Photo by stormcrypt.

There’s a bunch of discussion right now on renewable electricity vs. baseload electricity. David Roberts gives a good German example here. Chris Nelder goes so far as to suggest that thanks to renewables, "baseload is doomed," while John Farrell suggests that renewable energy is the new and sexy iPad, destined to replace the old baseload typewriter. Meanwhile, in utility land, we see issues like the one that took place in the Northwest last year, with Bonneville Power Association (BPA) forcing the curtailment of wind turbines, on the claim that the grid could not readily accommodate the rising percentage of intermittent resources.

So is BPA just a Paleolithic typewriter sales rep, or are these smart writers missing something fundamental about the power grid? I suggest to you that both are right -- but that the debate is focusing on the wrong axis. As evidence, consider that the percent of power generated from renewable energy in the U.S. today is virtually the same as the percent of power we generated from renewable energy 20 years ago. If something dramatic is happening in renewable energy that is disrupting the old paradigm, it hasn’t happened yet. So then why is there so much noise about the sudden challenge integrating renewable energy into our grid?

Photo by jonnyfixedgear.

U.S. electricity markets are in a weird place right now. Having grown at a steady 1 – 2 percent per year since 1970, retail electric sales have flat-lined.  That’s eased demand pressure on the system, but only temporarily, as the coming 30 – 70 GW of coal plant retirements are set to remove a substantial part of the baseload U.S. grid over the next decade.  Given construction times, that means we should be building assets now to replace that coal fleet.  But we’re not, largely because the collapsing natural gas price has pushed electricity prices down, drying up capital for new power plant construction projects.

At a purely logical level, that’s crazy.  Natural gas prices are notoriously volatile, and every time we’ve invested capital on the presumption that they weren’t, we’ve gotten burned.  (See: 1990s merchant boom, LNG terminal construction in the early 2000s.)  Making decisions about how to invest capital that will operate for 20 or more years based on the current price of a volatile commodity is tantamount to planning your retirement based on the sexiest NASDAQ stock every year.

What will the U.S. power mix look like in 10 to 20 years? It's impossible to predict for certain, of course, because there's no way to know what regulators will do. Given the heavily regulated nature of the electric sector, even in so-called "deregulated" markets, surprises tend to come from regulatory reform, not innovation. (The U.S. electric grid has shown itself capable of rapid, large-scale transformation in response to regulations.) Nevertheless, there is insight to be gained from thinking through how the generation mix would evolve in the absence of regulatory reform. Despite the lengthy time required to design, finance, …

Over the past few years, the U.S. electricity grid has begun a massive, underappreciated, and largely unintentional transition away from coal to natural gas. Because nobody decided on a shift to gas, or directed such a shift, many people have mistaken the transition for the outcome of a "free market." It's an easy mistake to make, since electricity markets do bear some superficial resemblance to competitive markets; we have spot prices, liquid markets, and no central planner telling us what to do. However, the shifting power mix derives much more from regulatory choices than from markets. (For that reason, future …

Photo: Vlasta JuricekThe Federal Energy Regulatory Commission (FERC) has ruled that the Bonneville Power Association (BPA) unfairly discriminated against wind turbine owners when it curtailed the production of power from wind assets last spring in response to high hydro production. Wind owners are understandably happy, having argued that BPA was essentially favoring hydro over wind. The technical argument went like this: BPA entered into contracts to sell all of the power available from their generators; if BPA (or any other grid operator) has the ability to unilaterally curtail wind generation, it would reduce the effective value of future wind contracts …

At what point do hamburgers reach cost parity with salad? Assume for a moment that this is a serious question and try to figure out how you'd answer it. What is the relevant metric of comparison? Cost per pound? Cost per calorie? Outside of a few rabid vegans, no one seriously tries to do that math, for self-evident reasons. But every time another story comes out about renewables nearing cost parity with fossil sources, that's exactly what we do. The problem is the metric. Competing power generation technologies are typically compared on a dollar-per-megawatt-hour ($/MWh) basis, but -- like the …

Here's the standard story about the U.S. power grid: It gets baseload supply from hydro, nuclear, and coal (in that order), using natural gas (and the occasional oil plant) as a swing producer to meet peak demands. Renewables play on the margin, but are neither big nor reliable enough to matter from a grid planning perspective. On average, that story is true. In recent years, however, a steadily larger portion of total U.S. power supply comes from sources that we historically think of as "intermittent" -- namely, natural gas and renewables. Is that the beginning of a new paradigm (the …

Like boiling frogs, it's the rate of change that matters when it comes to energy efficiency investments. Consumers who have grown accustomed to $4 gasoline are much less likely to buy a hybrid car than ones who just saw their gasoline price double from $1 to $2 between fill-ups. This is the silver lining of the current spike in energy costs -- lots of homes and businesses are finding economic and psychological reasons to invest in efficiency in the current economic environment who might not have before. The flip side is also true: when energy prices are stable or falling …

You get what you pay for. Clean power mandates in the US mandate that we buy megawatt-hours of clean energy, but they don’t mandate that those sources be reliable. This isn’t to say that clean energy can’t be reliable, but rather that it is mis-priced. Increasingly, this is causing conflicts for utilities, who have purchase obligations that conflict with their obligations to serve their customers. That conflict need not exist – but fixing it will require re-thinking how we structure our clean power mandates. Buying by the MWh For the past 33 years, the US has maintained policies that have …

Last October, I had some fun looking at the Department of Energy's historic predictions of natural gas prices and noting their consistent failure to, uh, predict. From 2004 to 2010, natural gas prices were massively volatile, ranging from $4 to $11 per million British thermal units (MMBtu) (on an annual, inflation-adjusted basis). Not only did DOE's predictions fail to anticipate this volatility, but every year they seemed to assume that the best 20-year predictor of future gas prices was ... last year's price. This has created an odd situation: The only thing more volatile than actual natural gas prices has …