Energy Economics Explained: Intermittency and Price Effects
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Energy Economics Explained: Intermittency and Price Effects
- 2. 1.a) Why would Germany built a Direct Current (DC) transmission line from the Northern part to the Southern part (a distance of more than 500 km)? Briefly motivate your answer. b) Netherlands is connected with Norway by a 580- kilometer long transmission line to Norway (called NordNed). Will this be an AC or DC line? Briefly motivate your answer. c) Mention one country that has the same frequency (Japan is thus excluded), but not everywhere the same synchronicity. 2. (Maximum 10 points ) Which type of electricity generation creates the most carbon emissions and which the least.
- 3. • Monday, double lecture in computer lab – 13:30-15:00 & 15:15-16:45
- 4. Renewables Efficiency Carbon emissions EU’s 20-20-20 strategy for 2020 Addresses the main problem
- 5. Literature: • Böhringer, C., Rosendahl, K,E, 2009. Green serves the dirtiest. Discussion Papers No. 581, April 2009 Statistics Norway, Research Department • Taylor Taylor, G., Tanton, T. 2012. The hidden cost of wind electricity. American tradition institute. http://www.atinstitute.org/wp-content/uploads/2012/12/Hidden-Cost.pdf
- 6. Effects of intermittent generation 1. Effect of subsidized intermittent generation (eg renewables) on the price of electricity
- 7. Renewables lower electricity prices: Good news? • "We learn (page 1) that German wholesale electricity prices are down from 5.115 cents estimated in 2012 to around 3.9 cents. Let’s just note that renewable energy has reduced wholesale prices by 1.2 cents per kWh.„ • "Multiply that by the 482 TWh they expect Germany to consume next year (page 21) , and we see that renewable energy will reduce wholesale prices by EUR 5.784 billion next year." Dr. Karl-Friedrich Lenz is a professor of German and European Law at Aoyama Gakuin University in Tokyo http://cleantechnica.com/2013/09/03/renewable-reducing-electricity-prices-in- germany/#mSySxjbiJeXeIWuq.99
- 8. 10 50 P=10 P=50 DL DH Units Fixed cost Variable cost Baseload 1 20 10 Peaker 1 0 50 prob DL DH 50% 50% 10% 10 50 1 20 0
- 9. Units Fixed cost Variable cost Baseload 1 20 10 Peaker 1 0 50 prob DL DH 50% 50% 10% 10 50 50% 10 50% 50 30P = × + × = 10 50 DL DH P=10 P=50 Average electricity price 50% ( ) 50% ( )L HQR P MC P MC= × − + × − 50% 50%L HP P P= × + × 50% (0) 50% (40) 20QR = × + × =
- 10. 10 50 P=10 P=50 Wind output Units Probability 2 10% 1 20% 0 70% Units Fixed cost Variable cost Baseload 1 20 10 Peaker 1 0 50 Wind 2 23.5 0 DL DH 1 20 0 Heavily subsidize to get 40% electricity from wind
- 11. P=10 P=50 10 50 0 P=0 P=0 Units Fixed cost Variable cost Baseload 1 20 10 Peaker 1 0 50 Wind 2 23.5 0 DL DH 1 20 Wind output Units Probability 2 10% 1 20% 0 70%
- 12. P=10 P=50 10 50 0 P=0 P=10 Units Fixed cost Variable cost Baseload 1 20 10 Peaker 1 0 50 Wind 2 23.5 0 DL DH 1 20 Wind output Units Probability 2 10% 1 20% 0 70%
- 13. P=10 P=50 10 50 0 Units Fixed cost Variable cost Baseload 1 20 10 Peaker 1 0 50 Wind 2 23.5 0 DL DH 1 20 Wind output Units Probability 2 10% 1 20% 0 70%
- 14. Wind availability prob DL DH 50% 50% 2 10% 0 0 1 20% 0 10 0 70% 10 50 ( ) 70% 10 20% 0 10% 0 7LP D = × + × + × = ( ) 70% 50 20% 10 10% 0 37HP D = × + × + × = 50% 7 50% 37 22P = × + × =0 Average electricity price 10 50 P=10 P=50 70% DL DH 10 50 P=0 P=10 20% DL DH 1 0 50 0 P=0 P=0 10% DL DH Units Fixed cost Variable cost Baseload 1 20 10 Peaker 1 0 50 Wind 2 23.5 0 Electricity price
- 15. Wind availability prob DL DH 50% 50% 2 10% 0 0 1 20% 0 10 0 70% 10 50 ( )20% 50% (10 0)QR = × × − 1= 0 Average earnings of Wind 10 50 P=10 P=50 70% DL DH 10 50 P=0 P=10 20% DL DH 1 0 50 0 P=0 P=0 10% DL DH Units Fixed cost Variable cost Baseload 1 20 10 Peaker 1 0 50 Wind 2 23.5 0 Electricity price
- 16. 50% 7 50% 37 22P = × + × = Average electricity price 23.5 1 22.5 15 50% 1 50% 2 1.5 − = = × + × Uplift on electricity price 22 15 37+ = Average electricity charge 23% increase in charges for consumers! 10 50 P=10 P=50 70% DL DH 10 50 P=0 P=10 20% DL DH 1 0 50 0 P=0 P=0 10% DL DH Units Fixed cost Variable cost Baseload 1 20 10 Peaker 1 0 50 Wind 2 23.5 0 Average charge without wind: 30
- 17. • Summary • Wholesale price before: E30/MWh After:E22/MWh • Consumer price before: E30/MWh After:E37/MWh
- 18. Units Fixed cost Variable cost Baseload 1 20 10 Peaker 1 0 50 Wind 2 22.5 0 ( )70% 50% (50 10)QR = × × − ( )70% 20 14= × = 0 10 50 P=10 P=50 70% DL DH 10 50 P=0 P=10 20% DL DH 1 0 50 0 P=0 P=0 10% DL DH Average Baseload earning (QR) Wind availability prob DL DH 50% 50% 2 10% 0 0 1 20% 0 10 0 70% 10 50 Electricity price
- 19. • Summary • Wholesale price before: E30/MWh After:E22/MWh • Consumer price before: E30/MWh After:E37/MWh • QR BL before: E20/MWh After:E14/MWh (“profiling costs”) – How much money should we raise for BL? – How would this affect consumer price? • 6/1.5=4 -> consumer price increases to E41/MWh
