Capacity Impacts and Power Generation

FERC recently reported that in the first half of 2014 Renewable Power made up 55.7% of all new install power generation capacity.  This increase of Renewable Power capacity has been recognized as a very promising trend towards substantially reducing future U.S. carbon emissions.  The FERC report, however, is based on maximum ‘design’ power generation capacities and does not compare new installed power capacities based on actual operations or annual generation capacities based actual ‘capacity factors’.  By adjusting newly installed power generation technologies for state-of-art capacity factors, how will the mix or level of Renewables’ power generation actually compare to Non-Renewable Coal, Natural Gas, Petroleum and Nuclear Power?

To answer this question we need to first review the recently published FERC data.  Refer to the following Table 1.

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Data Source: FERC “Office of Energy Projections, Energy Infrastructure Projects” for June 2014.  Originally derived Ventyx, an ABB Company, Velocity Suite data. Note: ‘Total Renewables’ excludes Coal, Natural Gas, Nuclear and Oil ‘primary fuel(ed)’ power generation. 

The Table 1 data clearly shows that ‘Total Renewables’ Power generation (design) capacity made up 28.5% of total new installed capacity in the 1st  half of 2013.  This Renewable power generation capacity was primarily supplied by new added Solar + Wind Power capacities.  Total Renewables Power capacity appears to increase up to 55.7% of total new installed capacity for the 1st half of 2014; once again provided primarily by Solar + Wind Power.  In the 1st halves of 2013 and 2014, Non-renewable Power capacity was primarily supplied by Natural Gas, and Coal (2013 only).

The problem with the published FERC data is that it is based on ‘maximum design’ capacities; valid for only relatively shorter periods of actual operation.  In other words the FERC data only applies to periods of Power Generation (levels) on the order of hours or days for Solar & Wind Power, and not over the period of a given full-year.  This longer term or full-year expected actual power generation capacity-performance is normally determined by applying what is commonly defined as ‘capacity factors’.  Since the wind does not blow (within maximum capacity generation levels) or the sun does no shine 24 hours/day and 365 days/year, the capacity factors or ‘actual annual power (net) generation’ divided by ‘maximum design generation capacity’ is normally much less than 100%.  Even Nuclear, Coal and Natural Gas, which can operate up to 24 hours-365 days/year (for specific years), must be shutdown every couple-few years for ‘routine maintenance/required upgrades’.  This required routine maintenance/upgrades causes even these generally much more reliable (non-renewable and fully dispatchable power)   generation sources to also have capacity factors somewhat less than 100%.  Capacity factors of Coal, Nuclear and Natural Gas Power are normally many times greater than (non-dispatchable/variable) Solar and Wind Power.  To illustrate the different capacity factors and impact on expected or actual annual power generation capacities for Renewables and Non-renewables, refer to the following Table 2:

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Data: FERC data shown in above Table 1 and EIA AEO 2014 ‘capacity factors’ (Table 1-Estimated Levelized Cost…).  Note: Natural Gas capacity factor based on ‘baseload’ operation needed to displace Coal, and Waste Heat/Other estimates are based on recent actual performance (EIA Monthly Capacity Factors). 

The actual annual power generation of newly installed Renewable and Non-renewable capacities are significantly different than the originally reported FERC design capacities; as shown in Table 1.  Table 2 shows that in the first half of 2013 total Renewables only provided 13.6% of total annual new power generation capacity.  This level of Renewables was largely exceeded by Coal Power, and overwhelmingly by Natural Gas Power in 2013 (1st half).  Table 2 also shows that Renewable actual power generation capacities increased up to 31.9% in 2014 (1st half).  While this 2.3X increase in Renewable Power annual generation capacity is a very promising improvement trend, new Natural Gas Power installed annual generation capacity still dominates the overall-total generation mix at 68%.

Future Renewable Power Generation Projections – The EIA has been increasingly criticized for under estimating future growth in Renewable Power.  Their latest projection (AEO 2014) only shows a 17% growth in total Renewable Power by 2030.  Based on the EPA’s new/proposed carbon regulations for new and existing power plants this latest EIA AEO 2014 Renewable Power projection is probably very low and needs updating in future years.

What many EIA Critics may not understand is why the EIA’s projections are conservative (or low in this case).  The EIA normally only includes existing or fully approved regulations and the associated impacts on future power generation projections.  In the case of Renewable Power some of the most influential regulations (power generation variables) historically have been individual States’ Renewable Power Standards (RPS), Wind Power Production Tax Credit (PTC), and Solar Power Net Energy Metering (NEM) subsidies.  Those regulations in effect including the RPS, PTC and NEM have been routinely incorporated into EIA AEO projections.  However, when changes are made, such as only a short-term extension or expiration of the PTC, the EIA does not assume another or perpetual series of short-term subsidies will continue.  In the case of the PTC expiring at the end of 2013, those projects deemed ‘under construction’ at year’s end will still qualify for up to 10 years of subsidies.  All of the 2014 (1st half) Wind Power installations most likely are included in this PTC extension and still qualify for the maximum of 10 years of 2.3 cent/KWh subsidies.

Other unknowns or variables such as the EPA’s newly proposed carbon standards for each individual State’s existing Power Generation capacity emissions (lbs. carbon/MWh generation) is still highly uncertain until the numerous Court challenges are settled and all States develop their final compliance plans.  The same level of uncertainty also may exist for Solar PV NEM returns, which are being challenged and debated in many States at this time.  Once these and other issues are resolved with a reasonable level of certainty should we expect the EIA to update future AEO projections accordingly.

Future Impacts of Power Generation Capacity Factors – The combination of technology developments and innovations have significantly increased the capacity factors of all types of state-of-art power generation over the years.  Wind Power for example has experienced a large increase of capacity factors from the low 20’s percent in the 1980’s to the mid-high 30’s percent today.  However, there is another very critical variable that can and does impact the level of power generation capacity factors: ‘maintenance performance’.  For example, when you visit or observe most large Wind Farmers around the U.S. (and other Developed Countries) have you noticed that on reasonably windy days it’s rare to not observe 10-20% or sometimes more of the turbines idled and obviously not in operation.  Why?  The reason is likely due to shutdown-maintenance issues, or possibly lack of adequate (preventative) maintenance.   Yes, unless all forms of power generation are routinely and properly maintained by their Operators, their capacity factors (and delivered annual power generation) can and will decline very significantly.

So, where’s the evidence other than random observations that Renewable Power capacity factors are possibly not increasing as technology developments and innovations should be expected to support?  For one credible example, refer to the EIA ‘Electric Power Monthly’.   This relatively new EIA data report shows that Wind and Solar PV capacity factors have been well below the projected state-of-art levels used in Table 2 (31% vs. 35% and 20% vs. 25% respectively for the overall average CY’s 2008-13).

And, what is the solution to improving and increasing Renewable Power generation capacity factors and actual annual power generation in the future?  Besides increasing the level of annually installed state-of-art Renewable Power (design) generation capacity and installing/connecting into efficient and ‘smart’ power grids, Owner-Operators need to (or be required to) ensure that existing generation capacity is properly and continuously maintained in the future.  And, possibly upgraded as new-improved technologies/innovations develop.  Your thoughts?