Grid-level impacts of renewable energy on thermal generation: efficiency, emissions and flexibility

Abstract: Wind and solar generation constitute an increasing share of electricity supply globally. We find that this leads to shifts in the operational dynamics of thermal power plants. Using fixed effects panel regression across seven major U.S. balancing authorities, we analyze the impact of renewable generation on coal, natural gas combined cycle plants, and natural gas combustion turbines. Wind generation consistently displaces thermal output, while effects from solar vary significantly by region, achieving substantial displacement in areas with high solar penetration such as the California Independent System Operator but limited impacts in coal reliant grids such as the Midcontinent Independent System Operator. Renewable energy sources effectively reduce carbon dioxide emissions in regions with flexible thermal plants, achieving displacement effectiveness as high as one hundred and two percent in the California Independent System Operator and the Electric Reliability Council of Texas. However, in coal heavy areas such as the Midcontinent Independent System Operator and the Pennsylvania New Jersey Maryland Interconnection, inefficiencies from ramping and cycling reduce carbon dioxide displacement to as low as seventeen percent and often lead to elevated nitrogen oxides and sulfur dioxide emissions. These findings underscore the critical role of grid design, fuel mix, and operational flexibility in shaping the emissions benefits of renewables. Targeted interventions, including retrofitting high emitting plants and deploying energy storage, are essential to maximize emissions reductions and support the decarbonization of electricity systems.