Energy Storage Replace Gas Plants

[KeyboardWarrior + 527]

@0R0 Ask Wombat for calculations and see what he spits up. If he says that it's simply not that easy, then you can tell him to quit making claims about solar because apparently he has no evidence to suggest its profitability. 

[Douglas Buckland + 6,308]

On 5/11/2020 at 5:16 AM, Enthalpic said:

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.

 

In very cold climates, that is correct, but overall, when possible, and we are in a ‘normal’ situation, drilling is prosecuted 24/7, 12 months a year.

[Jay McKinsey + 1,489]

2 hours ago, KeyboardWarrior said:

@0R0 Ask Wombat for calculations and see what he spits up. If he says that it's simply not that easy, then you can tell him to quit making claims about solar because apparently he has no evidence to suggest its profitability. 

My ballpark numbers are coming out to NPV :

Solar $922,247,709 @ CapEx $950M, no subsidies, 24.5% capacity factor https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_6_07_b

with 26% ITC NPV: $1,169,247,709

NGCC $1,261,304,420 @ $3mmBTU, CapEx $675M, 56.8% capacity factor https://www.eia.gov/electricity/monthly/epm_table_grapher.php?t=epmt_6_07_a

I reserve the right to modify this for errors and new information in the future. For now I concede that new NGCC  is still more profitable than pure solar. However going forward I will be looking at Solar + Storage as that is more of an equivalent to NGCC. The days of utility scale pure solar new build are over. 

 

Edited May 12, 2020 by Jay McKinsey

[Jay McKinsey + 1,489]

"To understand energy storage’s contribution to this boom, we need to break down the combined PPA into a solar and a storage share. Let’s take the aforementioned Eland project for example, in which the PPA without storage would have amounted to US$20 /MWh (“base” price) and a US$20 /MWh “adder” was offered for the storage system, resulting in a PPA of US$40 /MWh for all MWhs delivered. While a PV LCOE at this level is no big news anymore, US$20 /MWh for energy storage seems absurdly low. How is such a low storage adder possible, you might ask, considering that LCOS (Levelised Cost of Storage) is very likely to remain above US$100 /MWh for the next couple of years?"https://www.energy-storage.news/blogs/battery-storage-at-us20-mwh-breaking-down-low-cost-solar-plus-storage-ppas

Edited May 12, 2020 by Jay McKinsey

[nsdp + 449]

20 hours ago, Jay McKinsey said:

"To understand energy storage’s contribution to this boom, we need to break down the combined PPA into a solar and a storage share. Let’s take the aforementioned Eland project for example, in which the PPA without storage would have amounted to US$20 /MWh (“base” price) and a US$20 /MWh “adder” was offered for the storage system, resulting in a PPA of US$40 /MWh for all MWhs delivered. While a PV LCOE at this level is no big news anymore, US$20 /MWh for energy storage seems absurdly low. How is such a low storage adder possible, you might ask, considering that LCOS (Levelised Cost of Storage) is very likely to remain above US$100 /MWh for the next couple of years?"https://www.energy-storage.news/blogs/battery-storage-at-us20-mwh-breaking-down-low-cost-solar-plus-storage-ppas

No Jay, the $20/mwh adder is only for MWH delivered from storage batteries not all kwh delivered under the contract.  Two places your analysis goes wrong under the Mobile Sierra Pacific doctrine established back in 1956.   First payment of $40mwh for losses in storage is unjust and unreasonable.  Second payment of the $20 adder for kwh not stored in the batteries is injust and unreasonable.  Proper measurement is Levelized Avoided Cost of New Generation .  https://www.eia.gov/outlooks/aeo/pdf/electricity_generation.pdf 

LCOE does not capture all of the factors that contribute to actual investment decisions, making the direct comparison of LCOE across technologies problematic and misleading as a method to assess the economic competitiveness of various generation alternatives.

