Utility systems have always been hybrid power systems. The traditional hybrid mix was a combination of baseload and peaking plants. The primary utility business model was investing in capital-intensive systems to provide reliable power. On the generation side of their business, baseload generation systems like coal and nuclear had the lowest operating costs and the highest capital costs. Since the traditional regulatory structure allowed them to earn a return on capital but not on their operating costs they preferred baseload generation systems, but they also needed peaking plants that were cost-effective even at low capacity factors to provide reliable power during peak demand periods. These were typically either new simple cycle gas turbines or older less efficient and fully depreciated plants. Plants, like combined cycle natural gas, were intermediate in this spectrum between capital and operating cost.
Renewable power systems, like solar and wind, do not fit well in this categorization scheme. They have high capital costs and low operating costs like baseload power plants, but low capacity factors like peaking plants. They have an even greater need to be part of a hybrid mix that includes flexible technologies, because of the variable and uncontrollable nature of their output. The old scheme categorizing the different elements of the hybrid utility mix was based on the relative share of capital and operating costs in the cost structure of the plants. The new scheme will be a hybrid mix of flexible systems that consume fuel and emit carbon and inflexible systems that don’t consume fuel and emit carbon. Providing that flexibility in a clean and cost-effective manner is the new hybrid power system design challenge.
Storage is the most flexible power technology, but it is very expensive. The two other good candidates are simple cycle gas turbines and reciprocating engine. Reciprocating engines have the most flexibility but turbines are cleaner and lower cost. In addition to these cost structures the appropriate mix of these technologies also depends strongly on the actual time pattern of the variability of both the renewable resources and the electric load.
We are moving to higher contributions of renewable power in the utility mix due to government mandates and a combination of increases in fuel prices, environmental, security and balance of trade concerns. The optimal hybrid mix will need to evolve as the renewable contribution increases.
NREL developed HOMER, the Hybrid Optimization Model for Electric Renewables, to address these issues. They are most immediate in the context of isolated electric grids that rely on petroleum-derived liquid fuels, but they will become increasingly relevant in larger, more traditional utility systems. HOMER has been continuously enhanced since 1992 and available for use outside of NREL since 1998. By 2009 when NREL issued a commercialization license to HOMER Energy, LLC it was being downloaded over a thousand times a month. It is fundamentally different from traditional utility planning models by focusing specifically on these issues without the distraction of excessive other details. Although still primarily used for smaller isolated systems, its higher level viewpoint can provide valuable insights into optimizing the hybrid mix of renewable and flexible power systems in the future.