The flexibility of power systems in the context of changes in the energy mix

Transcription

1 The flexibility of power systems in the context of changes in the energy mix International examples with a focus on Germany Dimitri Pescia, Agora Energiewende FLEX-E ENERGY FLEXIBILITY, Warsaw,

2 Agora Energiewende Who are we Independent think tank with more than 20 energy policy experts Independent and non-partisan Project duration Financed by the Mercator Foundation and the European Climate Foundation Mission: How do we make the energy transition in Germany and worldwide a success story? Methods : scientific assessments, dialogue, putting forward proposals 2

3 Wind power and solar PV become key pillars of EU power systems in the context of the 2030 climate and energy targets Share of renewables in 2030 European power mix in line with EU commitments European countries with a share of variable renewables above 10% in 2015 (percentage of annual power consumption) Fraunhofer IWES (2015); National Energy Scenarios; EU 2030 Targets IEA (2016) adapted from Hirth (2015) 3

4 ct/kwh Wind energy and solar PV are in most part of the world the cheapest low-carbon options and already cost competitive to newly built fossil power plants Range* of levelized cost of electricity (LCOE) Hinkley Point C (UK): 11,3 ct/kwh ct/kwh 6-9 ct/kwh 7-11 ct/kwh 7-12 ct/kwh 6-13 ct/kwh ct/kwh 0 Wind (onshore) Solar PV (large scale) Hard Coal Gas (CCGT) Nuclear Hard Coal CCS Germany International Agora Energiewende (2015e) * based on varying utilization, CO 2 -price and investment cost 4

5 In 2016, renewable energy projects set low costs records around the globe : Wind Offshore: 4.99 cts /kwh in Denmark ; Wind Onshore: 2.7 cts /kwh in Marocco; Solar Photovoltaics: 2.6 cts /kwh in Chile Netherlands 5.5 ct /kwh Germany/ Denmark 5.38 ct /kwh Denmark 4.99 ct /kwh Jordan 5.45 ct /kwh Marocco 2.68 ct /kwh UAE 2.67 ct /kwh United States 4.20 ct /kwh United States 5.80 ct /kwh Mexico 3.17 ct /kwh South Africa 4.55 ct /kwh South Africa 5.80 ct /kwh India 5.77 ct /kwh Australia 6.16 ct /kwh Wind Offshore Wind Onshore Solar Photovoltaics Peru 3.31 ct /kwh Peru 4.29 ct /kwh Chile 2.60 ct /kwh Brazil 4.38 ct /kwh Fortum 2016; Sources: announcements by the investing companies and IEA report Renewable Energy Medium-Term Market Report 2015 for US, Brazil, South Africa, Australia and Jordan. Values reported in nominal EUR, 1 EUR = 1,12 USD, 1 EUR = 75,3 INR, 1 EUR = 9.48 SEK. United States values calculated excluding tax credits. Typical contract lengths are years. The prices indicate levels with which investors have been willing to invest, however, they may not describe the actual comparable costs as the bid prices may be reduced by preferential land prices, site exploration cost, targeted low-cost loans etc. The price level at which investors can hedge their renewable production for the next 4 years: average of electricity (LUL) + elcertificate futures with closing prices. This low price levels still result in continuation of investments in onshore wind in Sweden. 5

6 Wind and solar PV fundamentally change the operation and investment structure of the power system Gross electricity generation of renewable energies in Germany Electricity generation and consumption in a sample week 2023 in Germany GW Specific characteristics of Wind and Solar PV Intermittent High capital costs Very low variable cost AGEB (2015a), BNetzA (2014), BNetzA (2015b), own calculations Fraunhofer IWES (2013) 6

7 Flexibility is the new paradigm of systems with high shares of renewables

8 Flexibility is the new paradigm of power systems to cope with fluctuating wind and solar production Electricity generation and consumption in Germany in a sample week with 50% RES share (2030) Key flexibility options Flexible fossil and bioenergy power plants (incl. CHP) Grids and transmission capacities for exports/imports Demand Side Management Storage technologies (Batteries, Power-to- Gas) Integration of the power, heat and transport sectors (power-to-heat, electric cars) Own calculations on basis of Agora Energiewende (2015b) Making the power markets more flexible is key to integrate high shares of variable renewables : the electricity price on short-term markets (dayahead, intraday, balancing) must reflect the realtime value of power 8

