Baseload is dead, long live basedload

How I learned to stop worrying and love the load

What is baseload?

Despite its common usage, it technically does not refer to supply, especially big blocky power plants. Baseload refers to (surprise) load or demand. It is the minimum level of electricity consumption over a certain time frame. This mix-up comes from referring to certain power plants which are designed to run 24/7 to meet the baseload demand, hence the terms becoming almost synonymous.

Baseload then and now

Historically, building such power plants (e.g., big coal blocks or nuclear facilities), made sense. Utilities were very captive and integrated. Often initiated by governments, generation, transmission and supply to the end consumer were handled by a single company. Consumers would be connected to the service and billing might be based on a simple counter that tallies up the kilowatt-hours (kWh) used. So as consumers consumed, the utility would run the grid and power plants to meet that consumption and bill accordingly. They would put a big block in place to meet baseload demand, and more flexible ones to meet peak demand.

Things have moved on since then.

First, markets changed. Centrally controlled electricity supply turned out to be inefficient, and in the worst cases, led to corrupt and ailing systems (e.g., South Africa and Eskom). Liberalisation and debundling of generation, grids and supply promised to add competition to reduce costs. Formerly inefficient captive utilities suddenly had to face an open electricity market and compete with other power plants. Lean supply firms could offer cheaper and better customer service (fun exception: late 2010s in the UK with Bulb and the like blowing up). Grids, a natural monopoly, were largely carved out and regulated. In a modern electricity market, matching supply and demand is not centrally planned by a few guys in a room anymore (except for France to some extent). Instead, it is guided by the collective plans of many, many producers and consumers with traders in between, whose plans are reflected through a simple signal – a market price.

Secondly, ongoing innovation has greatly improved clean energy technology. On the supply side, this means no marginal cost and intermittent electricity production coupled with batteries firming and shifting supply. More interestingly, on the demand side, real time billing and access to wholesale markets, industry digitalising operations, millions of EVs being plugged into the grid, smart appliances running, and the ability to produce and store electricity as well as heat, with heat pumps heating/cooling when cheapest.

The emergence of a new type of load

As a result, we end up with consumers being able to serve themselves for quite a lot of the time – often called prosumers. They reduce the gross load (any demand) by their own production, yielding a lower net load (load remaining for wholesale markets). This can already be observed dramatically in high solar irradiance regions with lots of roof-top solar (famously California) where net loads tank.

Now the base of net loads will not hit zero, not everything has behind the meter production and storage. But often low net loads combined with very high utility renewables will eat into the residual load (any remainder; some utilities call this netload) that is left for dispatchable plants. Residual base loads have already hit zero in many markets, often driven by solar producing electricity as predictably as the sun rises and sets. This will continuously eat away at any potential MWhs produced by centralised, dispatchable power plants.

Photovoltaic (PV) is the most derisked, modular and, often tied with wind, the cheapest form of energy production. Its rapid deployment often leads wholesale prices to converge towards zero and the infamous duck curve emerges (plus the 50 terms that were spun off to name it).

Turn down solar for watt?

Solar is so cheap, people are building fences and facades out of it. Not only is it cheap, PV saves (or even makes) money. Utility renewables are still on the steep part of the sigmoidal (“S”) curve and companies lock in supply with power purchase agreements (PPAs) directly in highly competitive markets. The utility running the dispatchable power plant is picking up the remainder and turn from commodity- to a service-provider. They provide expensive MWhs, but much fewer.

As consumers do not care about centralised power plants’ and utilities’ profits we need to call them what they are: based. And these actors will dominate the future.

Baseload is dead. Long live basedload.