Overcoming Grid Integration Challenges of Variable Generation

Transcription

1 Overcoming Grid Integration Challenges of Variable Generation Marcelino Madrigal, Ph.D Sr. Energy Specialist, Sustainable Energy Department, The World Bank Small Hydro Latin America Conference December 6 th, Panama, Panama from Jeddah, Saudi Arabia

2 CONTENTS Variable Generation and Electricity Grids Access and Pricing to Transmission: The Interconnection Issues Grid Operations: The Integration Issues 1

3 VARIABLE RENEWABLE ENERGY TECHNOLOGIES AND THE GRID Given their role to achieve various policy goals, many grids are expecting larger shares of supply from variable renewable energy technologies: wind, solar, mini hydro Variable renewables have shorter term variability (various minutes time frame) which is different and more uncertain if compared to the sources many grids have been used to. In addition they have limited controllability at will of their output. Adapting operational practices and rules is required as their share increases into the grid: the integration issue The location of variable renewables is often far from existing grids or consumption centers. These sources are sparse and granular, achieving larger shares of supply from them requires exploiting and bringing transmission to a huge number of sites This requires expanding (and paying for) the transmission grid and its use: the interconnection issue 2

4 VARIABLE RENEWABLE ENERGY TECHNOLOGIES AND THE GRID Often grid interconnection and integration issues are underestimated in renewable development discussions and they become a huge barrier for renewable energy development The barrier is more acute than expected and requires proper attention by policy and regulations If not properly developed, weak statements such as connection guarantee, access guarantee, connection priority, frequent in policy or regulatory statements, are simply not enough to ensure transmission services will be delivered to renewable producers Most of the challenges can be tackled with a few policy actions, good planning and adjustments to regulation and operational practices The objective of this presentation is presentation is to brief on the issues, explain how is has been tackled in some countries, and present some guidelines that could help to move forward specific implementations 3

5 CONTENTS Variable Generation and Electricity Grids Access and Pricing to Transmission: The Interconnection Issues Grid Operations: The Integration Issues 4

6 ACCESS AND PRICING TO TRANSMISSION: THE INTEGRATION ISSUE Transmission needs to get the source, not source to the transmission. Resources are often misplaced : far away from consumption or existing network Scaling-up requires exploiting hundreds of sites whose average size is small (~100 MW) even at the high voltage levels and in countries with large penetration levels Frequently building transmission will take more time than building, e.g., the wind power plant Transmission not only key to connect supply, but smooth it across the system or to manage critical condition (e.g. min load) 5

7 TRANSMISSION: BARRIER TO RE GENERATION IN SEVERAL COUNTRIES In the USA: achieving 20% wind energy target will required $20 billion in transmission investments Wind (MW) on Transmission Lines Existing New >1000 Wind (MW) Used Inside the BA >5000 Source: US-DOE 20% Wind Energy by 2030 Increasing Wind Energy s Contribution to U.S. Electricity Supply, July

8 TRANSMISSION: BARRIER TO RE GENERATION IN SEVERAL COUNTRIES Renewable energy zones in Texas: Results RE-zones approved in 2008 Source: National Renewable Energy Laboratory & US DOE 7

9 TRANSMISSION: BARRIER TO RE GENERATION IN SEVERAL COUNTRIES In Europe: To meet target of 20% RE by 2020, 20 billion required for 42 large transmission projects Congestion: without upgrades with upgrades Projects reduce congestion cost by 1,500 million/year *Source: TradeWind Study. Feb

10 ACCESS AND PRICING TO TRANSMISSION: THE INTEGRATION ISSUE Costs faced by developer: extension and usage cost (for remote delivery) Network Assets Connection Assets Renewable Generator Network Upgrades System Extension Enabler Facilities Cost to Generators -Scale Deep Policy Shallow Policy Super-Shallow Policy Connection Cost Allocation High ($$$) Low ($) 9

11 LCE driven by Usage Cost ACCESS AND PRICING TO TRANSMISSION: THE INTEGRATION ISSUE Transmission cost can impact in private returns. A worry for the developer Options Connection Cost Network Cost A Transformer, Postage stamp-like usage connection line, and upgrade substation B Transformer and Flow-based method connection line C Zero cost Zero cost LCE with different transmission cost allocation and pricing rules BA BB AA AB AC 15% increase BC CB CA CC LCE driven by Connection Cost AA AB AC BA BB BC CA CB CC Note: AB means Connection Cost option A and Usage Cost option B 10

