High shares of renewable generation could enable the grid operator Southwest Power Pool to serve its customers with no increase in inflation-adjusted costs per MWh of electricity through 2050, a Brattle study has found.
While the low costs of renewable generation are a key driver of that result, it is also due in part to projected high load growth through 2050 that will spread the costs of renewables investments across more megawatt-hours, and in part to renewables tax credits.
Overall, the study says that “SPP could achieve high levels of decarbonization and electrification with minimal rate impacts.” The grid operator serves all or parts of 15 states in the central and western U.S.
From $88 billion to $263 billion of generation investments will be needed to support SPP’s load growth through 2050, Brattle projects. “This is possible without significant rate increases (in inflation-adjusted terms) due to load growth and fuel cost savings, especially if federal tax credits (or similar renewable generation support) remain available.”
Without renewables tax credits, generation investments would be about $80 billion lower over the next 25 years, and average costs of electricity would be about $10/MWh higher, Brattle found.
SPP commissioned the analysis “Future energy & resource needs study” to identify the most cost-effective resource mix to meet system needs through 2050.
Brattle said it coordinated with SPP staff and stakeholder groups “on all study inputs.” The firm then used a capacity expansion model to evaluate five scenarios.
Brattle considered three scenarios with high shares of carbon-free generating sources. In each scenario, the model selected primarily renewables. The three scenarios differed in having either a low, medium, or high level of electrification of energy uses such as heating and transportation. For two scenarios with moderate shares of carbon-free resources, Brattle evaluated low and moderate levels of electrification.
In the three scenarios with high carbon-free generation, SPP would reach about 90% renewable generation by 2050, about equally split between wind and solar generation.
SPP already generates 47% of its electricity from carbon-free resources, primarily wind power.
In the two scenarios with moderate carbon-free generation, inflation-adjusted costs per MWh would increase slightly from the present level, driven by additional fixed and operating costs for fossil generation.
Across the five scenarios, Brattle projected that solar, with 42-130 GW of new capacity by 2050, would outcompete wind, with 20-48 of new capacity. Brattle projected 22-59 GW of “cost-effective” battery storage would be built, often co-located with other generation, to maintain resource adequacy.
In the 2040s, the study projects that long-duration 8-hour storage, primarily paired with solar, will become “a key resource adequacy asset” in the three high-renewables scenarios.
Brattle found that differences across the electrification scenarios “do not drive significant differences” in system costs per MWh generated.
An additional 4 GW to 21 GW of transmission within the SPP region will be cost-effective by 2050, to support the delivery of generation to load centers.
SPP will become a more significant net exporter of electricity by 2050, the study projects, particularly in the high renewable generation scenarios, due to the high quality of renewable generation in the region.
The study includes a land use analysis, with Brattle finding that the SPP region has sufficient available land to accommodate the projected 60 GW to 180 GW of solar and wind additions through 2050, even after accounting for certain land use constraints.
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