Saving money and the environment with Smart Power Generation

Transcription

1 Saving money and the environment with Smart Power Generation

2 CONTENT Introduction 4 Case 1: California 6 Case 2: Great Britain 8 Case 3: India 10 IEA statements of ICEs 12 The value of flexibility 14 Future market design 15

3 INTRODUCTION W i nd and solar power are crucial to cut CO2 emissions and secure a flow of electricity to our homes and businesses. But the output of wind and solar energy changes with the weather. This becomes a problem when the capacity of wind and solar is large. Current systems cannot absorb the variations. Another challenge is coping with the daily peaks of electricity demand. Flexible generation is a costeffective, mature and readily available option to balance renewable energy variability and uncertainty. 1 What is flexibility? Flexibility in power generation can be defined as the ability to change the level of electricity output in response to an instruction or another signal. All forms of electricity production or consumption are flexible over certain timeframes. For example a combined cycle gas turbine (CCGT) can flex from producing no electricity at standstill to full output over the course of a couple of hours. Similarly some industrial processes take hours to days to entirely shut down to bring their electricity consumption to zero. For these new challenges, more flexibility is needed in power systems. The most important source of flexibility is flexible generation. It means fast-starting, efficient power capacity that can offer back-up for any Response time is the critical differentiator for valuing flexible forms of electricity when balancing intermittent renewables. variations in the supply of renewable energy and the demand of electricity. a balance can be maintained. Systems need to respond across different timeframes, from seconds to minutes to hours. Flexible forms of electricity must be able to ramp their output at the same rate that wind and solar output fluctuates, so that 4 5 This booklet showcases recent research by Wärtsilä. It demonstrates what Wärtsilä s Smart Power Generation (SPG) power plants, based on internal combustion engines (ICEs) can do to optimise power systems around the world. According to the results, flexible capacity can cause significant savings and reductions in CO 2 emissions. Modern combustion engine power plants use reciprocating internal combustion engines that burn natural gas. Unlike conventional gas turbines, the combustion takes place in cylinders, much like a car engine. However, the similarity with automotive applications ends there as engines for power plant applications have state-of-the-art control systems and are optimised and developed unlike anything found in the transportation industry. During the last few years, Wärtsilä has undertaken several studies related to power system optimisation of large-scale power systems. These studies include e.g. California (KEMA 2013; Wärtsilä & Energy Exemplar 2014a & 2014b), Great Britain (Wärtsilä & Redpoint Energy [Baringa Partners] 2013), India (Wärtsilä 2014), South Korea (Leino; Rautkivi; Heikkinen & Hultholm, 2012) and Australia (Wärtsilä & Roam Consulting 2014) 2. Despite the very different generation fleets in the above cases, the economic findings are well in line with each other. In this document, three of these studies will be introduced and the case-specific value of Smart Power Generation will be presented. These global studies have also led to new insights on how electricity markets should be designed in order to ensure affordable electricity. 1 International Energy Agency (IEA), The Power of Transformation Wind, Sun and the Economics of Flexible Power Systems 2

