Market Design fr High Penetratins f Wind and Slar Natinal Cnference f State Legislatrs May 29, 2014 Aarn Blm Aarn.blm@nrel.gv NREL is a natinal labratry f the U.S. Department f Energy, Office f Energy Efficiency and Renewable Energy, perated by the Alliance fr Sustainable Energy, LLC.
Variability Variability Variatins in the utput f generatrs r lad Observable Cannt be reduced thrugh study r measurement Everyday examples Observed distributin f human height Temperature ver the curse f the day 2
Lad, Wind and Slar Variability There are many surces f variability, but they differ in magnitude and timing There are tls t address these challenges MW Lad Hurly Average Lad 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 100 90 80 70 60 Pwer (MW) 50 40 30 20 Actual Wind Frecasted Wind (schedule) Average Wind 10 0 12:00:00 12:05:00 12:10:00 12:15:00 12:20:00 3
4 Variability Variability tends t get smther when surces f variability are aggregated Aggregatin f lads frm 1950-1990 Reduced regulatin reserve needs Reduced lad fllwing (ramping) needs Aggregatin f wind and slar reduces ttal variability Reduces regulatin reserve needs Reduces ramping Histrical surces f generatin variability d nt necessarily decrease with aggregatin
Uncertainty Frecast Errrs Frced Outages Difference between frecast and actual Nte difference in scale between graphs! The remval frm service availability f a generating unit, transmissin line, r ther facility fr emergency reasns Occur fr renewable technlgies as well as cnventinal Hwever the cncentratin f cnventinal resurces makes the impact larger, ie. ne large plant r transmissin element Surce: Hdge et al. 2012, A Cmparisn f Wind Pwer and Lad Frecasting Errr Distributins, http://www.nrel.gv/dcs/fy12sti/54384.pdf 5
6 Managing Variability and Uncertainty Plicies Crdinatin and Cllabratin Open Access Transmissin Tariffs Operatinal Practices Unit Cmmitment Ecnmic Dispatch Sub-hurly markets Reserve Prducts Regulatin Reserves Cntingency Reserves Financial Rules Market settlement Hedges Surce: MISO Markets Training Surce: http://www1.eere.energy.gv/slar/pdfs/50060.pdf
Variable Generatin and the Future f Market Design
High VG and Electricity Markets RTO market participant payment surces Bilaterals Negtiated transactins between knwn parties, can include fixed and variable csts Capacity market Auctin t prvide resurce adequacy and fixed cst recvery Energy market Day-ahead and real-time auctins that ptimize day-ahead scheduling and real-time dispatch based n bid in csts Ancillary Service market functins perfrmed by electric generating, transmissin, and system-cntrl equipment t supprt the reliability f the transmissin system Bilateral Agreements Capacity Market Energy Market Ancillary Services Other Revenue 8
9 Ptential Impacts f Wind and Slar Energy Markets Depressed energy prices because f lw variable csts fr wind and slar, ie. n fuel csts Increased price vlatility Increased need fr flexible resurces Decrease revenue fr cnventinal generatin Ancillary Services Markets May increase perating reserve needs Asynchrnus nature may create additinal need fr frequency respnse Capacity Markets Increase imprtance f capacity markets fr capital cst recvery
10 Actively Discussed Slutins FERC Order 755 Refrms t cmpensatin fr regulating reserves Nn-traditinal resurces Demand respnse and FERC Order 745 Flexible Capacity Prcurement Flexibility requirements in capacity markets Flexible Ramping Prducts New Ancillary Services fr peratins Sub-hurly settlement Financial practice that impacts peratins Multi-perid scheduling Shrt term peratinal price frecasting
NREL Research: Active Pwer Cntrls Electrical frequency Intercnnectin balance f supply and demand. Initial slpe f decline is determined by system inertia (r cumulative inertial respnse f all generatin) Frequency respnse decline 0 s typically, 5-10 s Primary Freq. Cntrl typically, 20-30 s AGC typically, 5 10 min Emergence f electrnically-cupled new technlgies withut PFR capabilities Current markets include disincentives 11
12 NREL Research: Active Pwer Cntrls Lack f incentives might be leading cause t frequency respnse declines (nt caused by renewables) Ancillary service market might be lgical next step with new BAL- 003 Higher penetratins f renewables may limit ability t respnd t such events Culd incentivize wind resurces t install primary frequency respnse capabilities Wind capabilities t prvide active pwer cntrls are very gd! Surce: Ela, E; et al. Active Pwer Cntrls frm Wind Pwer: Bridging the Gaps, NREL Publicatin ID: NREL/TP-5D00-60574 http://www.nrel.gv/dcs/fy14sti/60574.pdf
Average Ttal Regulatin (MW) 13 NREL Research: Flexibility Market Design 10000 9000 Average Ttal Regulatin fr 6 Dispatch/Lead Schedules by Aggegatin (Dispatch interval - Frecast lead time) Faster Faster Faster 8000 7000 6000 5000 4000 3000 2000 10-10 30-10 30-30 60-10 30-40 60-40 1000 0 Ftprint Reginal BAU Large Medium Small Milligan, Kirby, King, Beuning (2011), The Impact f Alternative Dispatch Intervals n Operating Reserve Requirements fr Variable Generatin. Presented at 10th Internatinal Wrkshp n Large- Scale Integratin f Wind (and Slar) Pwer int Pwer Systems, Aarhus, Denmark. Octber
14 NREL Research: Flexibility Market Design There may be several ways t incentivize flexibility Single perid SCED, Multi-perid SCED, Flexiramp Financial Settlement rules may incentivize flexibility Ttal Revenue Ttal Cst Ttal Prfit (Ttal Revenue minus Ttal Cst) Five-minute settlements Hurly average settlements Five-minute settlements Hurly average settlements Scenari 1 $15,208 $13,338 $10,895 $4,313 $2,443 Scenari 2 $17,479 $17,441 $13,373 $4,106 $4,068 Scenari 3 $17,134 $17,134 $13,053 $4,081 $4,081 Ela, E.; Milligan, M.; et al., Electricity Market Design with High Levels f Variable Generatin NREL publicatin ID: NREL/TP-5D00-61765
15 References and Cntact Frthcming Paper Credits Cntact Ela, E.; Milligan, M.; et al., Electricity Market Design with High Levels f Variable Generatin NREL publicatin ID: NREL/TP-5D00-61765 Ela, E; et al. Active Pwer Cntrls frm Wind Pwer: Bridging the Gaps, NREL Publicatin ID: NREL/TP-5D00-60574 http://www.nrel.gv/dcs/fy14sti/60574.pdf Markets t Facilitate Wind and Slar Energy Integratin in the Bulk Pwer Supply An IEA Task 25 Cllabratin. http://www.nrel.gv/dcs/fy12sti/56212.pdf Ela, E.; O'Malley, M., "Studying the Variability and Uncertainty Impacts f Variable Generatin at Multiple Timescales," IEEE Transactins n Pwer Systems, vl.27, n.3, pp.1324-1333, Aug. 2012 Ela, Milligan, O Malley (2011), A Flexible Pwer System Operatins Simulatin Mdel fr Assessing Wind Integratin. http://www.nrel.gv/dcs/fy11sti/50641.pdf aarn.blm@nrel.gv