4 signs that peaker plants are on their way toward obsolescence

September 21, 2015

Peaking power plants currently play the role of an important linchpin in the infrastructure of the United States energy grid. Littered across the country, peaker plants are up and running just a few times a year, only when electricity demand pushes the grid to its limits and emergency sources of generation are necessary to avoid a devastating blackout. Utilities are especially reliant on these plants in the summer when high temperatures force companies and families to turn up their air conditioners.

The problem? The operation of peaking power plants is massively inefficient, a byproduct of their design. The immense volumes of coal burned to help supplement the nation's power grid require peaker plants to operate at full capacity from a standstill at a moment's notice. As a result, the plants are responsible for producing large amounts of emissions each time they are activated.

A 2009 study published in Energy Policy predicted that demand for cooling will grow 72 percent by 2100. If this estimation is even close to correct, then the need for peaker plant will rise unless cleaner technology takes its place. Fortunately, the emergence of innovative technology like energy storage and several economic and environmental factors are likely to influence the growth of peaking plants:

1. Solar generation and energy storage join forces
One development that spells bad news for the future of peaking plants is the widespread adoption of rooftop solar. ValueWalk noted that the popularity of solar adoption poses a double-threat to the utility industry: Solar generation displaces some of the demand that leads to peaking plants being activated. On the other hand, many commercial businesses and schools are actually able to sell some of their on-site renewable electricity back to the utility. Depending on when excess power is supplied back to the grid, the utility will still need heavy reliance on peaking plants as standby power. However, with the expansion of the energy storage market, consumers who've invested in on-site energy storage will have the ability to store the on-site renewable electricity instead of supplying the grid with excess energy, thereby cutting the need for peaker plants.

2. Cost-benefit arguments for peaking plants are losing ground
For years, the primary argument in favor of peakers over more sustainable alternatives was the price difference. However, according to an analysis performed by ViZn Energy, this may no longer be the case as early as 2018. Data suggests that the cost of new energy storage solutions will soon become, on average, equivalent to or lower than a mid-range, combustion turbine peaker plant of equal capacity. With the price gap eliminated, utilities could be more likely to invest in renewables and energy storage, as well as encourage customers to participate in demand response programs, in lieu of building and running additional peaker plants. Energy storage technologies that have been around for awhile such as thermal energy storage for cooling buildings is already cost competitive with peaker plants.

3. Communities are raising environmental concerns
More communities are growing wary of peaker plant construction as citizens become better educated about potential environmental harms and sustainable alternatives. Armed with this information, towns and community groups have begun to make it more difficult for new peaking power plants to get approval in their areas.

Activists in beachside Oxnard, California, for example, are currently working to prevent the development of a new peaker plant by the California Energy Commission, according to the Ventura County Reporter. Environmentalists worry that the new plant will threaten local wildlife in addition to generating large amounts of emissions.

Similarly, community members protested the construction of a new peaker plant designed to replace the aging facility in Carlsbad, according to the San Diego Reader. They argued that the plant would be responsible for considerably more emissions than originally communicated. Though the plant will not exceed the emissions cap set by the Environmental Protection Agency during operation, critics pointed out that the EPA's rules allow for a 41-minute operational grace period where emissions can exceed the cap by five times. With the peaker plant expected to be activated hundreds of times a year, it's no surprise that local citizens are concerned about the plant's long-term ecological impacts.

4. Consumers are adopting energy conservation strategies
Companies can earn significant savings by adopting energy conservation strategies including demand response or permanent load shifting (PLS). Conserving energy during peak hours eliminates the need to build more peaker plants. To promote energy conservation, most utilities charge commercial buildings for their peak energy use, known as demand (kW) charges. Some utilities also provide incentives. For instance, Southern California Edison (SCE) offers a PLS incentive for shifting energy use from day to night. SCE has also already integrated 1,118 megawatts of demand response thanks to the efforts of over 300,000 customers, reported Transmission and Distribution World. By changing when and how they consume energy, these customers were able to significantly reduce their power bills while reducing strain on the grid.