Electricity Storage Regulation (Hungarian case study)

Transcription

1 Electricity Storage Regulation (Hungarian case study) Prepared by Dr. Gábor Szörényi ERRA www. erranet.org

2 Disclaimer This document and the presentation have been prepared for the CERA under the ERRA service contract signed with the Structural Reform Service of the European Commission. However the presentation reflects the view only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein. This training is not part of the European public service. 2

3 Storage Regulation Agenda Why we need storage technology in different segments of the electricity supply chain? Storage technologies and potential applications Proposed new EU regulation of storage (different arguments of the debate) Hungarian regulation of storage Some Hungarian Case Studies of application 3

4 World renewable-based power capacity additions by type and share of total additions Source: IRENA (2017), Electricity Storage and Renewables: Costs and Markets to 2030, International Renewable Energy Agency, Abu Dhabi. 4

5 Trends in renewable energy and consequences New renewable generation sharply increased in 2017, with wind, solar and biomass overtaking coal for the first time. They rose by 12% in 2017 to 679 Terawatt hours, putting wind, solar and biomass above coal generation for the first time. Massive tendency of increasing renewable generation necessitates the adjusted strategy and operation of network companies and the utilization of demand side flexibility as well as storage! 5

6 Trends in renewable energy ascending prices of variable RES Average LCOE (levelized cost of electricity) of solar and wind technologies dropped Source: IRENA (2017), Electricity Storage and Renewables: Costs and Markets to 2030, International Renewable Energy Agency, Abu Dhabi. 6

7 The flexibility need is increasing due to the increasing ratio of intermittent renewable technologies (negative prices) 7 7

8 Why do we need Storage? Balancing Generation and Consumption at all times Belgian Wind Power Forecasting Source: Elia, données de production éolienne 8

9 Renewable integration market design (ENTSO-E position) Appropriate market design efficient allocation of resources Renewable integration in the markets Future generation: high CAPEX, low OPEX Lowering the variability of intermittent sources such as wind and solar Predictable and sufficient price signal market players can react TSO as a facilitator organized tender for storage capacity procurement (like interconnectors) Source: ENTSO-E: Energy storage and storage services ENTSO-E position,

10 Flexibility Flexibility can be defined as the ability of the electricity system to respond to fluctuations of supply and demand while, at the same time, maintaining system reliability. Empowering customers to participate Role of aggregators Source: ACER: Facilitating flexibility, relevant to European Commossion s Clean Energy Proposals,

11 Sources of flexibility 11

12 Storage Regulation Agenda Why we need storage technology in different segments of the electricity supply chain? Storage technologies and potential applications Proposed new EU regulation of storage (different arguments of the debate) Hungarian regulation of storage Some Hungarian Case Studies of application 12

13 Storage Technologies and Applications Many Energy Storage Technologies on the Market and in R&D Chemical Electrical Ammonia Drop-in Fuels Supercapacitors Superconducting Magnetic ES (SMES) Hydrogen Synthetic Fuels Electrochemical Methanol Synthetic Natural Gas Adiabatic Compressed Air Liquid Air Energy Storage Mechanical Diabatic Compressed Air Flywheels Classic Batteries Lead Acid Li- Polymer Metal Air Na-NiCl 2 Li-Ion Li-S Na-Ion Na-S Flow Batteries Vanadiu m Red- Ox Zn-Fe Zn-Br Hybrid Supercapacitors Pumped Hydro Latent Heat Storage Thermochemical Storage Thermal Sensible Heat Storage Ni-Cd Ni-MH 13

14 Storage technology classification The maturity of each technology is important: the uncertainty in technical and economical parameters are less if there is more data from commercial use. The confidence level of the data is higher in these cases (better estimations). The maturity could be classified to 3 main categories: 14

15 Different storage technologies for gridscale applications 15

16 Possible Tasks of Energy Storage Source: WGSI Equinox Blueprint: Energy

17 Energy storage technologies can help to integrate variable renewables in the system by many ways Source: IRENA (2017), Electricity Storage and Renewables: Costs and Markets to 2030, International Renewable Energy Agency, Abu Dhabi 17

18 What could we solve with energy storage? 18

19 Technologies and Applications Network Reinforcement Deferral Peak demand growth triggers power network reinforcements. Option 1: Traditional network reinforcement (overhead or underground power lines) Option 2: Energy storage can be used to provide security of supply when required while providing additional services to the TSO/DSO at other times Energy capacity allocated to serve peak load at the Leighton Buzzard ESS Option 1 Complementary services can be provided along with peak shaving Peak Demand Growth Storage can be devoted entirely to the provision of other services Transport capacity constraint Possible Technologies: Option 2 Mechanical: Compressed Air Energy Storage, Liquid Air Energy Storage Electrochemical: Lead Acid, Li-Ion, NaS, Flow batteries Source : UKPN, Successful Demonstrations of Storage Value Streams

