MODERATOR: ENEA Consulting: Louis-Marie Jacquelin, Director of Development and Innovation. ENEA Consulting, Louis-Marie Jacquelin

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1 STAGE PM 3.15PM THE INTEGRATION OF RENEWABLE ENERGIES IN A SMARTER GRID SPEAKERS: ERDF: Jacques Merley, Head of Network Planning Department Federal Network Agency: Dr. Sascha Falahat, Assistant Head of Electricity Grid Development MODERATOR: ENEA Consulting: Louis-Marie Jacquelin, Director of Development and Innovation ENEA Consulting, Louis-Marie Jacquelin ENEA is a strategic advisory consulting firm with a strong technical background, which focuses on helping industrial clients to develop a responsible future in energy and sustainable development. Transmission is not the only solution to the intermittency problem in electrical grids. There are other means, and this session will address the way of optimising those means as well as mitigating the demand of equilibrium; allowing all the assets from production to consumption to communicate. If the management of the grid, energy storage and everything that is related to the electrical network is able to communicate, it will be possible to achieve balance between supply and demand. ERDF, Jacques Merley ERDF is the main distributor of energy in France accounting for 95% of distributed electricity. The company operates medium and low voltage networks; a 1,400,000 km network, half of which is medium and half of which is low voltage, which serves about 33,000,000 customers in continental France. ERDF has no generation assets; just lines and substations. Policy targets for 2020 in France are around 20 GW of wind power, for which the country is behind, and 5.4 GW of PV, for which they are ahead of schedule. By the end of 2012, 7 GW medium voltage connected wind power was installed in northern France, while PV is about 3 GW of capacity and mainly located in the south. All kinds of PV are installed: small capacity low voltage, medium capacity low voltage, and large capacity medium voltage. 95% of renewables are now connected to the distribution network, very few are connected to the transmission network, and there is nearly no offshore generation. Depending on incentives, it is hard to estimate capacity looking towards 2030, but figures such as GW of PV capacity and GW of wind capacity could be imagined. The issues can be summed up in three different questions/missions for network operators, with strong interactions between what the distribution system operator and the transmission system operator do:

2 1. Maintaining voltage, which is the driver of costs for a distribution network: how to maintain the voltage between periods of high consumption and low generation, and periods of low consumption and high generation. There are good technical solutions for network reinforcement and development which are not that expensive, although cheaper and more efficient solutions would be welcome. 2. Guaranteeing the safety of operations for people (customers or workers) and goods. The main difficulty is with generation downstream in a network, which changes the philosophy of protection schemes. Making sure the circuit breaker is open in order to stop power flowing into the system is technically it is possible, but expensive to make available for millions of connections. There are technical solutions, such as sending a signal to a point to make it safe or ensuring the point is smart enough to be aware of the problem, but one that is economically viable. 3. The preservation of the overall system security. We are shifting from a system that could be controlled by a few large centralised units of generation and adjusting a few settings in the system. Now there will be hundreds, thousands or millions of small units generating, probably none of which will be centrally controlled. Appliances on the consumption side will also be flexible. The system must work in both calm and pressure situations, and the solutions are probably on the diesel side. At a higher voltage level, there is both a regulatory and a technical solution to deal with the local imbalance between generation and consumption, both work and should be combined. The technical path is managing the reactive and active power by adding automations to support the system during incidents. The regulation path avoids problems by incentivising the right location for the generation of energy to have it synchronised. If this is successful, there won t be much of a need to reinforce the network. This isn t easy, it is preferable to have complete freedom of installation for developing renewable generation. The location and localisation of energy generation is very important with regards to cost. If generation is well located, it is cheap to connect medium voltage generation to the network because it will fit in the system, the electricity does not need to go very far. If a large scale unit is poorly placed in the middle of nowhere, especially in low voltage, transfering electricity is complicated and costly. Depending on location, operations could and should be a lot cheaper. An improved coordination scheme is the SRCAE/S3REnR, which recreates the coordination link between generators and the network developers. First, there is an assessment of the potential area, relating to the various sources that could be used. Then, it needs a solution which accommodates the assessment to build the network. It solves different issues and mainly provides some mutualisation effects; one important asset is built, and several generators are plugged in. This isn t going to be costless, however without this system, there will be even more capital expenditure required. Everybody is working on local reactive power management; it can ease the system, but it is not a silver bullet. It needs to be cleverly designed. If the system is entirely autonomous, it can have unpredictable results. The potential over cost has been assessed as significant; 30% cost reduction on the MV for MV connected PV, down to 10-20% reduction on LV reinforcement for LV connected PV. The drawbacks are the bigger machines and (probably) more losses in the system. The other smart technique is local active power control. For very short duration constraints, up to 10 hours a year, it is more effective to limit power injected into the system to the available capacity in the network. A statistical study by ERDF shows that this technique could result in a 30% reduction in total costs and smaller capital costs; with the drawback of increased energy losses. There is a strong regulatory issue in that the benefits can be assessed, but the tools aren t available to ensure that the benefits aren t gained by only one stakeholder. The smart grid is smart techniques plus smart regulation, and if one of these aspects is left out, the system will not hold.

