Energy Storage Replace Gas Plants

[Jay McKinsey + 1,489]

Is there a body of research on this that is being ignored or is this a concept you have developed?

[Douglas Buckland + 6,308]

@Wombat
 

”What is more, the O&G industry is seasonal,”

How did you arrive at this? Honestly, it seems like a strange comment. Just looking for clarification.

[Wombat + 1,028]

7 minutes ago, Douglas Buckland said:

@Wombat
 

”What is more, the O&G industry is seasonal,”

How did you arrive at this? Honestly, it seems like a strange comment. Just looking for clarification.

I simply refering to "summer driving season", "refinery maintenance season" and NG "storage season" etc.

[Douglas Buckland + 6,308]

12 minutes ago, Wombat said:

I simply refering to "summer driving season", "refinery maintenance season" and NG "storage season" etc.

Okay, thought that might be the case. Exploration, drilling and production are ongoing affairs. Thanks for the clarification!

[Wombat + 1,028]

12 hours ago, Jay McKinsey said:

Working on it. As @Monk astutely said there are a lot of variables and nuances to account for and I am double checking our numbers.

I'd also like to say to everyone out there that my goal is to honestly explore where the numbers stand today. The cost of renewables are dropping fast and we are just now at the inflection point where Solar-Wind-Storage (SWS) are becoming cost competitive with fossil fuels depending on the region and market. (I thoroughly acknowledge that natural gas prices are also dropping.)  Though as time goes on SWS will become competitive in all regions and all markets. And yes they wouldn't be at this point without massive investment in the form of subsidies. I am very much looking forward to getting rid of the PTC and ITC now that they aren't required.  

I am not a religious green zealot. That crew is generally anti-technology and anti-growth. I am very pro both! So you may be amused to hear that I receive just as much grief from a lot of the greens about my views!

All growth and all technologies have their costs, the question is how are they best valued and allocated. I leave the climate change arguments for others. My focus is on the more demonstrable economic costs of air / water pollution and geopolitics. For geopolitics that is neutering the middle east and Russia and generally decreasing resource conflicts. 

I am thrilled that natural gas is kicking coal to the curb! Fantastic for air and water pollution reduction. Next on the list is oil which natural gas will have its role in defeating as well in the form of electricity production for EV and direct combustion / fuel cell for bulk transport in shipping. Battery costs are in free fall and those who refuse to acknowledge the demonstrable cost curves are as much religious zealots as the green religious zealots they complain about. In just a few years the upfront purchase price of EV's will be less than ICE. At that point the new car market will rapidly shift to all EV by 2030. It will then take another 20 years for the fleet to turnover. A lot of that electricity for EV's will be produced by natural gas. But ultimately natural gas for electricity production will succumb to the zero marginal cost economics of solar & wind.( I can't stress enough that zero marginal cost is an economic function that drives everything else out of the market, whether you personally like it or not. Glad to discuss at length) 

As to the arguments that fossil fuels are required to underpin renewables - yes they are today but that role will decrease over time. For example much is made of the transport fuel required to transport or mine renewable resources. However, over time those transport resources will be mostly electrified. Coal is required for steel and I think that is just fine. I support metallurgical coal. It's benefits outweigh the costs. Likewise fossil fuels in concrete and plastics out weigh their costs per se. Plastic pollution is a separate issue, unrelated to whether it is made with fossil fuels or something else.

Biofuels are stupid with the possible exception of industrial algae for jet fuel. But I also don't have a great problem with using fossil fuels for jet or rocket fuel. The benefit out weighs the cost for the foreseeable future. 

FWIW my political economics evolved out of anarcho-capitalism (AC) and exponential scaling. In grad school I studied both extensively. My thesis advisor was David D. Friedman, Milton Friedman's son, and who is often referred to as the head of the utilitarian school of anarcho-capitalism.  At the same time I interned at the Semiconductor Industry Association as their Moore's Law expert. (Even got to meet Gordon Moore.) After graduation I tried for three years to combine the two economic models but couldn't. Exponential scaling was proven by hard numbers that I calculated first hand but AC was an unproven ideal. No matter how hard I tried to combine the two concepts the models went to hell and failed to scale. Political economics are not linear but circular. The far left and far right are both anarchists. And left anarchy scales just as poorly as right. So I ended up with the best model being in the middle. 50% right and 50% left or 50% authoritarian and 50% anarchy. The trick is determining the proper method of integration and that is my focus.