20 Trends in energy storage Electro-chemical storage is one of the most rapidly growing market segments Source: US DOE (2017) DOE Global Energy Storage Database. Available at 20

21 Annual Market Size in MWh European tendency of storage installation Market - Electrical Energy Storage (except PHS) 1200 Electrical energy storage capacity annually installed (MWh) Front-ofmeter Commercial and Industrial (f) 2019(f) 0.6 GWh Cumulative market size in Europe (GWh) 3.5 GWh Residential

22 E-mobility and its potential system effects 22

23 Electro-mobility potential as distributed storage Electric vehicles energy storage potential for EU Year = million EVs on EU roads Compared to assumed hydro storage that could be provided to Europe by Norway in 2022: at 35kWh avg battery size and 10kW avg connection 245 GWh storage capacity 70 GW regulation capacity Source: GreenWay 20 GW energy storage Source: EWEA 23

24 Smart charging could be beneficial for the EV users and for the electricity system operator as well 24

25 Smart charging could be beneficial for the EV users and for the electricity system operator as well 25

26 Storage Regulation Agenda Why we need storage technology in different segments of the electricity supply chain? Storage technologies and potential applications Proposed new EU regulation of storage (different arguments of the debate) Hungarian regulation of storage Some Hungarian Case Studies of application 26

27 2016/0380 (COD): Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL concerning on common rules for the internal market in electricity and repealing Directive 2003/54/EC (recast) (Preamble) Acting in accordance with the ordinary legislative procedure, Whereas: (42) Distribution system operators have to cost-efficiently integrate new electricity generation especially generating installations using renewable energy sources and new loads such as heat pumps and electric vehicles. For this purpose distribution system operators should be enabled and incentivised to use services from distributed energy resources such as demand response and energy storage, based on market procedures, in order to efficiently operate their networks and avoid costly network expansions. Member States should put in place appropriate measures such as national network codes and market rules, and incentivise distribution system operators through network tariffs which do not create obstacles to flexibility or to the improvement of energy efficiency in the grid. Member States should also introduce network development plans for distribution systems in order to support the integration of generating installations using renewable energy sources, facilitate the development of storage facilities and the electrification of the transport sector, and. 27

28 Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on common rules for the internal market in electricity Article 15 Active customers Member States shall ensure that final customers: are entitled to generate, store, consume and sell self-generated electricity in all organised markets either individually or through aggregators without being subject to disproportionately burdensome procedures and charges that are not cost reflective; 28

29 Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on common rules for the internal market in electricity Article 31 Tasks of distribution system operators (5) Each distribution system operator shall procure the energy it uses to cover energy losses and the non-frequency ancillary services in its system according to transparent, non-discriminatory and market based procedures, whenever it has such a function. Unless justified by a costbenefit analysis, the procurement of non-frequency ancillary services by a distribution system operator shall be transparent, non-discriminatory and market-based ensuring effective participation of all market participants including renewable energy sources, demand response, energy storage facilities and aggregators, in particular by requiring regulatory authorities or distribution system operators in close cooperation with all market participants, to define technical modalities for participation in these markets on the basis of the technical requirements of these markets and the capabilities of all market participants.. 29

30 Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on common rules for the internal market in electricity Article 32 Tasks of distribution system operators in the use of flexibility (1) Member States shall provide the necessary regulatory framework to allow and incentivise distribution system operators to procure services in order to improve efficiencies in the operation and development of the distribution system, including local congestion management. In particular, regulatory frameworks shall enable distribution system operators to procure services from resources such as distributed generation, demand response or storage and consider energy efficiency measures, which may supplant the need to upgrade or replace electricity capacity and which support the efficient and secure operation of the distribution system. Distribution system operators shall procure these services according to transparent, non-discriminatory and market based procedures. Distribution system operators shall define standardised market products for the services procured. Distribution system operators shall be adequately remunerated for the procurement of such services in order to recover at least the corresponding expenses, including the necessary information and communication technologies expenses, including expenses which correspond to the necessary information and communication infrastructure. 30

