Would firm generators facilitate or deter variable renewable energy in a carbon-free electricity system?

To reduce atmospheric carbon dioxide emissions and mitigate impacts of climate change, countries across the world have mandated quotas for renewable electricity. But a question has remained largely unexplored: would low-cost, firm, zero-carbon electricity generation technologies enhance—or would they displace—deployment of variable renewable electricity generation technologies, i.e., wind and solar photovoltaics, in a least-cost, fully reliable, and deeply decarbonized electricity system? To address this question, we modeled idealized electricity systems based on historical weather data and considered only technoeconomic factors. We did not apply a predetermined use model. We found that cost reductions in firm generation technologies (starting at current costs, ramping down to nearly zero) uniformly resulted in increased penetration of the firm technologies and decreased penetration of variable renewable electricity generation, in electricity systems where technology deployment is primarily driven by relative costs, and across a wide array of future technology cost assumptions. Similarly, reduced costs of variable renewable electricity (starting at current costs, ramping down to nearly zero) drove out firm generation technologies. Yet relative to deployment of “must-run” firm generation technologies, and when the studied firm technologies have high fixed costs relative to variable costs, the addition of flexibility to firm generation technologies had only limited impacts on the system cost, less than a 9% system cost reduction in our idealized model. These results reveal that policies and funding that support particular technologies for low- or zero-carbon electricity generation can inhibit the development of other low- or zero-carbon alternatives.