Natural Gas and Renewables: Lessons from California on Overdependency

Natural Gas and Renewables:
Lessons from California on Overdependency

But for the grace of nuclear, there go we.

“The whole is greater than the sum of its parts” isn’t holding true in California’s ongoing experiment with natural gas and renewables, and it should serve as a warning to states that see gas and renewables as their lifeline to a reliable, low-carbon future. The warning being that the individual attributes of natural gas and renewables are adding up to an overdependency that is creating problems. In equation form:

Price Volatility + Intermittency = High Prices + Questionable Reliability

Of particular concern in this article is the quote from GE, owner of the 800 MW Inland Empire CCGT Power Plant  in Southern California, which said that state policies “rank reliability and cost as low priorities”. This is currently being manifested by stranded natural gas plant assets and steep prices as California’s electricity rates regularly rank among the highest in the country. For 2014, California’s average retail rate was 15.15 cents/kWhr1 which was 6th highest in the lower 48 states. By comparison, Georgia’s retail rate was 10.03 cents/kWhr while the average U.S. rate was 10.44 cents/kWhr1. More recent data for March 2016 have California’s average retail rate at 17.66 cents/kWhr with Georgia’s at 11.14 cents/kWhr and the average U.S. rate at 12.58 cents/kWhr.

The volatility of natural gas prices and the intermittency of renewable energy resources have combined into a composite of high prices and questionable reliability for power generation in the future. States such as Georgia should pay very close attention to how this is working out because Georgia’s geographic endowment of solar and wind resources is quite different from that of California in terms of quantity, diversity and geographic proximity to states with substantial resources of their own.

3California Solar & Wind Technical Capacity
Utility-scale and Rooftop Solar:     4,198 GW
Onshore and Offshore Wind:            689 GW

3Georgia Solar & Wind Technical Capacity
Utility-scale and Rooftop Solar:     3,137 GW
Offshore Wind Only:                             59 GW

California continues to operate on the bleeding edge in its march towards generating 50% of its electricity from renewable energy by 2030. However, based on electricity prices it appears that California citizens are the ones being cut to pieces. California may very well reach its 50% goal, but price and future reliability don’t seem to be its greatest concern in that path forward.

My comment to the energy policy decision makers in Georgia:
But for the grace of nuclear, there go we.

 

1 Energy Information Administration; Electricity Rates for 2014
2Energy Information Administration; Electricity Rates for March 2016
3National Renewable Energy Laboratory

 

…ilyh…

 

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