P.S. I am looking forward to a carbon intensive future! Graphene and other single layer crystals are going to have a profound effect on our future.

I am a pretty hard-core greenie, but I a realist. That is why I am so upset with the Green Party here in Australia. They are irrational. They have blocked tha Adani thermal coal project here in QLD. Only just got approved (after 12 years of Green "lawfare"), at half original capacity. That means that for the last 8 years, India has been buying low-grade coal from Indonesia instead (which emits 30% more CO2), and to top it off, that required clearing vast swathes of rainforest, when deforestation is even greater contributor to atmospheric CO2 than coal! Talk about dumb?!? They also won't allow Australia to build any nuclear! Even dumber?!? I think Australia could easily cut our emissions by 65-75%, mainly with renewables, but don't believe we should go 100% renewable given that we gonna export s***loads of green power, thus leading the world in terms of our global contribution.

[KeyboardWarrior + 527]

12 hours ago, Wombat said:

I have been trying to tell young Keyboard Warrior how complex an NPV calculation is, that "garbage in = garbage out", that there are many variables to consider such as the ones you have just pointed out, but he never listens so I have blocked him

When you block people you demonstrate that you're pathetic. What actually happened is that I demanded some support for your claims though calculations, and you failed to provide them. Stop making claims then. 

NPV is not a complex calculation, but finding the correct numbers for it is. Since you've boldly asserted that solar is crushing gas, you should be ready to go with your numbers. If the answer is so clear, why is it so hard to find? You've got the burden of proof grandpa. 

Edited May 10, 2020 by KeyboardWarrior

[KeyboardWarrior + 527]

5 hours ago, Jay McKinsey said:

The more I look the more I find EIA numbers all over the board.

Yes, and I shouldn't say that they're telling lies because that's unsupported. Too many things I can't see. 

[Enthalpic + 1,496]

11 hours ago, Douglas Buckland said:

@Wombat
 

”What is more, the O&G industry is seasonal,”

How did you arrive at this? Honestly, it seems like a strange comment. Just looking for clarification.

Traditional oil rigs around here were very seasonal. They needed frozen earth to move equipment in wet areas.  Every spring when it all turned to mud they shut everything down.

 

[nsdp + 449]

On 5/8/2020 at 5:14 PM, Jay McKinsey said:

"Minnesota utility Great River Energy confirmed Thursday that it will pilot Form's technology, identified for the first time as an "aqueous air" battery system. While it's common for lithium-ion batteries on the market today to discharge their full power capacity for up to four hours, Form's 1-megawatt project will do so for up to 150 hours, an unprecedented achievement for the storage industry.

Great River Energy, the second-largest power supplier in Minnesota, announced plans Thursday to phase out coal power, add 1,100 megawatts of new wind capacity and expand market purchases, resulting in a cheaper electricity mix that is 95 percent carbon-free. The generation and transmission cooperative wants to see if long-duration storage works to ride out the lulls in wind generation."

https://www.greentechmedia.com/articles/read/form-energys-first-project-pushes-long-duration-storage-to-new-heights-150-hour-duration

They are two years behind XCEL the largest power provider in Minnesota and Colorado both.

"In Colorado, Xcel Energy says its recently announced goal of 80 percent reduction in carbon emissions by 2030 can be achieved with existing technology. Costs of renewables have declined, weather forecasts have improved, and engineers have learned how to integrate higher and higher levels of clean power without sacrificing reliability.

But for that final 20 percent of emissions-free power, the company wants to see improved weather forecasts, and, most critically, improved storage technology. Market reforms will also be needed to better manage the grid."  https://energynews.us/2019/03/06/west/with-100-clean-energy-goal-xcel-bets-on-advancements-in-solar-and-storage/

"New wind was a large part of Xcel’s Colorado Energy Plan approved by state regulators last September. With the new renewables, Xcel plans to close two aging coal plants at Pueblo by 2025. With that, Xcel expects to be 55 percent powered by renewables."

