Cost minimization of generation, storage, and new loads, comparing costs with and without externalities

The goal of this research is to understand the economics of anticipated large-scale changes in the electric system. 86 million different combinations of renewable generation (wind and solar), natural gas, and three storage types (hydrogen storage, electric vehicles equipped with vehicle-to-grid (V2G) technology, and building heat) are modeled within the PJM Interconnection. The corresponding electric systems are then operated and constrained to meet the load every hour over four years. The total cost of each energy system is calculated, both with and without externalities, to find the least cost energy systems. Using today's costs of conventional and renewable electricity and without adding any externalities, the cost-minimum system includes no renewable generation, but does include EVs. When externalities are included, however, the most cost-effective to system covers 50% of the electric load with renewable energy and runs reliably without need for either new conventional generation or purpose-built storage. The three novel energy policy implications of this research are: (1) using today's cost of renewable electricity and estimates of externalities, it is cost effective to implement 240 GW of renewable electricity to meet 50% of the total electric load; (2) there is limited need to construct new natural gas power plants, especially from a system-wide perspective; and (3) existing coal plants may still be useful to the energy system, and instead of being retired, should be repurposed to occasionally provide generation.