Gas fired power plants & The Energy Transition

Transcription

1 Gas fired power plants & The Energy Transition

2 WHAT HAS BEEN HAPPENING? Decarbonisation Decentralisation Digitalisation Decreasing demand (lower and changing demand) 24/08/2016 Meeting Exempts Representatives 2

3 Decarbonisation RENEWABLE CAPACITY KEEPS GROWING & WILL KEEP GROWING Extra installed capacity in 2015: In Flanders: 198 MW In Wallonia: 65 MW In Belgium: 263 MW 1501 Puissance installée Wallonie (MW) Geinstalleerd vermogen Vlaanderen (MW) 600 Totaal Belgium Onshore(MW) ONSHORE CAPACITY 3 24/08/2016 Meeting Exempts Representatives

4 RES is competitive in 2020 and already at level of a new CCGT. Decarbonisation 24/08/2016 Meeting Exempts Representatives 4

5 Adverse market situation for thermal power plants Strong decline of electricity prices on the wholsesale market in the period Period Electricity prices went down as a result of Declining coal prices Declining CO2 price Growth of subsidized renewables in the system Declining demand Price divergence due to: Stress in BE due to NUKES Renewables in GE 2017 October 5th e-gec 5

6 Adverse market situation for thermal power plants. Jan-13 Jan-14 Jan15 Jan16 24/08/2016 Meeting Exempts Representatives 6

7 Adverse market situation for thermal power plants Only limited decrease of natural gas price in the periode Limited decrease of gas price as a result of decreasing demand 24/08/2016 Meeting Exempts Representatives 7

8 Adverse market situation for thermal power plants The current market design mechanism pushes the gas fired power plants out of the market Current market design mechanism = energy only market Renewables (wind and solar) Low demand Coal plants CCGT 2017 October 5th e-gec 8

9 Variable Cost ( /MWh) 9 Energy only market - Building the merit order In the merit order units are ranked according to their marginal cost of production (SRMC) Technology Wind Hydro Nuclear Coal ST CCGT GT Installed capacity [MW] Variable cost [ /MWh] CO2 cost [ /MWh] Total Variable cost [ /MWh] The merit order can shift: a b Horizontally: due to technical outages, and unavailabilities Vertically: due to commodity price fluctuations 0 Source: CEEME/SEER Installed Capacity (MW)

10 Electricity price Energy only market Power plants are ranked according to their marginal cost = merit order Electricity price based on marginal costs of the marginal unit Revenue of CCGT = Clean spark spread = E price gas fuel costs CO2 price Revenue of Coal unit: Clean dark spread = E price coal fuel costs CO2 price Finally -> fixed costs (personnel, major overhauls, taxes, ) ned to be covered by the spread Marginale unit Market price Gas (combi) Gas (CCGT) Coal Nuclear Must run, RES Variable costs power plants Installed power 2017 October 5th e-gec 10

11 Energy only market Limited RES /MWh Demand Marginal unit Wholesale market price Fixed costs + profit RES NUC COAL CCGT GAS Peak MWh 2017 October 5th e-gec 11

12 Energy only market Growth of RES /MWh Demand Marginal unit Insufficient margin to cover fixed costs Wholesale market price RES NUC COAL CCGT GAS Peak MWh 2017 October 5th e-gec 12

13 Adverse market situation for thermal power plants 13

14 Adverse market situation for thermal power plants The gas fired power plants have become non-profitable in the energy-only-market DILEMMA Growing capacity of intermittent renewables = system requires backup capacity & extremely flexible power plants VS The existing market mechanism destroys these flexible power plants and backup capacity 2017 October 5th e-gec 14

15 Adverse market situation for thermal power plants Grid services like peak power and blackstart provide some revenues for Drogenbos Power plant is converted from Combined Cycle Gas Turbine into an Open Cycle Gas Turbine in dry boiler mode with remote control from Rodenhuize 2 x 120MW in 15 minutes Revenues are insufficient to keep the power plant alive for several years Slight recovery of electricity price, but CCGT s have become the marginal units = insufficient revenues to cover necessary investments (major overhauls) -> closures and mothballings continue New market mechanism is required to keep capacity in the market -> Capacity remuneration mechanism Belgium sets up strategic reserve in winter by forcing closed power plants to stay in the system 2017 October 5th e-gec 15

16 Are gas fired power plants friends or enemies of renewables? Gas & Renewables Are gas power plants frenemies of renewables? Gas power plants serve as a backup enabling growth of renewables Gas power plants and renewables are competitors

