Marcelino Madrigal - Arena International

Overcoming Grid
Integration Challenges
of Variable Generation
Marcelino Madrigal, Ph.D
Sr. Energy Specialist, Sustainable
Energy Department, The World Bank
Small Hydro Latin America Conference
December 6th,
Panama, Panama
from Jeddah, Saudi Arabia
CONTENTS
• Variable Generation and Electricity Grids
• Access and Pricing to Transmission: The Interconnection Issues
• Grid Operations: The Integration Issues
1
VARIABLE RENEWABLE ENERGY TECHNOLOGIES AND THE GRID
• Given their role to achieve various policy goals, many grids are
expecting larger shares of supply from variable renewable energy
technologies: wind, solar, mini hydro
• Variable renewables have shorter term variability (various minutes
time frame) which is different and more uncertain if compared to the
sources many grids have been used to. In addition they have limited
controllability at will of their output.
• Adapting operational practices and rules is required as their share
increases into the grid: the integration issue
• The location of variable renewables is often far from existing grids or
consumption centers. These sources are sparse and granular,
achieving larger shares of supply from them requires exploiting and
bringing transmission to a huge number of sites
• This requires expanding (and paying for) the transmission grid and its
use: the interconnection issue
2
VARIABLE RENEWABLE ENERGY TECHNOLOGIES AND THE GRID
• Often grid interconnection and integration issues are
underestimated in renewable development discussions and they
become a huge barrier for renewable energy development
• The barrier is more acute than expected and requires proper
attention by policy and regulations
• If not properly developed, weak statements such as “connection
guarantee”, “access guarantee”, “connection priority” , frequent in
policy or regulatory statements, are simply not enough to ensure
transmission services will be delivered to renewable producers
• Most of the challenges can be tackled with a few policy actions, good
planning and adjustments to regulation and operational practices
• The objective of this presentation is presentation is to brief on the
issues, explain how is has been tackled in some countries, and
present some guidelines that could help to move forward specific
implementations
3
CONTENTS
• Variable Generation and Electricity Grids
• Access and Pricing to Transmission: The Interconnection Issues
• Grid Operations: The Integration Issues
4
ACCESS AND PRICING TO TRANSMISSION: THE INTEGRATION ISSUE
• Transmission needs to get the source, not source to the
transmission.
• Resources are often “misplaced”: far away from consumption or
existing network
• Scaling-up requires exploiting hundreds of sites whose average
size is “small” (~100 MW) even at the high voltage levels and in
countries with large penetration levels
• Frequently building transmission will take more time than
building, e.g., the wind power plant
• Transmission not only key to connect supply, but smooth it across
the system or to manage critical condition (e.g. min load)
5
TRANSMISSION: BARRIER TO RE GENERATION IN SEVERAL COUNTRIES
• In the USA: achieving 20% wind energy target will required $20
billion in transmission investments
Wind (MW) Used
Inside the BA
Wind (MW) on
Transmission Lines
Existing New
100-200
200-500
500-1000
>1000
100-300
300-500
500-1000
1000-5000
>5000
Source: US-DOE “20% Wind Energy by 2030
Increasing Wind Energy’s Contribution to
U.S. Electricity Supply”, July 1008
6
TRANSMISSION: BARRIER TO RE GENERATION IN SEVERAL COUNTRIES
• Renewable energy zones in Texas: Results
RE-zones approved in 2008
Source: National Renewable Energy Laboratory
& US DOE
7
TRANSMISSION: BARRIER TO RE GENERATION IN SEVERAL COUNTRIES
 In Europe: To meet target of 20% RE by 2020, € 20 billion
required for 42 large transmission projects
Congestion:
without upgrades
Projects reduce congestion cost by € 1,500 million/year
with upgrades
*Source: TradeWind Study. Feb 2009.
http://www.trade-wind.eu/
8
ACCESS AND PRICING TO TRANSMISSION: THE INTEGRATION ISSUE
Costs faced by developer: extension and usage cost (for remote delivery)
Network Assets
Network Upgrades
Connection Assets
Renewable Generator
System Extension
Enabler Facilities
Shallow Policy
Deep Policy
Connection
Cost Allocation
Super-Shallow Policy
Cost to Generators -Scale
High ($$$)
Low ($)
9
ACCESS AND PRICING TO TRANSMISSION: THE INTEGRATION ISSUE
• Transmission cost can impact in private returns. A worry for the
developer
Options
A
B
C
Connection Cost
Transformer,
connection line, and
upgrade substation
Transformer and
connection line
Zero cost
Network Cost
Postage stamp-like usage
Flow-based method
Zero cost
LCE driven by Usage Cost
• LCE with different transmission cost allocation and pricing rules
9.6
9.4
9.2
9
8.8
8.6
8.4
8.2
8
7.8
15% increase
BC
AA
AC
BA BB
AB
CB
CA
CC
7.8
8
8.2
8.4
8.6
8.8
9
9.2
9.4
9.6
LCE driven by Connection Cost
AA
AB
AC
BA
BB
BC
CA
CB
CC
Note: AB means Connection Cost option A and Usage Cost option B
10
ACCESS AND PRICING TO TRANSMISSION: THE INTEGRATION ISSUE
• Transmission costs could change the policy alternative to achieve
certain goal. A worry for the policy maker and regulator
• Example: Transmission can change marginal abatement costs and
order and share of technology options
GHG Abatement Cost by Generation Technology without
Transmission Cost
GHG Abatement Cost by Generation Technology with
Transmission Cost
$150
$130
$/ton CO2
$/ton CO2
$130
$110
$90
$70
$110
$90
$70
$50
$50
$30
$30
$10
$10
-$10
Wind
CCGT
Hydro
CSP
-$10
CCGT
Wind
Hydro
CSP
Source: World Bank
Note: Natural gas cost of 4.12 US cents/ KWh used in the analysis is based on the price of natural gas at US$ 7/ MMcf (ESMAP, 2007).
