Last week, U.S. wind power output slumped to the lowest in almost three years, and generators ramped up natural gas use to keep the lights on. This is not a glitch or a one-time occurrence. It is simply the reality and highlights the difference between reliability and climate ambitions. And the former will always trump the latter.
July has not been a good month for wind energy in the United States. According to LSEG data cited by Reuters’ Gavin Maguire last week, the first three weeks of the month saw a 78% decline in wind power generation. This is not a particularly unusual occurrence. It is, in fact, quite usual for the summer months when wind is more of a luxury than part of the everyday picture.
In order to keep the electricity supply steady in these circumstances, power generators increased the consumption of natural gas. Unlike wind, natural gas is not dependent on specific weather patterns—especially during peak demand.
That wind and solar are intermittent is a fact of life that even their staunchest advocates acknowledge. The perhaps bigger problem is that the variability of wind and solar power output is such that peak output often coincides with the lowest demand, and the lowest output coincides with peak demand. The wind/gas situation in July is an illustration of this.
This weather-induced period of low generation for wind and solar is called dunkelflaute in Germany. This dunkelflaute has been on full display in the U.S. this month—and not just this month. Because of its not infrequent occurrence, dunkelflaute as a term has been incorporated in the wind and solar narrative as one of the challenges facing the hypothetical transformation of these into dominant energy sources.
In contrast to weather-dependent sources, gas—and coal as well—has remained the go-to source of electricity when the turbines stop turning and the panels stop generating. In the United States, natural gas is the largest single source of electricity, providing over 40% of the national total. This share may well grow in the future, thanks to Big Tech.
Earlier this month, the International Energy Agency said that global electricity demand was surging, driven by growing demand from the information technology sector, specifically in artificial intelligence, and by equally growing demand for air conditioning during the summer months in the northern hemisphere.
“The 4% growth expected for 2024 is the highest since 2007, with the exceptions of the sharp rebounds in 2010 after the global financial crisis and in 2021 following the Covid-induced demand collapse,” the IEA wrote in a report cited by Bloomberg. The agency, however, added an optimistic note, saying that solar would meet “roughly half of the growth in global electricity demand to 2025. Together with wind power generation, it will make up almost 75% of the increase.”
If the situation with wind power output in the middle of summer in the United States is any indication, solar and wind cannot meet any meaningful portion of this higher demand for electricity for reasons outside the control of their operators or the government. The optimistic note sounded by the IEA is one more of hope than fact. This essentially means a higher demand for gas and possibly even coal. And this, in turn, means that the new EPA emission standards need to be revised—because, as they stand now, they significantly reduce the potential for new gas generation capacity in response to greater demand for electricity.
“This rule poses a significant threat to affordable and reliable electricity for millions of Americans, especially as power demand skyrockets across the nation,” the chief executive of the National Rural Electric Cooperative Association, Jim Matheson said last week, as quoted by Politico’s E&E News. The NRECA has filed a request with the Supreme Court to stop the new regulations from coming into effect. A number of state attorney generals have also filed such requests.
The EPA’s new rules require coal and gas generators to cut their carbon dioxide emissions by as much as 90%. The rules concern existing coal plants and future gas plants, excluding existing gas capacity. That’s a small mercy for reliability, but demand is on the rise—and it is a strong rise because of the race in artificial intelligence. This race means more generation capacity would be needed before long, and it won’t be wind and solar because those AI data centers need electricity all the time.
Yet the new EPA rules would make new gas capacity unprofitable with the emission requirements that would essentially force developers to incorporate carbon capture systems in their facilities, and these do not come cheaply. This suggests that few developers would have the motivation to build new gas power plants. And that points to a strained grid, which would still be reliant on natural gas for close to half of the electricity flowing through it.
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By Irina Slav for Oilprice.com
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