Curtailment: When Renewable Power Loses Its Place in Line
It’s a very hot day, and as more air conditioners get switched on, the grid is working overtime. Power plants, fueled by coal, natural gas, uranium, the sun, and wind are generating electricity—first “stepping up” its voltage at substations, then transporting it miles across high-voltage transmission lines, stepping it back down, and finally distributing it to homes, factories, and businesses. Power flowing across those transmission conductors is routed and rerouted by the grid operator to ensure that the generation matches the load and that the frequency on the lines stays within a very narrow range of 60 cycles per second.
Happily, for fans of renewable energy, and everyone concerned about the climate crisis, the wind speed on the western edge of this particular grid’s footprint is about 30 miles an hour. And there are almost three dozen utility-scale wind energy farms in the region, with a nameplate capacity of about 12,000 megawatts; so, with a steady 30 mph breeze, the turbines may be producing, say, as much as 4,800 megawatts. But unfortunately for the grid operator, the environment, and consumers, the production of this wind energy may be “curtailed”— unable to be dispatched and consumed via the grid.
Sometimes the reason is benign: moderate temperatures and relatively low total load may mean that there’s just too much renewable electricity available. This happens frequently in California and Texas, which have significant renewable energy production that may simply exceed demand. But in other places and other conditions, local transmission constraints may cause curtailment, in which there’s insufficient capacity to deliver that electricity from where it’s generated, often in remote locations, to population centers where it’s needed. These constraints then result in transmission congestion, which increases what’s called the local marginal price (LMP) of electricity, which in turn must be paid for by ratepayers of the local utility.
Another problem, rarely discussed, is that American taxpayers across the country are often paying the price of curtailment because the federal government subsidizes many utility-scale wind energy projects through the Production Tax Credit, or PTC, and solar projects through the ITC, or Investment Tax Credit. So, building more renewables in many cases will increase curtailment unless one or more specific steps are taken, depending on the local and regional grid capacity, the size and type of renewable resources, the demand curve, energy storage capacity, demand response, and other factors. These include expanding transmission capacity and upgrading interconnections, improving operations including demand forecasting, increasing automation of market signaling, and better management of generation and reserves. Wind and solar power generators are also minimizing risk by negotiating Power Purchase Agreements (PPAs) that establish specific curtailment hours and explicitly sharing curtailment risk between the generator and off-taker.
In any event, the dispatch of utility-scale renewable plants below their maximum output is more of an issue for them than for fossil-fueled generation because of their different cost structures. Wind and solar plants’ economics depend on those plants’ ability to generate power whenever there is sufficient and sustained wind and sunshine. While those generators have substantial capital costs but no fuel costs, they can recover those capital costs only by maximizing their output. That also means minimizing curtailment whenever and wherever possible.