4 CASE 1: CALIFORNIA, 2020/2022 California has a legislated renewable portfolio standard (RPS) requiring 33% of the electricity load to be served by renewable energy, primarily wind and solar, by the year Every 2 years the CA public utility commission publishes details of all new capacity expected to be installed 10 years forward. For the years 2020 and 2022 the amounts published were 5 6 GW, or approximately 7% of the installed capacity. LEGISLATION 33% Renewable energy 44,000 42,000 40,000 38,000 36,000 34,000 32,000 SOLAR AND WIND and optimising provision of ancillary services. Flexibility combined with the superior reliability of multi-shaft engine plants is shown to reduce the number of hours of ancillary service shortfalls by 70%, and the amount (MW) of ancillary service shortfalls by more than 50%. Three studies were performed [1], [2], [3] which explored 28,000 outcomes if the new capacity were Wärtsilä Smart Power Gas turbines Did you know? 26,000 6 Generation (SPG) instead of the planned build out of pri GW 7 24,000 GAS marily open cycle gas turbines (OCGTs) and combined cycle gas turbines (CCGTs). Results showed California could save hundreds of millions of dollars annually, reduce CO 2 emissions by 1 2%, and improve reliability if they installed SPG instead of OCGTs/CCGTs. This is all due to the fact that SPG power plants are extremely flexible, can absorb fluctuations in the net load, and free the most efficient assets in the fleet (CCGTs) to do what they are designed to do run at full load with a minimal number of starts and stops. In short, the flexibility of SPG power plants unlocks the full potential of other assets in the fleet. The rapid start times, superior efficiency and flexibility of gas-fired combustion engines are shown to increase the entire fleet efficiency within the California Independent System Operator (CAISO) system. This is done by reducing cycling and starts/stops on existing combined cycles SPG GW Improvement through SPG H 2 O H 2 O $1,039,000,000 = 13% cost savings 1,450,000ton reduced CO 2 emissions 97,000,000 litres water saved 30,000 22,000 20,000 0:00 2:00 4:00 6:00 8:00 10:00 12:00 14:00 16:00 18:00 20:00 22:00 0:00 A typical day in California 2020 (Source: CAISO) Sources: [1] DNV (KEMA) How to Manage Future Grid Dynamics: Quantifying Smart Power Generation Benefits [2] Energy Exemplar Incorporating Flexibility in Utility Resource Planning [3] Energy Exemplar Power System Optimization by Increased Flexibility All of these studies can be found at By choosing the right electricity modeling system, electricity consumers can save up to 3%-units. Net load: The total electricity demand minus renewable generation. This remaining share of the demand has to be partly met with power generation that can be dispatched, i.e. generating units that can be ramped and started and stopped as needed. Ancillary services: Capacity which the system operator uses to maintain the required balance between generation and electricity load. Also known as balancing services. Divided to as contingency and operational reserves. Contingency reserves (spinning and non-spinning) handle system eventualities, such as a trip of the largest generator. Operational reserves (load following and regulation) are used to balance fluctuations in net load.

5 CASE 2: GREAT BRITAIN, 2020/2030 E l ectricity market in Great Britain is witnessing a sharp increase in the volumes of intermittent renewable generating capacity. The demand for flexible forms of generation to manage this intermittency is expected to grow. In particular, part-loading of conventional generation can unnecessarily drive up the cost of providing flexibility, adding to consumers electricity bills. SPG +4.8 GW Improvement through SPG TARGET >30% Renewable energy It has been demonstrated that Smart Power Generation Gas turbines 200 MW el. eff el. eff el. eff (SPG) can achieve significant savings over traditional of +4.8 GW 8 forms of flexibile generation, particularly as the penetra- 48% 52% 55% reserve 9 capacity tion of renewable generation technologies increases in the future. The Great Britain electricity market was modelled in for the years 2020 and In the scenarios 4.8 GW of new build combined cycle gas turbine (CCGT) generating capacity was replaced with the same amount of SPG. The outcome of the study showed significant savings in the costs of creating flexibility by using SPG compared to CCGT. Source: Redpoint Energy: Flexible energy for efficient and cost effective integration of renewables in power systems ANNUAL COST SAVINGS 545,000,000 = 5% in ,540,000,000 = 14% in MW 200 MW Traditional electricity reserves 200 MW of reserve capacity el. eff 55 % 400 MW CCGT running at part-load 200 MW CCGT spinning to supply energy What is part-loading? New SPG electricity reserves Electrical efficiency 50% Electrical efficiency 55% el. eff 400 MW CCGT running at full load 200 MW SPG stand -by Part-loading is the practice of turning down generating units that would otherwise be running at full load, so that they can be turned up again to provide flexible energy if needed. Similarly, generating units that are stopped can be turned on to produce low levels of output as a form of standby. It is a way of creating reserves of flexible energy. A generating unit that is turned down to part-load will produce less energy. So in practice, as one generating unit is turned down to part-load, another unit will need to be turned up simultaneously to maintain the overall balance of energy.

