Pacific Gas & Electric (PG&E) is the largest utility company in the US and has successfully replaced a Natural gas power plant with a solar + storage project.
The Natural gas power plant in Moss Landing California has been operational since 1950 and was mostly used in its later years as a peaker plant. Recently the power plant was replaced with the world's largest battery at 300MW/1200MWh
Picture from Moss landing
Peaker plant: A peaker plant is a power plant that runs only when there is a high electricity demand and they supply power only occasionally. The power supplied by peaker plants has a much higher cost per kilowatt-hour than the average price.With the replacement of such a power plant, a big question comes to mind was it worth it. This replacement is very symbolic and marks the transition from fossil fuel power plants to renewable energy happening in real-time. The reason that this is a significant stepping stone is the fact that solar + storage power plants have become cheaper than peaker power plants, and this project is living proof of that.
A case study done in 2019 by myself and a few other energy analysts compared the replacement of a Natural Gas power plant such as the Moss Landing peaker plant with Li-ion batteries.
In the case study, it is identified that Energy storage (Li-ion batteries) will be essential in the transition to a 100% renewable grid and that since California has a lot of curtailed energy from the large penetration of Solar in the grid is only logical to replace some of these peaker power plants with Li-Ion batteries.
In the case study it is stated "As supply and demand become more challenging to balance with increasing renewables, flexible assets become more valuable. The value of energy storage does not come from just the capacity it holds but for the flexibility it provides.".
Some opportunities that were identified in California by the case study were, 13GW of fossil fuel-fired peaking plants have been found as over 40 years old and have annual average capacity factors of 1-15% and will need to be replaced in the next five years. These peaker plants participate in wholesale energy markets in the California ISO, with prices reaching well over $100/kWh on some days. Because of the high operating cost of these resources, they are the last to come online at the highest marginal cost to the system.
Three factors: impending retirement of high marginal cost peakers, increasingly strict carbon regulations, and game-changing solar penetration, have combined to create a favorable market for replacing these plants with energy storage. The market opportunity presented by these factors has created a win-win scenario for plant owners (e.g.IPPs) and regulators.
Through emission and Levelized cost of energy analysis, the case study concludes that it is highly uneconomical to replace these retiring facilities with conventional turbine plants with the additional emissions of such a plant would entail increased risk and cost to the entire system in meeting emission reductions targets. Looking at the Levelized cost found in the case study we can see that especially in California Li-ion batteries have lower cost than Natural Gas, Gas turbines.
The only restriction that was found by the case study was that there is an ideal storage penetration level, dependent upon PV penetration on the grid above which there will no longer be enough excess energy from PV to charge the batteries sufficiently to meet the resource adequacy requirements to participate in wholesale markets. If renewable penetrations aren’t high enough, increased energy storage charging requirements can actually lead to higher emissions from the electric grid, so careful planning is crucial.
As I mentioned above, this is a stepping stone towards a cleaner future for the energy grid making more sustainable solutions applicable to a wider range. This case study was done in 2019 and technology improves every year and I am sure that currently, Li-ion batteries are even cheaper and in a better position to replace peaker plants than they were back in 2019.
By Sotiris Kyprianou
Sotiris is an energy analyst that dedicated his career to the energy sector with degrees in engineering and management in the sector with specialization in renewable energies, energy storage, and energy modeling.
Source: Britt B., Gaulier M., Kyprianou S., Roche M., Yar Y. (2019) The Replacement of Natural Gas power plants with Lithium-Ion Energy Storage, California, United States of America
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