12 $/ton CO2 $/ton CO2 ACCESS AND PRICING TO TRANSMISSION: THE INTEGRATION ISSUE Transmission costs could change the policy alternative to achieve certain goal. A worry for the policy maker and regulator Example: Transmission can change marginal abatement costs and order and share of technology options GHG Abatement Cost by Generation Technology without Transmission Cost GHG Abatement Cost by Generation Technology with Transmission Cost $130 $110 $90 $70 $50 $150 $130 $110 $90 $70 $50 $30 $30 $10 $10 -$10 Wind CCGT Hydro CSP -$10 CCGT Wind Hydro CSP Source: World Bank Note: Natural gas cost of 4.12 US cents/ KWh used in the analysis is based on the price of natural gas at US$ 7/ MMcf (ESMAP, 2007). CCGT results in 62% GHG emission reductions whereas wind, hydro and CSP result in 100% GHG emission reductions. 11

13 ACCESS AND PRICING TO TRANSMISSION: THE INTEGRATION ISSUE Pricing: no/low cost transmission for renewables for the generator is not the best option for all Somebody has to pay If it is the utility, like any other business, they also need to recoup the cost (which is not always the case if regulations are not clear or well enforced) If it is the electricity consumer (or tax-payer), need to make sure investment brings benefits beyond the cost A fare share paid by generator and consumer is best for all: To ensure best renewables (lower cost) are exploited Utility (transmission company) continues having the ability (financial and technical) to interconnect more RE Pricing methods should focus on cost recovery of expansion needs, not on tariffs that pretend to focus on efficient utilization 12

14 ACCESS AND PRICING TO TRANSMISSION: THE INTEGRATION ISSUE Planning: proactive planning can drastically reduce the cost (to all) and speed interconnection times. Proactive planning Transmission utilities and regulator to define an organized process with direct engagement of developers to determine transmission solutions for aggregated needs An organized process (contrary to first-come-first-serve) will speed implementation times and reduce the cost An organized process helps determining cost sharing between developers and utility (its electricity consumers) Regulator will be more confident that costs where minimized and cost gaps (what is not paid by developers) can be passed to consumers 13

15 ACCESS AND PRICING TO TRANSMISSION: THE INTEGRATION ISSUE To ensure RE can be connected Proactive transmission planning a key part of the solution Promptly, so that RE are not waiting years to get a connection! And efficiently, so that the cost of transmission is minimized and to ensure that RE policy goal is met at total minimum cost. The cost can never be higher than the value given to RE. There will be different ways in which proactive planning can be implemented in different institutional settings of the electricity sector 14

16 ACCESS AND PRICING TO TRANSMISSION: THE INTEGRATION ISSUE Example: Proactive Transmission Planning Implementation Source: World Bank Report on Transmission Options for RE. With PSR 15

17 TRANSMISSION LINKED TO ENERGY AUCTIONS FOR RE Features Auction to buy energy from RE (not FIT) Planer determines network RE suppliers pay transmission price except difference between pre and post auction (passed to consumers) A new transmission company (regulated return) develops and operates the needed transmission network 16

18 SOME GENERAL PRINCIPLES TO HELP IMPLEMENT SPECIFIC SOLUTIONS Principle 1: Extra transmission is often worth the cost. The cost of expansion transmission is often worth the incremental benefits renewable generation. Benefit should be measured considering the value attributed exclusively to renewable (P3). Principle 2: Develop transmission proactively. Sparsely and granular renewable resources require proactive and organized planning to reduce cost and connection times Principle 3: Maximize the net benefit of renewable transmission. Transmission should be planned as to maximize the befits of renewable minus the cost of generation. Along with proper pricing, this ensure that the most valuable sources are developed first Principle 4: Transmission should use efficient pricing. Suppliers need to pay their share of transmission costs, to help ensure best combined transmission and renewable generation resources are developed first and reduce excess profits Principle 5: Broadly allocate uncovered transmission costs. Given the befits of renewable are externalities reduced, uncovered transmission charges should be applied as broadly as possible 17

19 CONTENTS Variable Generation and Electricity Grids Access and Pricing to Transmission: The Interconnection Issues Grid Operations: The Integration Issues 18

