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System Integration of Renewables
- 1. System Integration of Renewables Dr. Nick F. Frydas Energy & Water Advisory - IFC Tashkent – 5 December 2017
- 2. Some myths about wind and solar generation Weather driven variability is unmanageable VRE deployment imposes a high cost on conventional power plants VRE capacity requires 1:1 “backup” The associated grid cost is too high Storage is a must-have VRE capacity destabilizes the power system 2
- 3. Different phases of RES integration (i) 3 Phase Description 1 VRE capacity is not relevant at the all-system level 2 VRE capacity becomes noticeable to the system operator 3 Flexibility becomes relevant with greater swings in the supply/demand balance 4 Stability becomes relevant. VRE capacity covers nearly 100% of demand at certain times 5 Structural surpluses emerge; electrification of other sectors becomes relevant 6 Bridging seasonal deficit periods and supplying non-electricity applications; seasonal storage and synthetic fuels
- 4. Different phases of RES integration (ii) 4 Attributes (incremental with progress through the phases) Phase 1 Phase 2 Phase 3 Phase 4 Characterization from a system perspective VRE capacity is not relevant at the all-system Level VRE capacity becomes noticeable to the SO Flexibility becomes relevant with greater swings in the supply demand balance Stability becomes relevant. VRE covers nearly 100% of demand at time Impacts on the existing generator fleet No noticeable difference between load and net Load No significant rise in uncertainty and variability of net load, but small changes to operating patterns Greater variability of net load. Major differences in operating patterns; No power plants are running around the clock; all plants adjust output to VRE output Impacts on the grid Local grid condition near points of connection, if any Likely to affect local grid conditions; congestion is possible, driven by shifting power flows Significant changes in power flow patterns across the grid; increased two- way flows between HV and LV grids Requirement for grid-wide reinforcement, and improved ability of the grid to recover from disturbances Challenges depend mainly on Local conditions in the grid Match between demand and VRE output Availability of flexible resources Strength of system to withstand disturbances
- 5. Net load comparison for different phases of VRE integration 5
- 6. Integration strategy depend on power system characteristics 6
- 7. Integration studies – Objectives and Scope Objectives Impact of different wind / solar technologies Impact of different plant distributions and weather patterns Steady-state power flow, N-1 contingency analyses; contingency assessment and stability analyses, power quality, harmonic analyses, ... Evaluation against grid code requirements Acknowledge (enhanced) wind / solar capabilities Investigate various mitigation or participation options Scope Scenario Selection Production cost simulations Loadflow Assessment Short-Circuit Levels Dynamic Modelling Stability Analysis 7
- 9. Flow chart of a complete integration study – IEA TF 25 9
- 10. Focus on Phase 1 of VRE integration 10
- 11. Focus on Phase 2 of VRE integration 11
- 12. Concluding Comments Integration is itself a subset of wider and longer-term energy strategy. VRE targets should be considered in concert with wider energy system developments – Holistically. Challenges for integrating wind and solar are often smaller than expected at the beginning. Power systems already have flexibility. Barriers can be technical, economic and institutional. Challenges can be minimized via system friendly deployment; Technology mix – outputs from different technologies are complimentary - Geographical spread – dispersal of VRE plants can smooth the variability - System services – VRE plants that can provide system services Making better use of available flexibility is most often cheaper than ‘fancy’ new options Trade-off with transmission planning and operational policies requires multiple studies Studies should evolve from ”what are my problems?” to ”how can I take advantage of my new control options? 12
- 13. The European “Energy Transition” Dr. Nick F. Frydas Energy & Water Advisory - IFC Tashkent – 5 December 2017
- 14. Objectives of EU energy policy
- 15. The largest Electricity Market in the world 15 - Approx. 1000 GW net generation - 13% of sales traded x-borders - Pooling of resources saves the European customer €13 bil./year
- 16. The electricity value chain From the source to the customer 1. The power plants 2. High-voltage transmission lines 3. Substations 4. Transformers 5. Local distribution System 6. Traders (wholesale) - Suppliers (retail) NETWORKS Regulated Natural Monopolies
- 17. The wholesale market is the third pillar of the energy value chain An organized Spot Market
- 18. Commercial Relationships in Competitive Markets 18 Generator 1 Generator 2 Generator 3 PX Supplier 1 Trader 2 Wholesaler 3 Bilateral Contracts / OTC Final Consumer 1 Final Consumer 2 Final Consumer 3 Final Consumer 4 Final Consumer 5 Supply Contracts PX purchases PX sales TSO