3 FEDERAL NETWORK AGENCY, Dr. Sascha Falahat The Federal Network Agency is the national regulator in Germany. I wish to show what has been happening in Germany in the past 18 months. There are five main steps for which the agency is responsible: 1. Defining possible scenarios for the next years, based on what kind of political targets are in place, how demand and supply progress through the next 20 years, and the impact of specific events such as the nuclear phase out, etc. 2. Taking those scenarios coming from the TSO s and consulting with stakeholders to transfer these political targets/numbers into one framework, which will then enable the TSO s to do marketing modelling. We need to know where and within what hour the generators are working and feeding into the system. The TSO s need data that is reliable. Aside from the production of electricity, consumption needs to be known; where and what quantity of electricity will be taken out of the system. 3. After the TSO s model the economics that are expected in the next 10 years, they also have to perform grid modelling. They have to show a development plan to stakeholders, regulators and the public on how the network on the TSO level has to be developed for the next years to accommodate all market drivers. 4. Assessing the environmental impacts. There are thousands of kilometres of transmission lines that need to be built and limited space in Europe and especially in Germany. The regulator finds where critical areas are and to consult with stakeholders and the public. 5. Consulting the public for solutions that suit everybody for every step mentioned above. Permission procedures for transmission lines on every level can be accelerated if there is increased acceptance. There must be higher public acceptance if we want permitting procedures to take 3.5 years. By the end of 2012, the transmission grid in Germany needs the implementation of the HVDC Overlay grid to take the first step towards a supergrid. Three major corridors have been identified that are supposed to be built by 2022 based on HVDC technology. In total, including HVDC and AC grids, this will add up to 2,800km of new transmission lines. The country isn t far away in relation to the distribution grid. A recent study (Dena) stated that 214,000km of changes are needed in the distribution grid to accommodate the rest of the integration that is wanted. For the regulator, this means transforming political targets into a technical framework and promote changes on which suppliers, TSOs and DSOs will work and benefit. The regulator has to develop broader involvement with new stakeholders, such as citizen groups or institution work groups, which involvement needs to be deeper than before. The regulator is now involved in expert discussions with suppliers, universities, etc, because they have to assess which technology and solution is appropriate for a given task. The regulator is now the one-stop shop to accelerate everything and looks at the technical validation of the plans, environmental assessments, and permission orders, as well as the traditional tasks of economics and regulation. Only 2-3 years ago, it wouldn t have been imagined that this work would be done by the agency, but they now have to develop an entire new division to complete these tasks. QUESTION FROM THE AUDIENCE:

4 You mentioned in the introduction that the smart grid will interconnect production, demand and storage. Regarding storage: assuming that power to gas and hydrogen from electricity could be injected into the gas network, could we limit the investment in the electricity grid, using the gas network and then using the hydrogen combined to gas coming back to electricity on CCCG? ERDF, Jacques Merley There are a lot of schemes that focus on the transformation of primary electricity into gas. In my opinion, we are at the proof of concept stage rather than the development stage. I see appliance storage, for example we have 12 million customers that have electricity stored in their boiler; this saves 3 GW in the morning and 3 GW in the evening, at nearly no marginal costs. It would take a lot of progress to beat this solution. ABB GROUP, Prof. Dr. Jochen Kreusel (speaker, previous session) If we want to manage all these changes, we need to look at the bigger picture rather than just electricity. Interconnection between various infrastructures may help. With current technology, changing electricity to gas and back to electricity results in high losses throughout the value chain. There are other short term solutions, for instance in some parts of Europe there are extended district heating systems, which can be used as a buffer if cogeneration plans are in place. In general it is the same story and efforts for success; whether infrastructures can be interconnected, in particular with infrastructures that have cheap storage, which is not the case with electricity and won t be the case for decades. All storage that is being spoken about today is indirect storage; hydro, maybe gas, chemical energy. It s never electricity though it is something that needs to be explored. QUESTION FROM THE AUDIENCE: What is a realistic timeline for the emergence of something you could call a European supergrid? FEDERAL NETWORK AGENCY, Dr. Sascha Falahat Grid planning so far shows 10 to 20 years. We have a ten year network development plan by the TSOs also looking into the future. There are two important points: permitting procedures and the need to start developing pilot projects to show that the technology is there and ready. To look in the direction of Alstom and ABB, if they say let s do this and let s define a pilot project or several pilot projects that might get the stamp of a project of common interest, then we as an authority would say 10 years. The next step would be to connect those projects across member state borders. QUESTION FROM THE AUDIENCE: Since Germany decided to dismantle nuclear power plants, seven of them have been disconnected correctly but the high voltage lines have never been really overloaded. What is your opinion about potential blackout risks in Germany and collateral damage? FEDERAL NETWORK AGENCY, Dr. Sascha Falahat As a regulator, we observe how the grid is behaving very closely, especially in winter. When the phase out of the first 7-8 nuclear power plants took place, we were looking at grid models and the winter forecast to predict if there was a need of nuclear power as a reserve- there was not.

