Managing Flexibility on the Electricity System

Transcription

1 Managing Flexibility on the Electricity System The Role of Fossil Fuels in the 21 st Century ECT SIG IChemE Grantham Institute for Climate Change 27 November 2014 Andy Boston Energy Research Partnership

2 The Energy Research Partnership: About Us Background and Mission: Ø The ERP was announced by the Chancellor in his March 2005 Budget Statement to bring together key public and private sector funders of UK energy RDD&D, who promote a coherent approach to addressing UK energy challenges, set within an international context and increase long-term energy related activity and investments in the UK. Ø The ERP provides leadership to guide public and private sector activities in energy research and innovation, reflective of the UK s very broad energy portfolio, with a Statement of Purpose covering: Research and Development targeting of UK priority technology areas; Innovation developing partnership models to stimulate and deliver innovation; Policy providing the factual basis to inform decision making; Delivery promoting the role of social science in understanding consumer preferences for the deployment of new technologies and innovations.

3 Preliminary Results Nov 2014 Subject to Revision ERP Structure Co-Chairs Members Public Prof John Loughhead Chief Scientific Advisor, DECC Secretariat Private Dr Keith MacLean Independent Co-chair, formerly SSE Administrative Support from DECC, SSE ERP Analysis Team Hosted by UKERC

4 Four Key Messages Intermittent renewables need supporting low carbon technologies to provide balancing services and firm capacity Policy makers and system operators need to value these ancillary services so new providers feel a market pull Therefore Levelised Cost of Electricity (LCOE) is no longer a useful concept, technology value is best judged by its ability to reduce total system cost A holisitic approach recognises the greater value of firm low carbon technologies and reduces value of intermittent renewables which consume balancing services. Cannot achieve decarbonisation targets (or get close) with just wind, PV and marine. Need nuclear or biomass or CCS. Currently some necessary services (e.g. inertia/ frequency response) are provided free or as a mandatory service. These providers are disappearing, and demand is growing, but new providers can t develop in the absence of a market signal LCOE puts all the value on energy. However short run costs are decreasing and capacity and ancillary services are growing in value, so it is now a very poor measure of the value of a technology The corollary of valuing necessary services means providers see more value, but consumers (eg intermittent generation) see their value reduced.

5 What s Being Said About This? A short review of the literature

6 Increase in reserve requirement Incr. as % of wind capacity Day-ahead forecasts 4hr forecasts 1hr forecasts 0% 10% 20% 30% Wind penetration (% of gross demand) Key points: Wind requires reserve capacity to be available in general; Reserve that is actually needed is lower once forecasts are clearer; Thus far, reserve is from existing thermal plants that back off from wind.

7 Integration cost ($/MWh wind) 10 5 Preliminary Results Nov 2014 Subject to Revision US integration costs (PGE / EnerNex 2011) Generally < 10GW systems GW systems 0 0% 10% 20% 30% 40% Wind penetration (capacity basis) Key points: Costs are higher for smaller systems; Unit costs ($/MWh) increase with higher wind penetration.

8 US and European integration costs (IEA 2013) Integration cost ( /MWh of wind) % 10% 20% 30% Access to Nordpool s Wind penetration (% of gross demand) hydro facilities Key points: Storage (Nordpool hydro) reduces costs; Unit costs ( /MWh) increase with higher wind penetration.

9 Issues for Short Term Balancing

10 Balancing Supply and Demand 1 century 1 decade Climate change Investors and policy makers 1 year Prices 1 month 1 week Energy Markets Weak or missing feedback 1 day 1 hour 1 minute 1 second System operators Automatic systems

