What we need to keep the lights on…

Batteries cannot make 100 percent renewables feasible for

Colorado

By David Wojick, Ph.D.

dwojick@craigellachie.us

March 25, 2019

Summary of conclusions

The goal of 100 percent renewables for electricity in Colorado requires that power be
reliably available when wind and solar are not producing, which occurs fairly frequently.
Batteries have been proposed as a possible solution to this power production problem, so
we have examined several plausible scenarios.

What we find is that using batteries to make wind and solar power reliable is
prohibitively expensive; in fact, the cost would likely be astronomical. In round numbers,
our Colorado scenarios for battery could cost range from $900 billion to $4 trillion, with
a midpoint of over $2 trillion.

These figures make the Colorado Energy Plan at $2.5 billion and the fuel switching goal
to 100 percent renewable with its $44 billion seem reasonable.

Put another way, Mars is 33.9 million miles from the Earth. $4 trillion dollars laid end to
end goes to Mars and back two times.

These huge numbers are because the amount of electricity involved is enormous. The
total present use of batteries for utility scale storage nationally is just around 1000 MWh,
while Colorado alone will need between one and two million MWh of storage for 100
percent renewables with reliability. See Scenarios below and Appendix A for details.

Introduction

Ours is a simple study of a very complex situation. The simple point is that the use of
batteries to meet the challenge of intermittent renewable power generation will be
extremely expensive. While this analysis can be greatly refined, refinement is unlikely to
change this simple result by very much. It would take a technological miracle for battery
backup to become affordable.

Governor Jared Polis has called for Colorado customers to get 100 percent of their
electricity from renewables predominantly industrial wind and utility scale solar. By
definition, Colorado doesn’t consider large scale hydroelectricity to be renewable or

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clean.

The well-documented problem with wind and solar is what is called intermittency. The
sun does not always shine, and the wind does not always blow enough to meet the
electric needs to power an entire state.

In today's world the intermittency problem is avoided with backup generation, typically
from fossil fueled power generators which can operate when needed. Under the 100
percent renewable scenario this fossil-fuel fired generation is prohibited, so some other
solution is required.

Two new solutions to the intermittency problem have been proposed

We look at the battery case

One proposed solution is called the super grid. Here the U.S. Power transmission system
is vastly expanded, so that power can be generated where the wind is blowing and the sun
shining, then delivered to wherever in the country it is needed. The super grid is not a
solution that Colorado can implement on its own. In fact, it would require a complete
restructuring of the U.S. electric power industry, plus a massive array of new, very large
cross-country power lines.

The other proposed solution to the problem of intermittency is battery backup, which is
the subject of our analysis. In principle, battery backup is very simple. Generate more
power than needed when the wind and sun are strong, store it in big batteries, and then
use it when wind and sun don't do the job. This is what off-grid solar homes do, but an
entire State like Colorado is very different from a solar home.

The question is what would it cost to power Colorado this way? The cost turns out to be
enormous, primarily because wind and solar power generation can be close to zero for
days at a time. This is especially true for wind power, where week long periods of near
peak need for electricity can coincide with no power. Solar can also fail for several days
at least, during which there also may be no wind power generation.

It takes a tremendous amount of battery storage to cover these extended periods of no

power generation. Even under reasonable assumptions, the cost may be as high as several
trillion dollars.

We first explore two plausible scenarios, one at a high cost and the other at a lower cost.
We then calculate the midpoint cost between these two scenarios.

High cost battery scenario – 100 percent wind power

Cost results:
Total battery cost = $3.726 trillion (or roughly $4 trillion)
Total 10-year household battery bill = $1,638,000 per household
Annual household battery bill = $163,800 per household per year

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The high cost case has the following characteristics:
1. 100% of the renewable capacity is wind.
2. There is a 7-day period with near-peak demand and no wind generation due to low
wind speeds. This is a relatively common condition.
3. Statewide peak demand has grown to 13,000 MW in accordance with Xcel's
projection. See Appendix C.
4. The number of residential customers (households) remains 2 million. See Appendix B.
5. All of the battery costs are passed on to the residential customers.
6. These costs are spread over a 10-year period (the estimated useful life of the batteries).
7. The cost of batteries does not go down.
See Appendix A for details.

Low cost scenario – 50 percent wind power

Cost results:
Total battery cost = $900 billion.
Total 10-year household battery bill = $225,000 per household.
Annual household battery bill = $22,500 per household per year.

