SCENARIOS FOR DG/RES DEVELOPMENT ON CASE STUDY, COUNTRY AND EUROPEAN LEVEL

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3 SCENARIOS FOR DG/RES DEVELOPMENT ON CASE STUDY, COUNTRY AND EUROPEAN LEVEL Wolfgang PRÜGGLER, Carlo OBERSTEINER, Hans AUER Energy Economics Group (EEG), Technische Universität Wien Gusshausstraße 25-29/373-2; 1040 Wien Tel: , Fax: Web: Abstract: The recently observed increase in distributed generation based on renewable energy sources (DG/RES) in the European electricity system is most likely to continue or even increase its growth rate in the future. Distributed Generation (DG) as one core focus of this paper is mainly meant to be connected to distribution grid areas. Thus, scenarios for DG/RES development on distribution level are derived for a time horizon set between 2009 and Distribution areas in which the future development of additional DG/RES is analysed are located in the Netherlands, Germany and Spain, These areas have different characteristics in terms of already existing load and the type of generation installed whereas the penetration levels evaluated can vary significantly. A further increase of partly intermittent and non-intermittent generation capacities is most likely to drive distribution grids to its limits resulting in increased balancing and backup power upgrades as well as grid reinforcements (see e.g. [1]). As capacity increases in Germany, Spain and the Netherlands are observed the question has to be discussed, which technical solutions result in which cost bandwidths of a large-scale DG/RES grid integration. Correspondingly, cost development bandwidths of alternative grid integration strategies are analysed. As a consequence, explicit mechanisms e.g. in grid regulation policies or alternative business modelling approaches have to be introduced in order to enable calculated grid integration cost savings which lie between 150 per metering point (mp) (both for generation and demand) and 85 /mp. Only then, expected DG/RES development will not imply further economic disincentives regarding distribution grid integration. Keywords: Distributed generation, renewable energy sources, development scenarios, alternative grid integration approaches, distribution grid cost bandwidth development 1 Introduction For derivation of future DG/RES scenarios the simulation software GreenNet 1 has been updated for specific needs within the IMPROGRES 2 project. GreenNet has been developed within the Fifth Framework project GreenNet (EU-15) and has recently been extended in the 1 For a detailed model description please visit 2 Research project supported by the European Commission, Directorate-General for Energy and Transport, under the Energy Intelligent Europe (EIE) programme, for further details see [2] Seite 1 von 10

4 EIE project GreenNet EU27 to the EU-27 region and, finally, the Western Balkan region was included in the EIE project GreenNet -Incentives in 2009 (finally covering the major 35 European countries). The model is capable to derive future DG/RES development scenarios on an aggregated basis (e.g. EU-27 region as a whole) as well as on disaggregated country (e.g. The Netherlands) or even case specific level (e.g. case study region in Spain). The major purpose of this software tool is to derive DG/RES deployment under different cost allocation policies on grid integration ( deep versus shallow versus hybrid ) based on the currently implemented DG/RES promotion instruments in the different EU Member States (see Figure 1). For this work essential database updates were performed, both on country as well as on case study level in order to derive specific DG/RES scenarios on distribution level. In addition, data regarding potentials for three case study regions have been provided by distribution system operators (DSOs) within their grid operation areas (see [2]). Furthermore, scenario projections until 2030 are performed based on GreenNet simulation results. In practise, inputs of recent reports of the European Commission (EC) including the PRIMES model (for a model description see [3]) scenarios (compare [4] and [5]) are used to identify a possible DG/RES development gradient for performing projections starting from 2020 until Above all, an allocation of simulation results to distribution level was implemented, in order to provide a basis for cost impact analysis of different grid integration strategies. 2 Methodology 2.1 Modelling of DG/RES development scenarios The GreenNet model conducts a comparative and quantitative analysis of least-cost DG/RES grid integration strategies in the liberalised European electricity market. The general modelling approach in GreenNet is to describe both DG/RES generation technologies (supply curve) and energy efficiency measures (demand curve) by deriving corresponding dynamic cost-resource curves (for a detailed description see [3]). The costs as well as the potentials of these dynamic cost-resource curves can change year by year. These changes are given endogenously in the model depending on the outcome of the previous year (n-1) and the policy framework conditions set for the simulation year (n). Based on the derivation of the dynamic cost-resource curves, an economic assessment takes place, considering scenario specific settings like DG/RES policy selection, socioeconomic parameters (consumer/investor behaviour) as well as wholesale electricity price and demand forecasts. Wholesale electricity price projections on the conventional power market are implemented exogenously in GreenNet. Then, in the economic assessment additional costs for system operation (with versus without storage options) and grid reinforcement/extension are modelled and in case of selection allocated to the marginal generation costs of the corresponding DG/RES technology. Seite 2 von 10