XCEL's service area in Lea, Chaves and Eddy counties in New Mexico can provide enough solar energy with combined storage in the Permian Salt and water recirculated from the El Capitan Aquifer to provide 100% of the  energy demand from the lower 48 states.  It would take a HVDC build out like China has done with Three Gorges and other dams.

A sop to Doug, you get to rework all of the  Permian Basin New Mexico oil holes to gas cavern storage.  Recycle those old holes.  Texas side is short of water from the El Capitan and Austin isn't smart enough to permit it. https://www.forbes.com/sites/jamesconca/2017/01/10/wipp-nuclear-waste-repository-reopens-for-business/#3cd2e1062052

[nsdp + 449]

7 hours ago, KeyboardWarrior said:

Yes, and I shouldn't say that they're telling lies because that's unsupported. Too many things I can't see. 

Or omitted because they aren't/weren't PC for what ever administration held office.   Based on EIA data the 2008 Texas Energy Plan called for 35,000MW of new coal plants by 2020.  EIA is known to leave costs like dry tower cooling for condensors as required by Section 316 of the Clean Water Act out of their estimates.  They often leave soft costs like engineering ,inspections and permitting out.  A fully completed ready to run CCGT costs about $3200/kwh name plate from Data introduced in the Pande Energy Vs ERCOT lawsuit.  $612/kwh would be believable for an aero derivative CT only.

Edited May 10, 2020 by nsdp

[KeyboardWarrior + 527]

27 minutes ago, nsdp said:

Or omitted because they aren't/weren't PC for what ever administration held office.   Based on EIA data the 2008 Texas Energy Plan called for 35,000MW of new coal plants by 2020.  EIA is known to leave costs like dry tower cooling for condensors as required by Section 316 of the Clean Water Act out of their estimates.  They often leave soft costs like engineering ,inspections and permitting out.  A fully completed ready to run CCGT costs about $3200/kwh name plate from Data introduced in the Pande Energy Vs ERCOT lawsuit.  $612/kwh would be believable for an aero derivative CT only.

Can you directly provide a source for $3200/kW 

That would put a 1000 MWe plant at $3.2 billion...

I know what to do. I'll go and look at the balance sheets of energy companies. 

Edit: I understand why there's a CAPEX for kWh

Edited May 10, 2020 by KeyboardWarrior

[KeyboardWarrior + 527]

47 minutes ago, nsdp said:

Or omitted because they aren't/weren't PC for what ever administration held office.   Based on EIA data the 2008 Texas Energy Plan called for 35,000MW of new coal plants by 2020.  EIA is known to leave costs like dry tower cooling for condensors as required by Section 316 of the Clean Water Act out of their estimates.  They often leave soft costs like engineering ,inspections and permitting out.  A fully completed ready to run CCGT costs about $3200/kwh name plate from Data introduced in the Pande Energy Vs ERCOT lawsuit.  $612/kwh would be believable for an aero derivative CT only.

I would also like to note that while inspections, engineering, and permits are a hefty sum, that's nowhere near enough to raise capital expenditures by two billion. 

Edit: Info Adding

I'm reading an article that cites subsidized wind as the primary reason for Pande Energy's bankruptcy... how very fascinating. Furthermore, a larger culprit cited is oversupply due to false projections for power demand in the area where ERCOT operates. I'm looking into the lawsuit as well, with a citation of $2.2 billion spent on three combined cycle plants. That doesn't equate to $3.2 billion for a single plant. Seriously. 

Edited May 10, 2020 by KeyboardWarrior

[Jay McKinsey + 1,489]

1 hour ago, nsdp said:

XCEL's service area in Lea, Chaves and Eddy counties in New Mexico can provide enough solar energy with combined storage in the Permian Salt and water recirculated from the El Capitan Aquifer to provide 100% of the  energy demand from the lower 48 states.  It would take a HVDC build out like China has done with Three Gorges and other dams.

Wow! 

