The Energy Systems Analysis Group (ESAG) at the Andlinger Center for Energy and the Environment is one of nine groups that has been selected to receive funding from Princeton University’s Innovation Fund. The ESAG’s work will involve a modeling study of the U.S. electric grid. ESAG will lead the project and work in collaboration with NRG Energy, a leading power company in the U.S., to assess how the ongoing penetration of renewables might affect the U.S. electric grid and prospects for decarbonization in order to meet the goals of the Paris Agreement on climate.

ESAG developed this research project over the past several months through discussions with NRG since both parties share strong interests around a low-carbon future for the U.S. power sector. Analysts at NRG will bring perspectives of a private-sector player in electricity markets to help inform ESAG’s efforts.

More details on the project are below:

Deep Decarbonization of the Grid – Addressing the Challenges of Intermittent Renewable Electricity 

Motivated by concerns that uncoordinated policies aimed at reducing CO₂ emissions might lead to stranded power generation assets, unnecessarily high costs, and unmet climate targets, this project – led by ESAG’s Tom Kreutz, energy systems modeler, and Eric Larson, senior research engineer – seeks to identify technologies, policies, and market mechanisms that can provide low-cost pathways to decarbonize the U.S. power grid.

Over the last decade, falling costs of intermittent renewable electricity (IRE, i.e., wind and solar photovoltaics) and generous federal and state incentives have fueled the rapid expansion of IRE across the U.S., a trend that shows no sign of abating. Ironically, despite IRE’s zero CO₂ emissions, its high penetration might actually undermine the decarbonization of the U.S. power sector. This situation results from two characteristics of IRE: 1) intermittency, and 2) very low operating costs.

First, the unreliable nature of IRE necessitates standby generators (or energy storage) to provide reliable power (so-called “balancing”) in order to maintain grid stability – a task well-handled today by natural gas-fired power plants. As a result of low-cost shale gas, these generators also currently provide the least-costly balancing capacity throughout much of the U.S., driving a widespread switch from coal to gas. This shift roughly halves CO₂ emissions, but U.S. power sector emissions must be much lower to meet the stringent 2050 targets articulated in the 2015 Paris Agreement on climate change. Meeting those goals may require the premature shutdown of gas-fired power plants that would contribute to higher costs for customers.

Second, because of its inherently low operating costs, high penetration of IRE threatens the proper functioning of wholesale electricity markets by significantly depressing the average price paid to all generators, even those that play a critical balancing role and others with very low CO₂ emissions but relatively high operating costs (e.g., nuclear plants and fossil-based generators with CO₂ capture and geologic storage). Because power markets were not designed to handle this situation, unchecked growth of IRE has the potential to make new power plants  – both conventional and low carbon – economically impractical.

ESAG will build a model of the U.S. electricity grid to study the consequences of high (greater than 50%) penetration of IRE and its complex interactions with critical carbon policies, such as a tax on CO₂ emissions (or a cap-and-trade program). The model will first be used to investigate the prospective evolution of the grid to 2050 under business-as-usual assumptions, i.e., technologies and policies currently in the pipeline. This analysis will provide a basis for diagnosing possible failures in the design of current wholesale power markets and of incentives for low carbon technologies to enable the testing of hypothetical alternative market designs and carbon pricing policies. The model will be extended to explore “what if” scenarios that illuminate the potential impact of future advances in both the performance and cost of low carbon energy conversion and storage technologies.

More on the Andlinger Center for Energy and the Environment

The mission of the Andlinger Center for Energy and the Environment is to develop solutions to ensure our energy and environmental future. To this end, the center supports a vibrant and expanding program of research and teaching in the areas of sustainable energy-technology development, energy efficiency, and environmental protection and remediation. A chief goal of the center is to translate fundamental knowledge into practical solutions that enable sustainable energy production and the protection of the environment and global climate from energy-related anthropogenic change.

For more information on the Andlinger Center for Energy and the Environment, contact Sharon Adarlo, communications specialist, at sadarlo@princeton.edu or (609) 258-9979.