Renewable Generation



History, challenges, and what to expect

Renewable generation has significantly increased in the past decade. As the Energy Information Administration (EIA) reported, the United States generated about 4 trillion kWh of electricity in 2015. About 7% of this electricity was generated from non-hydro renewable resources.

Figure 1

(Source: Energy Information Administration (EIA))

The generation capacity from wind and solar has roughly increased by a factor of 10 in ten years.

Figure 2

(Source: ABB Velocity Suite)

All ISOs in US have experienced a significant growth in the renewable generation capacity as shown in the following two charts.

Figure 3

(Source: ABB Velocity Suite)

Figure 4

(Source: ABB Velocity Suite)

The increase was partly encouraged by federal incentives that make renewable generation investment economically attractive. These incentives have been provided through the Production Tax Credit (PTC) and the Investment Tax Credit (ITC). The PTC was created under the Energy Policy Act of 1992 and allows an income tax credit for the production of electricity from utility-scale wind, geothermal, solar, hydropower, biomass and marine and hydrokinetic renewable energy plants. The ITC provides a direct tax rebate of the investment in a qualifying facility. It varies depending on the type of renewable energy project; solar, fuel cells and small wind are eligible for credit of 30% of the cost of development. In late 2015, Congress passed a bill that extends the PTC and the ITC that have benefited wind and solar projects.

The continuing decline of capital costs, particularly for solar photovoltaic panels, has also encouraged the increase of renewables. Such incentives, along with the renewable portfolio standard requirements, have been driving the development of new wind and solar projects in the last decade. Renewable portfolio standards were created partly based on environmental policy objectives to provide energy from clean resources. The Trump administration’s roll back of the Clean Power Plan, EPA’s landmark rule to reduce carbon emissions from existing power plants, could slow down this trend as new policies will evolve around such de-regulations.

Challenges

The integration of renewable resources has given rise to challenges in power system operation. Uncertainty and variability will continue to be the major challenges for the day-to-day operation of renewables. Furthermore, renewable resources, such as wind farms and solar farms, are typically sited where the relevant renewable resource is most available. Therefore, they are generally located far from load centers, requiring availability of transmission to reach consumers. Transmission congestion and curtailment of renewable generation are among the challenges that system operators and generator owners have been facing as a result of transmission deficiency.

The Federal Energy Regulatory Commission (FERC) has continued to pursue modifications in market and operational policies to allow all resources, including renewable resources, to compete in markets on a level playing field. As the level of renewable share increases, it is expected that such modifications are made based on having renewables behave more like conventional generators. FERC order No. 827, issued in 2016, for example, eliminates the exemptions for wind generators from the requirement to provide reactive power. As a result, all newly interconnecting non-synchronous generators will be required to provide reactive power.

Other practices such as: sub-hourly scheduling and dispatch, setting reserve requirements on a dynamic basis, allowing variable generators and demand response to provide reserve (if they can meet the technical requirements), and implementing better forecasting and data collection requirements, are among the state-of-the-art solutions for more efficient integration of renewable resources.

Summary

In summary, renewables have made an increasing contribution to electricity generation as clean energy resources. While the challenges posed by the renewable energy sources increase the complexity of operation, new solutions have been or will be implemented to allow for effective operation of the grid. Also, the continuation of federal tax credits and the declining capital costs help to keep renewable project economics attractive for developers in the near term. However, the new regulatory climate brought on by the new Trump administration, as well as how states respond to the actions at the federal level, will impact this trend in the coming years.

ABB has done significant additional research describing the best way to design a project from the ground up for success. The white paper reviews pitfalls to avoid and how to assess the three key areas for success through a study of siting, financials and interconnection issues in Navigating the Renewable Boom, click the link to read the white paper.