In June, I wrote how intermittent power sources such as photovoltaics and wind would have to compete with baseload technologies such as IGCC "Clean Coal" and nuclear for capacity on the grid. The key problem is that neither baseload technologies nor intermittent technologies are able to match themselves to the fluctuations of demand. This creates a need for technologies that can fill the varying gaps between supply from these sources and normal energy use. From the comments, it seems like I was not completely clear how intermittent and baseload power cause problems for each other, so I will start with a simplified example, which I will use to illustrate the various strategies for dealing with the problem. I see investment potential in all of these strategies.

The one-house grid: an illustration

Suppose that the entire grid were just one house, and it was the utility's job to make sure that there was always enough power to run all the gadgets that anyone in the house was using. Even in the middle of the night when everyone is asleep, there will still be some power usage: running clocks, the VCR, charging cell phones for use the next day, and maybe the porch light. That is the minimum load of the house, and traditionally utilities have met this demand with baseload power. In contrast, there will probably also be a moment on hot summer afternoon when the air conditioner is running full blast, the refrigerator kicks on, dad is watching football on his 60" plasma TV, dinner is cooking in the electric oven, and 15 other appliances are on somewhere or other. This is peak load, and the difference between the minimum load and peak would traditionally be met with dispatchable generation, which, until recently, mostly means gas turbines.

In addition, some dispatchable generation will always be kept running below full capacity in order to maintain power quality and availability as appliances are turned on and off throughout the day. These ancillary services [pdf] are called load-following reserves (maintaining availability) and voltage and frequency regulation (power quality), and both require fuel, even if the actual energy provided is negligible. Ancillary services are like your car's engine idling at a stop light so that you can start quickly when the light changes. They're necessary to keep the system running, and they use fuel, but they don't actually get you anywhere. Also like idling engines, options like hybrids exist that can save much of the energy cost (see below).

Add a solar panel

Suppose we now add a photovoltaic (PV) system and a wind turbine on the roof. Most people with solar systems know that if you want to spin your meter backwards (i.e., produce more energy than you are using) the best time to do it will be in the late morning, while it is still cool, but it's bright enough that the panels (which actually produce more power from the same amount of light when they are cool) are producing near their peak output.

With grid-connected solar, spinning your meter backwards may be fun, or at least get you bragging rights. However, in my fictional one-house grid, we now have a new minimum demand: demand will be negative (we're going to have to find something to do with the excess electricity) because there is no other grid to sell it back to. Peak demand will also be reduced, because on the hot summer day, the PV will also be producing power. The result is that the one-house gird with a PV system will no longer need any baseload generation (since minimum demand is now negative), and it will probably also need less dispatchable generation, because peak demand will also have been reduced, most likely by more than minimum load. Not only will peak demand have been reduced, but it will also have shifted to the early evening when the PV is producing little electricity, but cooling, cooking, and football-watching needs are still high.

Adding a wind turbine to the roof has a similar effect. Now, the meter will also be spinning backwards on windy nights, and demand is reduced whenever it's windy, which will in turn save fuel and reduce the need to run the remaining dispatchable generation. However, if the climate is similar to that here in Denver, on the hottest days of the year, the wind will typically be minimal, so there will be little further reduction in peak load, so nearly the same total amount of dispatchable generation will be needed, although it will not be in use as often.

Consequences

As the above illustration shows, the oft-repeated shibboleth that we "need" baseload generation is not only misleading, but also counter-productive. Adding baseload generation will simply increase the number of hours per year that intermittent sources of power exceed net demand. I, too, formerly believed we needed baseload. I no longer do, although some level of baseload power in the grid is no doubt inevitable, at the very least produced by renewable sources such as geothermal and electricity generation from industrial waste heat.

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In part II of Investment ideas from a one-house grid, Tom Konrad looks at solutions and investments using the one-house grid illustration.