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A New Study on Electric Reliability under Deep Decarbonization in New England

November 18, 2020 Work Area: Advanced Nuclear, Carbon Capture, Zero-Carbon Fuels

A new study, carried out by the Energy Futures Initiative (EFI) and Energy and Environmental Economics (E3), is a thoughtful and rigorous analysis of what could be required to achieve net-zero economy-wide GHG emissions in New England, emphasizing the need to substantially expand the region’s electric sector, the importance of firm clean energy resources along with renewables and the need for policymakers to support ambitious technology innovation programs. Ongoing and future policy making efforts would do well to build on this study by expanding the scope of decarbonization pathways it examines, carefully analyzing their relative technological, economic and siting uncertainties, and adopting an explicit risk-management perspective to policymaking. (Full disclosure: I served on the Advisory Committee to this study but had no control over the final report).

The Calpine/EFI/E3 study clearly demonstrates the importance of dramatically expanding the regional electric sector to decarbonize other sectors of the economy; the need for a roughly 60% to 90% increase in annual electric generation; 42 to 51 GW of effective firm electric capacity (compared to about 30 GW today) to complement a substantial buildout of wind and solar, maintain system reliability and provide affordable energy to consumers; and the potential beneficial impacts of technology innovation in the building, transport and industrial sectors.

Two important implications follow:

First, this is a lot of generation and transmission infrastructure to site (as much as tripling installed generating capacity, for example) in a region famously protective of land and scenic corridors, and where nearly all large scale energy projects, renewable or otherwise, face opposition. That will pose a serious challenge – and one that will require reexamination of our institutions and policies.

Second, a lot of the generation will need to be firm and not dependent on the weather – we’ll need nearly as much firm generation as the peak demand of the system. A wind and solar dominated system, according to this analysis, cannot be run at reasonable cost just with renewables and batteries. Whether the required firm energy is gas with carbon sequestration, or hydrogen from multiple sources, or expanded nuclear energy (which today provides a third of the region’s power and nearly all its carbon free power), the region will need to embrace a more complex view of a decarbonized future.

While the study has great merit, it can also be misinterpreted as a single roadmap to the future. The study’s reference decarbonization case focuses mainly on a renewables- and gas-centric decarbonization scenario that envisions adding up to 10 GW of new gas capacity on top of today’s 23 GW, with declining gas generation but capacity retained to provide for grid reliability. This scenario also envisions an electric system two to nearly three times larger than today’s total installed capacity, with a wind and solar buildout alone of up to 57 GW (from less than 5 GW today) which itself is nearly double all of today’s installed capacity of all kinds, and implies (but does not quantify) substantial additional onshore long distance and local transmission. The study also includes several sensitivity cases exploring the resource and cost impacts of other portfolios related to the availability of new gas capacity, carbon capture and sequestration and advanced nuclear.

At the same time, the study does not explicitly examine in detail important uncertainties with these paths and the potential of other paths that, while also subject to uncertainty, could also decarbonize the region in a timely, practical and affordable manner.

For instance, the reference case outlined in this study hinges in part on successful development of new gas infrastructure and commercialization of hydrogen as a zero-carbon fuel for combustion turbines eventually operating at very low capacity factor to maintain reliability– both developments certainly plausible but also uncertain given siting and commercialization risks. As importantly, the treatment of other types of firm zero carbon electric generation including gas CCS and advanced small modular nuclear reactors is cursory despite the modelling results suggesting the availability of these technologies could lower system costs by more than $4 billion annually below that of the renewables- and gas-centric scenario. The study also appears largely silent on the potential for new reservoir hydro from Canada beyond the amounts recently contracted by Massachusetts (beyond the MA Section 83 D/NECEC resource) and other potential sources of firm capacity such long-duration energy storage.

As other decarbonization planning efforts in New England are expanded and new ones are initiated at the state and regional levels, they would do well to build on this study by expanding its scope, delving more deeply into the relative uncertainties of alternative pathways, and adopting an explicit risk-management perspective.

In recent years, numerous techno-economic analyses examining deep decarbonization scenarios in the United States have pointed to the promise of diverse pathways. In these studies, the lowest cost modeling cases typically include a very large share of generation supplied by wind and solar along with substantial firm electric resources that provide grid reliability and lower system costs. In some cases, these firm resources also reduce the need for new transmission infrastructure and land required to site dispersed generating facilities. These firming resources include technologies such as long-duration energy storage, fossil generation with carbon capture and sequestration, advanced nuclear, reservoir hydropower, zero-carbon liquid fuels such as hydrogen, or other firm renewable technologies such as advanced geothermal energy.

Just as with the gas-centric path examined in this study, each of these other pathways has some promise and their own important uncertainties. In broad terms, the uncertainties have to do with the degree to which these technologies have been technically proven and demonstrated to perform as designed, their commercial competitiveness relative to other low- and zero-carbon technologies, and their potential to be sited, permitted and constructed in New England at the very rapid scale needed to fully decarbonize the electric sector in a timely way. Because of these uncertainties and their ubiquitous nature, there is no escaping the simple reality that any single pathway, relied up to the exclusion of others, would be a risky approach to timely decarbonization.

These real-world uncertainties can be managed by adopting a risk-based approach to decarbonization planning and policy. This involves analyzing a full range of low- and zero-carbon generation and storage technologies; assessing their particular technical, economic and deployment scaling risks; understanding the sequencing of actions needed given the time required to develop new infrastructure, commercialize technologies and build supply chains; quantifying the benefits of rapid technology innovation in and outside the electric sector; and based on that analysis, developing multi-pronged, flexible policies that speed deployment of a range of technologies in the near term, work to overcome remaining engineering, economic and siting challenges, and then adjust those policies over time as technical, competitiveness and social conditions evolve in the region.

Such a risk-based approach more accurately represents the real-world decarbonization challenge with all its uncertainty, highlights technical, commercial and siting questions for policymakers to address, and helps sequence key decisions through time. This will lead to more effective policy making and ensure the region’s economy will be fully decarbonized in a reliable, affordable and timely way.

The study suggests, but does not answer, many of these risk-related questions. If treated as a starting point rather than an endpoint for the decarbonization discussion in New England, this study will have served a great purpose in raising them.

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