California’s push to use only carbon-free electricity hinges on a big bet—that battery costs will plunge.
Lawmakers are expected to vote this week on a bill mandating that power generation come entirely from clean sources like wind and solar by 2045. But without cheap batteries, that could cause power prices to soar. That’s because it could spell the end for natural gas plants which currently generate about a third of the state’s electricity and are critical to keep the grid stable.
California would need to install more than 200 times as much energy-storage capacity than it has now to make up for the loss of gas plants, according to the Clean Air Task Force, a Boston-based energy-policy nonprofit. Gas plants both provide steady power output and can react quickly when there are supply constraints. The availability of renewables can be intermittent, making the ability to store power key.
“It could happen, but you are taking a gamble,” said Toby Shea, a New York-based analyst at Moody’s Investors Service. Cutting out gas entirely “will require battery costs to continue to decline precipitously.”
Proponents of the bill say solar and wind energy already compete in price with fossil fuels and that costs are expected to decline further. In addition, the proposal allows for the state to meet the target with a mix of clean-energy resources, including large hydroelectric dams. The bill’s sponsor, California state Senator Kevin De Leon, said critics have predicted time and again that clean energy initiatives would drive up costs.
“They were wrong,” De Leon, a Democrat, said in a statement. “California has the fastest growing economy in America—and the fastest growing jobs sector in our economy is in clean energy.’’
The measure makes clear, he said, that the state will only move toward generating all its power from clean sources if it can be done in a cost-effective way.
Renewables are already closing in on gas as the state’s dominant source of electricity. At times, so much solar and wind power is generated that excess supplies cause prices to plunge to negative levels, forcing the grid operator—and consumers—to pay to curtail their output. Gas plants are being crushed by low prices and the grid has had to enter into contracts to keep some of them running so the lights stay on.
Replacing Gas
Achieving a 100 percent renewable energy target in California would require 36.3 million megawatt hours of energy storage, assuming the goal is met mostly through wind and solar, according to the Clean Air Task Force. That compares with 150,000-megawatt hours of storage available in the state including pumped-hydroelectric facilities, according to the group.“If you don’t solve the storage problem, you will end up with more solar dumped in the middle of the day and negative prices,” said Sharon Tomkins, vice president, customer solutions and strategy for Sempra Energy’s Southern California Gas utility serving households to industrial consumers.
Battery prices are expected to fall 67 percent from current levels by 2030, according to a Bloomberg NEF forecast.
Even then, California power prices would be “astronomically high” if a 100 percent renewables target goes into effect, Stephen Brick, a senior adviser at the Clean Air Task Force, said in an interview. A clean-energy standard that included other carbon-free technologies would be less expensive, Brick added.
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