[0R0 + 6,251]

On 5/7/2020 at 7:51 AM, Wombat said:

Wrong. Once a few more of your LNG plants completed over next 24 months, Henry Hub natural gas price will jump to at least $4/mmbtu, and will be EVEN LESS COMPETITIVE with solar/battery.

It will likely remain under $3 and be held down from there. EQT and others in the Marcellus can produce well below that price level and down to $2. They can respond rapidly to rising prices. 

Once oil prices justify resumption of fracking in the Permian, the HH price will remain closer to $2 and LNG will be working at $4-5. The tanker rates are already back to normal range, thus indicating an offtake greater than remaining online production, or a large increase in practical storage volumes. 

 

[0R0 + 6,251]

On 5/7/2020 at 9:40 PM, Wombat said:

On 5/7/2020 at 9:21 PM, KeyboardWarrior said:

@Wombat

Let's do NPV

Both plants are rated at 1000 MW and will sell all of their power.

Solar plant gets $80 per MWh, gas plant gets $70 per MWh.

Gas plant costs $1B, solar costs $1.5B.

20 year period. Gas is $3 per million btu.

interest is 5%

GAS

[($200,000,000 * 20) / ((1 + 0.05)^20)] - $1,000,000,000 = approx $500,000,000

SOLAR

[($110,000,000 * 20) / ((1 + 0.05)^20)] - $1,500,000,000 = -$670,000,000

Is this correct?

Definitely not. "Garbage in = Garbage out". You whole hypotheses that gas more "profitable" than solar is wrong. Unless a gas plant get much higher wholesale electricity price than solar, your entire analysis a waste of time. What makes you think solar get just half as much revenue for same amount of electricity sold? You need to start all over again.

He is saying that the Solar plant gets a higher electric  rate because of carbon credits. Not lower. 

What he is doing, correctly is applying the appropriate % of down time. 45%. If you do not apply that, and go for a no downtime forcing of the scaling to 1000 MWh as minimum, then the plant will have to be 90% higher max capacity and your storage will have to cover prolonged downtime. Which makes it that much less competitive. 

The reason these plants can be sized properly on comparable scales is that there is a network backing them up with NG or other FF production and/or  storage. Which is why they reduce everyone's profits on the grid while operating and move the profits to storage and FF spike plant operators when they are not working. As history of electrical pricing in Australia shows, the merchant solar does very well while it is on. But the storage operator makes the money the rest of the time. Only when storage is depleted do you get FF plants filling in. But that is now happening less frequently so the FF plants are losing money and some of them will shut down, presumably coal. 

Lazard's numbers should account for that. 

[Wombat + 1,028]

9 minutes ago, 0R0 said:

He is saying that the Solar plant gets a higher electric  rate because of carbon credits. Not lower. 

What he is doing, correctly is applying the appropriate % of down time. 45%. If you do not apply that, and go for a no downtime forcing of the scaling to 1000 MWh as minimum, then the plant will have to be 90% higher max capacity and your storage will have to cover prolonged downtime. Which makes it that much less competitive. 

The reason these plants can be sized properly on comparable scales is that there is a network backing them up with NG or other FF production and/or  storage. Which is why they reduce everyone's profits on the grid while operating and move the profits to storage and FF spike plant operators when they are not working. As history of electrical pricing in Australia shows, the merchant solar does very well while it is on. But the storage operator makes the money the rest of the time. Only when storage is depleted do you get FF plants filling in. But that is now happening less frequently so the FF plants are losing money and some of them will shut down, presumably coal. 

Lazard's numbers should account for that. 

But that is my whole point! FF PLANTS ARE LOSING MONEY! Not twice as profitable as renewables?!? Indeed, FF plants will lose EVEN MORE MONEY as storage becomes widespread???????

[KeyboardWarrior + 527]

3 minutes ago, Wombat said:

But that is my whole point! FF PLANTS ARE LOSING MONEY! Not twice as profitable as renewables?!? Indeed, FF plants will lose EVEN MORE MONEY as storage becomes widespread???????

you're neurotic 

Provide your own fucking calculations you coward. I know you can see this. 

