The Power of Transformation Wind, Sun and the Economics of Flexible Power Systems

Transcription

1 The Power of Transformation Wind, Sun and the Economics of Flexible Power Systems Federal Ministry for Economic Affairs and Energy, 1 July 2014, Berlin

2 Main Results and Strategic Approach Ms Maria van der Hoeven Executive Director International Energy Agency 2

3 Large-scale integration accomplished today, but more to come Denmark Ireland Iberian Iberia pen. Germany Great Britain Italy NW Europe ERCOT Sweden France Instantaneous shares reaching 60% and above Higher shares locally: Wind in Tamil Nadu (India) approx. 13% India Case studies Brazil Japan VRE share of total annual electricity output 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Wind 2012 PV 2012 Additional Wind Additional PV Note: ERCOT = Electricity Reliability Council of Texas, United States Source: IEA estimates derived in part from IEA Medium-Term Renewable Energy Market Report

4 Three main results 1. Very high shares of variable renewables are technically possible 2. No problems at low shares, if 3. Reaching high shares cost-effectively calls for a system-wide transformation 4

5 Three pillars of system transformation 1. Deploy state-of-the art system friendly VRE 2. Improve market design and operations 3. Invest in four sources of flexibility Grid infrastructure Dispatchable generation Storage Demand side integration 5

6 Focus on key findings Dr. Paolo Frankl Head, Renewable Energy Division 6

7 The Grid Integration of Variable Renewables Project - GIVAR Third project phase 7 case studies covering 15 countries, >50 in-depth interviews Technical flexibility assessment with revised IEA FAST tool 2.0 Detailed economic modelling at hourly resolution 7

8 Interaction is key Properties of variable renewable energy (VRE) Flexibility of other power system components yrs Variable Grids Generation Uncertain sec Non-synchronous 100s km Location constrained Storage Demand Side 1 km Modularity Low short-run cost 8

9 The GIVAR III case study regions Power area size (peak demand) Grid strength Interconnection (actual & potential) No. of power markets Geographic spread of VRE Flexibility of dispatchable generation Investment opportunity India Italy Iberia (ES & PT) Brazil NW Europe Japan (East)? ERCOT (Texas, US) OECD/IEA

10 No problem at 5% - 10%, if Power systems already deal with a vast demand variability Can use existing flexibility for VRE integration Exceptionally high variability in Brazil, 28 June 2010 No technical or economic challenges at low shares, if basic rules are followed: Avoid uncontrolled, local hot spots of deployment Adapt basic system operation strategies, such as forecasts Ensure that VRE power plants are state-of-the art and can stabilise the grid 10

11 Much higher shares technically feasible NW EUR Japan (East) FAST2 assessment: Italy Iberia ERCOT Brazil Uncurtailed share of VRE in power generation [%] Assumption: perfect grid (copper-plate), system operation maximises flexibility Result: all power systems can take 25% in annual generation There is no technical limit on how much variable generation a power system can absorb But system transformation increased flexibility required for higher shares Curtailment none low medium high VRE share 2012 Source: FAST2 assessment. 11

12 Annual share in generation Current levels of VRE Curtailment 20% Used Wind Curtailed Wind Used PV Curtailed PV 15% 10% 5% 0% Wind Wind PV Wind Wind Wind PV Ireland (2012) Italy (2013) Spain (2012) ERCOT (2013) Germany (2012) Spain: reasons: 20% network constraints, 80% system-wide reasons ERCOT: curtailment peaked at 17% in 2009, market reform in 2010 and continued grid expansion main factors for ten-fold reduction Germany: total curtailed energy: 385 GWh 2012, 421 GWh in 2011, 127 GWh in 2010 Curtailments remain low, almost 100% of available VRE is used 12

13 Net load (GW) Main persistent challenge: Balancing Higher uncertainty Larger and more pronounced changes Illustration of Residual power demand at different VRE shares Larger ramps at high shares 0.0% 2.5% 5.0% 10.0% 20.0% Hours Note: Load data and wind data from Germany 10 to 16 November 2010, wind generation scaled, actual share 7.3%. Scaling may overestimate the impact of variability; combined OECD/IEA effect 2014 of wind and solar may be lower, illustration only. 13

14 Net load (GW) Main persistent challenge: Utilisation Netload implies different utilisation for non-vre system Maximum remains high: Scarcity % 2.5% 5.0% 10.0% 20.0% Changed utilisation pattern Lower minimum: Abundance Hours Note: Load data and wind data from Germany 10 to 16 November 2010, wind generation scaled, actual share 7.3%. Scaling may overestimate the impact of variability; combined OECD/IEA effect 2014 of wind and solar may be lower, illustration only. 14 Peak Mid - merit Base - load Peak Mid - merit Base - load