- 19. DAH price formation: supply/demand balance Power Price Industrial demand Residential demand Exports Commercial demand Nuclear CCGT Renewables Coal Peakunits Imports Hydroreservoir
- 20. Balancing Mechanism SO balances the system in “real time” either by contracts with Generators/Suppliers at Administrative prices or through commercial transactions in a “balancing market” mechanism Shortfall Spill Shortfall
- 21. continuous intraday trading is the essential link between long-term trading and physical balancing Complete Markets in all time horizons PX BM
- 22. Markets are about: financial risk transfer Efficient pricing Contractual delivery of energy Traded bilaterally (Broker) – Terms agreed between Seller and Buyer Or in a centralized way – in a PX Trading results in POSITIONS for Market Participants – Net sum = 0 LONG obligation/right to take electricity / SHORT obligation to deliver Commercial positions revert to physical obligations towards TSO after GTC Markets deliver the best price possible – Liquidity reflects the fundamentals Balancing settlement is where physical and contractual meet What are Markets for
- 23. Price Drivers
- 24. Market Coupling (MC) – no congestion
- 25. Market Coupling (MC) – no congestion
- 26. Market coupling needs a day-ahead Auction at both sides of interconnector Transportation capacity: Allocated together with the day-ahead power Utilized to the maximum Cannot be hoarded 100% utilization Flows in right direction A market with: Lower risks Better access smaller parties, end users Better liquidity, lower volatility, robust index Price convergence Mitigates market power abuse
- 27. IEM – status of play October 2016 EU Internal Energy Market for electricity. Guidance and standards for each timeframe: Day Ahead (DA), Intra-Day (ID), Balancing and Forward Market. Multi-Regional Coupling (MRC) – TSOs + PXs •Coupling of regions and efficient management of available transmission capacities between areas and countries •Implicit capacity allocation - Cross Border Intraday Trading Price Coupling of Regions (PCR) •The initiative of 7 Power Exchanges to develop a single price coupling solution, launched Feb 2014 •EUPHEMIA algorithm IEM is expected to increase liquidity, efficiency, social welfare and transparency of prices and flows. 27 UK ESTONIA LATVIA LITHUANIA PORTUGAL SWEDEN FINLAND SPAIN ITALY AUSTRIA POLAND DENMARK NORWAY NETHER- LAND GERMANY LUXEMBOURG BELGIUM FRANCE RUSSIA SWITZERLAND BELARUS NORTHERN IRELAND IRELAND HUNGARY SLOVAKIA CZECHREPUBLIC TURKEY MONTE- NEGRO BOSNIEN& HERZEGOVINA SERBIA MOLDOVA ROMANIA UKRAINE MAKEDONIA BULGARIA GREECE
- 28. Climate Change targets “20/20/20” Three main targets by 2020: Greenhouse gas emissions reductions (20%) Improvements in energy efficiency (20%) Share of renewable energy (20%) 2 April 2014 | Page 28
- 29. EU is on its way to meeting its 2020 targets
- 30. A renewed ambition for 2030 10% by 2020 15% by 2030 Interconnection target IMPORTANT regional differences & needs must be considered About 45% of RES generation in the electricity transmission system +27% energy efficien cy -40% CO2 emissio ns 27% Renewa ble Energy Sources
- 31. Third Energy Package: the tools towards the IEM IEM Unbundling Third Party access Network codes Incentives for new infrastructure ACER / ENTSOs
- 32. Massive policy turn towards “Green”
- 33. Peak Wind output 4 times average
- 34. Variable generation Thousands of small units Huge flows all over Europe System Stability, Resource Variability, Uncertainty, New connections, Changed power flows Challenges Internal energy market: the challenges
- 35. Impact of loop flows on neighbouring power systems Source: BDEW
- 36. Projected maximum “power ramps” required in Germany
- 37. Impact of RES on market prices
- 38. System operation: Delivering coordinated schemes Market: Delivering well designed pan-European markets Infrastructure: Delivering a fit for purpose network Three pillars for delivering the Internal energy market Efficiency Competitive prices Better service Security of supply Sustainability System stability Resource variability Uncertainty Changed power flows
- 39. Co-ordinated Infrastructure Planning - TYNDP By end 2016 2017 and beyond 2020 Europe – 17% increase in infrastructure: Concrete projects are clearly needed; they depend on each other in the Europe- wide system and we’ll struggle to get them permitted and built in time. • €150 billion investment in grids… • 1.5-2 €/MWh over the 10-year period, • 2% of the bulk power prices, • less than 1% of the total end-user electricity bill RES is triggering 80% of assets growth
- 40. Smart Grid is a pre-requisite for the “Energy Transition” The four fundamental layers electricity/heat (e.g heat pumps) and electricity/gas (e.g. power-to-gas) Power Transmission Networks Power Distribution Networks Other energy networks (gas, heat) Flexible generation (large-scale) Flexible generation (distributed) Consumers connected at transmission or distribution level Distributed storage Large- scale storage Financialflows Dataflows Cyber-physical layer (software embedded in hardware components of the energy system, IT network managed by system operators) Hardware layer Communication layer Market layer Transmission Distribution Storage, sector interfaces Flexible generationDigitalisation Governance and market design THE “GRID” AND BEYOND Source: EU IP
