Unlocking true 24/7 carbon free electricity

Share
Share on facebook
Share on twitter
Share on linkedin
Share on email

The “24/7” carbon free energy movement  aims to meet electricity demand from consumers such as corporations, cities, and retail electricity providers with clean energy in every hour of every year and in every region, a goal which Form Energy has at the very heart of its mission. At Form Energy, we’re working to commercialize a new class of cost-effective multi-day energy storage to enable exactly that, in-region renewable energy available every hour of the year, even during extreme weather.

To achieve true 24/7 clean energy, we need to match energy needs and energy supply not only during typical days, but also during renewable energy lulls, extended periods of extreme weather, and when critical grid infrastructure has an outage. Indeed, one of the primary impacts of 24/7 clean energy programs is their ability to drive the development of the clean “firm” resources needed to fill gaps in renewable energy production.

Efforts to define 24/7 carbon free energy took an important step forward recently, with EnergyTag releasing the first global standard for “Granular Certificates” (“GCs”), a tool that can help stakeholders track when clean energy was produced and, thus, how often they are consuming clean energy.

However, more work is still needed. It’s important to establish best practices to ensure that 24/7 carbon free standards truly achieve carbon free energy in all hours. For example, is electricity truly 24/7 carbon-free if it’s only available 80% to 90% of the time in practice, or should the industry set ambitious goals of close to 100% available 24/7 energy, measured against real-world conditions of good and foul weather? We think targets can and should be set high. That’s why we worked with the Long Duration Energy Storage Council, its member companies, and its partner McKinsey to define a quality assessment framework for 24/7 clean energy procurements.

Because 24/7 clean energy is so core to our mission, we’ve designed hundreds of high reliability 24/7 clean energy portfolios for our customers and partners using Formware™, our proprietary capacity expansion, unit commitment, and economic dispatch model.

That experience has taught us that time-based clean energy credits alone will be insufficient to bring about the impact that 24/7 programs promise. What follows are three critical design considerations that large energy consumers should follow to maximize the impact of their 24/7 carbon free procurements:

  1. Best practice definitions about the availability (or reliability) of 24/7 clean energy products need to be defined to truly achieve the goals of these initiatives.
  2. Generation from renewables should be co-optimized with firm resources to achieve 24/7 carbon free portfolios that are also cost effective and value accretive in zero carbon grids.
  3. The value of any given resource in a 24/7 carbon free portfolio should be measured by its ability to lower the cost or increase the reliability of a 100% available, zero carbon portfolio.

 

24/7 carbon free means 100% clean and reliable power that’s available in every hour

According to the latest research from the Intergovernmental Panel on Climate Change, to avoid the worst impacts of climate change will require the complete decarbonization of the power sector: we need to meet electricity demand with zero carbon resources in nearly 100% of hours. Achieving a truly 24/7 carbon free grid won’t just require supplying clean energy in all hours of a day during typical weather, it will require planning for and supplying carbon free energy during multi-day periods of low renewable energy production, extreme weather, and equipment failures.

This requires introducing the concept of availability alongside time-based clean energy credits, which is important to ensure that claims of meeting 24/7 clean energy match physical reality. Availability describes the percent of time in which demand is met by clean energy, and it is something that must be measured across multiple years, under average conditions and the periodic stress events we know will occur when we can’t let the grid fail. Some entities looking for time-matched clean energy don’t specify the percent of hours in which they intend to match demand with clean supply, while others target 80% or 90% availability. This means they plan to consume carbon intensive energy in 10% to 20% of hours.

Of course, an 80% or 90% reduction in emissions would be a major accomplishment! However, on today’s grid, an 80% to 90% reduction in emissions would leave 1.5 to three gigatons – or 1.5 to three billion tonnes – of emissions remaining. On tomorrow’s grid, as we electrify vehicles, homes, and industries, electricity demand globally could more than double, meaning that meeting only 80% to 90% of tomorrow’s electricity demand with zero carbon energy could spell even more gigatons of emissions. The evidence is clear: given the pivotal role electricity will play in decarbonizing a broad array of  industries, we must aim for near complete decarbonization of the power grid.

Decarbonizing the last 10% to 20% of hours will be the most challenging, requiring a real commitment to scaling firm assets that provide power during the hours and days without renewables. In some regions, this will be harder than others. It is precisely those challenging last few percentages and last few grid regions that deserve our attention and investment in order to achieve our long term decarbonization goals.

 

Firm zero carbon capacity offers a scalable path towards zero carbon grids

In addition to defining the availability of portfolios, consumers should aim to align the resources they procure to the needs of zero carbon grids. Introducing a second new measure – the quantity of excess clean energy procured to meet a given 24/7 demand – can help consumers drive towards 24/7 portfolios that are compatible with zero carbon grids.

Firm zero carbon capacity resources – like multi-day energy storage – are a critical part of zero carbon grids. Form’s modeling shows that adding multi-day energy storage to a 24/7 clean energy portfolio can lower costs, dramatically reduce or eliminate curtailment, reduce land use requirements, and improve reliability.

It’s useful to explore an example of a 24/7 renewable product that does not attempt to manage excess renewable energy, producing a portfolio that is incompatible with a zero carbon grid. In this example, a 100 megawatt (MW) wind resource and 100 MW solar resource are split up into two tranches. One tranche – making up the first 40 MW of the power generated from the combined projects – is sold to a consumer looking to procure “24/7” renewables. The remaining energy is sold elsewhere, either to a consumer looking to green their energy supply without time-based targets, a consumer looking for low cost power, or simply to a wholesale power market. This tranched contracting is common in the renewable energy industry today.

