This article is the fourth in a series titled “Real Talk on Reliability,” which examines the reliability needs of our grid as we move toward 100% clean electricity and electrify more end-uses on the path to a climate stable future. It was written by Michelle Solomon who is a senior policy analyst at Energy Innovation.
With the continual drumbeat of data center announcements, the calls for additional energy sources to support growing electricity load are getting louder. It’s not just data centers, manufacturing facilities and crypto mining, but the increased electrification of vehicles and appliances are pushing utility load forecasts higher even as climate change increases grid stress due to extreme weather. And this is just the beginning — to reach our economy-wide climate goals, United States electricity demand will need to double or triple by 2050.
Recently, the PJM Interconnection’s capacity auction highlighted the need to bring new energy sources online faster to meet growing demand, particularly as aging and uneconomic fossil plants retire. The auction, which is based on forecasted peak demand and the power plants available to meet it, cleared prices nearly ten times higher than just one year before. These costs, totaling $14.7 billion in capacity payments, will be borne by customers across 13 states and the District of Columbia.
In response to this challenge, a new term is taking hold — “clean firm” generation. Clean firm includes resources like enhanced geothermal energy, advanced nuclear technologies, and forms of gas with carbon capture that can sequester nearly all the carbon produced. It is a catch-all term for weather-independent clean resources that can be turned on and off at will. Especially for power-hungry AI data centers operating around the clock, sources of carbon-free power that can provide electricity when needed through all four seasons and through any weather, are appealing.
This enthusiasm has fed the pervasive belief that that the transition to a low- or zero-carbon grid depends on 1:1 replacement of fossil with clean firm capacity, but clean firm is not a silver bullet. In fact, due to the high cost of clean firm energy, even in future projections, it may be best considered as part of a broader generation portfolio that relies on much lower cost wind and solar most of the time. The more expensive clean firm resources can then supplement renewable generation when their output is low or demand is high — particularly through extreme weather or long droughts in wind and solar production, as well as inter-annual and inter-seasonal variation in renewable output.
Clean firm energy tends to be more expensive
Eric Gimon, senior fellow at Energy Innovation, notes that because of its flexible attributes, clean firm energy is not necessarily best used in the 24/7 power applications that many imagine. Instead, he compares its role as an on-demand power source in a low-carbon grid in part to the safety features in a car. “Day to day, you need good brakes that won’t fail, but you also want a seatbelt and an airbag even if they are not used all the time,” he says. Here, clean firm energy technologies are the seatbelt and airbag — they are needed in emergency conditions, but not used 100% of the time.
This distinction is primarily economic — wind and solar are the cheapest sources of electricity, and they are commercially available now. To build the most affordable and cleanest grid as quickly as possible, the U.S. should primarily rely on these resources. Studies show that the U.S. could meet as much as 80%-90% of its current electricity needs with existing carbon-free sources and additions of low-cost wind, solar and short-duration batteries.
However, research shows that as the nation moves toward 100% clean electricity, using just new wind, solar and batteries to maintain reliability is technically possible, but unlikely to be the lowest-cost approach. It would require additional resources and transmission capacity and storage to ensure sufficient electricity during infrequent extreme weather events or long periods of low renewable production.
Instead, a portfolio of complementary resources that includes both clean firm generation and renewables can lower costs and provide better reliability.
The biggest myth about clean firm energy, says Wilson Ricks at Princeton’s ZERO Lab, “is that there is a choice to be made between the combination of wind, solar and batteries, and clean firm energy. In reality, the most affordable system is going to be a combination of all of these because they each play a different role on the grid.”
Clean firm energy needs help to deploy
While clean firm technologies are attracting increasing commercial interest, the options to deploy clean firm at large scale currently are slim, a reality that needs to change if utilities are going to reach 100% clean electricity fast enough to meet U.S. and global climate goals.
Promising projects are underway — enhanced geothermal, which applies novel drilling techniques to tap into underground heat, has seen a flurry of activity. Google and Fervo Energy collaborated on a 3.5 MW advanced geothermal power plant that is currently operational, and plan to scale up significantly by 2028, when they expect to complete a 400 MW plant.
Long-duration energy storage, which when paired with renewable energy can act like clean firm energy, is also progressing, with Form Energy scaling up manufacturing in West Virginia and undertaking pilot projects in New York, Minnesota, Colorado, Georgia and California that range from 5 MW to 15 MW.
The Department of Energy has been focusing on getting these technologies from exciting potential to commercial “liftoff” by early 2030, which is defined as the point at which the market is self-generating demand for the technology. For enhanced geothermal, for example, this means 2 GW to 5 GW deployed and a 60% reduction in levelized costs, down to $60/MWh on average and $45/MWh at the most competitive sites. Long-term, the DOE expects that enhanced geothermal could reach average prices of $45/MWh by 2035, making it one of the most cost-effective clean firm generation resources, but only if it receives the necessary support.
The DOE Liftoff effort recognizes the wide range of technologies that could work together to diversify the electricity mix and reduce the costs of reaching high levels of decarbonized electricity. These include virtual power plants, long duration energy storage and even upgrading the transmission system to increase electricity shared between and across regions.
Demand-side resources, as we detailed in a previous edition of “Real Talk on Reliability,” can also provide significant benefit during times of peak electricity demand by decreasing or shifting demand to times at which energy is more available. This is a particularly attractive solution because the cheapest power plant is the one that does not have to be built.
Interregional transmission lines, too, can significantly moderate variation in wind and solar output by creating a “grid bigger than the weather.” In fact, interregional transmission lines have been shown to have significant reliability value, similar to a power plant.
What should regulators and utilities be doing now?
No one technology can meet electricity needs alone — instead, investing in a broad portfolio of clean energy resources can build an affordable, reliable and 100% clean grid fast enough to meet carbon reduction goals and avoid the worst impacts of the climate crisis. Right now, the best way to add capacity is using commercially available resources — wind, solar and batteries. A recent analysis showed that if PJM had been able to bring online even 30% of the projects that entered interconnection queue between 2015 and 2019, the region could have added 7 GW of capacity by 2024 and brought auction prices 63% lower.
Simultaneously, states, regulators and utilities should continue to support clean firm technologies via research, development and deployment of early-stage projects. This can help ensure that these technologies are ready when we need them most. Instead of just assuming clean firm resources will be available, regulators should create investigatory dockets on these potential resources, request information from vendors on technology status and cost, and independently evaluate the pathways toward commercialization.