17 From dromedary to duck = already today need for flexible gas plants 2017 October 5th e-gec 17

18 From dromedary to duck = need for flexible gas plants Growing solar/wind generation contribution is changing radically the load profile of thermal (conventional as well as nuclear) units : Noon peak is disappearing (becoming the belly of the duck) Sharp increase for the evening peak Too much energy on the net at certain moment of the day, strong need for modulation Thermal generation becomes the back-up of renewable 2017 October 5th e-gec 18

19 Towards 100% renewables in 2050 What does it take? What are the challenges? 2017 October 5th e-gec 19

20 Towards 100% renewables in 2050 Storage will be important, since the load and the production of Variable Renewable Energy (VRE) is not correlated 2017 October 5th e-gec 20

21 Towards 100% renewables in 2050 STORAGE Short-term variations will be mainly balanced with electric batteries Seasonal back-up solutions required to ensure security of supply Thermal plants that burn Synthetic fuels (hydrogen or methane) produced with surplus electricity, or Bioenergy (solid biomass or biogas) Using large hydro reservoirs These needs are particularly present for countries that rely more on wind resources 2017 October 5th e-gec 21

22 Towards 100% renewables in 2050 Power to Hydrogen is still expensive but competitive with alternative solutions for quarterly cycle energy storage 2017 October 5th e-gec 22

23 Towards 100% renewables in 2050 Power to gas as seasonal storage has a high potential because of the high energy density, quick response time, and high potential for large-scale applications Power to Hydrogen is already competitive in some niche markets (industrial applications) In 2030, Power to Hydrogen could be competitive with Hydrogen produced from natural gas under certain conditions: Around 1000 hours low price power (high shares of intermittent RES) Exemption of network costs CO2price around 70 /ton Possibilities to store and transport hydrogen 2017 October 5th e-gec 23

24 Transition to 100% renewables in 2050 CCGTs will increase their production during the transition to a 100% RES system. Existing units could be refurbished and converted to biogas/synthetic gas burning units at the end of the horizon CCGT capacity is added to the system between 2025 and 2040 to ensure the transition to a fully decarbonized system and also to cope with the coal phase out October 5th e-gec 24

25 Challenges ahead for large industrial clients in a 100% RES world Issue with scalability of RES: too low energy density of PV/wind no possibility for 100% local production Need for reliable base-load supply Interest for 100% green supply, at affordable cost! Need for stable, baseload supply, but confronted with intermittent RES production! - VOLUME: act as aggregator for large volumes of renewable production, outside the customer s site. - RELIABILITY: complementary portfolio of energy solutions compatible with RES (large scale batteries, pumped storage, P2G2P, ) - AFFORDABILITY: optimized portfolio management via digital solutions and advanced asset modelling. 00/00/2015 PRESENTATION TITLE ( FOOTER CAN BE PERSONALIZED AS FOLLOW: INSERT / HEADER AND FOOTER") 25

26 PROPOSED VALUE CHAIN, WITH A KEY ROLE FOR BU GEN Production shedding when required External RES production 100% RES portfolio optimization with advanced modelling and digital control ENGIE RES production Customer RES production Industrial customers with RELIABLE, AFFORDABLE, 100% GREEN ENERGY Economical charging/discharging ST & LT storage solutions: batteries, pumped storage, P2G2P BU GEN 00/00/2015 PRESENTATION TITLE ( FOOTER CAN BE PERSONALIZED AS FOLLOW: INSERT / HEADER AND FOOTER") 26

27 Transition to 100% renewables in 2050 Full decarbonization objective appears not only technically feasible but also economically affordable as a result of sustained decreasing costs of renewable and storage technologies The increase of total system cost to reach 100% RES is only 15% higher compared to no emission reduction target. Short-term storage (batteries) and long-term back-ups (hydro reservoirs, bioelectricity, synthetic fuels) are essential to ensure the balance of the system. Thermal RES capacities (burning solid biomass, biogas or synthetic fuels) play an important role in a 100% RES system. Without them, balancing the system would entail massive overinvestment in RES generation and storage facilities, a strong increase of generation curtailment in surplus periods and load shedding when generation is weak. All this would result in a very high system cost increase (+46%). Important role of (natural) gas-fired CCGT during most of the transition, replacing coal and nuclear units: At the end of the horizon, for green gas penetration. The actual development of this CCGT capacity, needed for daily and seasonal backup but subject to low and unpredictable running hours, requires the definition of a market design adapted to this reality. An adapted regulation and market design enabling the transition is key 2017 October 5th e-gec 27

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