Flexibility is increasingly important in power sector planning, especially as low natural gas prices and proliferating renewables increase net load variability and cycling for grid-connected assets. This report explores how enhanced flexibility through lower minimum load levels (also called “turndown” limits) for coal- and natural-gas-fired power plants can impact operations and profitability. Using soft-linked capacity planning and unit commitment models, this research examines the economic value of this flexibility and variation across different regions, generation asset types, and market environments (e.g., level of renewable deployment).
Model results suggest that lower minimum loads are most valuable for mid-merit units with intermediate capacity factors, policy conditions that rearrange the merit order (e.g., carbon pricing), regions and scenarios without seasonal layup of assets, and units that are more flexible than generators with otherwise similar characteristics. Lower minimum loads increase operating hours and net revenues, and decrease startups and long-run maintenance costs. The scenarios in this analysis show that plant flexibility affects operations more than annual profitability. For many plants, the modest changes in net revenues as a fraction of net revenues with higher minimums mean that the focus will likely be on making operational changes to increase flexibility rather than capital investments. Additionally, this analysis quantifies how revenues from ancillary services markets can boost the value of lower minimum loads, especially for efficient natural gas units, but total market size and depth are uncertain.