5 Support framework support policy Scenario selection on a yearly basis ( ) Social behavior dynamic constraints Grid integration policy, scenarios General framework price scenarios, etc. Determination of cost resource curves per supply side technology per year RES-E (hydro, wind, biogas, etc.) Assessment of grid integration costs per year grid connection, grid reinforcement, balancing, system capacity Investment decisions (myopic) - link of different technologies and respective markets Determination of cost resource curves per demand sub sector per year Industry Household Tertiary RES-E: offer price <> support level Demand: switch price <> consumer price feedback year n+1 Results ( ) Deployment per technology, grid integration costs (annual, cumulated) feedback year n+1 Figure 1: Overview on the least-cost modelling approach in GreenNet Promotion instruments for DG/RES technologies include the most important price-driven strategies (feed-in tariffs, tax incentives, investment subsidies, subsidies on fuel input) and demand-driven strategies (quota obligations based on tradable green certificates - including international trade, tendering schemes). In addition, electricity taxes and other direct promotion instruments supporting energy efficiency measures on the demand side can also be chosen. As GreenNet is a dynamic simulation tool, the user can change DG/RES policies and parameter settings within a simulation run on a yearly basis. Within this work it was decided to use currently implemented policy settings of the software in order to derive BAU scenarios for each analysed country. The results are derived on a yearly basis by determining the equilibrium level of supply and demand within each market segment considered. For further details on DG/RES scenario modelling it is referred to [2]. 2.2 Alternative grid integration research At higher penetration levels of DG the former purely passive distribution system becomes active and the unidirectional flow changes to a bidirectional load flow. However, this development is usually not reflected when it comes to grid operation, since in most cases DG is simply seen as a negative load. Real active operation means that generation, the network Seite 3 von 10

6 and consumption (loads) within the distribution system actively interact and adapt each other according to the actual load flow situation. Recent research (compare e.g. [6]) developed new strategies in the field of distributed generation where currently passive distribution networks become active networks, able to accommodate a significantly higher penetration of DG. The conversion from passive to active operation introduces many challenges considering DG network integration, power quality, concepts and strategies for network planning, control and supervision as well as information and communication technologies. Besides the research work in the field of active networks mainly focusing on theoretical part of the problem one further goal must be the practical realisation of demonstration grids where the active network approaches are implemented with minimised investment costs. In general, no single solution exists that can be applied in every case and grid. Consequently, a larger set of different approaches was introduced. This set of technical measures includes solutions, of which some can easily be combined and some are complementary. By applying these measures to different, carefully selected case study grids on a simulative basis, a step model was created that describes possible measures in an ordered form, from simple but less effective solutions up to complex, but very effective measures. Keeping the voltage between the defined limits is becoming a primary concern of DSOs. Increasing levels of DG penetration cause the voltage to rise above limits, presenting risks for customer equipment. As the present DSO s voltage control equipment is only able to handle limited amount of DG, the modification, replacement and new installation of different equipment is necessary to increase the DG penetration on the distribution networks. Loads, line impedances, power exported by DG and the distance of DG from the primary substation are the most important factors causing the changes in the voltage profiles. Voltage Voltage violation at upper limit Upper voltage limit Lower voltage limit Voltage violation at lower limit Time Figure 2: Schematic illustration on violation of voltage levels limits (source [7]slightly adapted) So, the following set of alternative approaches for voltage control has been developed to overcome above mentioned voltage violations (also compare Figure 3): Seite 4 von 10

7 110 kv OLTC 110 /30 kv 30 kv B. D. Voltage regulator ITinfrastructure M2 DG 4 DG1 DG5 Active and reactive power control DG2 M1 DG 1 A. DG 6 Local voltage control M3 ITinfrastructure Metering point M3 DG 3 C. Figure 3: Overview on a set alternative approaches for voltage control as active grid control concepts (source [6] slightly adapted) A. Local Voltage Control In this solution, the On-Load Tap Change (OLTC) transformer is controlled traditionally (fix set-point), but some selected generators (e.g. DG6 in Figure 3) and/or loads perform local voltage control with reactive and active power management. B. Decoupling Solution This solution considers the use of an additional voltage regulator (shown in left grid branch of Figure 3) to decouple the voltage in parts of the network. Mostly in those branches many DG/RES units imply a different voltage situation and therefore need voltage up or down regulation by the voltage controller in order to keep voltage within its limits. C. Distributed Voltage Control Here, the OLTC is controlled according to real-time voltage measurements at critical nodes of the network. In case the voltage exceeds the operational limits at one of the monitored nodes, the OLTC performs a tap change. The effectiveness of this control is limited by the network characteristic (e.g. different load flow characteristic of MV branches). This solution demands a communication infrastructure with limited requirements between selected nodes and the OLTC controller. Seite 5 von 10