15 Total system costs (USD/MWh) Adding VRE without adapting the system is bound to increase costs % Grid cost DSI 80 Fixed VRE 60 Emissions Fuel 0 Legacy low grid costs 0% VRE Legacy high grid costs Transformed generation & 8% DSI, low grid costs 45% VRE penetration Startup Fixed non-vre Test System / IMRES Model Fixed costs of un-adapted power plant fleet largest cost driver Uncoordinated grid retrofits can be expensive Startup costs have low impact 15

16 Three pillars of system transformation Technology spread 1. Geographic Let wind and spread solar play their part Design of power plants System friendly VRE 3. Take a system wide-strategic approach to investments! 2. Make better use of what you have Investments Operations 16

17 1) System friendly VRE deployment Wind and solar PV can contribute to grid integration But only if they are allowed and asked to do so! Take a system perspective when deploying VRE German market premium step in right direction Example: System friendly design of wind turbines reduces variability Source: adapted from Agora,

18 2) Better system & market operation VRE forecasting Better market operations: Fast trading Best practice: US (Texas) 5 minutes Price depending on location Best practice: US Locational Marginal Prices Better flexibility markets Example: Fully remunerated reserve provision Align system and market operation Example: US Independent System Operators Make better use of what you have already! Example: ERCOT market design 18

19 3) Investment in additional flexibility Four sources of flexibility Grid infrastructure Dispatchable generation Storage Demand side integration 19

20 Million USD per year Benefit/cost of flexibility options North West Europe Demand Side Integration (DSI) Basic approach: 1. Establish baseline scenario using business as usual at 30% VRE 2. Insert DSI and calculate savings compared to baseline (system benefit) 3. Compare system benefit to DSI cost DSI assumed to be 8% of annual power demand: 70% made of heat and other schedulable demand (110 TWh) 30% EV demand (44 TWh) System benefit 899 DSI costs DSI Capex CCGT Fixed Opex Start up costs Variable cost incl. fuel CO2 costs CO 2 price USD 30 per tonne Coal price USD 2.7/MMbtu Gas price USD 8/MMbtu Overall system savings of 2.0 bln $/year Benefit/cost ratio: 2.2 DSI costs of 0.9 bln $/year Note: graph represents the differences between DSI scenario (DSI 8% of overall demand) and baseline scenario 20

21 Benefit/cost of flexibility options North West Europe Benefit/cost ratio DSI has large benefits at comparably low costs Interconnection allows a more efficient use of distributed flexibility options and generates synergies with storage and DSI Cost effectiveness of hydro plant retrofit depend on project specific measures and associated investment needs Notes: 1) CAPEX assumed for selected flexibility options: interconnection 1,300$/MW/km onshore and 2,600$/MW/km offshore, pumped hydro storage 1,170$/kW, reservoir hydro 750 $/kw -1,300$/kW (repowering of existing reservoir hydro increasing available capacity). Cost of DSI is assumed equal to 4.7 $/MWh of overall power demand (adjustment of NEWSIS results) 2) Fuel prices and CAPEX ($/kw) for VRE and flexibility options are assumed constant across all scenarios Source: OECD/IEA IEA/PÖYRY 2014 DSI + IC DSI IC Storage + IC Storage Hydro capacity boost 21

22 Total system costs (USD/MWh) Cost-effective integration means transformation of power system % % Grid cost DSI 80 Fixed VRE 60 Emissions Fuel 0 Legacy low grid costs 0% VRE Legacy high grid costs Transformed generation & 8% DSI, low grid costs 45% VRE penetration Startup Fixed non-vre Test System / IMRES Model Large shares of VRE can be integrated cost-effectively Significant optimization on both fixed and variable costs 22

23 Recommendations 1/2 All countries where VRE is going mainstream should: Optimise system and market operations Deploy VRE in a system-friendly way to maximise their value to the overall system Countries beginning to deploy VRE power plants (shares of up to 5% to 10% of annual generation) should: Avoid uncontrolled local concentrations of VRE power plants ( hot spots ) Ensure that VRE power plants can contribute to stabilising the grid when needed Use state of the art VRE forecast techniques 23

24 Transformation depends on context Recommendations 2/2 Stable Power Systems Little general investment need short term Slow demand growth* Dynamic demand growth* Dynamic Power Systems Large general investment need short term Maximise the contribution from existing flexible assets Decommission or mothball inflexible polluting surplus capacity to foster system transformation Implement holistic, long-term transformation from onset Use proper long-term planning instruments to capture VRE s contribution at system level * Compound annual average growth rate , slow <2%, dynamic 2%; region average used where country data unavailable This map OECD/IEA is without 2014 prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. 24

25 Panel Discussion 25