9 TWh In 2016, renewables are the most important source in the German electricity system followed by lignite and hard coal Share in gross electricity generation by fuel 2016 Hard Coal 17% Lignite 23% Natural Gas 12% Others 5% Nuclear 13% Renewables 29,5% ~ 90 GW variable renewables Installed capacity Wind 12% Solar PV 6% Biomass 8% Hydro 3% Gross electricity generation by fuel Renewables Nuclear Lignite Hard Coal Natural Gas Others 648 TWh AGEB (2016) * preliminary AGEB (2016) * preliminary 9

10 22 Aug 23 Aug Flexibility is a matter of today already (1) : Renewables covered more than 80% of the consumptions during few hours in august 2015 and may 2016 Electricity generation in Germany August 2015 Export 17% Conv. 83% RES Biomass & run-of-river Wind offshore Production pilotable Wind onshore PV Load Agorameter 10

11 Flexibility is a matter of today already (2): Christmas week 2014 with 60% RES. Fossil power plants reacting according to the wholesale power prices Demand and power production on December 21-27, 2014 Conventional power and spot market price on Dec 21-27,

12 Don t be afraid of the flexibility challenge: How Germany coped with the partial solar eclipse in March 2015 Solar power production on March 20, GW Solar power production on March 20, GW Due to the solar eclipse, electricity production from solar PV ramped down 12 GW within 65 minutes, and ramped up again roughly 19 GW within 75 minutes These ramps are unusual today, but will occur frequently in 2030 in Germany, when roughly 50% of electricity will be produced by renewables Electricity supply remained stable during the hours of the eclipse. Flexibility was traded in the intraday market. Prices and volumes traded on the Intraday market, March 20, 2015 Agora Energiewende (2015): Die Sonnenfinsternis

13 Grid Netzanbindung connection Nachbarstaaten to neighbours zusätzliche Flexibilisierung Flexibilisation of conventional CHP KWK zusätzliches DSM DSM Short-term storage (1h) Kurzzeitspeicher 1h Short-term storage (8h) Kurzzeitspeicher 8h Langzeitspeicher Long-term storage 720h (720h) Several options can deliver flexibility at various costs Savings Extra costs Costs/savings of one GW of flexibility in Germany (43% renewable scenario) Mio. / GW / a Agora Energiewende Grids, flexibilisation of conventional generation and demand side management (DSM) are the cheapest flexibility options in Germany. In Germany, the flexibility needs are so far nearly solely met by flexible power plants and interconnectors with neighbours From an overall system perspective, new storage is required only at very high shares of renewable energies. However, short-term storage can already today deliver several ancillary services at competitive costs. Furthermore, they can help avoiding grid expansion in the distribution grid. 13

14 Increasing the flexibility of conventional power plants

15 Coal plants Existing coal power plants are likely to continue to play a role in several countries during the energy transition period. However, limiting global warming well below 2 can only be achieved if the power system is fully decarbonized in the long run. United States (39%) 287 China (72%) UK (30%) 13 0,4 Japan (34%) Korea (43%) Poland (81%) , Vietnam (24%) Germany (45%) ,6 Turkey (30%) (X%) : Share of coal in power production Operating (GW) Construction (GW) Announced (GW) South Africa (87%) ,3 211 India (75%) Australia (61%) 26 1,3 1,2 Indonesia (53%)

16 GW Making conventional power plants more flexible can be a key strategy to integrate large shares of renewables more effectively in power systems dominated by coal assets. Renewable and conventional power production during two examplary days in a system with 60% RES in In several countries, the development of renewables is often hampered after reaching a certain level, because of the claim that the existing power system cannot cope with the weather dependent electricity generation of wind and solar plants. An obvious illustration of this trend is the high level of renewable energy curtailment occurring in certain power system (for example China), where the priority is given to baseload operation of conventional generators hours Conventional generation RES curtailed variable RES Agora Energiewende (2017) In markets characterized by few other flexibility options, making conventional power plants more flexible can be a key strategy to integrate higher shares of renewables. In a system with high coal power plants, the flexible operation of coal power plants generally reduces its overall CO2 emissions, since the coal power plants produces in general less electricity over the year, avoiding wasteful curtailment of RES