Edited May 11, 2020 by KeyboardWarrior

[0R0 + 6,251]

3 minutes ago, Wombat said:

But that is my whole point! FF PLANTS ARE LOSING MONEY! Not twice as profitable as renewables?!? Indeed, FF plants will lose EVEN MORE MONEY as storage becomes widespread???????

Yes, FF are not cutting it because there are "too many" competing for the profitable slots when solar (or wind) is not at capacity. You added the solar capacity to the grid, so crashed prices while it operates. Then the enterprising storage independent filled in a large portion of that slot. So duration of high prices for the FF producers is insufficient to cover them. But that is not because the Solar plant is that great, but because the market is oversupplied. Close down a coal plant and the prices during the offtime will get high enough to have the CCGP remaining make big money whie operating 20% of the time at full capacity. Unfortunately, you will also have grid failure on a regular basis so that someone will have to turn their demand off when solar is out. The coal plants were set up for base load operation and make for a lousy intermittent source - though they can. 

[KeyboardWarrior + 527]

7 minutes ago, 0R0 said:

Yes, FF are not cutting it because there are "too many" competing for the profitable slots when solar (or wind) is not at capacity. You added the solar capacity to the grid, so crashed prices while it operates. Then the enterprising storage independent filled in a large portion of that slot. So duration of high prices for the FF producers is insufficient to cover them. But that is not because the Solar plant is that great, but because the market is oversupplied. Close down a coal plant and the prices during the offtime will get high enough to have the CCGP remaining make big money whie operating 20% of the time at full capacity. Unfortunately, you will also have grid failure on a regular basis so that someone will have to turn their demand off when solar is out. The coal plants were set up for base load operation and make for a lousy intermittent source - though they can. 

This is basically what I realized after reading about the Panda Energy bankruptcy. It's all oversupply. I've set up a scenario, perhaps four times, where each project sells everything they produce and every time solar ends up with negative value. 

We can set up all kinds of scenarios where we debuff gas, and it still comes out on top. 

Recall that solar's NPV was negative at $0.95 per watt after 20 years. Let's see if a combined cycle plant at 50% capacity can still end up in the positive... Btw after searching for more figures, I'm still convinced that CAPEX is $1 per watt at most. 

Combined cycle profits with 50% capacity factor equate to $200 M in earnings per annum for a 1000 MWe plant.

[($200,000,000 * 20) / (1 + 0.05)^20] - $1,000,000,000 = ~ $500 M. Still in the positive, while a solar farm with the same CAPEX is still in the negative (refer to other examples). Without oversupply gas wins. 

Edited May 11, 2020 by KeyboardWarrior

[Wombat + 1,028]

5 minutes ago, 0R0 said:

Yes, FF are not cutting it because there are "too many" competing for the profitable slots when solar (or wind) is not at capacity. You added the solar capacity to the grid, so crashed prices while it operates. Then the enterprising storage independent filled in a large portion of that slot. So duration of high prices for the FF producers is insufficient to cover them. But that is not because the Solar plant is that great, but because the market is oversupplied. Close down a coal plant and the prices during the offtime will get high enough to have the CCGP remaining make big money whie operating 20% of the time at full capacity. Unfortunately, you will also have grid failure on a regular basis so that someone will have to turn their demand off when solar is out. The coal plants were set up for base load operation and make for a lousy intermittent source - though they can. 

USA coal-fired power plants have already dropped from 600 to just 160. Will all be gone in 5-7 years. NG already supplies 35% of US electricity. Big difference in profitability between EXISTING  gas plant and NEW Build. With more solar/wind + storage coming online, an electric utility would be mad to build new CCGT! They all know this. Just ask them if u don't believe? Or try reading the articles on this site in relation to the matter?

[0R0 + 6,251]

1 hour ago, Wombat said:

USA coal-fired power plants have already dropped from 600 to just 160. Will all be gone in 5-7 years. NG already supplies 35% of US electricity. Big difference in profitability between EXISTING  gas plant and NEW Build. With more solar/wind + storage coming online, an electric utility would be mad to build new CCGT! They all know this. Just ask them if u don't believe? Or try reading the articles on this site in relation to the matter?

