Deploying Balancing Power Could Accelerate U.S. Energy Transition and Save $68 Trillion Globally by 2050: New Wärtsilä Report

­Wärtsilä’s global power system modeling, published in the Crossroads to net zero report, compares two pathways from the year 2025 to 2050 with the aim to reduce greenhouse gas emissions and limit global warming, as per the Paris Agreement targets. In the first pathway, only renewables, such as wind and solar power, and energy storage are added to the power mix. In the second pathway, balancing power generation technologies, that can be ramped up quickly when needed to support intermittent renewables, are also added to the system.

The modeling shows that power systems which include balancing renewables with thermal flexible power generation have significant advantages when it comes to both cost and CO₂ reductions. The model reveals that this pathway would generate cumulative savings of $68 trillion by 2050 compared to a renewables-only pathway, due to less renewable capacity needed. The report outlines that the effectiveness of renewables can be maximized if supported by balancing power plants, which are key in scaling up renewable energy.

“This report reveals that more considerations for balancing technologies are needed in U.S. power systems,” said Risto Paldanius, Vice President, Americas at Wärtsilä. “For example, Texas has become the leader in wind and solar generation, and the state also introduced a fund to support new investment in flexibly dispatchable, non-duration limited balancing power. The fund aims to support its rapidly growing economy and ensure reliable, affordable electricity. As government incentives such as the Inflation Reduction Act (IRA), state-level net-zero mandates, and declining technology costs continue to power renewable generation’s rapid growth in the U.S., flexible, dispatchable generation to manage output is crucial to managing this variability.”

Key Findings

1. Reduced costs: The study shows that compared to a renewables and energy storage-only pathway, the deployment of balancing power plants will reduce the cost of future power systems by as much as 42%, equaling $68 trillion.

2. Reduced emissions: Adding balancing power can reduce the total cumulative power sector CO₂ emissions between now and 2050 by 21% (19 Gt), compared to the renewables and storage-only path.

3. Less wasted energy: The modeling shows that the use of balancing power allows for enhanced power system optimization, resulting in 88% less wasted energy due to renewable curtailment by 2050, compared with a renewable and energy storage-only pathway. In total, 458 000 TWh of curtailments would be avoided, enough to power the whole world with the current electricity consumption for more than 15 years.

4. Less renewable capacity and land needed: By adding balancing power plants, we can halve renewable capacity and land needed to meet our decarbonization targets.

“While we have more renewable energy on our grids than ever before, it is not enough on its own,” said Anders Lindberg, President, Wärtsilä Energy & Executive Vice President. “To achieve a clean energy future, our modeling shows that flexibility is essential. We need to act now to integrate the right levels and types of balancing technologies into our power systems. This means rapidly phasing out inflexible assets and transitioning to sustainable fuels. Balancing power plants are not merely important; they are critical in supporting higher levels of renewable energy.”

Calls to Action for the Power Sector
Decisive actions from the entire power sector are crucial to achieve a low-cost and low-emission energy transition in line with the 2050 Paris Agreement. Instead of only focusing on the acceleration of renewable build up, a holistic system level thinking must be in place when investing in and planning power systems.

1. Enable accelerated expansion of renewables and balancing technologies to ensure affordable electricity

• Enable fast expansion of renewables by upgrading transmission systems, streamlining permitting processes, and investments in regional interconnectors.  
• Rapidly expand short and long duration balancing technologies to ensure grid reliability and resilience. Together, these technologies support the rapid growth of renewable energy, reduce reliance on inflexible assets, such as coal plants, and accelerate emission reductions. 
• Mobilize financing to secure the development of renewable and balancing power projects at the necessary scale and speed. 

2. Redesign electricity markets to incentivize flexibility

• Reform electricity market structures to support greater integration of variable renewable energy. Balancing should be incentivized to provide essential flexibility to optimize renewable energy systems
• Increase dispatch granularity to 5-minute resolution in energy wholesale markets. Shorter and more precise time frames for pricing and supply adjustments will support variable renewable energy integration and incentivize flexible balancing power plants that can respond quickly to changes in electricity demand.
• Introduce new ancillary services to guarantee grid stability. The need for ancillary services increases with higher renewable penetration, and the supply can be co-optimized with energy and balancing requirements and provided by balancing technologies.
• Establish bankable revenue models for low-running-hour balancing power plants, including mechanisms like flexibility-linked capacity payments and scarcity pricing.

3. Choose the right future proof technologies and prepare for sustainable fuels

• Select balancing technologies that are future proof and ready for the introduction of sustainable fuels to fully decarbonize the power sector from the mid-2030s onwards.
• Support rapid ramp up of renewables and enable the phase out of legacy technologies, by using natural gas as a transition fuel for flexible balancing power plants. Bridging the transition with gas balancing can cut more than 75% of annual power sector CO2 emissions by 2035 (in comparison to 2023 level).
• Prepare for the introduction of sustainable fuels by building the needed expertise and infrastructure to ensure a seamless transition to a fully decarbonized power sector in the future. Competitiveness or cost-parity of sustainable fuels will require policy action, which could be in the form of subsidies, regulation, carbon taxes or a mix of these.  

Pathway 1: Renewables and storage
In the Renewables and storage pathway, power sector expansion relies exclusively on variable renewable energy (VRE) and energy storage systems (ESS). Existing power plants are gradually decommissioned by 2040 but are allowed to operate within emission limits until retirement. No new power generation capacity except for renewables and energy storage systems is introduced during the modeling horizon.

Pathway 2: Balanced
In the Balanced pathway, expansion is also led by renewable energy and energy storage systems, but with the addition of balancing power plants that provide additional flexibility and enhance system performance. These are enabled for sustainable fuels that are expected to become more widely available in the 2030s. Existing inflexible power plants are gradually replaced with new capacity upon retirement. Capacity additions for nuclear, biofuels, and coal and gas plants with carbon capture and storage (CCS), follow conservative projections from publicly available sources, such as International Energy Agency (IEA) and International Atomic Energy Agency (IAEA).

Methodology: The analyses in the Crossroads to net zero report are based on techno-economic optimization to determine the least-cost capacity mix required to meet future electricity demand while adhering to emission limits and other political constraints. Conventional power plants are included with their technical specifications and fuel sources to accurately model their emissions and role in balancing variable renewable generation. Wind and solar generation are modeled using hourly profiles based on weather data.

This detailed optimization uses a chronological approach, balancing the variability of renewable generation and load on an hour-by-hour basis from 2023 to 2050. The model co-optimizes system expansion with dispatch, using a one-hour resolution to capture load and renewable generation patterns in high detail.

The global power system is aggregated into a single model, aligning various regional power profiles to preserve daily patterns such as demand peaks and solar output regularity. This aggregated approach avoids time-zone discrepancies that could distort demand and generation profiles.  

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