- 41. Thank you for your attention www.ifc.org Nfrydas@ifc.org
Editor's Notes
- Each VRE deployment phase can span a wide range of VRE share of generation; there is no single point at which a new phase is entered
- H
- recommendations for the individual steps IEA Task Force 25 § Input data § Portfolio set-up § Capacity value/Reliability § Flexibility/production cost simulations § (Load flow and dynamic stability – presented by Damian Flynn) § Analysing and interpreting results When studying small amounts of wind/PV power (share in energy <5-10 %), or short term studies, wind/PV power can be studied by adding wind/PV to an existing or foreseen system, with existing operational practices. 2. For larger shares and longer term studies, § changes in the assumed remaining system become increasingly necessary, and beneficial: expedient generation portfolio and network infrastructure development, taking into account potential sources of flexibility (also demand response) and technical capabilities of power plants (dynamic stability responses). § additional scenarios or operating practices should be studied. Market Structures/design to enable operational flexibility, should be assessed.
- VRE output is not noticeable for system operator • VRE variability tends to be negligible compared to fluctuations in demand • Priority areas are connection requirements and first, simple grid codes (starting more elaborate definition) • At initial deployment, integration of VRE requires little additional effort Appropriate technical grid connection rules are critical to ensure that VRE plants do not have a negative impact on the local quality and reliability of electricity supply.
- First instances of grid congestion • Incorporate VRE Forecast in scheduling & dispatch of other generators • Focus also on system friendly VRE deployment Updated system operations, sufficient visibility & control of VRE output becomes critical in Phase II
- Trade-off with transmission planning and operational policies requires multiple studies • At higher wind / PV shares, stability issues take precedence over UC / flexibility / market issues / … • Accurate assessment requires validated wind turbine / PV models + proposal of control strategies – Verification of conventional generation capabilities + load models • Relative importance of voltage / transient / smallsignal / frequency stability issues system dependent – Network topology, underlying plant portfolio including renewables, e.g. solar, wind turbine types + location, grid code requirements – Studies should evolve from ”what are my problems?” to ”how can I take advantage of my new control options?”
- The European target model shall ensure the completion of the EU Internal Energy Market for electricity. Guidance and standards for each timeframe: Day Ahead (DA), Intra-Day (ID), Balancing and Forward Market. A fair and transparent day-ahead power price is an key factor for the models success. Price Coupling of Regions (PCR) The initiative of 7 Power Exchanges to develop a single price coupling solution, launched Feb 2014 EUPHEMIA algorithm Multi-Regional Coupling (MRC) Coupling of regions and efficient management of available transmission capacities between areas and countries Implicit capacity allocation Cross Border Intraday Trading (XBID) The integrated European electricity market is expected to increase liquidity, efficiency, social welfare and transparency of prices and flows.
- High Capital Intensiveness: Low Variable and High Capital Costs for networks, Moderate to high capital costs for Generation Long lead times of project development and long life time of assets Very limited Storage to manage fluctuating demand – So Demand must meet Supply instantaneously The commodity is injected into and retrieved from the network, quantities are measured but cannot be traced and does not flow over the “contractual path” High social and economic costs of demand curtailment or supply failure It propagates with the speed of light, therefore requirement for Automatic Control and Real-Time Operational responsibility The system operates as an “integrated machine”, actions of anyone may have consequences for others
- Competitive power markets are commonly organized around one or more auctions. Particularly, a market maker receives bids from generators and demand estimates or bids from power retailers and/or end-users, from which he/she calculates an optimal dispatch schedule – i.e. the production rule that minimizes the cost of meeting demand, subject to the technical and physical constraints imposed by the grid. Moreover, the price and dispatch schedule found constitutes a reference for other products, such as bilateral contracts, term products, financial contracts, physical options, and the like (Léautier, 2001). In order to enhance market transparency, typically a daily price index is published.
