Gas Renewables Integration Continues to Evolve

As investment in solar, wind, and gas generation continues to evolve, dynamics are changing rapidly and differ by region-based utility mandates, state policy, proximity to low-cost gas production, and solar and wind resources. Especially as we consider a post-Covid world, the expectation is that a focus on environmental, social, and governance (ESG), investment, and zero-carbon plans will continue to put pressure on further solar and wind development and declines in coal burn.  

Is there an opportunity for the increased need for gas generation to back continued renewables intermittency, especially since a long-duration battery solution is not on the immediate horizon? Here we look at how solar, wind, and gas development is evolving and how gas burn is changing through time at a state and plant level. 

Wind, Solar, and Gas Development Opportunities 

Aging thermal fleets continue providing opportunities for development in solar, wind, and gas. The chart above shows the combined total gas and coal capacity by state compared to the percentage of the fleet that is 15 years or older. Texas, Florida, and California's large populations place them at the top of the list, combined with relatively more modernized generation fleets. Highlighted are four states that have greater than 20 gigawatt (GW) fleets and where over 80% of the fleet was built prior to 2005—this includes Illinois, Indiana, Arizona, and Oklahoma. 

As it turns out, the states with the most solar and wind development also tend to have the most natural gas plant development. Shown above are the states with the most combined solar and wind development compared to gas development. Texas, California, and New York are in the top spots, but if we look at the four previously selected states, we see that Illinois and Indiana have active development of solar, wind, and gas. This data is from BTU Analytics' Power View, which has a project vetting methodology called the "BTU Grade," so the projects shown are only projects actively moving through the development process. Considering that Indiana and Illinois still have substantial coal fleets, active solar, wind, and gas development is planned. Meanwhile, wind development leads in Oklahoma, while in Arizona, solar represents the most development. 

Gas Burn and Emerging Trends by State 

Looking at how gas burn has responded to date, we can see emerging trends by state. Illinois and Indiana have already seen steep decreases in coal capacity. In Illinois, coal capacity has gone from 17 GW in 2010 to 11 GW in 2020, and Indiana from 21 GW in 2010 to 17 GW in 2020, with commensurate significant drops in coal generation. As shown above, natural gas burn on an average hourly basis for June 2016, 2018, and 2020 shows year-over-year increases in both Illinois and Indiana. Meanwhile, in Arizona, solar development reaching 2 GW in 2020 combined with coal capacity and generation declines have resulted in a gas burn that is starting to look like the "duck curve" in the California ISO.  

Arizona peak gas burn is moving later into the day and ramping more steeply, presumably to backfill falling levels of solar at the end of the day. In Oklahoma, where coal generation has gone to almost zero while wind has grown from 1 GW in 2010 to 8 GW in 2020, gas burn has declined yearly. With considerable wind development on the books in Oklahoma, this trend is likely to continue.

How Anecdotal Evidence Supports Trends 

Finally, if we look at anecdotal evidence at an individual plant level using BTU Analytics' Power View hourly thermal plant data, we can see evidence supporting these trends. In Indiana, the St. Joseph Energy Center located in northern Indiana has 1,400 megawatts (MW) of capacity and went into service in 2018. As shown above, this plant has been providing consistent baseload generation running at near capacity except for a few hours between 2 a.m. and 6 a.m. Plants like this one and others result in the previously shown increase in power burns in Indiana year over year. Meanwhile, let's look at the Sundance Peaker gas plant in southern Arizona. We can see strong dispatch in the later afternoon and evening hours, supporting the trend of gas backing solar generation at the end of the day.  

Conclusion 

As more coal retires and more solar and wind are developed, absent a long-duration battery, natural gas will be called upon to back renewable intermittency.

This article was originally published on the BTU Analytics website.  

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