11 Energy Balancing at Work 50 Hz target Short Term Operating Reserve (STOR) is available within 5-20 minutes of instruction, although some can be as long as 4 hours. This provides a longer term replacement for the lost generation Inertia slows the fall in frequency immediately after an incident, buying time for frequency response services to act Frequency response automatically increases generation or decreases demand to begin recovery. Acts in 10-30s window (primary) or 30s-30m window (secondary) Fast Reserve is available to replace plant that was on frequency control and aid recovery by increasing generation within 2 minutes of instruction Generator loss incident 1000MW is lost at 13:43. Frequency drops to 49.6 Hz before recovery begins. Statutory limit is 49.5 Hz. There are 22 services NG buy, but these four are key for energy balancing

12 Ancillary Services in Detail Service Timescale Current Volume Market Size (Est. Ou)urn 2014/15) Modelled? Iner5a Instant GW.s None, provided free Yes, Improved ROCOF* should allow reduc5on to 90 GW.s Frequency Response 10s (Primary & High) 30s (Secondary) 700 MW 182M Fast Reserve 2 minutes 600 MW 122M STOR 20 minutes 2300 MW 81M Opera5ng Reserve minutes variable Much provided free Modelled fast elements not provided by static plant. Estimated 2500MW + 30% of wind cover * Rate Of Change of Frequency (more of that later)

13 Experience in Other Markets

14 Experience In Other Markets Germany Ireland PV Now: Wind 36GW, Solar 38GW Wind

15 Curtailment in Ireland Proportion of wind 50% Ceiling for wind From Malley and Walsh, DOE, EERE Grid Integration Planning Workshop Arlington, Virginia, Feb 19-20, 2014 There are plans to increase ceiling to 75% demand. This may involve Eirgrid buying new services from providers of flexibility 15

16 A windy month in Germany Gas Coal Generally exports are higher when it s windy, although not a perfect correlation The inset box shows why. Although hard coal can flex, lignite is relatively inflexible so wind is exported to ensure it keeps running Lignite Nuclear Biomass

17 A sunny month in Germany Gas June 2014 showing how exports (pink below) correlate strongly with PV generation (yellow) As with wind generation the aim is to keep lignite running. Coal Lignite Nuclear Biomass

18 Phase 2 Modelling Assumptions

19 Scenarios National Grid s Slow Progression scenario has 20 GW of wind & PV by 2020 and 40 GW by Capacity, Demand (GW) Slow Progression I/C Flexible Wind PV Nuclear Inflexible Max Dem 20 Min Dem Gone Green Today we have about 16 GW of intermittent generation. Demand varies from 20 to 60 GW. The Gone Green scenario has > 70 GW of wind & PV by 2030 Capacity, Demand (GW) I/C Flexible Wind PV Nuclear Inflexible Max Dem Min Dem

20 Focus on Slow Progression 2030 CCGT Gas CCS Onshore Wind New Nuclear Slack Sensitivity variables Fixed (SP 2030) Each study used 9 levels of nuclear, 8 of wind and 7 of CCS to make 504 runs. CCGT capacity was set to achieve 10% derated capacity margin Key prices CO 2 Emitted: CO 2 Burial: Gas Price: Biomass: 70/t 19/t 76p/therm = 26/MWh.th 23/MWh.th Capex [inc IDC*] ( /kw) Nth Of A Kind New nuclear: 3860 [4713] Onshore wind: 1532 [1609] Gas CCS: 1237 [1435] CCGT: 601 [647] Payback: 30 years Discount Rate: 10% Based on Parson Brinkerhoff 2013 * Interest During Construction at 10%

21 Full Load, Total cost comparison Note new nuclear here is close to 90/MWh cf CFD Onshore wind appears to be the cheapest on this basis * scenario variable techs * Interest During Construction at 10%

22 Modelled Genera5on 2014 wind gas coal CHP nuclear Current technology mix and prices Picture of scheduling to meet energy demand in load duration format

23 Genera5on 2030 Base wind gas CCS CHP nuclear Mixed scenario, 15GW Nuclear, 32GW Wind, 10GW Gas CCS Picture of scheduling to meet energy demand in load duration format