The low-cost case has the following characteristics:

1. 50% of the renewable capacity is wind and 50% is solar.
2. There is a 3-day period with near-peak demand and no solar generation due to bad
weather.
3. There is at the same time a 7-day period with peak demand and no wind generation due
to low wind speeds.
4. Statewide peak demand has not grown from 10,000 MW. See Appendix B.
5. The number of residential customers remains at 2 million. See Appendix B.
5. 50% of the battery costs are paid by the residential customers, the rest by the industrial,
commercial and irrigation customers.
6. These costs are spread over a 10-year period (the estimated useful life of the batteries).
7. The cost of batteries goes down by 50%.
See Appendix A for details.

Note: Given all of these variables there are many other possible scenarios. The high cost
case is not really the worst that is possible, nor is the low-cost case the lowest possible.
However, these more extreme cases seem far less likely.

Midpoint costs
The most likely case might be the midpoint between the high cost and low-cost cases
given above. This midpoint cost is not a single case, as there are several combinations of
characteristics that give this same midpoint result.

Cost results:

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Total battery cost = $2.3 trillion.
Total 10-year household battery bill = $931,500 per household.
Annual household battery bill = $93,150 per household per year.

A simple rounding gives these ballpark midpoint figures which are easy to remember:
Total battery cost = $2 trillion.
Total 10-year household battery bill = $1 million per household.
Annual household battery bill = $100,000 per household per year.

Notes on the customer data

Peak demand and the number of residential customers are based on the "2010 Colorado
Utilities Report" from the Colorado Governor’s Energy Office, August 2010. This
appears to be the last statewide survey of Colorado's 58 power utilities. While this data is
not new, the numbers are unlikely to have decreased, making them conservative for the
present purpose. The survey data is listed by utility in Appendix B.

By coincidence, the numbers for statewide summer and winter peak demand, as well as
the number of residential customers, are all very close to simple round numbers. For
simplicity those round numbers have been used, as follows:

Colorado's winter and summer peak demand are taken to both be 10,000 MW.
The number of residential customers (households) served is 2 million.

Battery life expectancy

The figure that is generally used for grid scale battery life expectancy is ten years.
Reportedly, most warranties are this long or less. The giant insurer Munich Re just started
offering battery project performance insurance for up to ten years. Thus, we are using 10
years for our amortization period.

Given that the scale of battery backup addressed in this study is far beyond anything ever
attempted, new battery systems might be developed with longer life expectancy. But this
might also increase the MWh cost significantly, so we are using present day values.

Distributed storage

Cost aside, using batteries to truly back up renewables is clearly a major undertaking.
This raises the interesting issue of central versus distributed deployment of backup
battery systems. There are precedents and arguments for both approaches.

In reality there are two very different sorts of distributed backup battery approaches. We
can call these the supply side and the user side battery systems. On the supply side the
battery systems will each be located in conjunction with a large renewable emery source,

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such as a wind farm or solar array. This is already being done, albeit to just a tiny degree
as far as large-scale backup goes.

On the user side the battery systems might even be what is called "behind the meter"
installations. That is they will be located to serve a particular user, on their premises. This
is already being done in conjunction with industrial and large commercial customers. In
some cases, the utility still owns and services the batteries.

Grid scale batteries are sensitive to very low temperatures, with losses up to 40% of
capacity being suggested. In Colorado, this means that the backup batteries will need to
be indoors, in heated facilities. While backup battery systems have been fielded without
protective buildings in warm places like South Australia and Puerto Rico, Colorado's
below zero winter temperatures make enclosure and warmth a necessity.

The need for climate-controlled enclosure makes the case of user side installation of
backup batteries all that more attractive. These might even be added to electrical service
in general.

A specific case of user side batteries that has been widely discussed is that of using
electric vehicles (EVs) for backup storage. Given that increased use of renewables and
electric vehicles will both greatly increase the backup requirements, this is a relatively
extreme scenario. It is however a realistic case, since on this scenario every household
will have a significant battery capability in their vehicles. How they would be
compensated for storage is the big question.

The general case of user side batteries is especially interesting because it introduces the
idea of user choice in the backup equation. That is, users might decide for themselves
how much they want to pay to avoid certain sorts of blackouts, that might be relatively
infrequent. Given the potentially horrendous cost of complete protection, this might be a
reasonable decision. Industrial and large commercial customers already make this sort of
choice.

It is important to note that the utility might actually pay customers to host battery backup.
This is especially interesting in the EV case, where a new system of power provision and
storage might emerge, one that is specifically adapted to the intermittency of renewable
generation. However, it is beyond the scope of this study to go into these novel
distributed storage scenarios, especially their cost.

The low wind case

Under standard conditions no power is generated by a typical wind farm about 25% of
the time, due to low wind conditions. The exact figure does not matter, as it no doubt
varies from year to year. What is important is that no-power low-wind conditions are
relatively common.