17 Baseload operation of conventional power plants is an obsolete concept. Existing coal power plants can provide much more operational flexibility than many think. Power generation from nuclear, hard coal and lignite power plants and demand in Germany, 23 to 30 March 2016 Existing coal power plants can provide much more operational flexibility than many think, as experience in countries like Germany, Danemark and the US have shown. But keeping (flexible) coal in the system is also pushing less emitting gas power plants out of the system (in the absence of proper pricing of CO2 emissions!). Furthermore, an inflexible must-run block still remains in most systems (in the form of CHPplants and power plants providing balancing reserves). Agora Energiewende (2017)

18 % of Pnom % of Nominal Capacity per minute State-of-the-art-design improves significantly the flexibility characteristics of fossil-fuel power plants Minimum load of different hard coal power plants (as a percentage of nominal capacity) 60% 50% 40% 30% Ramp rates of hard coal power plants in South Africa compared to most-commonly used and state-of-the-art designs 7% 6% 5% 4% 3% 20% 10% 0% Typical hard coal power plants in China and India Most-commonly used and state-of the art hard coal power plants Example of retrofit in Germany (Bexbach Unit) 2% 1% 0% hard coal power plants in South Africa most-commonly used hard coal power plants state-of-the-art coal power plants DEA, NREL, Fichtner Prognos, Fichtner

19 Numerous technical possibilities exist to increase the flexibility of coal power plants Illustrative subdvision of a coal power plant 3) Control and communication system 19) Auxiliary system and heavy machinery 20) Ancilliary systems 8) Boiler 16) Steam turbine system 2) Energy derivation and auxiliary power supply Retrofit measure for reducing: Minimum load Start-up time Ramp rate Limitations 5) Oil and ignition fuel supply 4) Conventional fuel supply 14) Chemical flue gas treatment system Legend of Material Flows: Klumpp (2009) 9) Coal mills, coal bunker and allocation system 10) Combustion air system 12) Electrical precipitator 11) Flue gas system 13) Denox Circulation Water Steam Untreated Water Air 15) Steam, water and gas cycle Solid fuels Other substances (ash) Non-flammable gases Oil 17) G~ Generator system 18) Cooling water system 7) Water supply and disposal 6) Ash handling plant and slagremoving device 1) Grid & distribution system Indirect Firing Fire stability Switching from two mill to single mill operation Water-steam circuit Control system and plant engineering upgrade Auxiliary firing with dried lignite ignition burner Thermal energy storage for feed water pre-heating Fire stability/ thermal stress Fire stability and boiler design Repowering N/A Usage of optimized control system Thermal stress Thin-walled components /special turbine design N/A Mechanical and thermal stresses New turbine start Turbine design Reduction of wall thickness of key components Mechanical and thermal stresses

20 1. Cross-border The Energiewende systemin integration a nutshell Minimising with a focus the flexibility on the challenge power sector

21 As wind power and solar PV are weather-depend generation is fluctuating and flexibility requirements increase. Yet, coupling power systems helps Fraunhofer IWES Vienna, 22 February 2017 Christian Redl 21

22 TWh Seasonal weather patterns match monthly wind and PV generation yielding a more stable total renewables output Monthly wind power and PV generation in Europe in 2030 Fraunhofer IWES (2015) Weather year 2011 Vienna, 22 February 2017 Christian Redl 22

23 Market integration limits wind & PV curtailment (or storage needs) at times with high feed-in, increasing RES value Curtailment of vres within PLEF and Europe in autarchy and integration scenarios Curtailment is greatly reduced by market integration Curtailment in autarchy case is ten times higher due to lack of exchange options with other regions Not only cross-border grids are important, but also enough transfer capacities within countries must be available Fraunhofer IWES (2015) Still, avoiding curtailment altogether would be difficult to achieve just by increasing transfer capacities, as highly correlated feed-in situations can occur Vienna, 22 February 2017 Christian Redl 23

24 Key priorities for managing the flexibility challenge in Germany

25 Challenge 1: Grids More grids to transport wind energy to the south of Germany AND promotion of regional markets as a new framework for decentralization Installed wind capacity (103 GW, Scenario Best Sites ) 2033 German network development plan 2025 Reinforcing the grid infrastructure is crucial (wind power will be installed mainly near the coast in the north of Germany, but key consumptions centres are located in the south) There has been a delay in grid expansion, thus redispatch, loop flows and curtailment have increased significantly New policy to use underground cables whenever necessary. Measures to reduce consternation and compensation for concerned parties need to be considered from the very beginning Fraunhofer IWES (2013) BNetzA (2015) Decentralization is a new and lasting structural characteristics of the Energiewende: - congestion in the grids are likely to persist - citizen and politic attach great importance to decentralized solutions. 25