24 Reserve/Response 2030 Base curtailed wind pumps gas biomass Horizontal line is fixed requirement (2375 MW) Solid black line at top is fixed + intermittent reserve Model meets a basic reserve requirement representing reserve and response which currently needs to be spinning

25 Iner5a 2030 Base Current inertia is always > 150 GW.s. By changing grid code and Rate of Change Of Frequency (ROCOF) trip settings it is hoped to reduce inertia requirents. We model a reduction to 90GW.s which is double the ideal limit. Inertia not a problem in base scenario (above), It is always above the dashed line at 90 GW.s which is the constraint modelling assumes. Nuclear provides nearly all the inertia required, and it is always spinning even if curtailed.

26 Iner5a 2030 High Renewables 56 GW of wind, no new nuclear or CCS Showing right hand (low demand) half of load duration curve Not modelled As Modelled Current No constraint Total System Cost (TSC) = /MWh CO2 = 181 g/kwh 90 GW.s constraint TSC = +0.6 /MWh = +1.5 /MWh.wind CO2 = + 4 g/kwh 150 GW.s constraint TSC = +2.5 /MWh = +6.6 /MWh.wind CO2 = +17 g/kwh

27 Phase 2 Modelling Results

28 Total system CO2 Emissions 0 GW Wind makes some difference but even 56 GW of wind only makes the same reduction as 14GW of nuclear. nuclear 40 GW The addition of perfect storage would let wind follow the line of steepest slope. Could then achieve 100 g/kwh with 60 GW wind (black spot) Alternatively adding 18GW of nuclear to 56GW wind can get to 50 g/kwh (red spot) It s very clear how effective nuclear is at reducing emissions. Bold line is 32 GW, close to National Renewables Energy Action Plan (NREAP) 56 GW Only high nuclear scenarios reduce emissions to <50 g/kwh. CCS alone cannot get below 80 g/kwh. Wind alone struggles to get below 150 g/kwh although with perfect storage the tangential line shows 56 GW could reach 100 g/ kwh. Wind + gas CCS asymptotes around 80 g/kwh

29 100 Nuclear Wind Preliminary Results Nov 2014 Subject to Revision Total system CO2 Emissions C D A B The diagram colours and contours indicate CO2 emissions (in g/kwh), black is high, green low. It can be seen that the top far corner (high wind, no nuclear or CCS) is still dark. The shelf is close to the National Renewables Action Plan for wind. This illustrates the 100 g/kwh and 50 g/kwh surfaces. E.g.if we are aiming for a 50 g/kwh or less (as recommended by CCC) we have to be this side of the nearest angled surface: Four solutions for 50 g/kwh: A = 31 GW nuclear B = 13 GW nuclear + 30 GW gas CCS C = 18 GW nuclear + 56 GW wind D = 11 GW nuclear + 56 wind + 30 CCS

30 Total system cost at 70/t 0 GW Chart shows total system cost (TSC) as nuclear is added Heavy line is for a system with 32 GW wind. Note that as nuclear is added TSC accelerates upwards for example building the first 10 GW adds less than 1/MWh to TSC, the second 10 GW adds 3 and the third adds 8 The other curves are for different levels of wind on the system. With no wind nuclear can be added for almost no cost (bottom curve)

31 Total system cost at 70/t These charts show effect of adding three main technologies explored, Wind (top), Nuclear (middle) and Gas CCS (bottom). 0 GW Wind (GW) It can be seen from the positive slope that wind is costly even with no new nuclear on the system. 0 GW Taking a mid nuclear scenario (20GW) then adding 30GW of wind (same output as 10GW of nuclear) adds 5/MWh (cf < 1 for 10GW nuclear) Nuclear (GW) 56 GW 0 GW wind Gas CCS (GW) CCS also increases system cost but two interesting facts emerge: 1) It is less sensitive to wind on the system (because it has a high marginal cost so when it is curtailed it reduces TSC) 2) It s effect on TSC does not increase in a non-linear manner for the same reasons

32 Nuclear Wind Preliminary Results Nov 2014 Subject to Revision 3D system cost, C = 70/t +7.7% +7.7% +3.2% O O +3.2% Showing contours of equal system cost. At 70/t none of the low carbon technologies are economic. Hence optimum place to be (marked O ) with no constraints is at the origin (gas world) However imposing a 50 g/kwh constraint (solution must be on or viewer s side of diagonal surface) The cheapest (bluest) zone is between 30 GW nuclear or 20 GW nuclear 20 GW Gas CCS with up to 5GW wind.