Our point is meteorological. The fact is that the weather conditions that often create peak

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or near peak demand are among these low wind conditions. Specifically, these are long
duration high pressure systems, which may be near continental in scale and last a week or
more. This fact must be accounted for in reliability computations. Total system generating
capacity is determined by the likely worst case. This is what determines the MWh of
battery capacity needed.

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 Appendix A

Backup battery cost analyses

Background:

The cost of utility scale battery systems is usually not disclosed by buyer or seller, but the
US Energy Information Administration published the results of a survey in "U.S. Battery
Storage Market Trends," May 2018. The average cost for storage capacity was around
$1500 per KWh or $1,500,000 per MWh, which is used herein.

Also of note is that according to EIA the total large-scale storage capacity in the entire
U.S. was under 900 MWh as of 2017. In the scenarios below, we estimate the storage
need at roughly from one to two million MWh. In short there is nothing like this in
existence.

The existing national storage capacity is virtually zero compared to what Colorado would
need to make 100% renewables reliable using batteries. This is why the costs seem so
high; the amount of electricity that would need to be stored at one time is enormous.

Here is the basic math:

For the high cost scenario

Storage required equals 13,000 MW times 7 days times 24 hours per day
= 2,184,000 MWh.
This storage requirement times $1,500,000 per MWh = $3.726 trillion dollars.
Divide by 2 million households = $1,638,000 per household.
Spread over 10 years = $163,800 per year per household.

For the low-cost scenario

Solar and wind storage requirements are each based on 50% of 10,000 MW = 5,000 MW.
Solar based storage required = 5,000 MW times 3 days times 24 hours per day
= 360,000 MWh.
Wind based storage required = 5,000 MW times 7 days times 24 hours per day
= 840,000 MWh
Total storage required (solar + wind) = 1,200,000 MWh.
Storage cost is 50% of $1.5 million per MWh (the EIA average) = $750,000 per MWh.
Total storage required times lower MWh storage cost = $900 billion total storage cost.
Residential customers pay 50% of total storage cost = $450 billion.

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Divide by 2 million households = $225,000 per household.
Spread over 10 years = $22,500 per year per household.

Note that these huge battery costs do not include a lot of additional significant costs.
These include:
1. Land, buildings, roads, transmission infrastructure, etc.
2. Operation and maintenance, including heat in winter and cooling in summer.
3. Recycling and/or disposal of a huge amount of battery materials. This could be a very
serious challenge, as nothing of this scale has ever been attempted.

Also, these batteries may have a relatively short life compared to the generators they
backup, so multiple sets may be required. For example, if the batteries all need replaced
after ten years then this is the amortization period that the ratepayers need to cover. Thus
the annual cost to ratepayers is very sensitive to the useful life of the batteries. This is a
major research question.

Clearly these huge battery costs are prohibitive. The battery systems being installed
today, typically with a solar generator, provide less than an hour of storage. They are for
short term stabilization or peak shaving, not lengthy backup during protracted peak
demand.

In fact the total battery backup capacity installed in America today amounts to just a few
minutes of peak generation. Clearly the 100% renewables goal involves battery backup
capability on a scale far beyond anything that has been done to date. At today's numbers,
the cost of this amount of battery backup would be astronomical. Nor do we know how to
make such an enormous battery system work.

In short, 100% renewable generation is not technologically or economically feasible at

this time.

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 Appendix B

Colorado utility peak demands and residential customers

Summer total = 10,157 MW (round to 10,000 MW)

Winter total = 10,186 MW (round to 10,000 MW)
Residential customers = 2,032,544 (round to 2 million)

Notes: Many Colorado utilities report peak demands that are very different in summer
than in winter. But when the values for all utilities are summed statewide, by coincidence
the total amounts for summer and winter peak demand are almost identical.

Peak demands reported by each utility follow. All values are in MW, with summer peak
listed above winter. Below this are the total residential customers. A few more
explanatory notes occur at the end of the listing.