5 On the other hand we did see problems, especially in the transmission grid, in the winter of However the TSOs were able to handle them, and we took this as a sign to talk to power plant owners to ensure they had reserve capacity for winter time for which they would be remunerated. In case of a problem in the transmission grid due to overloads or re-dispatch issues, we could access their power plants and feed it into the system, rather than overloading in another area of Germany. That is the type of legislation and regulation that is in force at the moment; that there is reserve capacity available through power plants that usually wouldn t be running at that time of year. ENEA CONSULTING, Louis-Marie Jacquelin We spoke about the timing for putting regulation in place and actually building the lines. What about the social timing for these projects? It took fourteen years just to launch the actual fieldwork for the lines between France and Spain. The problem is getting worse and communication with the public is taking more time. Do you have any new ways of handling the interaction between all stakeholders of such a project? FEDERAL NETWORK AGENCY, Dr. Sascha Falahat There are different responses to that question. The first one is that the goal must be clear. That way, stakeholders can easily identify problems/solutions for the goal. It is necessary to sit down with everybody, environmental protection, suppliers, etc., to discuss the technology to achieve the goal in the time frame of a project. The other response is that everybody is talking about transforming the grid, etc, but there is a gap between technical experts and the public that needs to be bridged. If you talk to somebody about the need for an interconnector between Germany and France, they ask, why in my backyard? the answer is that you live on the border, and we need to create a European energy market. This is the argument for the public, rather than this is the way it has to be. ABB GROUP, Prof. Dr. Jochen Kreusel Before lunch, a panellist said, the problem doesn t start with the building of a power plant or a line, the root cause of the problem is that we use electricity. Electricity is so easy to connect, doesn t make noise, it doesn t smell. There is a benefit which is not free. All these benefits come at a price and users are driving energy development. Discussion on these issues must be precise and open. We would have fewer problems today with the exception of transmission if the story of renewables in the 90s had not been about distributed generation: this was imprecise. Some renewables are distributed and some are more central than ever before. People understood that because it was distributed, it was small and beautiful, but this technology is large and centralised, even larger than a traditional power plant. The idea was that by spending more money and protecting our environment, we would get rid of the ugly grids. This was an political promise that was misleading. This should not be repeated. Infrastructure always causes a burden for one in order to benefit the rest: streets, railways, everything. We are used to compensating this to a certain extent, and there have already been improvements in this framework. In Germany, we have started to talk about grid extensions. We didn t have this choice before, not even have the freedom to choose cables, a more expensive technology, because the legal framework forced the use of the cheapest technology. This was the 70s and before, when these issues didn t exist. Times have changed but the legal framework hasn t changed, but this is progressing. The example of the French-Spanish line was ultimately solved through a change in technology. The first off-shore wind farm connection in Germany was built, with the 130km subsea cable became famous. The 70km landline cable was less famous; it was approved and built within three years. It is a

6 cable, part of an HVDC line. Cables are not the solution, they are a large technology, and depending on where they are located, they can have a huge impact on the environment. But in the north, the environment is extremely favourable. We need to be more flexible in discussing alternatives and we need to understand that there isn t a single solution for all problems. The public participation process in the network development project resulted in the strongest opposition in the current German network development plan, in relation to an HVDC convertor close to Dusseldorf. HVDC, because of the connection to cables, was seen as the solution. Now it turns out to be a problem, because a convertor is also a big installation, which needs to be discussed. We are moving into a world of electricity, which will consume more technology than ever before. We are coming from an electricity industry with highly concentrated fuels and few big plants, into a world where we are using primary energy with a very low density. This means that we will have to deploy much more technology to gather and distribute electricity. We need to speak about it early enough, increase participation and make people prepared, so that there are no surprises.