La regulación del incierto futuro de los sistemas eléctricos

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Dominic Daniels
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eléctrica en Colombia 25 de mayo, Cartagena, Colombia

1 La regulación del incierto futuro de los sistemas eléctricos Foro XM-2017 El futuro de la energía eléctrica en Colombia 25 de mayo, Cartagena, Colombia Carlos Batlle

2 Sunny Germany Non-renewable power capacity Complete power capacity Image source: Carbon Brief, Mapped: How Germany generates its electricity 2

3 Sunny Germany May 8th, 2016: ~95% supplied from RES in a couple of hours 3

4 Sunny Germany Small and medium-size installations of less than 30 kv have dominated Germany's solar expansion in recent years, so that 70% to total PV capacity is now connected to the low-voltage grid. "In some low-voltage grids," they say, "the installed PV capacity can even exceed the peak load by a factor of ten. IEEE's Power and Energy Magazine (March-April, 2013) 4

5 Learning cliff Source: cleantechnica.com 5

6 ICTs integration DER Power Electronics Small Biomass Small Hydro Dispatchable Large Biomass Large Hydro Rooftop Demand response solar Small and Medium Electric Vehicles Solar PV and Wind farms Small-scale Storage Micro-cogeneration Micro-turbines Intermittent Large Solar PV and Wind Farms Renewables MORE DECENTRALIZED MORE CENTRALIZED Source: The MIT Utility of the Future Study 6

7 Fashionable and wearable power nest.com 7

8 Fashionable and wearable power 8

9 Fashionable and wearable power 9

10 Is the future distributed? 10

11 The future is integrated 11

12 Improved network regulation To enable the development of more efficient & innovative distribution utility business models 12

13 Regulatory tools to reduce information asymmetry & manage uncertainty Incentive-compatible menu of contracts to induce accurate utility forecasts and minimize strategy behavior Engineering-based reference network models to equip regulators for forward-looking benchmarks and analyze uncertainty scenarios Automatic adjustment mechanisms to account for forecast errors See Jenkins & Pérez-Arriaga (2017), Improved Regulatory Approaches for the Remuneration of Electricity Distribution Utilities with High Penetrations of Distributed Energy Resources, The Energy Journal 38(3): 63-91

14 Cost-reflective prices and charges 14

15 The (old?) discussion Zonal versus nodal prices EUROPE vs US 15

16 The new reality Source: The MIT Utility of the Future Study 16

17 Energy: trans. Energy: distr. CVR Distr. deferral Gen. deferral Total Insights on the Economics of DERs Average locational value per MWh $ $80 $60 $40 $20 $0 Source: The MIT Utility of the Future Study 17

18 Energy: trans. Energy: distr. CVR Distr. deferral Gen. deferral Total Insights on the Economics of DERs Average locational value per MWh $100 Average locational value per MWh $80 $60 $40 $20 $0 7.9 Source: The MIT Utility of the Future Study 18

19 Insights on the Economics of DERs Locational value: distribution network capacity Source: Jenkins, Luke & Vargara (MIT), forthcoming 19

20 Insights on the Economics of DERs Drivers of locational value Network losses Network capacity constraints & upgrade costs Local reliability costs (User premium value?) Variation in LV Variation in MV Source: Jenkins (MIT), forthcoming Semi-urban networkresults 20

10-100 MW 1-2 MW 1-10 kw 10-100 MW 1-2 MW 1-10 kw 10-100 MW 1-2 MW 1-10 kw 10-100 MW 1-2 MW 1-10 kw Capital annuity and fixed O&M ($1,000/MW-yr) Insights on the Economics of DERs (ii) Economies of

21 MW 1-2 MW 1-10 kw MW 1-2 MW 1-10 kw MW 1-2 MW 1-10 kw MW 1-2 MW 1-10 kw Capital annuity and fixed O&M ($1,000/MW-yr) Insights on the Economics of DERs (ii) Economies of unit scale (fixed-tilt U.S. solar PV systems) $400 $350 $300 $250 $200 $150 $100 $50 $ (high cost estimate) (medium cost estimate) (low cost estimate) Incremental unit cost relative to MW system Source: The MIT Utility of the Future Study 21

22 Spatial granularity Granularity of price signals With respect to both time and location Distribution nodal LMPs (DLMPs, real & reactive) Intermediate DLMPs (substation/zonal/other) Wholesale LMPs + distribution losses Wholesale nodal LMPs Wholesale zonal LMPs Time-of-use pricing Critical peak pricing Day-ahead hourly price Real-time spot price Temporal granularity Source: The MIT Utility of the Future Study 22

charge 0,75 0,50 0,25 0,00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

23 $/kwh End-user price signals Example: Forward-looking peak-coincident network capacity charges 1,50 1,25 1,00 Energy charge Network capacity charge 0,75 0,50 0,25 0, Hour Source: The MIT Utility of the Future Study 23

24 End-user price signals Individual injection & withdrawal profiles Symmetrical Avoiding going behind the meter User Profile DERs Power Flows Meter Source: The MIT Utility of the Future Study 24

25 End-user price signals Residual network & policy costs allocation without distorting efficient incentives Tariff or cost [ /month] Residual costs Unassignable costs Long-run marginal costs Generation and competitive activities Marginal stand-alone systems Source: The MIT Utility of the Future Study Cost-recovery tariff Stand-alone systems 25

cross-subsidies and result in greater variability in charges

26 End-user price signals Address distributional concerns without sacrificing efficient incentives Efficient pricing would unwind cross-subsidies and result in greater variability in charges Lump-sum bill credits or surcharges can restore desired cross-subsidies if desired 26

27 Revisit industry structure 27

28 Need to unlock the value of new services Locational Services: Energy, network capacity margin, network constraint mitigation, reliability, etc. Non-Locational Services: Firm capacity, operating reserves, CO 2 emissions reduction, etc. 28

regulatory oversight Market Platform Network Provider System Operator Data hub?

29 Minimize conflicts of interest Responsibilities and independence of network providers, system operators and market platforms through unbundling and strict regulatory oversight Market Platform Network Provider System Operator Data hub? DER Provision / Ownership Retailing / Aggregation Generation Source: The MIT Utility of the Future Study 29

30 Update electricity markets 30

proper integration 14 12 Diaria Semanal 15 días 30 días 10 8 Media: 7.

31 [MWh] Improve wholesale market and RES subsidies design Reward flexibility improving bidding formats, time granularity and reserves pricing Evolve RES support mechanisms for a proper integration Diaria Semanal 15 días 30 días 10 8 Media: 7.33 MW Mínimo: 4.04 MW Mínimo: 2.54 MW Mínimo: 1.94 MW 0 Mínimo: 0.42 MW Jan Feb Mar Apr May Jun Jul Aug

32 Planning, Operation, Regulation The need for a level playing field 32

Estudio Utility of the Future

Estudio Utility of the Future Dr. José Pablo Chaves Ávila jose.chaves@comillas.edu Dimensiones económicas del nuevo modelo energético en España Pamplona,12 de junio 2018 Contents 1. A power sector in transition