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KTLO: that’s utility-speak for Keep the Lights On.

As you would expect, it’s every utilities’ mandate to “KTLO” as close to 100 percent of the time as possible. And that’s not an easy task.

Keeping the lights – and everything else – on and supplied with power is a challenging problem for utilities under normal circumstances. Now that state and local governments want to integrate wind and solar into their energy portfolios, new associated risks with these technologies are making it harder for utility companies to keep the lights on.

It all started with mandates that require more of our energy to come from renewable sources like wind and solar. The obvious benefits are the reduction of greenhouse gases. It also reduces our imports of foreign oil. The downside is the unreliability of these sources for obvious reasons that we’ll address soon.

With Congress seemingly stuck in perpetual energy policy gridlock, individual states (37, according to the Pew Center on Global Climate Change) have put renewable or alternative energy mandates in place.

These standards or goals force electric utilities to provide a certain amount of electricity from renewable or alternative sources. This can be anywhere from 20 to 40 percent, depending on the state.

Over the last few years, wind and solar have gotten a big boost as a result. Foreign wind turbine makers like Gamesa Corp Technologica (Nasdaq: GCTAF.PK) and Vestas Wind Systems (Nasdaq: VWDRY.PK) are increasing their presence here.

The only reputable domestic wind turbine company of scale left in the United States is General Electric Company (NYSE: GE).

The Real Problem With Wind and Solar

The biggest problem with wind and solar is their variability. Clouds, night and calm days play havoc with utilities trying to balance supply versus demand.

Just imagine what happens when a cloud passes over a one-megawatt solar farm that’s tied into the grid. The cloud acts like a giant switch, turning off 50 to 75 percent of the farm’s output, and then turning it back on when it passes by.

So what’s the big problem with variability? The current grid isn’t designed to handle it. Solar and wind power sources can represent major disruptive forces to grid operators.

Jim Detmers, former COO of the California Independent Systems Operator (CAISO), says it’s a big problem in the making. California’s ultimate goal is to obtain 33 percent of power from renewables. That means Jim will need over 400 megawatts per minute of instantaneously available power to deal with the variability of wind and solar.

Grid storage via batteries could smooth out the variability of solar and wind’s intermittent characteristics. Providing 400 megawatts of them would be cost prohibitive.

Natural Gas to the Rescue

The real answer to improve alternative use and reduce greenhouse gases lies elsewhere: natural gas-fired plants. These power plants can be brought online very rapidly. GE just announced a 510-megawatt combined-cycle power plant that can certainly help.

GE spent more than $500 million and leveraged its expertise in jet engine design to achieve a fuel efficiency of over 61 percent. But the real benefit to guys like Jim Detmers is the ability to ramp up his output at over 50 megawatts per minute.

The International Energy Agency (IEA) recently issued a report on the problem. It stated there’s nothing wrong with using renewables to meet a large share of the overall load. A utility must be sure that its markets and generators are properly balanced. It further stated that flexible, efficient natural gas-fired power plants are essential to increasing the percentage of renewables on the grid.

I’ve written on numerous occasions regarding the increased use of natural gas by utilities. They used to use it for peaking plants. Now they’re increasingly using it as a fuel for base load power plants.

The rapid deployment of wind and solar farms is just one more reason that natural gas will play an increasingly larger role in the power generation industry.

As infrastructure will be needed in order to expand access to and the use of gas, pipeline operators like El Paso Pipeline Partners, LP (NYSE: EPB) and Williams Companies, Inc. (NYSE: WMB) are two great examples of companies who’ll benefit regardless of the price of the gas itself.

Disclosure: None

Source: As Renewable Energy Risks Rise, Invest in Natural Gas