6 CASE 3: India, Coal has traditionally been the main source of electricity production in India. Going by the recommendations of the 12 th and 13 th 5-year plans, this dependence is likely to continue well into the future. An average addition of 14,000 MW of coal plants has been planned every year. Focusing heavily on coal plant baseload leads to inefficiency and inflexibility. Power demand is increasingly following a cyclical pattern, characterised by sharp peaks during certain hours and low patches during off-peak hours and night. If the capacity Flexible gas ICE power plants will be of baseload plants exceeds a certain threshold in the system, coal-spg these plants will run at sub-optimal loads during off-peak hours. 11,900 Rs crores (* important in meeting the objective of This leads to a significant drop in their efficiency. Many of the coal plants are already operating at a lower-than-normative annual plant-load factor. A major reason for this is the reduced conosumption of power during off-peak hours and night. It has been shown that pruning down the Indian baseload coal plants to about 80% of the planned capacity and that replacing 20% of the planned coal capacity with flexible peaking plants will generate annual cost savings of over 5%. The benefits of these optimised or hybrid systems are clearly visible and quantifiable. The savings are significant also with high liquified natural gas (LNG) prices. 100% Coal increase +14 GW / year Improvement through optimised hybrid setup > 5% cost savings 13,000,000ton reduced CO 2 emissions 500,000,000,000 litres water saved System load Gas price US$/MMBTU Stand alone coal Coal-gas hybrid reliable, 24/7 power supply for India. Peaking energy provided by peaking plants Contingency reserves provided by peaking plants Source: Peaking & Reserve Capacity in India: Using flexible, gas-based power plants for affordable, reliable and sustainable power 20% of coal increase replaced with SPG *)1,500,000,000 Contingency reserves Contingency reserves Contingency reserves Time (hours of day)

7 IEA STATEMENTS OF ICEs Rising flexibility needs make internal combustion engines (ICEs) increasingly attractive for power [...], stacked in so-called bank or cascade plants (20 MW to 200 MW) or operated with a combined steam cycle (> 250 MW). ICE DRIVERS (IEA): HIGH PART-LOAD EFFICIENCY MODULARITY RAPID START-UP At 48% full-load efficiency, ICEs outperform OCGTs ( < 42%) but fall short of CCGTs ( < 61%), while having better flexibility and part-load efficiencies. MULTI-FUEL CAPABILITY Internal combustion engine (ICE) plants [...] offer higher efficiencies [...] than a large CCGT operating at part load. LOWER CAPITAL COSTS THAN OCGT SHORT CONSTRUCTION TIME OCGT: Open cycle gas turbine CCGT: Combined cycle gas turbine Source: Energy Technology Perspective: Harnessing Electricity s Potential, IES 2014 Source: Energy Technology Perspective: Harnessing Electricity s Potential, IES 2014

8 THE VALUE OF FLEXIBILITY FUTURE MARKET DESIGN Recent studies clearly show that adding flexible generation reduces total system costs in high renewable energy power systems. To develop a reliable, affordable and sustainable power system, three key actions can be identified: In high renewable energy power systems, flexibility is no longer an invisible and low-cost side product of power generation, but a key factor in the power system design and optimisation. 1 Understand that the energy market environment has dramatically changed due to increasing amounts of variable renewable generation this new environment requires increased services (flexibility). 14 While continuously ensuring capacity adequacy, adding flexibility to a system significantly reduces generation costs and CO 2 Recognize the value of flexibility and make it visible for market players through marginal pay-as-cleared balancing energy and cost 2 emissions. 15 reflective imbalance prices and by developing short-term energy markets. 3 The value of flexibility cannot be materialised by modifying existing inelastic generating assets or by demand response new flexible power generation is needed. Create a transparent market place for flexibility enabling efficient procurement of system services and provide clear market signals for investing in flexibility. Future electricity markets need to recognise the value of flexibility to boost investments in flexible power generation this requires a new approach to electricity market design. Adding incentives for flexibility to the electricity markets should remain high in the EU agenda Flexible capacity can provide savings of several billion euros annually to European consumers.

9 Simple solutions for complex problems Portfolio optimization is the key to sustainable, affordable and reliable power systems. This has never been more relevant than it is for utility systems tasked with meeting ambitious renewable energy targets. Inclusion of internal combustion engine (ICE) power plants in the suite of new build options can yield future fleets that are more flexible and reliable, require less capacity to meet utility needs, while delivering both ratepayer savings and greenhouse gas reductions. The modularity and flexibility of ICEs is what Smart Power Generation is all about: cost competitive, flexible, efficient and clean capacity, ultimately designed to unlock the full potential of a sustainable, affordable and reliable Smart Power System.