A need to rethink network regulation: the challenges of massive RES integration Péter Kaderják Director, REKK Development and Integration of Renewable Energy Resources in the Black Sea region: Regulatory Issues and Regional Market Opportunities March 8, 2011, Istanbul
2020 RES targets of CEE countries SLOVAKIA SLOVENIA ROMANIA POLAND HUNGARY LITHUANIA LATVIA ESTONIA CZECH R. BULGARIA 0 5 10 15 20 25 30 35 40 45 % of total consumption 2005 Share TARGET TARGET NREAP
3 The beginning in Hungary: 2001 Major motivation: EU RES policy context Hungary agreed to increase the share of its RES electricity generation up to 3,6% of domestic consumption (DC: ~ 40 TWh) by 2010 Baseline in 2001: ~ 0% No policy preference for any particular type of RES No real understanding of RES potentials / costs The proposal of the Regulator: establishing a production support scheme to meet the 3,6% target at least cost Uniform Feed In Tariff Tariff level based on avoided damage estimate
What has the uniform FIT system delivered? RES-E 4 Development of RES-E generation Dominance of large biomass Biogas Wind Waste Hydro 2008-ban 2007-ben 2006-ban 2005-ben 2004-ben 2003-ban 2002-ben Biomass Total 0 500 1000 1500 2000 2500 kiadott villamos energia, GWh/a Germany and Hungary are the only countries that met the 2010 RES-E target
Fast penetration of DG in Hungary 5
Fast penetration of DG in Hungary 6
Shortcomings Promotion of outdated technologies (large biomass with < 30% efficiency) Political debate about its effects on forest quality No attention to RES in heat production Heat accounts for 40% of primary energy consumption in Hungary Investment into wind is limited by quota set by TSO and Regulator (330 MW) Its allocation was not transparent and market based RES support mixed up with CHP support Rent seeking spoiled the FIT scheme switch to differentiated FIT scheme 7
Planning and operational challenges to grid operators 8
Challenges No. 1: Resource is distant from load Connection No 2: Forecasting intermittent generation Balancing No 3: Providing enhanced system flexibility Reserves 9
10 Cost of RES integration US studies Date Study Capacity Penetration (%) Regulation Cost ($/MWh) Load Following Cost ($/MWh) Unit Commitment Cost ($/MWh) Gas Supply Cost ($/MWh) May 2003 Xcel-UWIG 3.5 0 0.41 1.44 na 1.85 Sept. 2004 Xcel-MNDOC 15 0.23 na 4.37 na 4.60 June 2006 CA RPS 4 0.45 trace na na 0.45 Total Operational Cost Impact ($/MWh) Feb. 2007 GE/Pier/CAIAP 20 0-0.69 trace na na 0-0.69 June 2003 We Energies 4 1.12 0.09 0.69 na 1.90 June 2003 We Energies 29 1.02 0.15 1.75 na 2.92 2005 Pacificorp 20 0 1.6 3.0 na 4.60 April 2006 Xcel-PSCo 10 0.20 na 2.26 1.26 3.72 April 2006 Xcel-PSCo 15 0.20 na 3.32 1.45 4.97 Dec. 2006 MN 20% 31 4.41 Jul. 2007 APS 14.8 0.37 2.65 1.06 na 4.08
Weather-dependent generation is costlay to control - wind, Hungary 11
Wind forecasting Wind plant output uncertainty is different than demand forecasting. Demand forecasts are typically small and do not change much over time. Example Demand forecast error for a 12 hour forecast is normally 3% and unlikely to be more than 10%. Wind forecast error for 4-5 hours : ± 5% Wind forecast error for a 12 hour forecast could be 20% or as much as 100% At present in Hungary schedules are required for 13-27 hours ahead
California Wind, Solar, Load Output, July 2003: flexibility needed! Source: NERC 13
14 Downward regulation MW PROBLEMATIC PERIODS! REGULATORY SOLUTIONS? Daily load curve 6000 Intermittent RES 3000 Obligatory feed in CHP Must-run generation Nuclear 00 24 Hours
Directions for regulatory improvements - balancing Intra-day markets to allow schedule modification close to real-time Encourage demand side participation of large customers Storage Regional integration of balancing markets, cooperation with neighbouring TSOs 15
+ DSO level issues Large scale connection of distributed, intemittent and micro generation to the grid Large scale application of demand side management and energy efficiency projects Future: penetration of electric cars Need for smart solutions for metering and communication 16
Thank you for your attention! Péter Kaderják Director Regional Centre for Energy Policy Research (REKK) Corvinus University of Budapest pkaderjak@uni-corvinus.hu www.rekk.eu