Reliability costs associated with backstopping renewables could rise to $435 billion a year around the world by 2030, the company said in a report released Wednesday.
As utilities increase the amount of renewable energy in their fuel supply mixes, the associated need for an increase in resource buffers could lead to oversupply that would increase power price volatility and grid reliability costs, said Moody’s Investors Service in a Wednesday report.“Because wind and solar power generation depends on weather conditions and is thus not dispatchable, load-serving utilities will likely build in a cushion of supply to enhance reliability and compensate for resource volatility,” the report says.
The credit ratings agency said that reliability costs associated with backstopping renewables could rise to $435 billion a year globally if the International Energy Agency’s forecast of 9.9 TW of solar, wind and hydro capacity being added by 2030 is accurate.
“So far, battery storage has failed to alleviate the growing price gap as the growth of new renewable generation outpaces new storage,” Moody’s said, adding that while battery storage could “reduce the gap” between daytime and nighttime power prices, new battery storage would need to exceed new renewable capacity instead of falling behind it.
Katofsky said that new storage and greater demand flexibility will improve renewables integration, and that U.S. states leading the clean energy transition “are not just focused on the buildout of bulk renewable generation but also on these other innovations.”
Seth Mullendore, president and executive director of the Clean Energy Group, said Moody’s concerns are all “solvable issues.”
“With proactive grid planning and deployment of flexible resources, such as energy storage and virtual power plant aggregations, high levels of wind and solar can be reliably and cost-effectively integrated onto the grid,” he said.