Energy Storage Wins In Gas Vs Solar Matchup

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Like the once-mighty King Kong swatting at airplanes with his bare paws, natural gas power plants are fighting a losing battle against powerful new technologies. Although new gas power plants are still in the works, others are succumbing to the fact that renewable energy plus energy storage is a more flexible, timely, and affordable answer to the rapid rise in electricity demand.

Energy Storage Is Here And Now

Despite the efforts of President Trump, 21st century technology is prying gas out of the US power generation profile. Energy analyst Lisa Martin Jenkins teases out the details in a new article for Latitude Media, in which she details how batteries and renewables can replace new natural gas power plants.

In today’s project development environment, inflation, supply chain issues, and other factors are giving nimble, flexible energy storage technologies a significant advantage over new gas power plants. Jenkins focuses attention on the new $5 billion Texas Energy Fund, which launched in 2023 to help accelerate power plant construction. About 20% of the new gas generating capacity initially covered by TEF loans has already been rejected or withdrawn voluntarily.

The global firm Engie, for example, withdrew a 930-megawatt project, citing issues with equipment procurement among other obstacles. For similar reasons, Engie also ditched another proposed 483-megawatt gas power plant project in Texas that was not financed through TEF.

Something Might Be Gaining On You

The remaining projects are looking at a typical construction timeline of five years if not longer. That’s a best case scenario. Aside from the issues referenced by Engie, developers also need to account for the long delays connecting new power plants to transmission lines. The ongoing transformer shortage isn’t helping, either.

“Transformer lead times have been increasing for the last 2 years – from around 50 weeks in 2021, to 120 weeks on average in 2024,” Wood Mackenzie reported last April, with larger transformers requiring lead times of up to 210 weeks.

With inflation at work, longer construction timelines mean higher costs, and ratepayers will foot the bill. Jenkins cites energy analyst Doug Lewin, who describes a Duke Energy application to replace a coal power plant with a 1.5 gigawatt gas project. The cost worked out to about 50-70% higher than expectations.

Up until recently, none of this would matter. Money was no object. Coal was the only real competition for gas, and gas quickly got the upper hand during the Bush administration when the fracking boom took off.

Utility-scale wind and solar finally began to enter the picture after 2009 and they soon began to compete against gas on cost, even without a mature domestic supply chain. Supply chain issues are still somewhat problematic for for wind, but a quick look at the solar industry underscores the difference between 2009 and now. The Solar Energy Industries Association notes that in 2022, just before the Inflation Reduction Act passed, US domestic solar module manufacturing capacity per year stood at less than 7 gigawatts. On February 4, the organization reported that domestic capacity has passed the 50-megawatt mark.

According to SEIA, that’s enough to meet “all demand for solar in the United States.”

The Energy Storage Solution

SEIA also notes that plans are in the works for 56 GW of new U.S. solar cell production, 24 GW of wafers, and 13 GW of ingots. “Solar tracker manufacturing capacity now exceeds 80 GW,” they add.

Into this picture steps energy storage. Like wind and solar, lithium-ion battery arrays have been sliding down in cost while stepping up in domestic supply chain support, and they are helping to push gas “peaker” plants out of the picture.

Lithium-ion battery arrays typically last for 4-6 hours. In 2021, a team of researchers at the National Renewable Energy Laboratory concluded that four hours of energy storage can be “largely sufficient, at least in the near term and in some regions,” to do the job of gas peaker plants.

“No matter how much the policymakers may wish it weren’t so, gas peakers are struggling to compete against batteries,” Jenkins wrote for Latitude Media, referring to an observation by Doug Lewin to the effect that batteries and peaker plants serve the same market.

“Usually markets speak pretty loudly, and the market is speaking very loudly that batteries are not only quick to deploy, but serve the need better,” Lewin emphasized.

The Energy Storage Ripple Effect

Gas peaker plants are called into action for just a few hours daily, to fulfill routine peak demand periods. Battery energy storage systems (BESS) can do the same thing, and they also provide additional efficiency, resiliency, and environmental benefits.

In 2022, NREL took a look at the market potential of BESS and confirmed an earlier study which concluded that meeting peak demand for just a few hours in the evening is the economically optimal use for short-term energy storage, because solar energy can fill in during daytime hours.

“Over time, NREL found the value of energy storage in providing peaking capacity increases as load grows and existing generators retire,” the lab also noted.

The value of BESS as a replacement for peaker plants is just one benefit. NREL also reported that the availability of energy storage has a positive effect on the efficiency of wind farms and solar arrays. Instead of curtailing operations when demand falls below output, the excess clean kilowatts can be shuttled to a BESS.

NREL further observed that the renewables-plus-storage setup enables grid operators to avoid the costs and emissions associated with starting up gas peaker plants to meet peak demand.

The Long Duration Difference

So much for gas peaker plants. Researcher at NREL have also been exploring the value of long duration energy storage systems that aim to provide the same grid services as a conventional baseload power plant. In 2021 they produced a study titled, Economic Potential of Diurnal Storage in the U.S. Power Sector, with diurnal referring to longer-duration energy storage systems of up to 12 hours.

The researchers concluded that the value of long duration energy storage is optimized where the grid is saturated with solar energy, and where the storage system can be deployed for capacity and time-shifting services. Based on their economic analysis, the team concluded that “utility-scale diurnal energy storage deployment grows significantly through 2050, totaling over 125 gigawatts of installed capacity in the modest cost and performance assumptions—a more than five-fold increase from today’s total.”

That’s the lowball estimate. “Depending on cost and other variables, deployment could total as much as 680 gigawatts by 2050,” NREL adds.

To provide some perspective on those figures, NREL notes that the US currently has a grand total of just 23 gigawatts of diurnal energy storage in hand, all of which comes under the umbrella of pumped hydropower.

ESS, Form Energy, and other US firms that are introducing next-generation, long duration energy storage systems to maximize wind and solar resources. Gas stakeholders also face new competition from advanced geothermal energy systems and green hydrogen as well.

So much for Trump’s American Energy Dominance plan. Between Trump and Tesla CEO Elon Musk, the two of them have sold America’s self-declared exceptional status for a mess of pottage, energy “domination” and all. The rest of the world is moving on past fossil fuels regardless of what the US does.

If you have any thoughts about that, drop a note in the comment thread or better yet, find your representatives in Congress and share your thoughts with them.

Photo (cropped): Researchers are zeroing in on the value of utility-scale energy storage systems as a replacement for gas peaker plants and other grid services (courtesy of NREL).