Lots of people  including Lazard haven't snapped that.  LCOE instead of LACE is why 7 out of 8 investor owned utilities in Texas went bankrupt between 1991 and 2011.   LCOE only works when marginal costs  faced by customers are rising not falling.   If Marginal costs are falling, customers find that they are better off investing themselves and collecting the  savings.  That results in load loss and the Utility Death Spiral.  LCOE on the four coal units at WA Parish  power plant looked great  BUT LACE costs for industrials was such that 44% of HL&P's annual KWH sales  went to self generation.  The killer for fossil fuel plants is that you cannot put them where transmission and distribution costs are lowest.   Since pricing is Local Marginal Price at the customers' location, LACE calculates what the customer would pay to replace your central unit  with self generation. . That is what killed coal and steam boiler NG in Texas and is killing badly sited CCGT. A few NG boiler units like Greens Bayou have survived because they can supply 400 MVRh 7 miles from downtown Houston as opposed to 65 miles for WAParish. Taht figures to be $10/MVAH/MWH. That is why ERCOT has " LMP values do not include the Real-Time price adders ".  that is why every ones' models posted here are the same path that lead to Bankruptcy for TXU, HL&P, CP&L, Gulf States, EPE, WTU, CSW.

It is the cost of substitute power that drives the customer's decision not YOUR LCOE.  Electrric monopolies are gone.

Edited May 13, 2020 by nsdp

[Jay McKinsey + 1,489]

2 minutes ago, nsdp said:

No Jay, the $20/mwh adder is only for MWH delivered from storage batteries not all kwh delivered under the contract.  Two places your analysis goes wrong under the Mobile Sierra Pacific doctrine established back in 1956.   First payment of $40mwh for losses in storage is unjust and unreasonable.  Second payment of the $20 adder for kwh not stored in the batteries is injust and unreasonable.  Proper measurement is Levelized Avoided Cost of New Generation .  https://www.eia.gov/outlooks/aeo/pdf/electricity_generation.pdf 

LCOE does not capture all of the factors that contribute to actual investment decisions, making the direct comparison of LCOE across technologies problematic and misleading as a method to assess the economic competitiveness of various generation alternatives.

Lots of people  including Lazard haven't snapped that.  LCOE instead of KACE is why 7 out of 8 investor owned utilities in Texas went bankrupt between 1991 and 2011.   LCOE only works when marginal costs are rising not falling.   If Marginal costs are falling, customers find that they are better off investing themselves and collecting the  savings.  That results in load loss and the Utility Death Spiral.  LCOE on the four coal units at WA Parish  power plant looked great  BUT LACE costs for industrials was such that 44% of annual KWH sales  went to self generation.  The killer for fossil fuel plants is that you cannot put them where transmission and distribution costs are lowest.   Since pricing is Local Marginal Price at the customers' location LACE calculates what the customer would pay to replace your central unit  with self generation. . That is what killed coal and steam boiler NG in Texas. A few NG boiler units like Greens Bayou have survived because they can supply 400 MVRh 7 miles from downtown Houston as opposed to 65 miles for WAParish. Taht figures to be $10/MVAH/MWH. That is why ERCOT has " LMP values do not include the Real-Time price adders ".  that is why every ones' models posted here are the same path that lead to Bankruptcy for TXU, HL&P, CP&L, Gulf States, EPE, WTU, CSW.

It is the cost of substitute power that drives the customer's decision not YOUR LCOE.  Electrric monopolies are gone.

That wasn't my analysis. It was a quote from the linked article that is in parentheses.

Edited May 13, 2020 by Jay McKinsey

[nsdp + 449]

24 minutes ago, Jay McKinsey said:

That wasn't my analysis. It was a quote from the linked article that is in parentheses.

Why did you link it? didn't you know it is obsolete methodology? I do believe you made this statement:" And we all know how lefty green liberal the US military is. 😘 "

The  reason they do it is renewables don't come with body bags attached to new supplies.  If you don't know diesel, in Afghanistan, cost $400/gallon when they were having to run truck convoys across Lithuania, Russia, Uzbekistan and Turkmenistan when Pakistan closed roads and Air Space. Remember what killed Rommel in North Africa? Supply. If you don't have to transport diesel for base use you save a lot of money and water you don't use in cooling engines.. AND YOU DON"T HAVE TO WRITE THAT LAST LETTER FROM THE CO TO SOMEONE"S WIFE THE WAY I DID IN 1971. Fewer people exposed in resupply when you eliminate POL.

Edited May 13, 2020 by nsdp

[Jay McKinsey + 1,489]

2 minutes ago, nsdp said:

Why did you link it? didn't you know it is obsolete methodology? I do believe you made this statement:" And we all know how lefty green liberal the US military is. 😘 "

The  reason they do it is renewables don't come with body bags attached to new supplies.  If you don't know diesel, in Afghanistan, cost $400/gallon when they were having to run truck convoys across Lithuania, Russia, Uzbekistan and Turkmenistan when Pakistan closed roads and Air Space. Remember what killed Rommel in North Africa? Supply. If you don't have to transport diesel for base use you save a lot of money and water you don't use in cooling engines.. AND YOU DON"T HAVE TO WRITE THAT LAST LETTER FROM THE CO TO SOMEONE"S WIFE THE WAY I DID IN 1971.

