An exploration of how renewables connect to the grid, how these connections impact grid operations, and implications of a high penetration of renewables for the grid in the future.
Date April 15, 2020 (Updated March 24, 2022) Authors Kathryne Cleary and Karen Palmer Publication Explainer Reading time 8 minutesGenerating electricity using renewable energy resources (such as solar, wind, geothermal, and hydroelectric energy) rather than fossil fuels (coal, oil, and natural gas) reduces greenhouse gas emissions from the power sector and helps address climate change. While renewables are preferable to fossil fuel generators from an emissions standpoint, power output from renewable sources depends on variable natural resources, which makes these plants more difficult to control and presents challenges for grid operators. To properly balance electricity supply and demand on the power grid, grid operators must have a sense of how much renewable energy is being generated at any given moment, how much renewable energy generation is expected, and how to respond to changing generation. All this information can be difficult for grid operators to know due to the intermittent nature of renewable power and the wide variety in the size and locations of renewable energy resources across the power grid. As the proportion of renewable energy capacity on the grid grows, these issues are becoming increasingly important to understand. This explainer explores how renewables connect to the grid, how these connections impact grid operations, and implications of a high penetration of renewables for the grid in the future. This explainer frequently references the workings of the electric grid. To learn about how the grid functions and find definitions of some common terms, read “Electricity 101 :Terms and Definitions.”
There are two main types of renewable energy generation resources: distributed generation, which refers to small-scale renewables on the distribution grid where electricity load is served; and centralized, utility-scale generation, which refers to larger projects that connect to the grid through transmission lines.
Centralized, utility-scale renewable energy plants are comparable to fossil-fueled power plants and can generate hundreds of megawatts (MW) of power. Like natural gas, coal, and nuclear plants, large renewable plants produce power that is sent across transmission lines, converted to lower voltage, and transmitted across distribution lines to homes and commercial buildings.
Unlike conventional fossil-fuel plants, however, renewable energy plants are typically not dispatchable (or able to generate power when called upon), because they depend on variable resources like the sun and wind that change over the course of a day. However, when renewable energy is available, sources like wind and solar get priority in the dispatch order. Wind and solar have zero fuel costs, so their production is used before other generator types because they are the cheapest energy source available at that time. (To better understand how electricity generation is dispatched, read “Electricity Markets 101.”)
On the other end of the spectrum, small residential and commercial renewables typically range between 5 and 500 kilowatts (kW). Most of these small-scale renewables are solar panels, which are easily customizable in size (for a breakdown of solar types, see page 3 of this RMI document). These distributed resources, such as rooftop solar panels, are typically located on-site at homes or businesses. Unlike large, centralized renewable plants that connect to the grid through high-voltage transmission lines, distributed resources like these are connected to the grid through electrical lines on the lower voltage distribution network, which are the same lines that deliver electricity to customers.
Oftentimes, these projects occur “behind the meter,” which means that the electricity is generated for on-site use (such as a rooftop solar system that supplies a household with power). These small, distributed projects typically lower the demand for electricity at the source rather than increasing the supply of power on the grid. For example, when the sun is shining, a house that has solar panels on its roof may not need electricity from the grid because its solar panels are generating enough electricity to meet the residents’ needs.
Community-scale renewables, which are larger than rooftop projects but smaller than utility-scale, are also connected to the grid through distribution lines and are therefore also considered to be distributed generation. Unlike small rooftop renewables, however, community-scale renewables reside “in front of the meter,” meaning that the power they generate is not used on-site but rather flows onto the distribution grid to be used by homes and businesses in the vicinity.
Both centralized- and distributed-generation renewables have benefits and costs for customers and grid operators. From an economic perspective, centralized utility-scale renewables are much cheaper than distributed resources due to economies of scale. As of November 2018, the levelized cost (the net present value of the cost of electricity generation over a plant’s lifetime) of rooftop solar was estimated to be anywhere from 4.5 to 7 times more expensive per MWh relative to utility-scale solar.
In addition to being cheaper, centralized projects are often much easier for the grid operator to control. Because distributed renewables are often small and behind the meter, they can be very difficult to track from a grid operator’s perspective and can significantly complicate load forecasting. Grid operators usually only know that these projects exist because they noticeably reduce customer demand for electricity during certain times of day.
However, distributed renewables can provide the grid with benefits that large projects cannot. Since the energy from distributed generation is typically used on-site or nearby, distributed energy resources can significantly reduce energy losses that occur when electricity is carried on transmission lines, and they can avoid the cost of new transmission and distribution infrastructure (see NREL and Acadia Center). If they are connected to microgrids, distributed renewables can also provide greater resilience during storms that disrupt the power grid by providing power even if the larger grid experiences outages.