8 D. Coordinated Voltage Control This approach represents the most complex control (coordinated use of measures in A and C ) strategy. A control unit operates the OLTC and the generators and/or loads participating to local control on the basis of the measurements received from the critical nodes. The use of coordinated local control allows solving the conflict appearing in the previous approach (OLTC is not able to maintain the voltage within the limits in the whole network). Like in the previous steps, the critical nodes and the controlled generators have to be suitably selected. For this control, the requirements on the communication infrastructure are higher (bidirectional information flows). Table 1 highlights the utilised assets for each active grid integration solution depending on the integration approach where the OLTC is set at a fixed voltage level or varies its tap position. Table 1: Overview on developed voltage control solutions and utilised assets Assets utilised Solution OLTC DG Loads Decoupling assets A. Local Voltage Control B. Decoupling Solution C. Distributed Voltage Control D. Coordinated Voltage Control Fixed set-point Fixed set-point Variable set-point Variable set-point Grid integration costs As grid cost development is of essential interest for both DSOs as well as grid tariff regulating authorities, the main goal of this work is to derive future grid integration cost development bandwidths regarding several DG/RES scenarios on distribution levels in selected European countries. For this, high as well as low grid integration costs were evaluated (according to [8]) as shown in Table 2. Table 2: Parameters (year 2006 values) for grid integration cost scenarios (high and low values) according to [8] Grid integration costs [ /kw] CON - HIGH CON - LOW DVC - HIGH DVC - LOW CVC - HIGH CVC - LOW As a consequence grid cost developments were derived for different grid integration strategies characterised by conventional solutions (CON - e.g. new cable lines), by distributed voltage control strategies (DVC) and by a coordinated voltage control strategy (CVC) assuming that chosen strategies are able to grid integrate all future DG/RES units. Furthermore, total grid integration costs are referred to overall metering points (mp) per country and are expressed in year 2006 values. Seite 6 von 10

9 3 Results Electricity supply chains have been facing a fundamental change towards a more distributed system in the last decades in many European countries. GreenNet simulation results on (country specific) annual DG/RES installations until 2030 indicate that these tendencies will continue or even rise in the future, if current support policies are continued. 300 NL: installed capacities [MW/year] PV BG BM Wind Hydro Figure 4: Yearly DG/RES installations on distribution level in the Netherlands according to [2] In detail, Dutch DG/RES generation capacities show high growth rates (up to ~280 MW/yr) until 2020 followed by lower increases between 2020 and In general, simulation results show that on distribution level a significant increase of wind capacities can be expected in the Netherlands, if BAU policy settings are implemented. For further DG/RES development scenarios, especially on case study and European level it is referred to [2]. GER: installed capacities [MW/year] PV BG BM Wind Hydro Figure 5: Yearly DG/RES installations on distribution level in Germany according to [2] 3 Observed steps of yearly capacity installations between the periods 2020 to 2021 and 2025 to 2026 are due to implemented scenario projections according to [3]. Seite 7 von 10

10 Figure 5 and Figure 6 show further simulation results on country level for Germany and Spain on yearly DG/RES developments until High photovoltaic and biogas installations are evident in Spain whereas Germany will face further increases in wind as well as biomass installations. Cumulated values of overall additional DG/RES installation capacities in each country will be used to derive DG/RES grid integration cost bandwidths presented below. ES: installed capacities [MW/year] PV BG BM Wind Hydro Figure 6: Yearly DG/RES installations on distribution level in Spain according to [2] Caused by the overall objective to increase the shares of distributed generation based on renewable energy sources (DG/RES) distribution grids have already come to their limits. However, research in innovations in grid integration approaches show, that there exist cost reduction potentials (see [6]). Consequently, cost development bandwidths on country level are calculated according to above presented DG/RES development scenarios (as shown in Figure 7 to Figure 9) assuming that CVC and DVC solutions can be realised in each country. 180 NL: distribution grid cost development [ /mp] CON-HIGH CON-LOW DVC-HIGH DVC-LOW CVC-HIGH CVC-LOW Figure 7: Dutch 4 distribution grid cost development bandwidth until 2030 addressing three grid integration strategies (conventional, DVC &CVC) 4 7 million metering points according to [9] Seite 8 von 10