Huh? That was a sarcastic comment to that guy that was telling me how horrible lefty green renewables are and I was pointing out to him that the US Military supports renewables. The sarcasm was that if renewables are horrible lefty green things then the US military must be lefty green. I fully support the US military use of renewables and point it out to conservatives often just to show them that they aren't restricted to the lefty greens.

[Jay McKinsey + 1,489]

2 hours ago, nsdp said:

No Jay, the $20/mwh adder is only for MWH delivered from storage batteries not all kwh delivered under the contract.  Two places your analysis goes wrong under the Mobile Sierra Pacific doctrine established back in 1956.   First payment of $40mwh for losses in storage is unjust and unreasonable.  Second payment of the $20 adder for kwh not stored in the batteries is injust and unreasonable. 

Mobile Sierra Pacific and its children only apply to contracts that cross state lines. The contract at issue is completely within the state of California between LA Water and Power and the Eland project 70 miles from LA.The other two projects are also within state boundaries.

The original offer was just for solar at $19.97. Before that offer was accepted Eland made a new offer to add storage. Then they made an offer to add even more storage. LADWP was free to accept any of the offer and they went with the solar + max storage offer. Even if this were subject to Mobile Sierra Pacific on what possible grounds would it be found to be unjust and unreasonable? It is dirt cheap.

Edited May 13, 2020 by Jay McKinsey

[Jay McKinsey + 1,489]

1 hour ago, nsdp said:

  Proper measurement is Levelized Avoided Cost of New Generation .  https://www.eia.gov/outlooks/aeo/pdf/electricity_generation.pdf 

LCOE does not capture all of the factors that contribute to actual investment decisions, making the direct comparison of LCOE across technologies problematic and misleading as a method to assess the economic competitiveness of various generation alternatives.

Lots of people  including Lazard haven't snapped that.  LCOE instead of LACE is why 7 out of 8 investor owned utilities in Texas went bankrupt between 1991 and 2011.   LCOE only works when marginal costs  faced by customers are rising not falling.   If Marginal costs are falling, customers find that they are better off investing themselves and collecting the  savings.  That results in load loss and the Utility Death Spiral.  LCOE on the four coal units at WA Parish  power plant looked great  BUT LACE costs for industrials was such that 44% of HL&P's annual KWH sales  went to self generation.  The killer for fossil fuel plants is that you cannot put them where transmission and distribution costs are lowest.   Since pricing is Local Marginal Price at the customers' location, LACE calculates what the customer would pay to replace your central unit  with self generation. . That is what killed coal and steam boiler NG in Texas and is killing badly sited CCGT. A few NG boiler units like Greens Bayou have survived because they can supply 400 MVRh 7 miles from downtown Houston as opposed to 65 miles for WAParish. Taht figures to be $10/MVAH/MWH. That is why ERCOT has " LMP values do not include the Real-Time price adders ".  that is why every ones' models posted here are the same path that lead to Bankruptcy for TXU, HL&P, CP&L, Gulf States, EPE, WTU, CSW.

It is the cost of substitute power that drives the customer's decision not YOUR LCOE.  Electrric monopolies are gone.

LADWP is municipal not an IOU, they are required by law to begin sourcing large amounts of renewable energy. In the situation you describe it appears that the plants were selling into a market, in the case at hand the LA PPA is a 25 year fixed contract. Further you clearly state that the problem is local marginal cost and the plants that survived were closest to the customer. Well 70 miles from LA is about as close as you are going to get with a giant solar plant! And if Lazard hasn't cottoned to your analysis then I'm in good company.

Edited May 13, 2020 by Jay McKinsey

[Wombat + 1,028]

6 hours ago, Jay McKinsey said:

LADWP is municipal not an IOU, they are required by law to begin sourcing large amounts of renewable energy. In the situation you describe it appears that the plants were selling into a market, in the case at hand the LA PPA is a 25 year fixed contract. Further you clearly state that the problem is local marginal cost and the plants that survived were closest to the customer. Well 70 miles from LA is about as close as you are going to get with a giant solar plant! And if Lazard hasn't cottoned to your analysis then I'm in good company.

