🔋Shift Happens
🔋Shift Happens
If renewable energy intermittency really is a grid problem, what are the solutions?
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With climate change as one of the main priorities of major nations around the world, renewable energy sources such as solar and wind have gained the most attention as solutions to the problem. In general, the price of these technologies have trended down for a meaningful number of years such that they are cost competitive on a large scale with other historically dominant forms of energy such as hydro, nuclear, coal, oil, and natural gas. Technological breakthroughs, manufacturing efficiencies, and as I’ve argued low energy prices have allowed renewable energy to come forward as one of the main candidates to tackle climate change.
There is much debate on both sides of the argument starting from to what extent climate change is an existential threat to the planet. Taking that it is as an axiom, what energy sources provide the best way to solve that problem? Further, what role does the government play in choosing the outcomes? Finally, what are the consequences of each climate/energy plan and how to solve them if any? Each of these questions often manifest in political discourse and are subject to debates, but are often times convoluted and overlapping. Someone who does not believe climate change is an issue will not believe the government should take an outsized role in funding or choosing which energy sources best for example. In contrast, someone who thinks climate change is a risk and believes governments should make it a priority could say that any consequences from that action are merely a side effect of necessity and that intervention be worth it. To summarize each debate:
Is climate change an existential threat to the planet?
What are the best energy sources to tackle it?
Government role in tackling climate change/energy markets?
Consequences from various energy sources/government intervention/climate action?
Since there is so much complexity in nuance in the climate topic as a whole, I often deconvolute the issues into these subcategories. If we take 1 as an axiom and assume that we have no control over what the government does in 3, we can view things through the trajectory we are on for 2, rather than hypotheticals. Currently, renewables such as wind and solar seem to be most in favor for the current political regime in the US/Europe with fossil fuels out of favor and nuclear generally ignored but increasing in noteworthiness. As such, the fourth question above becomes the most interesting.
The main issue that arises is the intermittency problem. Renewable advocates roll their eyes at this argument while others double down that it is a real issue. The severity aside, the fact is there unprecedented changes in energy markets seen to date which deserves attention. So far, there have seen major grid failures, grid susceptibility, and significant energy curtailment as a consequence of the move to renewables. Grid operators for New York (NYISO) and and much of the Midwest/south (MISO) are sounding alarms that their grids will become increasingly fragile in coming years. Furthermore, there is a high correlation between electricity prices and renewable energy capacity in Europe meaning there is more nuance than just the up front cost of an energy source. I’m not making a statement for or against renewables here, but merely noting observations on the ground and implying they should be addressed with reasonable solutions which I will opine.
No state has installed as much renewable energy as Texas, and in 2022 the state curtailed (let go to waste) 5% and 9% of total wind and solar generation respectively. This means that the utilities were producing too much energy which was not needed. The EIA estimates that if no new transmission infrastructure is created, the percentages would rise to 13% and 19% wasted for wind and solar respectively by 2035. They likely will, so the numbers will realistically be somewhere in the middle. Those are significant numbers and ultimately add costs onto the utilities and consumers.
There are two main ways to solve this issue, storage or control. The first solution is storing the energy from when it is cheap and in abundance and using the excess at peak such that it is never wasted. Energy storage through Li-ion batteries or potentially next generation energy storage is the most promising way to solve the issue this way. Clearly this adds a significant total cost addition to any new system coming online if it requires storage. Further, the profitability of a battery storage project is more complicated than a coal plant for example. Another issue arises with competition with EV manufacturers for battery materials. Emerging technology like solid-state, sodium-ion, flow, metal-air, and perhaps others that I’ve written about are candidates to alleviate this choke point, however it may be years before the capabilities are built out to scale assuming success. With increasing grid demand for storage on top of the EV trend, it is hard not to make the bull case for battery metals going forward.
The second strategy, control, involves decreasing energy use during times where demand approaches total supply and/or shifting demand to other times of the day. This often comes when people want to be using energy hence why demand is high, so simply asking people or forcing people not to use energy is not a popular long term strategy. One of the best examples of a demand shifting would be if EV charging infrastructure was built out at workplaces. Then people could charge their cars during the day when the solar supply is higher and cheaper and would decrease demand on the grid from 6pm-10pm when demand is typically highest. The best way to conceptualize this is through the “duck curve” which shows the mismatch between solar power and peak demand times for example. In places like Texas and California with renewables energy expansion the curve is deepening, raising concerns about grid reliability to many experts.