CCGT results in 62% GHG emission reductions whereas wind, hydro and CSP result in 100% GHG emission reductions.
11
ACCESS AND PRICING TO TRANSMISSION: THE INTEGRATION ISSUE
• Pricing: “no/low cost transmission for renewables” for the generator
is not the best option for all
• Somebody has to pay
• If it is the utility, like any other business, they also need to recoup
the cost (which is not always the case if regulations are not clear
or well enforced)
• If it is the electricity consumer (or tax-payer), need to make sure
investment brings benefits beyond the cost
• A fare share paid by generator and consumer is best for all:
• To ensure best renewables (lower cost) are exploited
• Utility (transmission company) continues having the ability
(financial and technical) to interconnect more RE
• Pricing methods should focus on cost recovery of expansion
needs, not on tariffs that pretend to focus on efficient utilization
12
ACCESS AND PRICING TO TRANSMISSION: THE INTEGRATION ISSUE
• Planning: proactive planning can drastically reduce the cost (to all)
and speed interconnection times.
• Proactive planning
• Transmission utilities and regulator to define an organized process
with direct engagement of developers to determine transmission
solutions for aggregated needs
• An organized process (contrary to first-come-first-serve) will speed
implementation times and reduce the cost
• An organized process helps determining cost sharing between
developers and utility (its electricity consumers)
• Regulator will be more confident that costs where minimized and
cost gaps (what is not paid by developers) can be passed to
consumers
13
ACCESS AND PRICING TO TRANSMISSION: THE INTEGRATION ISSUE
Proactive transmission planning a key part of the solution
• To ensure RE can be
connected
• Promptly, so that RE are
not waiting years to get a
connection !
• And efficiently, so that
the cost of transmission
is minimized and to
ensure that RE policy
goal is met at total
minimum cost. The cost
can never be higher than
the value given to RE.
There will be different ways in which proactive planning can be implemented in different
institutional settings of the electricity sector
14
ACCESS AND PRICING TO TRANSMISSION: THE INTEGRATION ISSUE
Example: Proactive Transmission Planning Implementation
Source: World Bank Report on Transmission Options for RE. With PSR
15
TRANSMISSION LINKED TO ENERGY AUCTIONS FOR RE
Features
• Auction to buy energy from RE (not FIT)
• Planer determines network
• RE suppliers pay transmission price except difference
between pre and post auction (passed to consumers)
• A new transmission company (regulated return) develops
and operates the needed transmission network
16
SOME GENERAL PRINCIPLES TO HELP IMPLEMENT SPECIFIC SOLUTIONS
Principle 1: Extra transmission is often worth the cost. The cost of expansion
transmission is often worth the incremental benefits renewable generation. Benefit
should be measured considering the value attributed exclusively to renewable (P3).
Principle 2: Develop transmission proactively. Sparsely and granular renewable
resources require proactive and organized planning to reduce cost and connection
times
Principle 3: Maximize the net benefit of renewable transmission. Transmission should
be planned as to maximize the befits of renewable minus the cost of generation. Along
with proper pricing, this ensure that the most valuable sources are developed first
Principle 4: Transmission should use efficient pricing. Suppliers need to pay their share
of transmission costs, to help ensure best combined transmission and renewable
generation resources are developed first and reduce excess profits
Principle 5: Broadly allocate uncovered transmission costs. Given the befits of
renewable are externalities reduced, uncovered transmission charges should be applied
as broadly as possible
17
CONTENTS
• Variable Generation and Electricity Grids
• Access and Pricing to Transmission: The Interconnection Issues
• Grid Operations: The Integration Issues
18
VARIABLE RENEWABLE ENERGY TECHNOLOGIES AND PLANNING
• Variability, how bas it is ?
Demand is always variable
Supply is also variable
19
VARIABLE RENEWABLE ENERGY TECHNOLOGIES AND PLANNING
• How difficult it is: depends how the aggregated impacts combine load –
supply
2 weeks of load and wind variability
Source: Utility Wind Integration Group
20
VARIABLE RENEWABLE ENERGY TECHNOLOGIES AND PLANNING
• The cost of short-term impacts on short-term reserves..