As Keyboard warrior and I are pointing out, the issue is not that the "math" is in the solar plant's favor. It is that it is in the FF producer's detriment via oversupply crashing prices so that FF are pushed off of baseload during peak operations. During peak operations solar is the only operator since it has no fuel costs. It is during the other 16 hours of the day when solar is off peak output and during the remainder of days where solar does not produce appreciable output at all, that FF and storage make their money. For the short term extra couple of hours of high demand when solar output falls into sunset, Storage can fill up enough of the demand to keep prices down below fuel costs. That leaves non peak hours for the FF to compete for. Obviously, one major producer has to be shut down at 0 capital cost 250 day of the year, i.e. bankruptcy, so they can be there in the 115 overcast days, or if you are in old blighty, or Seattle, for 200 overcast days. 

The major mistake is the demand estimate. The solar plant was no more necessary than a hole in the head. But it was put in with an eye to lowering rates and filling a renewables quota. No real economic calculation was involved other than the fact that most days, for a few hours a day, your electricity costs are below fuel costs for a FF plant. Those happen to also coincide with peak demand. So the issue for a utility is that the only thing they can add to a well supplied market is something that consumes no fuel. The over-capacity condition is what drives the FF players out of profitability. If it were a FF plant added on, then its operation would be prorated and everyone would be scraping by. But oversupply with solar (or wind) and you can't really justify turning it off, so the FF players have to turn off. 

It is simply that solar and to a lesser extent wind, are a cherry picking technology, while storage is a fallen cherry picker, and legacy FF are literally pushed to the margin as fill in and surge capacity.  The end result is that nobody makes back their capital. 

[0R0 + 6,251]

On 5/8/2020 at 11:53 AM, KeyboardWarrior said:

Holy shit it gets even better!

https://www.eia.gov/todayinenergy/detail.php?id=31912

"Nearly 75% of the natural gas capacity installed in 2015 were combined-cycle units, which had an average installed cost of $614/kW"

I wonder what the cost is now!

Do you people have any idea how big of an issue this is for solar? These plants not only use half the fuel of traditional plants, but their capital cost is literally 3/4 of traditional models. 

Let's do another NPV for a 1000 MW gas plant, because apparently that's the way to go.

Combined cycle earns $400 per annum at $3 per mmBtu since its fuel cost goes from $400 to $200 million.

[($400,000,000 * 20)  ((1 + 0.05)^20)] - $650,000,000 = $2.3 B present value in twenty years. 

Give up. I've had it with this dishonesty. 

$674 for large scale according to GE. $1200 at smaller scale, all in. If memory serves

Edited May 11, 2020 by 0R0

[0R0 + 6,251]

On 5/7/2020 at 9:58 PM, Wombat said:

But Alberta is in Canada! I am talkin sunny Texas or Florida?

The sun belt extends into SW Canada where it is not overcast for a large enough time of the year. Florida is overcast plenty of days, and has a high winds problem that will blow large scale solar out once in a while, Similarly in S. Texas. Texas, however, is in a wind corridor on its Western half. New Mexico Arizona and Nevada can each supply the peak US demand several times over. 

[0R0 + 6,251]

On 5/8/2020 at 7:43 PM, KeyboardWarrior said:

Oh okay.

 

That's true, reading too fast.

No, it earns $50 million more in revenue according to you, while having a lower capital cost than traditional plants. Lower capital + higher revenue = guaranteed net positive.

Okay Jay, are we going to get somewhere finally? You gave me the figures, I did the calculations with a traditional plant vs a solar plant. Do we need to do it again? Should I compare it to a CCGP with capacity factor? I'm tired of this so let's get to an objectively proven conclusion. 

This is what monk put in. Doesn't help you at all. 

 

Do you know the cost of NG used in the calculation?

[KeyboardWarrior + 527]

8 hours ago, 0R0 said:

Do you know the cost of NG used in the calculation?

$3.00 per mmBtu, which translates to $4.20 actual for mmBtu at 60% efficiency. 

EDIT fuel cost is lower than I thought it was, by a significant number. (When gas is $3 and plant is 1000 MW). I won’t change any figures though. Need to have gas at an unreasonable disadvantage to reduce their ability to nitpick. 

Edited May 11, 2020 by KeyboardWarrior