20 VARIABLE RENEWABLE ENERGY TECHNOLOGIES AND PLANNING Variability, how bas it is? Demand is always variable Supply is also variable 19

21 VARIABLE RENEWABLE ENERGY TECHNOLOGIES AND PLANNING How difficult it is: depends how the aggregated impacts combine load supply 2 weeks of load and wind variability Source: Utility Wind Integration Group 20

22 VARIABLE RENEWABLE ENERGY TECHNOLOGIES AND PLANNING The cost of short-term impacts on short-term reserves.. [a] Costs in $/MWh assume 31% capacity factor. [b] Costs represent 3-year average. [c] Highest over 3-year evaluation period. Source: Wiser

23 Multiple windows for energy trade/dispatch: real time markets, day ahead markets Highly interconnected system: connect to multiple markets Flexible generation: Good ramping capab: GT, CCGT Generation with storage: hydro, pumped hydro Diversify/aggregate wind power: across different areas Other, most expensive, storage solutions VARIABLE RENEWABLE ENERGY TECHNOLOGIES AND PLANNING Flexibility should options as penetration increases $ Solutions 22

24 VARIABLE RENEWABLE ENERGY TECHNOLOGIES AND PLANNING Critical conditions: Spain min load max wind: CCGT Flexibility Source: Red Electrica Wind power output reduced by 75% in 6 hours, decrease met by fast responding CCGT Fast start units need be available to compensate for the loss: in this case CCGT Other options that can help: interconnections (as in Denmark), demand response, more wind and solar diversity. Which is the lower-cost option? reserves/interconnections? 23

25 VARIABLE RENEWABLE ENERGY TECHNOLOGIES AND PLANNING Critical conditions: transmission flexibility in Denmark During high wind conditions: excess traded to NORDEL or Germany During rapid wind decrease, large balancing area permit imports from Germany Grid stability is improved by interconnections Source Energinet.dk Denmark s TSO Wind power generation % of total consumption in

26 FINAL REMARKS Operational impacts of variable power sources can be managed without major challenges at lower penetration levels (<10%) and the cost implications tend to be low. Higher levels will require more attention to grid operations Small grid systems with limited flexibility (e.g. small size, old thermal generation, and/or islanded) could have a harder time managing variability Maintaining reliable grid operation with larger shares will require cooperation from grid and developers Updating grid electrical interconnection standards with regard to protections, voltage and frequency performance. Balancing between ensuring reliability and not imposing excessive cost to developers Collaboration with grid operator by sharing information for planning and also operations. The later includes importantly forecasting to improve the grid operator dispatch, helping ensure priority of dispatch and reduce reserve costs 25

27 CONTENTS THANKS 26

28 ELECTRICITY TRANSMISSION: THE IMPORTANCE OF ZONE PLANNING Illustration of the importance to organize the transmission process (proactively connect) and bundle projects Tuguegarao We focus on 21 projects in Luzon, out of more than 190 projects (wind, hydro, biomass, and others) that have already requested service contracts as of April 2010 Transmission needs first-come first-serve vs. planned approach: reactive vs. organized proactive approach Projects 230 KV substation 115 KV substation 27

29 ELECTRICITY TRANSMISSION: IN THE PHILIPPINES Characteristics, RE projects in Tuguegarao Project name Technology Installed Bus Geographical coordinates [ºdec] Capacity capacity [MW] Name Number Latitude Longitude factor [pu] TAREC 2 Wind 45 TAREC 2-WD TAREC 4 Wind 12 TAREC 4-WD DUMMON (Main cascade) Small hydro 2 DUM_HY DUMMON (Tributary) Small hydro 2 DUM_HY PINACAN-HY44 Small hydro 8 PINACAN-HY Some of the assumptions project and transmission costs All projects receive the same energy price (FIT) 11% discount rate 0.3 and 0.5 capacity factors, wind and hydro respectively Sample of transmission costs: Conductor size [AWG/MCM] Number of Resistance of Cost of Rated voltage 34.5kV Conductor size conductors per conductor transmission Number of Resistance of Cost of [AWG/MCM] bundle [-] bundle [Ω/km] line [ku$/km] conductors per conductor transmission 4/ bundle [-] bundle [Ω/km] line [ku$/km] / Rated voltage 69kV 28

30 ELECTRICITY TRANSMISSION: IN THE PHILIPPINES Results: Comparison and impact in tariffs Transmission price In $/Mwh 1/2 29