Investor owned utilities (2)

1. Xcel Energy
6,272
5,941
1,150,181

2. Black Hills Energy

365
296
81,549

Municipal utilities (30)

1. Aspen Municipal Electric System

10.9
14.1
2,022

2. Burlington Municipal Light & Power

8.3
5.8
1,731

3. Center Municipal Gas Light & Power

1.3
1.8

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868

4. City of Fountain Utilities

42.0
39.7
14,403

5. Colorado Springs Utilities

824.0
755.0
183,984

6. Delta Municipal Light & Power

10.7
10.1
2,245

7. Estes Park Light & Power

18.5
26.2
8,275

8. Fleming Electric Light Department

NR (5)
5.4
178

9. Fort Collins Utilities

263.8
242.3
57,148

10. Fort Morgan Electric Light & Gas Department

43.1
41.2
4,835

11. Frederick Municipal Light System

NR (10)
NR
NR

12. Glenwood Springs Electric System

22.2
24.2
4,598

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13. Granada Utilities
0.6
0.4
269

14. Gunnison Light & Water Department

8.1
13.8
3,314

15. Haxtun Municipal Light & Power

1.9
2.0
467

16. Holly Light & Power

NR (very small)
NR
406

17. Holyoke Municipal Light & Power

4.8
4.9
944

18. Julesburg Municipal Light & Power

2.6
2.2
637

19. La Junta Municipal Utilities

18.0
12.0
2,587

21. Lamar Light & Power

26.3
15.9
4,200

22. Las Animas Municipal Light & Power

7.0
4.4
1,391

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23. Longmont Power & Communication
163.0
132.5
33,749

24. Loveland Water & Power

125.3
105.5
28,122

25. Lyons Municipal Light & Power

2.8
2.8
946

26. Oak Creek Municipal Utilities

1.0
1.3
530

27. Springfield Municipal

NR (25)
NR
NR

28. Trinidad Municipal Power & Light

9.0
9.8
3,869

29. Wray Light & Power

4.7
3.4
968

30. Yuma Municipal Light & Power

6.8
5.0
1,253

Rural electric cooperatives (26)

1. Delta-Montrose Electric Association

98
112

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28,800

2. Empire Electric Association

80.1
89.3
13,068

3. Grand Valley Power

NR (100?)
NR
NR (20,000?)

4. Gunnison County Electric Association

15.7
28.1
8,808

5. High West Energy

52.5
34.0
616

6. Highline Electric Association

189.0 (irrigation?)
47.0
5,648

7. Holy Cross Energy

136.3
250.5
45,274

8. Intermountain Rural Electric Association

NR (250?)
NR
NR (50,000?)

9. K.C. Electric Association

55.8 (irrigation?)
23.6
3,216

10. La Plata Electric Association

140.0
160.0
33,163

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11. Moon Lake Electric Association
NR (100?)
NR
NR (20,000?)

12. Morgan County Rural Electric Association

NR (20?)
NR
4,822

13. Mountain Parks Electric

NR (25?)
NR
NR (5,000?)

14. Mountain View Electric

132
161
40,275

15. Poudre Valley Rural Electric

198
180
31,371

16. San Isabel Electric

NR (80?)
NR
NR (16,000?)

17. San Luis Valley Rural Electric

67.8 (irrigation!)
21.6
8,631

18. San Miguel Power

14
26
NR

19. Sangre De Cristo Electric

NR (20?)
NR
10,509

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20. Southeast Colorado Power
NR (30?)
NR
NR (6,000?)

21. Tri-County Electric

NR (very small)
NR
5 (?)

22. United Power

285
235
57,333

23. Wheatland Electric

241 (odd with few customers)
164
38

24. White River Electric

NR (150?)
NR
2,478

25. Yampa Valley Electric

80.8
125.7
20,852

26. Y-W Electric

130
25 (odd)
4,968 (says 55,698 commercial!)

Notes: 1. Peaks are simply summed, hence assumed to all be coincident. Non-reporting
peaks (labeled NR) are estimated based on total sales. Values are given as (xxx?).
Summer and winter peak are assumed identical. A few comments are included where
values seem odd. Where not reported, total residential customers are estimated from peak
demands. Some utilities buy power from out of state, including some hydro power. These
features are not included in the analysis because the amounts are unknown and probably
small.

2. Source: "2010 Colorado Utilities Report" from the Colorado Governor’s Energy
Office, August 2010.

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 Appendix C

Projected Colorado peak demand growth

Xcel's 2011 ERP documents include peak demand forecasts from 2011 through 2050. We
here take their forecasts of growth by 2040, for summer and winter, and apply the same
growth rate to the statewide peak demands found for 2009. This gives us a rough estimate
of statewide peak demand in 2040.

From Table 2.6-4 Xcel ERP 2011 Volume 2:

Xcel summer peak projection

2011 5,913 MW
2040 7,434
Increase = 25.7%

Xcel winter peak projection

2011 4,445
2040 5,883
Increase = 32.4%

Using comparable increases from the 10,000 MW of statewide demand in 2009, winter
and summer, gives the following rough estimates:
Summer = 12, 570 MW
Winter = 13,240 MW
We round this to 13,000 MW winter and summer.

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