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Automated Demand Response will be First Line of Defense for Managing Renewables

Lux Research

Natural gas and storage will both be necessary to make up the difference as wind and solar grow to 30% or more, says Lux Research


BOSTON, MA – October 9, 2012 – As renewables like wind and solar approach 30% grid penetration, operators will need to increase the flexibility of their grids using natural gas generation, manage up to 2% of their peak loads with automated demand response (AutoDR), and employ energy storage for at least 0.5% of the annual electricity generated to avoid renewables curtailment and outages, according to Lux Research.

On days of the year with the largest supply and demand discrepancy, the storage requirement will jump to 5.2% of installed capacity and 1.9% of daily consumption in order to fully meet demand.

“The emergence of modern wind and solar technologies promise to satiate government-mandated desires for large-scale renewables,” said Brian Warshay, Lux Research Associate and the lead author of the report titled, “Cloudy with a Chance of Energy: Evaluating Technologies to Manage Grid Intermittency.” “But resources depending directly on the wind and sun for their fuel bring with them the same uncertainty as the evening news weatherman, meaning utilities will need to change their grid operations to account for the unreliable supplies of large-scale intermittent renewables.”

Lux Research examined daily supply and demand curves in different climate regimes over the course of a year for scenarios with wind and solar penetration up to 50% of grid capacity to identify the lowest cost technology options required to manage intermittency. Among their findings:

  • AutoDR offers the cheapest option. Among all technologies to manage intermittency, AutoDR has the lowest levelized cost of electricity (LCOE) at $0.016/kWh. However, it cannot manage more than 2% of the peak generation at 30% renewables.

  • Price volatility dims natural gas option. Electricity generated from natural gas can address large, long-lasting supply fluctuations better than AutoDR, even though its LCOE is 3.7 to 5 times higher. At historically low gas prices, however, doubling the natural gas capacity in a mixed grid can facilitate the integration of wind and solar by offering increased supply flexibility for grid operators, cutting the storage requirement by 60% for 50% renewable energy penetration.

  • Wind and solar growth drives storage demand. In a grid with 1 GW of peak demand, consuming 168 GWh per year, with a typical generation mix and demand profile, 59 MWh of storage capacity is required with 10% wind and solar while 1,323 MWh of storage is required with 30% renewables, and 1,751 MWh of storage is required with 50% renewables.

The report, titled “Cloudy with a Chance of Energy: Evaluating Technologies to Manage Grid Intermittency,” is part of the Lux Research Grid Storage Intelligence service.