New study looks at impacts of different energy resource options on grid reliability

Published on December 20, 2023 by Dave Kovaleski

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The Electric Power Supply Association (EPSA) issued a report that looks at the impacts of different energy resource options on the reliability of the electric grid.

The analysis is designed to better capture the “full-cycle” levelized cost of electricity (LCOE). This includes the impact of regional costs, interconnection costs, curtailment costs, and the cost of ensuring that all units can provide an equivalent level of resource adequacy to the grid. It seeks to provide a fuller picture of the true costs of integrating different energy resources onto the grid. It also contains important implications for policymakers, regulators, and voters.

“EPSA members have been at the forefront of innovation and emissions reductions over the past two decades, including large-scale adoption of renewable resources. These resources play a vital and growing role on our grid. But it is critical that we have a clear understanding of what it costs to integrate these resources into our grid reliably. The future of our grid depends on balancing reliability, cost, and emissions. This analysis creates a better tool to help decision-makers understand those tradeoffs,” EPSA President and CEO Todd Snitchler said.

Among the key findings, the study found that the cost of providing resource adequacy services is more than 100 percent of the traditional LCOE cost of wind and solar units. Also, while traditional LCOE is lower for wind and solar units compared to combined cycle (CC) natural gas units in PJM in 2026, when accounting for the full cost of connecting to the system and providing resource adequacy services, natural gas plants are more competitive.

Further, it found that tax credits are critical to making carbon capture and storage (CCS)-equipped units economical, even at the low technology costs assumed by the National Renewable Energy Laboratory (NREL). In addition, small modular nuclear (SMR) nuclear units are competitive with other forms of non-emitting generation when accounting for the full cost of connecting to the system and providing resource adequacy services, at the technology costs assumed by NREL.

The analysis was conducted by FTI Consulting on behalf of EPSA. It utilized publicly available data from the PJM Interconnection, which operates the largest organized electricity market in the United States, covering more than 65 million Americans and 13 states and the District of Columbia.

EPSA recently hosted a webinar where study author and economist Robert Kaineg, managing director at FTI Consulting, discussed his methodology, assumptions, and findings. Kaineg is a veteran economist who has worked with the World Bank and government agencies in Japan, Mexico, Norway, and Ukraine in matters related to CO2 markets and low carbon development strategies.