by James A. Bacon
By some measures, solar energy looks like the most cost-effective path for Virginia’s electric utilities to achieving Environmental Protection Agency targets for reduction in CO2 emissions. A solar-intensive scenario has the lowest average levelized cost of four alternative scenarios explored in the 2015 Integrated Resource Plan (IRP) published by Dominion Virginia Power today. But the power company still has major concerns about how the inherently variable power source could be safely integrated into the power grid.
Dominion submits an annual IRP to the State Corporation Commission providing a 15-year outlook on what facilities and fuels will best meet customers’ electricity needs at the lowest cost in an efficient and reliable manner. Despite reservations, the 2015 plan views solar more favorably than did the 2013 plan.
Dominion had to grapple with big uncertainties in the 2015 study because the Environmental Protection Agency (EPA) has not yet set final targets for Virginia to reduce its CO2 emissions. The targets in the draft EPA guidelines call for Virginia utilities to make 38% reductions by 2030. But the McAuliffe administration and the State Corporation Commission pleaded for relief on the grounds that the draft targets were so stringent. The EPA is expected to issue final rules next month.
Dominion explored four broad strategies for attaining the draft EPA goal: a solar plan with a high concentration of solar resources; a co-fire plan, using natural gas to reduce the carbon intensity of eight coal-powered units; a nuclear plan, which would construct a third nuclear unit at North Anna Three; and a wind plan, with significant on-shore and off-shore wind development.
Dominion did not recommend any one plan over the others. A letter accompanying the submission of the IRP said that other plans, or even hybrids of the plans, might be considered.
A portfolio risk assessment of the four plans factoring in such variables as natural gas prices, coal prices, electricity demand, CO2 emission prices and capital costs over a 25-year period showed that the levelized average cost for solar exceeded that of the “least cost” plan (which would not achieve EPA compliance), but it was the least expensive of the four alternatives. Wind was the most expensive.
According to the cover letter, the cost of compliance above the least-cost scenario range from $4.3 billion for Plan A: Solar to $15.3 billion for Plan D: Wind. However, the IRP stressed the hazards of integrating a large amount of solar power into the electric grid. The problem stems from the intermittent nature of solar — it generates electricity only when the sun is shining. States the IRP:
The intermittent availability of solar energy due to cloud passage causes sporadic injections of energy into the grid, impacting key network parameters, including frequency and voltage. While the grid may not be adversely impacted by the small degree of variability resulting from a few distributed PV (photovoltaic) systems, larger levels of penetration across the network or high concentrations of PV in a small geographic area will make it difficult to maintain frequency and voltage within specified limits. Addressing grid integration issues is a necessary prerequisite for the long-term viability of PV generation as an alternative energy resource.
Significant resources would have to be dedicated to maintaining grid reliability in the face of the wide variability in solar output. Development of a technology to store solar power, which would help level out power flows, is “paramount,” Dominion says.
The anticipated growth of solar PV energy generation will result in significant challenges to the Company’s grid as well as the interregional grid as a whole. … The industry needs an understanding of the critical threshold levels of solar PV where significant system changes could occur. The nature and estimated cost of those changes are still unknown at this stage, but these costs, particularly at the higher penetration levels, could be substantial.
In a statement released before Dominion’s IRP went public, a coalition of environmental groups said that Dominion and Appalachian Power Co., which also submitted its 2015 IRP today, need to make “utility-scale investments” in offshore wind and solar energy, while also making it easier for customers to generate their own solar-generating resources on their own property.
“Dominion has stated that building solar is beneficial for customers because it is cheaper than market purchases of of a grid that consists primarily of coal and natural gas,” says the press release under the name of the Southern Environmental Law Center, Appalachian Voices, the Chesapeake Climate Action Network and the Virginia Chapter of the Sierra Club. “Yet all renewable resources in Dominion’s territory amount to just 2% of the company’s energy mix. Dominion’s latest proposal for a new 20-megawatt solar farm in Remington, Virginia, equates to just one-tenth of 1% of Dominion’s 17,500-megawatt generation fleet.”
The statement did not address the impact of large-scale solar development upon the reliability of the electric grid.