The Development of Distributed Generation

Transcription

1 The Development of Distributed Generation Martin Scheepers ECN Policy Studies Int. Conf. Energy in Changing Environment, December, 2007, Jacobs University Bremen

2 Contents What is distributed generation (DG)? The policy drivers Integration of DG in the network system Effect of a large penetration of DG on the regulated operators of electricity distribution networks Impact of a large penetration of DG and electricity from renewable energy sources (RES) on the total electricity system costs and costs for society

3 What is distributed generation (DG)? Large-scale generation Distributed Generation (DG) Combined Heat and Power (CHP) Large district heating* Large industrial CHP* Medium district heating Medium industrial CHP Commercial CHP Micro CHP Renewable Energy Sources (RES) Large hydro** Offshore wind Co-firing biomass in coal power plants Geothermal energy Medium and small hydro Onshore wind Tidal energy Biomass and waste incineration/gasification Solar energy (PV) * typical > 50 MW e ** typical > 10 MW e

4 Market presence of DG in Europe Source:DG-GRID / SOLID-DER DER share in total electricity capacity (%) Lithuania Poland Romania Slovakia Slovenia Hungary Latvia Estonia RES CHP DG total Austria Belgium Denmark Finland France Germany Greece Ireland Italy Luxemburg Netherlands Portugal Spain Sweden UK Bulgaria Czech Republic

5 The policy drivers Climate Change - 20% or 30% lower GHG emissions in 2020 compared to 1990 Renewable energy sources (RES) - 20% RES in final energy consumption in % to 60% RES in electricity mix in 2020 Energy efficiency - 20% more energy efficient in More CHP Energy Security - Reduction of gas and oil import dependency - Secured reliable electricity supply Market liberalization - Electricity directive: integration of DG in network system

6 Integration of DG in network system Electricity Directive Art. 14/7 - When planning the development of the distribution network, energy efficiency/demand-side management measures and/or distributed generation that might supplant the need to upgrade or replace electricity capacity shall be considered by the distribution system operator

7 DG-operators Regulator profit Incentive regulation: revenue cap price cap Equipment procurement Operating & maintenance Equipment Connection charges Use of System charges (Transport + system services) Transport services Ancillary services Connection charges Use of System charges (Transport + system services) Consumers DSO Energy loss compensation Large power producers Distribution grid

8 Effect of a large DG penetration on operational and capital expenditures (I) Problems to solve - DG in rural networks causes voltage rise problems. - DG in urban networks causes fault level increase. Reinforcement costs - At low DG penetration levels reinforcement costs are zero, but they will increase progressively with higher DG penetration. - Also DG-density causes cost increases. Energy losses - DG may initially reduce energy losses, but with higher DG penetration losses will increase. Distribution asset replacement value - DG may reduce power flows through high voltage T&D network assets and possibly postpone network reinforcements. This benefit reduces in case of high DG penetration and high DGdensity.

9 DG-operators Regulator profit Incentive regulation: revenue cap price cap Equipment procurement Operating & maintenance Equipment Connection charges Use of System charges (Transport + system services) Transport services Ancillary services Connection charges Use of System charges (Transport + system services) Consumers DSO Energy loss compensation Large power producers Distribution grid

10 DG-operators Energy loss compensation Ancillary services Regulator Incentive regulation: revenue cap price cap Equipment procurement Operating & maintenance Equipment profit Connection charges Use of System charges (Transport + system services) Transport services Ancillary services Connection charges Use of System charges (Transport + system services) DSO Consumers Smart Distribution grid (Active Network Management)

11 Effect of a large DG penetration on operational and capital expenditures (II) Active network management - Reinforcement costs can be reduced with active network management. However, in some high DG-penetration cases costs will be higher than passive network management. - Operational costs (i.e. energy losses, curtailment compensation, labour costs) will increase. This results in higher total costs in some cases.

12 Neutralizing negative effect on the DSOs revenues (I) Extra DSO expenditures - DG may induce extra operational and capital expenditures DSOs should not be compensated through DG connection charges - to guarantee non-discriminatory network access DG connection charges should be based on shallow costs (i.e. direct costs of the connection) DG-integration costs should be socialized - DG-integration costs socialized among consumers and DG operators through Use of System charges - Use of System charges should be cost reflective - Preferably differentiated by location and time of use - Should be positive (if network costs are increased due to DG operation) or might also be negative (if the network savings are greater than the costs)

13 Neutralizing negative effect on the DSOs revenues (II) 60% 50% 40% Impact DG on DSO revenue without regulatory improvements with regulatory improvements Incremental net profit/regulated profit 30% 20% 10% 0% -10% -20% -30% -40% -50% -60% Network type R R U U R R U U R R R R U U U U R R R R U U U U R R U U R R U U Network management P A P A P A P A P A P A P A P A P A P A P A P A P A P A P A P A Intermittency Yes Yes Yes Yes Yes Yes Yes Yes No No Yes Yes No No Yes Yes No No Yes Yes No No Yes Yes No No No No No No No No Concentration Low Low Low Low High High High High Low Low Low Low Low Low Low Low High High High High High High High High Low Low Low Low High High High High DG penetration (%) 11% 11% 11% 11% 23% 23% 23% 23% 23% 23% 23% 23% 23% 23% 23% 23% 46% 46% 46% 46% 46% 46% 46% 46% 46% 46% 46% 46% 91% 91% 91% 91% DG penetration (MW) Impact with compensation Impact without compensation

14 Impact of a large DG penetration on the total electricity system costs and society Power generation costs - Electricity from RES still more expensive - Intermittent RES (e.g. wind) causes higher balancing costs Network costs - Higher network costs Costs for society - Electricity prices (commodity prices + network tariffs) - Financing support schemes for RES/CHP

15 Funding Funding through through or or tax tax system system Consumers Consumers electricity end-user price network tariffs Support Support Mechanism Mechanism electricity market price Power Power Market Market Balancing Balancing Ancillary Ancillary services services Grid Grid production subsidy or feed-in tariff DG/RES-E DG/RES-E network tariffs

16 Funding Funding through through or or tax tax system system Consumers Consumers electricity end-user price Impact on balancing costs network tariffs Support Support Mechanism Mechanism production subsidy or feed-in tariff Large budget increase electricity market price Power Power Market Market DG/RES-E DG/RES-E Balancing Balancing Ancillary Ancillary services services Impact on market prices Grid Grid network tariffs Impact on grid costs

17 Evolution of total system costs Generation costs, incl. balancing Costs Generation costs incl. external benefits 0 RES-E/DG penetration over time (%)

18 Evolution of total system costs Generation costs, incl. balancing Costs Generation costs incl. external benefits Network integration costs 0 Innovative network integration RES-E/DG penetration over time (%)

19 Evolution of total system costs Generation costs, incl. balancing Overall costs incl. externalities Overall costs incl. innovations Costs Generation costs incl. external benefits Network integration costs 0 Innovative network integration RES-E/DG penetration over time (%)

20 Summary and conclusion In future a large share of power generation will come from DG and RES. The technical and economical impacts should be considered. Besides a smart technical integration also a smart economical integration of DG and RES is necessary. This requires adaptation of the regulatory framework and market design The overall costs of a electricity supply system with a high share of DG/RES may increase.

21 Acknowledgements and further information Thank you