11 For the Dutch case highest cost of grid integration are ~ 170 /mp in 2030 (CON-HIGH) whereas lowest ones can be achieved by ~24 /mp via a CVC solution at LOW costs. In Germany again highest cost of ~ 187 /mp 5 (referred to 30 million estimated metering points) are due to conventional grid integration strategies in the high cost storyline. On the contrary, lowest costs of ~26 /mp can be achieved by implementing a CVC solution at low costs GER: distribution grid cost development [ /mp] CON-HIGH CON-LOW DVC-HIGH DVC-LOW CVC-HIGH CVC-LOW Figure 8: German distribution grid cost development bandwidth until 2030 addressing three grid integration strategies (conventional, DVC &CVC) standardised by 30 million metering points In Spain costs (see Figure 8) lie between ~ 260 /mp 6 and ~36 /mp. Above all, cost bandwidths in 2030 calculate to ~ 225 /mp in Spain, followed by ~ 146 /mp in the Netherlands and 160 /mp in Germany. 300 ES: distribution grid cost development [ /mp] CON-HIGH CON-LOW DVC-HIGH DVC-LOW CVC-HIGH CVC-LOW Figure 9: Distribution grid cost development bandwidth until 2030 in Spain addressing three grid integration strategies (conventional, DVC &CVC) 5 ~ Due to missing metering data, results were standardised as costs per 30 million metering points. 6 ~ 22 million metering points according to [10] Seite 9 von 10

12 4 Conclusions and recommendations The impact of DG/RES capacity development scenarios on country level in the Netherlands, Germany and Spain calculated to grid integration cost bandwidths between ~ 225 /mp and 146 /mp for conventional grid integration strategies as well as alternative options characterised by a distributed or coordinated voltage control approach. Such high cost saving opportunities on distribution level therefore have to be further tested regarding their performance in daily distribution grid operation as well as applicability in several European distribution grid types. As a consequence, explicit mechanisms e.g. in grid regulation approaches have to be implemented in order to create adequate incentives for specific demonstration initiatives in European countries. Furthermore, as DG/RES grid integration should not imply economic disincentives for different actor segments (e.g. generation, demand or DSOs) a nondiscriminatory treatment of all actors is essential. Hence, it is recommended to analyse possibilities of alternative business models (in addition to technical solutions) to provide a system and least cost related as well as discrimination free pathway towards a broad DG/RES development in Europe. Above all, it has to be secured in advance (before implementing new technologies) that benefits over costs of such alternative system designs create added values for social welfare and economies of European countries compared to conventional solutions. References [1] R. Nenning: Das Forschungsprojekt DG DemoNetz Integration dezentraler Energieerzeuger in aktive Verteilernetze, Proceedings NEPLAN User-Meeting, Zürich, [2] W. Prüggler et al: Scenarios for DG/RES energy futures on case study, country and European level ; Report of the European research project IMPROGRES; ; Energy Economics Group (EEG), Vienna University of Technology, Austria, [3] Capros P.: The PRIMES Energy System Model Summary Description, model description; NATIONAL TECHNICAL UNIVERSITY OF ATHENS; European Commission Joule-III Programme, Athens, 2005 [4] European Commission: European Energy and Transport - Trends to update 2007 European Commission, ISBN , Luxembourg, [5] European Commission: European Energy and Transport Scenarios on high oil and gas prices, European Commission, ISBN , Luxembourg, [6] H. Brunner; B. Bletterie, A. Lugmaier: Strategien für die Spannungsregelung in Verteilnetzen mit einem hohen Anteil an dezentralen Stromeinspeisern, 5. International Energy Conference Vienna (IEWT 2007), Vienna, Austria, Feb [7] F. Kupzog, H. Brunner, W. Prüggler, T. Pfajfar: DG DemoNet-Concept - A new Algorithm for active Distribution Grid Operation facilitating high DG penetration ; Proceedings 5th International Conference on Industrial Informatics (INDIN2007), Vienna, 2007 [8] Data derived in the Project DG-DemoNet; Austrian project number ; Vienna, 2010 [9] J.S. Jones: Smart Metering in the Netherlands A blueprint for Europe? ; Metering International Issue 1; 2007 [10] H. Brunner: Schöne neue Welt des Smart Metering Möglichkeiten und Erfahrungen!, Berliner Energie Tage 2008, Berlin, 2008 Seite 10 von 10