26 Challenge 2: European Cooperation Further enhance the cooperation between neighbouring countries and deepen European power market integration Time series of onshore wind generation in May 2030 at different levels of aggregation Due to smoothening effects, wind output is less volatile and has fewer extreme values at higher aggregation levels (regional, EU). The flexibility requirements of interconnected power systems decrease, implying : - reduced residual load gradients & balancing requirements; - less renewables curtailment. Cross border system integration (grid interconnection, cooperation in system operations and market design) is key for minimizing flexibility challenges. Fraunhofer IWES (2015) * One pixel is equivalent to an area of 2.8 x 2.8 km; PLEF are the countries AT, BE, CH, DE, FR, LU, NL 17

27 Challenge 3: Legacy investments in coal plants Given low EU ETS prices, old lignite and hard coal plants are stumbling block to energy transition Installed capacity vs. peak demand EU (left) Installed capacity in a German coal consensus path (right) Increasing share of flexible resources and decreasing share of inflexible resources should go hand in hand with a growing share of variable renewables Most urgent challenge of EU power markets are implications of legacy investments; Energy market design alone reaches limits National managed retirement of old, highcarbon, inflexible capacity ( coal phase out ) prerequisite for successful market design & to support shift to a more flexible mix of conventional generation Required also EU level action Stabilisation of the ETS price through carbon floorprice (e.g. 30 EUR/t CO 2 ) Agora Energiwende (2016) Cancellation mechanism for additional domestic climate policy measures 18

28 Challenge 4: sector integration Future market for battery systems can be quite small or very large, depending on regulatory framework and development of EV market Estimated future markets of battery storage (GW) Mean demand (2014) min max min max min max Agora Energiewende 2014 Balancing Residential storage Transport The costs of lithium-ion batteries are declining fast. E-mobility may experience its commercial breakthrough in the 2020s. Household storage will also become cheaper The market for residential storage depends on how taxes and tariffs are set for households and commercial customers the current business case is based on avoiding these taxes and tariffs. Electric Vehicles constitute the largest share of the storage market potential and could potentially constitute twice the size of power demand. This will have impacts: car batteries may be used directly in the power system or via 2nd life use Balancing Market is small and will not lead to great demand for battery systems; projects that are already under way will probably already meet the current demand 28

29 Which market design in order to achieve, at low cost, a reliable power system with more than 50% RES

30 The power market pentagon : five elements are needed in order to get a good market design for high shares of renewables. The power market pentagon The five elements should not contradict each other (e.g. capacity payments for old coal power plants), but be mutually supportive. Recent and upcoming German legislation improve the regulatory framework in this direction : 3 Agora Energiewende (2016) Reform of the Renewable Energy Act (EEG 2017) 2 New electricity market law reliance on energy-only-market (EOM 2.0) + reserve to secure supply in emergency situations 3 Climate Reserve (DE) and reform of the Emission Trading Scheme (EU level) Entering the coal exit but long-term coal phase-out plan is still missing (likely to be at the political agenda after the Fall 2017 election) 21

31 Managing the flexibility challenge: main takeaways Wind energy and solar PV are reshaping power systems in Europe (share ~30% in 2030). Hence, it is crucial to increase system flexibility Various flexibility solutions exist already today for coping with the fluctuating output of wind and solar energy The flexibility needs are so far nearly solely met by flexible power plants. The good news : thermal power plants can provide much of the required flexibilty! Power system integration at regional and European level mitigates flexibility needs due to smoothing effects The power market can effectively manage the flexibility challenge, through price signals that incentivize generators and consumers to adjust their generation and consumption Still, a more flexible power system is required. The structure and operation of the conventional power plant park must change towards less baseload, more mid-merit and peak-load plants Storage solutions are required only at very high RES levels (>50-60%). However, new markets for battery storage and power to gas technologies are expected to emerge, especially in the transport and chemical sector 23

32 Agora Energiewende Rosenstraße Berlin T +49 (0) F +49 (0) info@agora-energiewende.de Please subscribe to our newsletter via Thank you for your attention! Questions or Comments? Feel free to contact me: Dimitri.pescia@agora-energiewende.de Agora Energiewende is a joint initiative of the Mercator Foundation and the European Climate Foundation.

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