Renewable Power and the Reliability and Cost of Electricity

Abstract

This paper, which appeared as Chapter 7 in Johnston, Climate Rationality: From Bias to Balance (2021), explains the economic and energy security challenges that arise when large amounts of electric power come from intermittent renewable power sources such as wind and solar. It overviews the structure and regulation of the interstate electricity grid in the U.S. and explains merit order dispatch across alternative power generators. The chapter then turns to explain the challenges to ensuring electric system reliability on a grid with high usage of renewable solar or wind power. It concludes by analyzing the economics of such high-renewable usage systems. As shown by experience from California and Germany, the true cost of wind and solar power in such systems includes not only the fixed costs of wind and solar, but a number of other costs. These include the cost of the natural gas – fired power plants that must be maintained as reserve power sources to maintain frequency stability and to provide power when wind and/or solar are unavailable, and the cost of new transmission lines (for wind) and expensive upgrades to transformer stations.

Keywords: renewable energy, electricity regulation, electric grid economics, climate