33 Total system cost at 100/t 0 GW At 100/t then onshore wind is almost economic if no nuclear is on the system. Adding nuclear decreases TSC for low wind penetrations but makes adding wind more costly 56 GW wind 0 GW X s show optimum level of nuclear build for a given wind build, for example purple cross shows for 32GW wind then 15 GW of nuclear is complementary optimum. 56 GW wind Again the high short run marginal cost (SRMC) of CCS makes its cost curves fairly flat 0 GW Nuclear and CCS are clearly beneficial to GW. Wind adds little value, or is detrimental if other low carbon technologies are in place

34 Nuclear Wind Preliminary Results Nov 2014 Subject to Revision 3D system cost, C = 100/t +14.8% +11.1% +7.4% +7.4% +7.4% +3.7% O +3.7% O +7.4% +3.7% The optimum point is 25 GW of nuclear with no wind or CCS There is little increase in cost (about 2.5%) if nuclear is traded off for CCS (white arrow). A similar increase in cost allows 16 GW of wind to replace 5GW of nuclear (yellow arrow) However imposing a 50 g/kwh constraint now favours nuclear and 30GW is needed if acting alone. Building 25GW CCS now only replaces 15 GW of nuclear. 16GW wind could still replace 5GW nuclear.

35 The Value of a MWh /MWh value of additional MWh Positive value Negative value The law of diminishing returns is demonstrated here

36 The Value of a MWh CO2=70 /t CO2=100 /t /MWh value of additional MWh CO2 price must be > 70/t to create value for low carbon techs. Wind (GW) Nuclear (GW) Wind (GW) Nuclear (GW) Gas CCS (GW) At 100/t nuclear and Gas CCS are positive, but significantly diminished if wind on the system already. Gas CCS (GW)

37 Reducing Emissions in 2030 System Cost M 70/t 0/t Costly Abatement 140/t Hydro nuclear Gas CCS Coal CCS Offshore Wind No-brainers Existing Nuclear Onshore Wind CHP Marine PV OCGT Avoid! Pump Storage Cheap fossil Same again but now it s 2030 and much has already been done (20 GW nuclear, 15 GW CCS and 32 GW wind. Technologies below the line make economic sense at 70/t carbon price. Technologies to the left of the vertical axis reduce CO2. Emission Change (Mt)

38 Technology Options N e w P r o v i d e r s E x i s t i n g Technology Iner<a (instant) Frequency Response (seconds) Fast Reserve (minutes) Nuclear Coal/Biomass conv CCGT OCGT (Oil) Not usually running so rarely there Too small Hydro (Run of River) Pump Storage & Lake Hydro CHP >25MW CHP <25MW Nuclear (Small Mod Rctr) OCGT (gas) But < steam Challenging STOR < 4h (hours) If warm If hot Wind Very Low Only by curtailment Could provide some PV Thermal+CCS Storage Interconnectors EV HP Other Demand Curtailment, large farms but low load Interrup5ble

39 Four Key Messages 1. Intermittent renewables need supporting low carbon technologies to provide balancing services and firm capacity 2. Policy makers and system operators need to value these ancillary services so technologies such as storage feel a market pull 3. This holistic approach means technology specific LCOE is no longer a useful concept, technology value is best judged by its ability to reduce total system cost 4. This approach recognises the greater value of firm low carbon technologies and reduces value of intermittent renewables which consume balancing services.