Minnesota Sees Energy Storage Competing Against Natural Gas Peaker Plants
Minnesota is the latest U.S. state to consider grid-scale storage as a possible alternative to natural gas peaker plants, under a new state law that requires power companies to include storage in their long-range plans.
A new omnibus jobs and energy bill “puts energy storage on a level playing field with natural gas plants and other resources,” Ellen Anderson, executive director of the University of Minnesota’s Energy Transition Lab, told Energy News Network. “Utilities will have to acknowledge the capabilities storage can provide as an alternative to, say, a fossil fuel plant.”
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As that requirement plays out, “the most likely victim could be peaker plants, which operate when utilities face high demand for short durations, such as hot summer days,” ENN notes, citing Anderson. “A 2017 study commissioned by the Energy Transition Lab found that peaker plants are a ‘marginal resource for meeting capacity needs’ and that storage, and solar-plus-storage, are ‘becoming increasingly cost competitive’. By 2023, the report predicts, the cost of storage becomes less than building new peaker plants.”
While not every utility is jumping to shut down its gas plants in every case, many of them see storage emerging quickly as a serious option.
Among the state’s investor-owned utilities, Energy News Network cites Minneapolis-based Xcel Energy as the first to present an integrated resource plan (IRP) that includes storage. It calls for an 80% carbon reduction by 2030 and zero-carbon electricity production by 2050, and sees storage playing a more “integral” role in the 2030s as costs come down and technologies advance.
“The major aspects of Xcel’s plan call for retiring all its remaining coal plants within the next decade, operating the Monticello nuclear plant until 2040, and adding 4,000 megawatts of solar and 1,200 megawatts of wind,” notes reporter Frank Jossi. “The plan calls for the acquisition of one combined cycle natural gas plant and the construction of another, along with an aggressive energy efficiency program.”
But based on current technology, Xcel concludes that storage is not the answer to intermittency in a grid that relies more heavily on renewable energy. “The current state of battery storage technology does not have the ability to match the duration of such events without significant (and very expensive) over-build of those resources,” the report states.
The most recent plan from one of the state’s transmission and generation co-ops, Great River Energy, includes a reference to a decades-old energy storage program that makes use of water heaters in customers’ homes. When the plan was developed, it foresaw all additions to its generating capacity through 2032 to come from wind, but resource planning manager Zac Ruzycki says storage is now getting a second look.
“We see storage assets as a potential replacement for peaking assets,” he told Jossi. “That’s how we’re going to look at it…even without the legislation, we were going to do this anyway.” But he added that storage won’t easily replace existing natural gas peakers that can run as long as needed if demand is high, or renewable power supplies are low.
“That’s not to say we’re not bullish on this; we see it as a potential resource for our members in the future,” Ruzycki said. “But there are some issues that needed to be considered in terms of the reliability of the system.”
Minnesota Power’s next IRP will include storage as a “technology choice for serving customer needs”, said spokesperson Amy Rutledge. “We need to try it out, because every situation is a little different,” she said. “They will be able to see what benefits they get for ratepayers and the energy system. They’ll have comfort the Public Utilities Commission will give them cost recovery for those projects.”