Here I propose the next most compelling solution that I see to this issue. Like it or hate it, it is Bitcoin. Now I’ve wrote about this before, and if you are a steadfast Bitcoin critic of course this by default is a non-starter. See my piece, Proof Of Energy, where I debunk the misguided claims that Bitcoin will consume the world’s energy, that it is unjustifiably contributing to greenhouse gas emissions, and why attacking it is likely a disguise for ulterior motivations. I also discuss the value proposition which briefly stated is a decentralized, incorruptible, permission-less network where value can be stored outside the influence of anyone else. In a world where government controls the money supply contributing heavily to inflation and whose censorship worldwide has been increasing over the years, like gold, Bitcoin is outside the “system”.
Since Bitcoin miners are just large data centers, the main input and cost is energy. These miners gravitate toward cheap energy to get better yield. They can capitalize on the cheap energy during the day and curtail their energy use during peak/expensive load so utilities don’t have to. Weather emergencies are an area which this comes in handy which has already been observed in practice. While many Bitcoin advocates refer to it as a “digital battery” which makes me cringe a bit, their point remains. They not only can shift, but are incentivized to shift their energy use to when it is least desired and curtail when it is most. It is better than that, because instead of wasting energy during the day when it is cheap, mining Bitcoin monetizes that energy. Whether utilities would ever adopt or not, instead of wasting the energy it can go towards securing the Bitcoin network and provide returns to the miners. In short, instead of flushing money down the toilet, money could actually be made during that time.
To conclude, after isolating the argument into specific topics, the solutions begin to appear. It is undeniable that the intermittency of renewable energy sources like wind and solar are causing a number of issues in areas that have gone the furthest. Some solutions are not quite available yet whereas others are altogether ignored. In the world to come, people and companies should not be obligated to drastically change their lifestyle or use less energy altogether in my view. As such, alternate battery technologies will have to fill the the gap with the majority of Li-ion batteries likely going toward electric vehicles. A more robust charging infrastructure would also help shift electricity demand from peak to trough. Finally, Bitcoin miners have already shown themselves a capable candidate to alleviate electricity demand issues while simultaneously securing a robust digital currency providing financial freedom to a world yearning for it. Until next time,
-Grayson
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It seems to me that we should focus on nuclear as a stable energy source (while it is also replacing fossil fuel sources). Having to create huge battery or other storage systems for solar/wind adds huge costs and complexities (ie, there isn't even enough Li to put in cars no less enormous battery banks. Granted, solid state could be a game changer here). Solar and wind are great adjuncts, for instance our solar panels are coming in very handy here in this crazy hot Texas summer.
I'm going to guess that quantum digital finance will be the future as opposed to crypto so maybe that aspect will solve itself.
I've just grazed the surface of that scenario though so I could be off target.
https://www.11onze.cat/en/magazine/all-set-quantum-financial-system/
Don't buy any argument about Bitcoin and energy. There never should be waste in energy production only poor allocations. Whether Bitcoin is a worthwhile use of energy is an entire other discussion. The storage issue about intermittent uses is critical particularly in areas where the utility is not vertical - the regionals where auctions dominate and renewable can be cheaper compared to facilities where stand-by reliability and quick ramp is needed (gas + oil backup or coal fired). The auctions place fixed capacity at a disadvantage but it's an arcane point.
Pending Vanadium flow or Sodium, etc we always have lead-acid which likely still backs up many teleco switching centers. We know how to recycle and materials are easy. Still both for Li-ion and Pb acid, the size of these batteries at utility scale is stunning - swimming pool(s) worth. We need a lot more than an hour of storage. In days past I've seen telco battery rooms of > 1500 sq ft full of battery racks. Servicing such rooms is a full time job with pallets outside of new and old batteries. And, of course, a diesel generator outside ready for the long haul.
Of course the obvious in nuclear but more tilted toward newer modular reactors. Research has been stalled for years by the same greens that now see Germany reverting to coal. Progress can't come soon enough.