates to clean the grid are passed. Mandating a specific technology mix pushes up electricity prices even more. New York State customers already pay some of the highest prices in the country. Arteaga's optimization results suggest political and regulatory officials need to consider the cost implications as clean energy targets are passed.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
