Electricity Resources Pros and Cons

There are many ways to create electricity. We can create electricity form Solar, Wind, Natural Gas, Coal, Water, and more. Not every resource is perfect. There always going to be pros and cons. Here we’ve listed a couple of pros and cons for each resource to consider. We should carefully evaluate each of these pros and cons to ensure a durable resource mix. We evaluated pros and cons based on cost, cleanliness, and operating characteristics.

Many of the comparisons use data provided by EIA’s AEO2020 capital cost assumptions.

Coal

Coal fueled power has been around since 1882. In first world countries, new coal development has declined because of emissions and high costs. In developing countries, coal continues to develop to support population growth.

The pros of coal include that it is not subject to variable gas prices. Coal prices can be more fixed and include long term price contracts. This minimizes risk but opens producers to miss out on lower prices.

Coal can have high costs and does not produce clean energy. Coal power plants have become less competitive in a market structure. Coal variable costs are less competitive with $0 variable cost solar and wind assets. The capital costs are also higher compared to natural gas alternatives. Coal power plants are among the highest emitters of carbon dioxide and particulate matter.

Pro

1. 1. 1. Not gas, subject to gas prices, prices more stable
      2. Large scale Dispatchable

Con

1. 1. 1. High emissions and particular matter
      2. High Operations and Maintenance Costs
      3. Slow ramping capabilities

Natural gas combined cycle

Natural gas combined cycles are a better fit for bulk energy production. Combined Cycle’s high thermal efficiency, lower capital costs, and lower O&M costs made it a popular replacement for it’s coal predecessors. Combined Cycle’s have become more popular as natural gas prices have become lower with the introduction of fracking around 2013.

Combined Cycle’s are popular because they are efficient, especially at larger scales. They are tied to natural gas prices, so have the potential for being low cost. They can also be used to ramp depending on energy needs.

Being tied to natural gas prices can also have its downsides as the variable price risk can be subject to high gas prices. When Russia invaded Ukraine at the beginning of 2022, natural gas prices increased 2x-3x.

Pro

1. 1. 1. Efficient large scale
      2. Lower cost potential
      3. Dispatchable

Con

1. 1. 1. Subject to price uncertainty in gas prices
      2. Quick start

Natural gas CT

Natural gas combustion turbines have been around since 1995 when siemens became the first manufacturer of Combustion Turbines for electricity production.

Natural gas combustion turbines have lower capital costs and quick start abilities. This makes them a good candidate for providing energy needed at peak times. They also have the potential to support variable renewable energy technologies.

Combustion turbines are subject to high gas price uncertainties and higher O&M costs. They are not as sensitive to prices since they are only turned on when they are needed most.

Pros

1. 1. 1. Lower capital costs
      2. Fast ramp times
      3. Flexible built out in small pieces

Cons

1. 1. 1. Gas price uncertainty
      2. High variable costs

Wind

Wind turbine development increased significantly with the incentive of the production tax credit. Wind development is popular where the wind speeds are higher because energy production is more efficient. In the US, wind speeds are higher in the middle of the country.

The main benefits of Wind power production are that it is clean energy and not fuel dependent. The fuel is not subject to price uncertainties. Wind can in some cases be distributed to evenly add energy to the grid.

Unfortunately, there are only certain places where it makes sense to produce wind power. Wind speeds are not the same everywhere. This might not match up with where people use the energy, so it requires more transmission build out. Wind production is also highest during the night, when energy is used the least.

Pros

1. 1. 1. Low-cost variable free
      2. Clean
      3. Scalable
      4. Good in Midwest
      5. Not fuel dependent

Cons

1. 1. 1. High wind in night doesn’t match up with peak
      2. Large land footprint, away from load
      3. Non-dispatchable

Solar

Solar Photovoltaic (PV) systems have come down in costs in recent decades. Cost declines and tax credits increased their ability to compete with other resources. Many Utilities plan to add GW’s of solar power in the next couple years to meet clean energy goals and provide lower cost renewable energy.

Solar PV is especially beneficial because it provides energy around peak times when energy is needed the most. Solar PV is also not tied to a fuel price.

The drawback of solar is that it is non-dispatchable. Unfortunately, there is not a light switch for the sun. Solar production is also not a viable solution for every location. In the US, solar production is the highest in the southwest, but not the most efficient in the north.

Pros

1. 1. 1. Low cost variable, free
      2. Clean
      3. Scalable
      4. Typically highest at historical peak loads
      5. Good in sunny areas
      6. Not fuel dependent

Cons

1. 1. 1. Only provides electricity during the day
      2. Non-dispatchable

Battery Storage

Battery storage is projected to become more competitive in the energy mix as costs continue to decline. Installed battery storage capacity has more than tripled from 2020 to 2021.

Battery storage is useful paired with renewable resources. Renewable resources like wind and solar are not dispatchable so they can’t be turned on or off. People use energy when the wind isn’t blowing, and the sun isn’t shining. Energy from renewable energy resources can be stored and used later. Battery storage is particularly useful because it can respond quickly. Quick response is beneficial with more variable renewable resources on the grid.

The main drawback of battery storage as a resource is that it doesn’t produce energy, it only stores it. With each cycle from energy stored to energy used there are losses usually around 15%. Either this requires an overbuild of renewable resources or enough extra energy from renewable resources to store for later.

Pros

1. 1. 1. Dispatchable
      2. Quick Start/Quick Response
      3. Easily scalable (up and down) – you can put a battery safely in your backyard

Cons

1. 1. 1. Losses – doesn’t produce electricity, only stores it
      2. Cost – although cost curves are coming down
      3. High cost for long duration

Nuclear

Nuclear has been around as a technology for decades, but it hasn’t had a clear outlook as a resource. Nuclear energy creates clean power that is dispatchable and can be scaled. Public sentiment has significantly declined because of disasters at Chernobyl, Fukishima, and Three Mile Island. This significantly increased the safety requirements when building a nuclear reactor and therefore increased the costs. New modular reactors have the potential to minimize more of the safety risk, but there is still a significant public distaste for nuclear power that would need to be overcome for new projects to be built.

Nuclear provides clean dispatchable energy that is cost effective. This makes it a viable option for meeting clean energy goals. Especially as variable renewable energy resources increase, a more reliable dispatchable resource such as nuclear is going to need to support the grid’s reliability.

The main detractors from nuclear power are the public sentiment from the nuclear disasters and cost overrun risks. It takes a long time to build a nuclear power plant. There are also more safety requirements now in place after the nuclear disasters. The combination of those two might result in cost overruns and delays such as those from the VC Summer plant which exceed $25 billion — a 75% increase over initial estimates.

Pros

1. 1. 1. Clean
      2. Dispatchable
      3. Large scalable

Cons

1. 1. 1. Public sentiment
      2. Build cost risk

Hydro

Hydroelectric power has been around since 1878 when William Armstrong used it to power a single lamp. Hydro power is now used to power about 16% of the world’s electricity.

Hydro power is a good clean energy resource that is also dispatchable. This can help support variable renewable energy technologies like wind and solar. It can also be used to help meet clean energy goals.

Unfortunately, hydropower cannot be used everywhere. You need the correct terrain including a lake or a river to build a hydropower plant. This severely limits the viability of growing hydropower as a resource. It is also highly dependent on the amount of rainfall in each season.

Pros

1. 1. 1. Clean
      2. Dispatchable

Cons

1. 1. 1. Location dependent/scarce locations
      2. Environmental disruption

Conclusion

There are many resources that should be considered during a resource selection. They all have their pros and cons. It is important to carefully analyze these resources to create a reliable, clean, and affordable energy mix.