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'Clean peak standard' needed for renewables, says Arizona white paper

Renewable portfolio standards have jump-started the renewable energy industry, but new approaches — such as the idea of a clean peak standard — will be needed to make sure that increasing levels of renewable energy work well with the grid, says a December white paper prepared for Arizona's Residential Utility Consumer Office. States that have renewable portfolio standards could use a clean peak standard to make sure that greener sources of electricity are used during times of peak demand, the paper suggests.

Renewable portfolio standards have worked to give a boost to clean energy, says the paper, which was written by Lon Huber and Edward Burgess of Strategen Consulting LLC in Berkeley, Calif. These state standards account for more than 60 percent of the growth in renewable generation since 2000, according to the authors.

But the simple megawatt-hour-based approach used for traditional RPS policies "does not differentiate between each renewable megawatt-hour based on its value to the grid or for reducing fuel consumption," said the white paper, Evolving the RPS: A Clean Peak Standard for a Smarter Renewable Future.

Some states "are experiencing challenges as renewable energy production during certain times is beginning to provide diminished value in terms of reduced fuel consumption or capacity contribution," the authors said. As states continue to achieve their RPS goals, "new approaches will likely be needed to guard against diminishing returns of a simple megawatt-hour-based approach."

Ideas could be applied broadly, not just in Arizona

Although the white paper was prepared for Arizona's Residential Utility Consumer Office, its ideas are meant to be discussed and applied broadly, said RUCO Director David Tenney in a Dec. 14 interview with the American Public Power Association. "We believe the principles and ideas here apply to any state that has the same problem we have," he said.

"We go through a lot of electricity here in Arizona," Tenney said. "We want to address the peak," when fossil-fuel-fired generators must ramp up in order to provide enough power for the heaviest load of the day.

Despite Arizona's efforts to encourage greater use of renewable sources of electricity, when the peak load hits at about 6 p.m., there is not enough solar or wind power to meet that load, he explained.

Some days, wind power is available during the peak, but some days it isn't, he said. And wind energy tends to be more plentiful in the spring and fall than in the summer, when Arizona's air conditioners are running at full tilt.

Rooftop solar panels work well in Arizona, but most of those photovoltaic panels face south rather than west, which means that after 5 p.m. their energy production drops way off, Tenney said.

By the time the peak load arrives late in the day, "most distributed generation solar has gone off the grid here," Tenney said. He noted that having more rooftop panels that face west, rather than south, could beef up the amount of solar power available at peak times.

Batteries that can store renewable power are a potential solution, Tenney noted, but are not yet up to the task. Such storage devices are getting better and their prices are getting lower, so they may offer greater promise in the future, he said.

Clean peak standard concept is explained

As a way of encouraging clean energy resources to provide all the necessary attributes of a reliable power system, "we propose building upon the traditional RPS framework by adding one or more new supplemental components that would work in parallel with the foundational MWh-based retail sales component," the white paper said.

"The first and foremost of these new components would be the clean peak standard," whereby a certain percent of energy delivered to customers during peak load hours must be derived from clean energy sources. For example, a 30 percent clean peak standard would mean that 30 percent of the megawatt-hours delivered to customers during a defined peak period would need to come from qualifying renewable resources.

Several types of resources might qualify as clean peak resources, the paper said, including: 1) renewable resources that could produce energy on peak; 2) energy storage, if charged by eligible clean peak resources; and 3) demand management measures, based on measured savings.

‘Clean' would have to be defined

The white paper does not attempt to define "clean" energy. The precise definition would be up to utility regulators in any state that decides to adopt such a peak standard, Tenney said in the interview with Public Power Daily. If the goal were to avoid carbon dioxide emissions from electricity production, for example, then nuclear power would qualify as clean, since it produces no CO2, he noted.

Other design features could be included with such a clean peak standard, "such as tradable compliance credits, locational adders, multi-part peak periods, and periodic updates to continually align new investments with system needs," said the paper. "Ultimately, if successful, the proposed RPS framework can help to achieve clean energy resource procurement that is aligned with the full suite of grid services that electric power system operators need to supply."

More than megawatt-hours are involved

A simple megawatt-hour-based standard "lacks specific market signals that differentiate between the value of each renewable MWh based on the time when it is produced," the paper noted.

From an electricity provider's standpoint, "the total MWh of energy supplied is only one component of what's needed to ensure reliable electric service," said the paper. The system must also have enough megawatts of capacity to meet peak demand. And there are other grid services that must be provided, such as frequency regulation, load following and spinning reserves.

Twenty-nine states and Washington, D.C., have adopted renewable portfolio standards, and those standards currently apply to 55 percent of U.S. electricity sales, according to the analysis. Although each state has its own variations on an RPS, state policies generally require retail electricity providers to supply a minimum percentage of their retail load, in megawatt-hours, from renewable resources, the authors explained.

Without a signal from the market, peak resources are likely to be provided by conventional sources of generation, which might be operating in standby mode, the white paper said.

Providing capacity during peak hours "is a time-specific grid service that is not well matched with an indiscriminate MWh-based standard," and a traditional RPS "would not necessarily encourage clean energy resources to provide these services," the paper said.

The December paper proposes a concept whose details will still need to be worked out, and the "clean peak standard" idea could take shape differently in different states or regions, said Tenney. The paper "is not intended to be the end of the discussion, but the beginning of it," he said.