- 20. Effects of intermittent generation 1. Effect of subsidized intermittent generation (eg renewables) on the price of electricity – Wholesale-market price low, end-user price high – Other plants (especially gas) do not recover costs
- 21. • Examples of effect on power plants
- 22. Irsching-5 in Bavaria, Germany (EON ) A gas-fired power station, Commissioned in 2010 “Germany needs flexible gas plants to underpin a greater share of renewable sources” German environment Minister Peter Altmaier “energy providers have little interest in building new power plants” Der Spiegel, October 10, 2012
- 24. • Effect on consumers
- 25. Czech Republic Germany Spain Electricity prices 2001-2012 http://epp.eurostat.ec.europa.eu/portal/page/portal/energy/data/main_tables €24 billion deficit
- 26. Units Fixed cost Variable cost Baseload 1 20 10 Peaker 1 0 50 Wind 2 22.5 0 Wind availability prob DL DH 50% 50% 2 10% 0 0 1 20% 0 10 0 70% 10 50 ( ) 70% 10 20% 0 10% 0 7LP D = × + × + × = ( ) 70% 50 20% 10 10% 0 37HP D = × + × + × = 50% 7 50% 37 22P = × + × = 0 Average electricity price 10 50 P=10 P=50 70% DL DH 10 50 P=0 P=10 20% DL DH 1 0 50 0 P=0 P=0 10% DL DH
- 27. Effects of intermittent generation 1. Effect of subsidized intermittent generation (eg renewables) on the price of electricity – Wholesale-market price low, end-user price high – Other plants (especially gas) do not recover costs 2. Effect on other power plants – Cycling/ramping problem – balancing costs • Leads to negative price spikes!
- 28. 10 50 0 P=0 P=0 10% DL DH Add shutdown and start-up costs (cycling costs) Baseload plants don’t like cycling
- 30. Cracked header
- 33. • Use more plants with lower cycling costs – Open Cycle Gas Generators (OCCG) – Also more inefficient and more CO2 emissions.
- 34. Emission: 87
- 38. 0% of wind capacity Emission: 205
- 39. • Denny & O’Malley (2005) 2005 study on Ireland shows that carbon emission savings using wind generation are lowered by 20%-30% due to cycling – Assumes wind penetration of 3% • Hirth (2013), basing his approximation on a literature study, uses a (fixed) estimate of E4/MWh as balancing cost.
- 40. • Once intermittent generation has high penetration levels, the cycling problem becomes very large
- 44. • How can negative prices come about in Germany? – Mandatory dispatch of wind and solar – “Must-run” generation • Central Heating and Power plants (CHP) – Baseload plants don’t like cycling • For what price would a baseload plant (eg a big nuclear) bid in its electricity? – (DA & ID)
- 45. • Day-Ahead market (DA market) – Bid your quantity and price for each hour of the next day – Market closes at 14:00. – Eg. On 1st June at 13:59, I send in a schedule for 2nd June with 24 quantity-price bids (one for each hour) • Intra-Day market (ID market) – Bid for 2 hours ahead – Eg.: On 2nd June, before 3:59 I send in one quantity-price bid for the hour 6:00-7:00.
Editor's Notes
- Baseload will disappear from the system! But is not even profitable for wind!
- Baseload will disappear from the system! But is not even profitable for wind!
- Baseload will disappear from the system! But is not even profitable for wind!
- Baseload will disappear from the system! But is not even profitable for wind!
- Baseload will disappear from the system! But is not even profitable for wind!
- Ofgem said last month the country may face a power capacity shortfall as the lack of gas- fired capacity
- Baseload will disappear from the system! But is not even profitable for wind!
- Corrosion fatigue damage in the steam-cooled wall in the heat recovery area is evident in this photo. The steam-cooled sidewall has a damaged economizer header penetration. Cycling caused differential thermal growth, and the penetration is badly damaged. Note the numerous repair welds and the broken and missing refractory caused by thermal growth. Courtesy: Intertek-Aptech
- 1. Cracked header. Cold feedwater introduced to a hot header caused the crack in this economizer header. The cold water created a large through-wall temperature gradient change in temperature during startup and during off-line top-off opportunities. Courtesy: EPRI
- • This graph from Aptech Engineering Services shows the different types of load cycles (megawatts versus time) that a unit could be exposed to and the relative damage that occurs each cycle. • Three different low load cycling points LL1, LL2 and LL3 are defined on this slide. Each point affects the degree of thermal cycle transient experienced during a load following event because the metal incurs larger temperature changes. • Three on/off cycles are defined based on hours off-line (hot, warm and cold starts) with the worst damage occurring during a cold start cycle. • Definition of Equivalent Hot Start – Standardized in a 1985 EPRI study of Haynes Unit 5 (Supercritical 350 MW unit) • Load follows each have relatively low damage costs but because there are so manyof them, the cumulative impact of manyload follows leads to the ypy damage of an equivalent hot start.