[a] Costs in $/MWh assume 31% capacity factor.
[b] Costs represent 3-year average.
[c] Highest over 3-year evaluation period.
Source: Wiser 2011.
21
$
Other, most expensive,
storage solutions
Diversify/aggregate wind
power: across different
areas
Generation with storage:
hydro, pumped hydro
Flexible generation: Good
ramping capab: GT, CCGT
Highly interconnected system:
connect to multiple markets
Multiple windows for energy
trade/dispatch: real time markets,
day ahead markets…
VARIABLE RENEWABLE ENERGY TECHNOLOGIES AND PLANNING
• Flexibility should options as penetration increases
Solutions
22
VARIABLE RENEWABLE ENERGY TECHNOLOGIES AND PLANNING
Critical conditions: Spain min load max wind: CCGT Flexibility
Source: Red Electrica
• Wind power output reduced by 75% in 6 hours, decrease met by fast responding
CCGT
• Fast start units need be available to compensate for the loss: in this case CCGT
• Other options that can help: interconnections (as in Denmark), demand
response, more wind and solar diversity. Which is the lower-cost option ?
reserves/interconnections ?
23
VARIABLE RENEWABLE ENERGY TECHNOLOGIES AND PLANNING
Critical conditions: transmission flexibility in Denmark
• During high wind conditions: excess traded
to NORDEL or Germany
• During rapid wind decrease, large balancing
area permit imports from Germany
• Grid stability is improved by interconnections
Source Energinet.dk
Denmark’s TSO
Wind power generation 22.22
of total consumption in 2007
%
24
FINAL REMARKS
• Operational impacts of variable power sources can be managed without
major challenges at lower penetration levels (<10%) and the cost
implications tend to be low. Higher levels will require more attention to grid
operations
• Small grid systems with limited flexibility (e.g. small size, old thermal
generation, and/or islanded) could have a harder time managing variability
• Maintaining reliable grid operation with larger shares will require
cooperation from grid and developers
• Updating grid electrical interconnection standards with regard to
protections, voltage and frequency performance. Balancing between
ensuring reliability and not imposing excessive cost to developers
• Collaboration with grid operator by sharing information for planning and
also operations. The later includes importantly forecasting to improve
the grid operator dispatch, helping ensure priority of dispatch and
reduce reserve costs
25
CONTENTS
THANKS
26
ELECTRICITY TRANSMISSION: THE IMPORTANCE OF ZONE PLANNING
• Illustration of the importance to
organize the transmission process
(proactively connect) and bundle
projects
Tuguegarao
• We focus on 21 projects in Luzon, out of
more than 190 projects (wind, hydro,
biomass, and others) that have already
requested service contracts as of April
2010
• Transmission needs
first-come first-serve
vs. planned
approach: reactive
vs. organized
proactive approach
Projects
230 KV substation
115 KV substation
27
ELECTRICITY TRANSMISSION: IN THE PHILIPPINES
• Characteristics, RE projects in Tuguegarao
Project name
Technology
TAREC 2
TAREC 4
DUMMON (Main cascade)
DUMMON (Tributary)
PINACAN-HY44
Wind
Wind
Small hydro
Small hydro
Small hydro
Installed
capacity [MW]
45
12
2
2
8
Bus
Name
TAREC 2-WD06
TAREC 4-WD03
DUM_HY-42-43
DUM_HY-42-43
PINACAN-HY44
Number
30006
30003
20042
20042
20044
Geographical coordinates [ºdec]
Latitude
Longitude
18.4004
121.4514
18.3670
122.2200
18.0736
121.8790
18.0736
121.8790
17.6627
121.9473
Capacity
factor [pu]
0.3
0.3
0.5
0.5
0.5
• Some of the assumptions project and transmission costs
• All projects receive the same energy price (FIT)
• 11% discount rate
• 0.3 and 0.5 capacity factors, wind and hydro respectively
• Sample of transmission costs:
Conductor size
[AWG/MCM]
4/0
266.8
336.4
Rated voltage 34.5kV
Number of
Resistance of
conductors per
conductor
bundle [-]
bundle [Ω/km]
1
0.1837
1
0.1238
1
0.0981
Cost of
transmission
line [kU$/km]
38.46
41.74
43.98
Conductor size
[AWG/MCM]
4/0
266.8
336.4
397.5
477
556.5
636
Rated voltage 69kV
Number of
Resistance of
conductors per
conductor
bundle [-]
bundle [Ω/km]
1
0.1837
1
0.1238
1
0.0981
1
0.0833
1
0.0692
1
0.0596
1
0.0521
28
Cost of
transmission
line [kU$/km]
75.59
81.37
84.15
87.15
92.17
92.29
97.08
28
ELECTRICITY TRANSMISSION: IN THE PHILIPPINES
• Results: Comparison and impact in tariffs
Transmission price
In $/Mwh
1/2
29