The growing growth of solar energy is creating challenges for the U.S. power grid

No other energy source has experienced faster growth in the United States over the past half-century than solar energy. However, rapidly expanding solar installations have begun to disrupt power distribution and transmission systems in states with the highest solar energy production, such as California, creating challenges for utilities and the grid.

Battery storage could help solve these problems, and while it is also growing, it still lags behind solar capacity increases.

It is therefore not surprising that despite the continuing decline in coal-fired energy production in the US, the share of coal in America’s electricity mix still exceeds 15%, which is more than any renewable energy source.

In 2022, all renewable energy sources combined – wind, solar, hydro, biomass and geothermal – outperformed coal-fired power generation for the first time in the U.S. power sector. However, coal still accounts for about 16% of electricity generation, which is above the share of wind in the electricity generation mix of about 11%, hydropower 6% or solar power 4%.

Solar power has now surged and accounts for about 6% of total U.S. electricity generation after growing 155% from 2018 to 2023, according to EIA data cited by Reuters columnist Gavin Maguire.

But while solar power has made the U.S. power generation system greener, it has also made it more volatile, especially in the leading solar market, California.

There, peak solar energy production coincides with the lowest residential electricity demand during midday hours. When energy demand begins to increase after 6 p.m., solar energy production begins to decline.

To cope with natural and weather-dependent solar energy, the grid needs significantly more batteries than are currently available to even out the difference in peak power output and peak demand, and the large swings in energy prices. Power systems and grid operators must cope with often negative prices when solar energy production peaks during the day.

In California, for example, “on sunny spring days when demand is not as high, electricity prices drop and solar generation should be ‘curtailed’ or essentially scrapped,” says the Institute for Energy Research (IER).

California has nearly 47 gigawatts (GW) of installed solar power, which could provide a quarter of the state’s electricity if it could operate 24/7 and on demand, as traditional sources do, including coal, natural gas and nuclear power, IER analysts wrote in a commentary last week.

“Wasted” solar power and insufficient battery storage are driving up electricity prices in the state, according to the institute.

Battery storage is growing, but to provide energy when needed it must exceed optimistic government projections.

Earlier this year, the EIA estimated that solar and battery storage will account for 81% of new U.S. electricity generation capacity in 2024. Power developers and owners plan to add 62.8 GW of new scale-up electricity generation capacity this year industrial, which means an increase of 55% compared to the capacity added last year, i.e. 40.4 GW. According to EIA forecasts, solar energy will have the largest share of new generation capacity in 2024 – 58%, followed by battery storage – 23%. The increase in additional solar installations would be almost double last year’s 18.4 GW, which itself was a record for annual utility-scale solar installations in the United States.

“As the impact of supply chain challenges and trade restrictions eases, solar continues to outpace capacity additions from other generation sources,” EIA noted.

The addition of new battery storage is also expected to break records this year, with U.S. battery capacity expected to nearly double in 2024 as developers plan to add 14.3 GW of battery storage to the existing 15.5 GW this year. In 2023, 6.4 GW of new battery capacity was added to the U.S. grid, representing an annual increase of 70%. California and Texas are leading the charge when it comes to increasing battery capacity due to the rapid growth of variable solar and wind power in these two states.

“In most of the United States, batteries do not yet play such an important role in load transfer,” Ed Crooks, vice president of the Americas at Wood Mackenzie, wrote last week.

“But California and Texas are pointing the way into the future for other U.S. energy markets and other countries around the world. As the share of variable renewable generation in the electricity supply increases, the value of battery storage increases.”

WoodMac expects battery storage in the U.S. to grow faster than wind or solar energy in the coming decade.

Author: Tsvetana Paraskova for Oilprice.com

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