Flawed DoE assumption results in baseload bloat
Over the past four decades, solar photovoltaic (PV) prices have been dropping by an average of 9% per year. As a result, rooftop solar is the cheapest daytime source of electricity today in many countries.
In the Philippines, the levelized cost of electricity (LCOE) from solar rooftops has gone below six pesos per kilowatt-hour, cheaper than any electric utility in the country.
While commercial systems have a solar conversion efficiency of around 20%, efficiencies in research labs already exceed 45%. As these research results are commercialized, we can expect prices to continue dropping in the coming years.
Thus, we face the happy prospect of even cheaper solar electricity in the future.
The entry of solar (and wind) plants in the electricity mix results in three distinct types of power plants: • Variable plants (solar, wind)
have no fuel costs. They produce additional kW-hours at no additional cost (zero marginal cost). For this reason, in mixed grids, their output is dispatched first. The country’s Renewable Energy Act recognizes this, thus, giving them priority in dispatch. However, these plants’ output varies with the weather. Thus, variables need the next type
to take up the slack during cloudy or windless days. • Flexible plants ( batteries,
hydro, biomass, gas turbines) take up this slack. They can be started up or shut down each day, or as needed. Operators can ramp their output up or down. The Department of Energy (DoE) calls them peaking or mid- range. Peaking plants operate only a few hours each day, during peak hours. Midrange plants operate longer hours but still shut down daily, during periods of lowest demand. Except for hydro, flexibles tend to cost more to operate. • Baseload plants (coal, nuclear)
must run twenty-four hours a day, seven days a week. Shutting them down frequently makes them very inefficient and raises their costs unacceptably. Like the variables, baseloads also need flexible plants on standby but for a different reason — since baseloads must run 24/7, they are only good for loads that are also 24/7. This is called the base (i.e., minimum) load. As soon as demand exceeds the minimum, flexible plants have to come online to take up the slack. As long as they run 24/7, baseload plants have low average costs. For this reason, they got dispatched first in the past. Today, zero-marginal cost plants get higher priority.