- Balance between demand and supply must be kept Trade positions can differ from real-time positions for all kinds of reasons Open positions Forecasting errors Unplanned generation outages Self-dispatch imperfections A balancing mechanism is required that handles any deviations between trade positions and real-time positions of all market parties A balancing mechanism requires that imbalances can be allocated to and settled with accountable parties For this reason, balance responsibility is a necessary obligation on each market party
- Day-Ahead and Intraday markets complement one another: ‒ Day-Ahead: blind auction process liquidity optimisation ‒ Intraday: continuous trading, closer to real-time flexibility tool
- Market coupling enables an efficient use of the transmission grid through strong interactions between local markets and an efficient European wide price formation A single price coupling algorithm will calculate clearing prices, net positions for all bidding zones and cleared orders This can deliver one single price across the connected bidding zones… but prices will differ in case of congestion…
- Enables coupling of multiple areas together with efficient allowance for loop flows on meshed networks Supports block bids and other local market requirements Supports bilateral contracts and netting of counterflows Requires only limited harmonization of market rules, and no change to local notification/imbalance arrangements Provides open and fair market access with no additional barriers beyond existing local PX requirements Transparent, rule based, auditable methodology Market coupling is a way to integrate power markets in different physical areas while requiring minimal changes to the local arrangements. Under TLC the three power exchanges continue to exist as separate legal entities with their own trading platform, contracts and clearing. The markets are nonetheless brought together by using the available transmission capacity to create a single regional market most of the time. The transmission capacity is used in an optimal way, enabling the best bids and offers to be matched from across the region. One-step process, ease of access Priority on interconnectors based on price - Interconnector schedules based on area price difference Hedging instruments - All local players also play internationally - Encourages liquidity and transparency ……thereby mitigating market power abuse
- WHAT is PCR? Price Coupling of Regions (PCR) is the initiative of seven European Power Exchanges to harmonize the European electricity markets HOW is this done? By developing a single price coupling algorithm (Euphemia). It will be used to calculate electricity prices across Europe.
- Key energy and climate achievements towards 2020 Climate and Energy Policy framework for period 2020-2030 Climate and Energy Policy framework towards 2050
- EU: installation of about 44% of the world's renewable electricity (excluding hydro) at the end of 2012; Reduction of EU economy intensity by 24% between 1995 and 2011 whilst the improvement by industry was about 30%; Decrease of carbon intensity of the EU economy by 28% between 1995 and 2010.
- The Roadmap to 2050: Reduce of emissions to 80% below 1990 levels through domestic reductions on EU level Milestones: reductions of the order of 40% by 2030 and 60% by 2040. Energy efficiency: usage of 30% less energy in 2050 than in 2005. On average, savings of € 175-320 billion annually in fuel costs over the next 40 years in the EU. Most cost-effectively transition to a low-carbon economy for main sectors responsible for Europe's emissions (power generation, industry, transport, buildings and construction, as well as agriculture).
- By 2014 European Union countries had invested approximately €1 trillion, €1000,000,000,000, in large scale Renewable Energy installations. Fixed Feed-in Tariffs stimulate mass take up This has provided a nameplate electrical generating capacity of about 216 Gigawatts, nominally about ~22% of the total European generation needs of about 1000 Gigawatts. The actual measured output by 2014 from data supplied by the Renewables Industry has been 38 Gigawatts or 3.8% of Europe’s electricity requirement, at a capacity factor of ~18% overall. Accounting for capacity factors the capital cost of these Renewable Energy installations has been about €29billion / Gigawatt. That capital cost should be compared with conventional gas-fired electricity generation costing about €1billion / Gigawatt.
- However The value of Security of Supply and adequacy are not reflected in market signals No focus on long term investments for adequacy Conflicting or overlapping political targets, and public interventions often not aligned Fast and massive evolution of the energy mix challenges the technical resilience of the pan-European power system Uncertainty of regulatory framework, market design and of price signals lead to low investments
- 8 GW/h on an average residual load of 37 GW. It is the extent of these ramps as well as the rate and frequency with which they occur that is the balancing challenge