The POWER Interview: State of the Wind, Solar, Storage, and Hydro Markets
Increased power generation from renewable resources such as wind and solar also has created a growing market for energy storage. Generators want to harness that power and have it available when it's needed, whether or not the wind is blowing or the sun is shining.
Rob Allerman, senior director of Power Analytics for Drillinginfo, which provides market research and data insight for a variety of energy industries, recently spoke with POWER about the growth of U.S. wind and solar power, and the market for energy storage paired with wind and solar, which many analysts have said will further alter the power generation landscape. Allerman also touched on the hydropower market.
Allerman previously was head of North America Power Markets for EDF Trading, part of the EDF Group that serves the electricity, natural gas, liquefied natural gas, liquefied petroleum gas, coal, freight, and environmental products markets. He has a background in renewable power analytics, has worked as a hydrologist, and was a manager with the Bonneville Power Administration (BPA).
POWER: Where are the solar and wind markets at today?
Allerman: Solar is definitely growing, in California especially it's growing faster than wind. The power prices are going down. Solar energy in general is growing quickly in the Southwest, picking up steam in Texas, and we're seeing increases [in deployment] in the Southeast.
We're seeing a lot of wind builds in Texas, and you're seeing solar build-out in Texas. In the Midwest, in MISO [Midcontinent Independent System Operator], you're still seeing wind be the dominant feature. Wind is still the dominant renewal resource in the U.S. except in the Southwest and parts of the West, where solar is overtaking wind.
Rob Allerman
POWER: Where is the market going?
Allerman: It's very regionally based, and it's based on which state you're in. All the renewable portfolios that each state has, that determines what is being built. Geography plays a big role in that. In the Southwest, [geography] lends itself to solar. The West has some areas in which wind is being built, in areas with large temperature gradients, like between the [Pacific] coast and the desert. Those temperature gradients can cause some strong winds.
Look at the eastern end of the Columbia River Gorge, there's some strong wind there, too. In the wintertime in the Pacific Northwest, it can get very windy in the Columbia River Gorge. In the Plains states, it's also very windy " look at the strong winds that have been producing terrible weather, particularly when you get those strong southerly winds coming off the Gulf Coast.
ERCOT [Electric Reliability Council of Texas] has been setting records for wind generation. (Editor's note: ERCOT in April set monthly records for both wind and solar generation.) You see these weather patterns that cause a lot of wind, and wind farm developers are going to put their wind farms there.
There are some good locations in the Northeast, in the Appalachians, but there aren't too many good wind conditions in the Southeast. However, the Southeast is adding solar capacity, you're seeing solar development in Florida, but it's not like the growth we're seeing compared to California or West Texas.
POWER: How rapid do you think these deployments will be?
Allerman: Everything I've read and the data we see seems to indicate that prices will continue to go down as the technology improves. Also, as the efficiency improves, the prices will continue to drop. As the prices continue to drop, it lends itself to more development. That's also helped by tax incentives and mandates from states for more renewable energy. States are forcing utilities to put that in, and the utilities keep getting better at it.
The wholesale market is really interesting because of renewables, especially in the spring. Wholesale prices are very low in the spring. Like in ERCOT, we have had some pretty decent loads, but because it's been so windy, prices are being kept in check. In the SPP [Southwest Power Pool], because it's been so windy, we're seeing negative prices at night, over the past 30 to 45 days [through late May].
And then in California, during the day, especially during the weekends, prices have been very low, near zero at times, because of all the solar generation. It's also a really good hydro year in California.
POWER: What do you see in the hydro market, which has a large presence in the western U.S.?
Allerman: My view on hydro in the West, especially with the hydro plants owned by the federal government, I would suspect that the political will would be to keep those going because of how beneficial it is to those regions to keep prices low. There's a lot of political will in the Northwest to keep Bonneville Power Administration intact, and keep those low prices going.
I would suspect that will be the case not only in the Northwest with BPA, but also with TVA [Tennessee Valley Authority, which has about 30 power-generating dams across the Tennessee River system].
POWER: What could hurt the future of U.S. hydropower?
Allerman: If there's a requirement for utilities to retrofit dams, to [make changes] due to fish requirements [to save species]. I suspect that could happen, and hydro operators might just say it's not worth it anymore. We've seen that in the Northwest. PacifiCorp just pulled out [of some hydro plants] " in order to relicense them it would have required some large changes to those dams. (Editor's note: The Klamath River Renewal Corp. (KRRC) was recently formed and in April entered into a dam removal design-build contract with Kiewit Infrastructure West Co. KRRC was formed to take ownership of four PacifiCorp dams-J.C. Boyle, Copco Nos. 1 and 2, and Iron Gate-and dismantle them. The four dams had generation capacity of about 129 MW.)
POWER: How quickly will energy storage bring significant disruption to power markets?
Allerman: A couple of years ago, I heard it was five years away. Now we're a couple of years later, and I don't think it's a few years away. You're seeing states, especially California, mandating research into storage. You see Elon Musk pushing it. As for utility-scale batteries, when you start talking about 200- and 300-MW battery [systems], that's probably where the game-changer would be.
-Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine)
The post The POWER Interview: State of the Wind, Solar, Storage, and Hydro Markets appeared first on POWER Magazine.