Jay, did you read this article?  https://oilprice.com/Energy/Energy-General/Trump-Administration-Approves-Largest-US-Solar-Project-Ever.html

[Jay McKinsey + 1,489]

7 hours ago, Wombat said:

Jay, did you read this article?  https://oilprice.com/Energy/Energy-General/Trump-Administration-Approves-Largest-US-Solar-Project-Ever.html

Yeah, very awesome! It has really had me wondering what is the optimal ratio of battery to solar capacity? I realize it won't be the same in all cases but I suspect the industry will settle on a rough standard. For max revenue the batteries should be fully filled and discharged every day plus some electricity will be sold during the day while production is occurring. Australia is going to be covered by projects like this in a few years.

[KeyboardWarrior + 527]

7 hours ago, Jay McKinsey said:

Yeah, very awesome! It has really had me wondering what is the optimal ratio of battery to solar capacity? I realize it won't be the same in all cases but I suspect the industry will settle on a rough standard. For max revenue the batteries should be fully filled and discharged every day plus some electricity will be sold during the day while production is occurring. Australia is going to be covered by projects like this in a few years.

Why does it cost $1 billion? The storage? 

Finally looked at your calculations. Solar doesn't look too bad according to those numbers. Was wondering what you put in as cashflow for the solar farm. 

Edited May 14, 2020 by KeyboardWarrior

[KeyboardWarrior + 527]

21 hours ago, Jay McKinsey said:

If Marginal costs are falling, customers find that they are better off investing themselves and collecting the  savings.

This is why opportunity cost is so important, and it's one of the reasons that I can't figure out how to synthesize fertilizer with renewables while collecting higher revenues. It's simply more profitable to sell the power. 

Of course mid sentence I've switched to something industrial and not related to a power customer, but it's the same concept. 

Edited May 14, 2020 by KeyboardWarrior

[Jay McKinsey + 1,489]

2 hours ago, KeyboardWarrior said:

Why does it cost $1 billion? The storage? 

Finally looked at your calculations. Solar doesn't look too bad according to those numbers. Was wondering what you put in as cashflow for the solar farm. 

Presumably $650M for solar and $350M for storage. 

Solar Annual Output = 1000MW*.245CF*24H*365D*1000kW=2,146,200,000kWH/yr

Cash Flow = 2,146,200,000*$.07=$150,234,000/yr

Edited May 14, 2020 by Jay McKinsey

[KeyboardWarrior + 527]

10 hours ago, Jay McKinsey said:

Presumably $650M for solar and $350M for storage. 

Solar Annual Output = 1000MW*.245CF*24H*365D*1000kW=2,146,200,000kWH/yr

Cash Flow = 2,146,200,000*$.07=$150,234,000/yr

Ohh I see. I was simply multiplying rated capacity, in kW, times kWh/y per installed kW as given by location. For instance in Georgia it was 1800 kWh/y per kW. 

Since 24% capacity factor brings higher numbers, it makes me wonder if the figures per installed kilowatt are for dated panels in the order of 13% efficiency. 

[Wombat + 1,028]

On 5/14/2020 at 3:51 PM, Jay McKinsey said:

Presumably $650M for solar and $350M for storage. 

Solar Annual Output = 1000MW*.245CF*24H*365D*1000kW=2,146,200,000kWH/yr

Cash Flow = 2,146,200,000*$.07=$150,234,000/yr

That's it, pays for itself in 10 years (including interest), after that, virtually no running cost and hence almost 100% profit for another 10-15 years! Unlike CCGT? Do you think keyboard warrior startin to cotton on?

[Wombat + 1,028]

On 5/11/2020 at 10:17 AM, 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. 

You are correct, despite fact that US only has 160 coal plants now compared to 600 some 20 years ago, there ARE STILL TOO MANY OF THEM! That is what makes CCGT (new build) uncompetitive at moment. No problem. Solar + storage, as I said, will make coal LOSE EVEN MORE MONEY, thus they close down sooner, and CCGT become profitable because CF will rise from 30% to 50%. At the moment, CF of CCGT not much greater than solar, don't know where Keyboard Warrior got 56% from? Coal also has CF of about 40%, this why it losing money. It is not just case of too much generation sources, it was always the case. Due to both daily and seasonal variability in demand for electricity. That is why both short-term and long-term storage is crucial to meet peak demand at lowest cost. There has never been enough storage. Instead, there has always been excess generating capacity as a result. Very inefficient. Now that storage costs coming down, electricity will become even cheaper.