Form simulated generation from a wind and a solar site near Amarillo, Texas – a renewable energy hub – using an open source tool, Renewables Ninja (visualized in the figure below). By selling the first 40 MW of energy from the combined wind and solar facilities, the “24/7 consumer” can  match renewables to its demand in 91% of hours, a level that exceeds the time-matching goal of many stakeholders. The consumer could use time-based clean energy credits to demonstrate clearly that they’ve done so.

 

While this approach would enable a consumer (or group of consumers) to meet an ambitious time matching goal, this “24/7” approach is incompatible with a zero carbon grid for two reasons:

  1. Uneconomic Curtailment: In a zero carbon grid, there’s no market for excess clean energy, and there’s a limit to how much renewable energy overbuild is optimal in cost and physically possible due to land-use constraints. In the above example, the “24/7” customer consumes roughly 50% of the clean energy. In a zero-carbon grid, the remaining 50% would be wasted. This would result in doubling the cost of the delivered energy, because all the wind and solar costs would need to be recovered across half of the energy. Some might argue that the remaining energy could be used somehow, for example, to produce hydrogen. However, this would simply increase the demand for 24/7 clean energy, increasing the amount of supply needed and resulting in the same curtailment problem. Overbuilding renewables and curtailing excess energy is an important strategy to lower grid emissions, but it is not a viable solution for a zero carbon grid on its own.
  2. It can’t scale to match 100% of customer load: With exceptional renewable resources, this approach can work for achieving 80% to 90% time matching, but it breaks down as it approaches 100% time matching with energy demand, the level necessary to achieve a net zero economy. Using the same data as in the above figure, getting to 99% time-matched zero carbon supply and demand, the project would only be able to sell the first 1 MW. The remaining 199 MW of the project would be wasted, entailing significant land and transmission use. The only reasonable way to achieve 100% reliable clean energy supply is through a portfolio of balanced resources, not excessive renewable energy overbuild alone.

 

A better approach is to use a full portfolio of clean energy resources, including firm zero carbon resources such as multi-day energy storage (MDS). This approach allows the producer to minimize the quantity of excess energy produced in the portfolio and spurs the development of the firm zero carbon resources needed to decarbonize the grid cost effectively. In the example visualized below, we see multi-day storage operating in concert with lithium ion, solar, and wind, to meet a customer’s demand during a multi-day period of low wind generation.

 

 

Of course this does not mean that multiple consumers shouldn’t share resources. Doing so offers great flexibility and can lower the cost of achieving 24/7 targets. However, when viewing the grid as a whole, the combined demands and supplies should be roughly in balance, a goal that’s only truly achievable with a portfolio of renewables and firm zero carbon resources like multi-day storage or geothermal, or nuclear.

 

Portfolio valuation: the whole is greater than the sum of its parts

Finally, we must recognize that what we’re solving for as a society is the least cost 24/7 portfolio, not necessarily the least cost single asset. Today’s grid is made up of renewables with zero generating costs, baseload plants with low generating costs (think nuclear), mid-merit plants with medium generating costs (think combined cycle fossil gas plants), and gas peakers. While gas peakers have very high generating costs, they play an important role in the grid, providing high value energy when other plants can’t. Combined, the mix of low cost resources with high cost resources delivers the cheapest grid possible. However, if we had looked only at the marginal cost of each resource individually, we may never have built the peakers that are essential parts of the portfolio.

24/7 clean energy portfolios are the same. The least cost portfolio will be made up of low cost renewables plus other balancing assets such as short duration energy storage and multi-day energy storage. Given that most assets are procured through power purchase agreements (PPAs), it can be tempting to evaluate the cost of each asset on its own. However, this would miss the forest for the trees.

Another way of understanding this concept is to note that not all time-based clean energy credits are created equal. Credits during mid-day when the sun is shining will be relatively cheap: there will be no shortage of solar energy at noon on a sunny day in a clean energy grid. However, credits during the night in winter months or during stormy periods should be relatively more expensive, because there’s very little clean energy to meet demand.

 

Bringing it all together

24/7 clean energy initiatives hold great promise to accelerate decarbonization by stimulating investment in the firm clean capacity necessary to fill hourly, daily, and seasonal gaps in clean energy generation. These initiatives have made significant progress with the development of protocols to track when clean energy is produced and consumed.

However, to truly achieve 24/7 clean energy  an important next step is to more clearly define additional best practices. These should include defining availability standards that approach 100% of hours, optimizing clean energy portfolios to meet demand without relying unreasonably on  excess clean energy relative to firm clean capacity, and valuing resources based on whether they unlock the least cost 24/7 carbon free portfolio for the grid as a whole.

Large energy consumers can lead the way toward broad global electric grid decarbonization by ensuring that 24/7 zero carbon initiatives focus on developing high availability, firm portfolios of time matched clean energy that benefit the grid as a whole.

 

_

1 Note that consumers in this blog refers to corporations, cities, and retail electricity providers: the entities currently driving demand for 24/7 carbon free electricity.

2 If you’d like to replicate this simple analysis, Form Energy used the following latitude and longitude: 35.29, -102.2. Form used default settings for all parameters with the exception of wind turbine hub height, which it set to 100 meters, a common hub height for modern wind farms.