DSM from a power system perspective

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1 Berlin Seminar on Energy and Climate Policy DSM from a power system perspective Wolf-Peter Schill Berlin, 10 December 2014

2 Overview 1. Increasing flexibility requirements 2. DSM and other flexibility options 3. Some insights from power system modelling 4. Conclusions 2

3 1 Increasing flexibility requirements Energiewende: Increasing shares of fluctuating renewables in Germany Special characteristics: Fluctuating availabilities Short-term forecast errors Asynchronous network connections Locations of RES potentials vs. geographic distribution of load and historic network configuration 3

4 1 Development of residual load GW A 2022 B 2022 C 2022 B Hours Schill (2014), Energy Policy Renewables substitute fuels, but not much capacity 4

5 1 Development of hourly load gradients Increasing short-term flexibility requirements Schill (2014), Energy Policy 5

6 2 Applications for DSM and other flexibility options Balancing of expected residual load: Daily and seasonal balancing Renewable surplus integration Smoothing of load gradients Peak load supply Compensation of forecast errors Spatial balancing Capacity value Network value Arbitrage value Reserve value Contributions of the demand side and other flexibility options 6

7 2 DSM and other flexibility options 7 Flexibility options Examples Demand-side Load shifting Load reduction New flexible loads (Power-to-X) Power-to-Heat Power-to-Gas Power-to-Mobility Supply-side Indirect water storage Flexible biomass and CHP Flexible RES feed-in Flexible thermal plants Functional power storage (Power-to-Power) Power storage Mechanical, electrochemical, chemical Short-term, daily, seasonal Networks Network extension and optimization Power electronics

8 3 When to realize what services? Some insights from dispatch and investment models Two stylized applications: NEP scenarios : Existing generation capacities 2010, 2020, 2030 Green field : endogenous capacities, perspective 2050 Objective function: Cost minimization NEP: Dispatch of existing capacities Only marginal DSM units (1 MW) with 1, 2, 3, 4, 12 hours Green field: investment and dispatch of all capacities Scope: Germany only Hourly resolution, full year Wholesale only Focus on arbitrage value in hourly day ahead market and capacity value (green field) 8

9 3 Input parameters DSM parameters based on Frontier, Formaet (2014) Duration (hours) Variable costs ( /MWh) Specific investments ( /kw) Max. installable (MW) DSM_curt DSM_curt DSM_curt DSM_shift DSM_shift DSM_shift DSM_shift DSM_shift Industry HH + c/t/s Industry HH + c/t/s Industry: low specific investments, high variable costs Households and commerce/trade/services: opposite 9

10 3 NEP scenarios: full load hours hours DSM_shift1 DSM_shift2 DSM_shift3 DSM_shift4 DSM_shift12 reference_2010 reference_2020 reference_2030 High full-load hours particluarly for longer-term shifting 10

11 3 NEP scenarios: shadow prices of the capacity restriction /kw DSM_shift1 DSM_shift2 DSM_shift3 DSM_shift4 DSM_shift12 reference_2010 reference_2020 reference_ hour-shifting substantially decreases system costs 11

12 3 Sensitivities for NEP scenarios: interaction with other flexibility options (shadow prices) /kw 0-2 DSM_2020 DSM_2030 biofix_2020 biofix_2030 1GWPHS_2020 EV_ Less flexible biomass -8 DSM_shift1 DSM_shift2 DSM_shift3 DSM_shift4 DSM_shift12 Cannibalisation Additional power storage and electric vehicles 12

13 3 Green field (2050): Installed capacities of storage and DSM, depending on minimum RES share GW DSM_shift12 DSM_shift3 DSM_curt2 DSM_curt1 Sto3_long Sto2_med Sto1_short res_share_0 res_share_20 res_share_40 res_share_60 res_share_80 res_share_100 Several DSM technologies at capacity restriction Except for 100% renewable system (interaction storage)

14 4 Conclusions Renewable expansion: increasing flexibility requirements DSM and other options can provide flexibility in different fields of application Benefits compared to large-scale power storage: smaller project sizes, no acceptence problems, no losses? Modeler s view: vague potentials and costs parameters Interactions between DSM and other flexibility options Regulatory framework should ensure fair competition When and what? Highly dependent on context and field of application 14

15 4 When to realize what services? Depends on assumptions... Specific applications Shares of fluctuating renewables Forecast errors of RES and load Regulatory framework DSM requirements Flexibility of thermal generators Power-to-X: Heat, H2, CH4, electric vehicles Development of power storage Balancing area (European interconnec tion) 15

16 Vielen Dank für Ihre Aufmerksamkeit. DIW Berlin Deutsches Institut für Wirtschaftsforschung e.v. Mohrenstraße 58, Berlin Redaktion Dr. Wolf-Peter Schill