[Dan Clemmensen + 1,011]

1 hour ago, Wombat said:

You are correct, despite fact that US only has 160 coal plants now compared to 600 some 20 years ago, there ARE STILL TOO MANY OF THEM! That is what makes CCGT (new build) uncompetitive at moment. No problem. Solar + storage, as I said, will make coal LOSE EVEN MORE MONEY, thus they close down sooner, and CCGT become profitable because CF will rise from 30% to 50%. At the moment, CF of CCGT not much greater than solar, don't know where Keyboard Warrior got 56% from? Coal also has CF of about 40%, this why it losing money. It is not just case of too much generation sources, it was always the case. Due to both daily and seasonal variability in demand for electricity. That is why both short-term and long-term storage is crucial to meet peak demand at lowest cost. There has never been enough storage. Instead, there has always been excess generating capacity as a result. Very inefficient. Now that storage costs coming down, electricity will become even cheaper.

It seems to me that short-term storage capacity (lithium batteries) can make CCGT more capital-efficient at the system level. You need less CCGT max capacity if you can shave the peaks using batteries. This would increase the CF for the CCGT systems. You also gain extra time to dispatch CCGT in the most efficient manner. This would increase the thermal efficiency. Another way to say this: replacing the least efficient gas plants (peakers) with storage, will actually increase the efficiency of the remaining plants.

[KeyboardWarrior + 527]

2 hours ago, Dan Clemmensen said:

It seems to me that short-term storage capacity (lithium batteries) can make CCGT more capital-efficient at the system level. You need less CCGT max capacity if you can shave the peaks using batteries. This would increase the CF for the CCGT systems. You also gain extra time to dispatch CCGT in the most efficient manner. This would increase the thermal efficiency. Another way to say this: replacing the least efficient gas plants (peakers) with storage, will actually increase the efficiency of the remaining plants.

Since these plants have access to high temperatures, a more efficient storage medium might be syngas. 

[KeyboardWarrior + 527]

@Jay McKinsey

You’ll notice that solar capacity factor is a technological limitation, whereas combined cycle factor is a market limitation. If you place a plant where the market isn’t flooded, suddenly solar becomes grossly uncompetitive. 

Its also important to calculate net earnings after 20 years, since you won’t be paying interest on a loan after that time period. 

@Wombat clearly doesn’t understand that one investment contains higher yield. It’s to be expected though, because he sounds like the type of bloke to have 50% of his portfolio in precious metals. 

[Jay McKinsey + 1,489]

19 minutes ago, KeyboardWarrior said:

@Jay McKinsey

You’ll notice that solar capacity factor is a technological limitation, whereas combined cycle factor is a market limitation. If you place a plant where the market isn’t flooded, suddenly solar becomes grossly uncompetitive. 

Its also important to calculate net earnings after 20 years, since you won’t be paying interest on a loan after that time period. 

Storage solves the capacity factor problem. Solar + Storage with have a 60% CF or higher very soon. Actually it will likely go to 90% or more because these facilities will begin listing their namplate power not by how much solar but how much battery. And the battery will be sized for maximum utilization.

Edited May 15, 2020 by Jay McKinsey

[KeyboardWarrior + 527]

11 minutes ago, Jay McKinsey said:

Storage solves the capacity factor problem. Solar + Storage with have a 60% CF or higher very soon. 

I think one of us is confused about the definition of capacity factor.

[Jay McKinsey + 1,489]

1 minute ago, KeyboardWarrior said:

I think one of us is confused about the definition of capacity factor.

Actually it will likely go to 90% or more because solar + storage facilities will begin listing their namplate power not by how much solar but how much battery. And the battery will be sized for maximum utilization.

[KeyboardWarrior + 527]

7 minutes ago, Jay McKinsey said:

Actually it will likely go to 90% or more because solar + storage facilities will begin listing their namplate power not by how much solar but how much battery. And the battery will be sized for maximum utilization.

Jay, solar has 24% capacity factor because of how much it generates annually, not how much is sold. 

Solar is not capable of generating more than 24% of its capacity on annual average. Storage allows you to SELL all of it by releasing it when there’s demand.