Do Northern California and Southern Australia Herald the End of Baseload Generation?

by Bob Shively, Enerdynamics President and Lead Instructor

Since the mid-20th century, it’s been widely accepted wisdom: For electric utilities to economically serve customers they must build generating systems rooted in large baseload plants. But with the recent growth of renewables in various global markets, the need for large baseload plants is in question. Developments in markets such as Southern Australia and Northern California suggest that the concept of baseload generation may soon be considered a thing of the past.

Adding significant amounts of wind and solar to the electric grid results in a paradigm shift from traditional baseload generation. Now a significant amount of electric supply is not controllable and is variable in nature. The new resources share some interesting characteristics with typical baseload units and in other ways are the exact opposite.

From a cost standpoint, renewables share the baseload characteristic of low operating costs but higher upfront capital costs. This means that utilities prefer to take the output of renewable units whenever it is available. And given the operating restrictions on baseload units, system operators do not like to ramp the units much meaning that controllability of baseload units is low. This is similar to renewables (at least from the standpoint of the ability to ramp up, renewables can usually be ramped down by simply curtailing their power although this is not a popular alternative). But the key difference is variability. Traditional baseload units are expected to have similar output every hour (except during planned or forced maintenance outages), whereas renewables are a variable resource whose output depends on weather.

As renewables grow, system operators shift the focus on operating traditional units to serve all loads to operating them to serve the “net load’ – that portion of load not served by renewable resources. Forecasts for some scenarios suggest that eventually solar power may push net loads in some regions to below zero. To maintain system balance, operators in this case would either need to export power to another grid, have available storage options, have flexible loads willing to use more power, or curtail solar output.

So will renewables be the death of baseload? In 2015, Australian professor Mark Diesendorf raised eyebrows in the utility industry with his paper titled “Do We Need Base-load Power Stations?” The paper suggested that “base-load power stations are unnecessary to meet standard reliability criteria for the whole supply-demand system, such as loss-of-load probability or annual energy shortfall.” Diesendorf suggested that future dispatch curves may look like this:

      Source: Energyscience.org [1]

In the last few months, it has become clear that Diesendorf’s thoughts are not just idle speculation. In May, the state of South Australia closed its last baseload unit, the 520 MW Northern coal unit. Now, the dispatch curve in the state shows large amounts of renewables supplemented with flexible gas generation:

      Source: RenewEconomy [2]

In June the major utility in Northern California, Pacific Gas and Electric (PG&E), announced a settlement that will result in closing their 2,240 MW Diablo Canyon nuclear unit by 2025[3]. The settlement outlined PG&E’s plan to replace Diablo’s power with a mix of reduced loads through energy efficiency, flexible loads, storage, and renewable power. Once this occurs, one of the largest utilities in the U.S. will be operating without any traditional baseload units.

In most cases, major infrastructure such as electric grids take many decades to transition once new technologies are introduced[4]. Many regions will continue to use baseload units for years to come. But markets such as Southern Australia and Northern California show us that, in some cases, transitions happen more quickly than we expect. And yes, it is possible to run an electric system without baseload units.

Footnotes:

[1] Available at: http://www.energyscience.org.au/BP16%20BaseLoad.pdf

[2] Giles Parkinson, Wind and solar power become the new “base load” power for South Australia, May 16, 2016, available at http://reneweconomy.com.au/2016/wind-and-solar-become-new-base-load-power-for-south-australia-99364

[3] See Joint Proposal for the Orderly Replacement of Diablo Canyon Power Plant with Energy Efficiency and Renewables, available at http://www.pge.com/includes/docs/pdfs/safety/dcpp/MJBA_Report.pdf

[4] See for instance this blog by Vaclav Smil: http://blogs.scientificamerican.com/the-curious-wavefunction/vaclav-smil-e2809cthe-great-hope-for-a-quick-and-sweeping-transition-to-renewable-energy-is-wishful-thinkinge2809d/