31 Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on common rules for the internal market in electricity Article 32 Tasks of distribution system operators in the use of flexibility (2) The development of a distribution system shall be based on a transparent network development plan that distribution system operators shall submit every two years to the regulatory authority. The network development plan shall contain the planned investments for the next five to ten years, with particular emphasis on the main distribution infrastructure which is required in order to connect new generation capacity and new loads including re-charging points for electric vehicles. The network development plan shall also demonstrate the use of demand response, energy efficiency, energy storage facilities or other resources that distribution system operator is using as an alternative to system expansion. The regulatory authority shall consult all current or potential system users on the network development plan. The regulatory authority shall publish the result of the consultation process on the proposed investments. 31

32 Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on common rules for the internal market in electricity Article 36 Ownership of storage facilities 1. Distribution system operators shall not be allowed to own, develop, manage or operate energy storage facilities. 2. By way of derogation from paragraph 1, Member States may allow distribution system operators to own, develop, manage or operate storage facilities only if the following conditions are fulfilled: (a) other parties, following an open and transparent tendering procedure, have not expressed their interest to own, develop, manage or operate storage facilities; (b) such facilities are necessary for the distribution system operators to fulfil their obligations under this Directive for the efficient, reliable and secure operation of the distribution system; and ( c) the regulatory authority has assessed the necessity of such derogation taking into account the conditions under points (a) and (b) and has granted its approval. 32

33 Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on common rules for the internal market in electricity Article 36 Ownership of storage facilities (cont.) 3. Articles 35 and 56 shall apply to distribution system operators engaged in ownership, development, operation or management of energy storage facilities. (unbundling conditions) 4. Regulatory authorities shall perform at regular intervals or at least every five years a public consultation in order to re-assess the potential interest of market parties to invest, develop, operate or manage energy storage facilities. In case the public consultation indicates that third parties are able to own, develop, operate or manage such facilities, Member States shall ensure that distribution system operators' activities in this regard are phased-out 33

34 Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on common rules for the internal market in electricity Article 40 and 54 TSO related rules Similar to DSOs, but more strict conditions! (Derogation possibility for ancillary services being non-frequency. Decisions to grant a derogation must be notified to ACER and the Commission) 34

35 Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on common rules for the internal market in electricity Definitions Energy storage' means, in the electricity system, deferring an amount of the electricity that was generated to the moment of use, either as final energy or converted into another energy carrier. Fully integrated network components means static network components that are integrated in the transmission or distribution system, including storage facility, and are used for the only purpose of ensuring a secure and reliable operation of the transmission or distribution system but not for balancing nor congestion management. Non-frequency ancillary service' means a service used by a transmission system operator for steady state voltage control, fast reactive current injections, inertia for grid stability, short circuit current, black start capability and island operation capability or a service used by a distribution system operator, including storage facility, for steady state voltage control, fast reactive current injections and short circuit current. 35

36 Strong debate in the storage related rules Directive Article 2 - Definitions European Comission proposal 30/11/2017 Council general approach 18/12/2017 'energy storage' means, in the electricity system, deferring an amount of the electricity that was generated to the moment of use, either as final energy or converted into another energy carrier. New definition fully integrated network components means static network components that are integrated in the transmission or distribution system, including storage facility, and are used for the only purpose of ensuring a secure and reliable operation of the transmission or distribution system but not for balancing nor congestion management; European Parlament plenary text 21/02/2018 New definition integral part of the transmission system means network components that are integrated in the transmission or distribution system, including storage facilities, and are used for the sole purpose of ensuring a secure and reliable operation of the transmission or distribution system, however not for balancing or congestion management, except for the reactive instantaneous restoration of network security in case of network contingencies; 36

37 EU Energy Storage Policy Many Questions still need to be addressed (opinion of the European Association for Storage of Energy (EASE)) 1. Further clarify a definition of energy storage that covers all energy storage technologies 2. Establish clarity on the rules under which energy storage can access markets ownership question 3. Include energy storage in the network codes and respect the specificities of energy storage devices 4. Enable long-term contracts for storage on a level playing field, to increase investment certainty and speed up the deployment of storage technologies 5. Prevent double taxation of energy storage facilities 6. Introduce scarcity and congestion pricing to support flexibility solutions such as energy storage 37

38 Different utilization of battery storage in the electricity supply chain require different regulatory incentives (1) Main categories: 1., Generation support - Time shifting (Peak-off arbitration; Speculation on Price differentiation) - Balancing/ ramping support - Maintenance management 2., Grid support - Ancillary Services (Frequency control, Reactive Power and Voltage control, Black start ) - Congestion management - T&D upgrade deferral - Operational assistance for microgrids 3., Consumer support - Time shifting (Peak shaving, Time-off use optimization) - Power quality improvement - For Prosumers (balancing self generation and consumption) - Ramping (smooth out the different between contracted and actual consumption) 38

39 Different utilization of battery storage in the electricity supply chain require different regulatory incentives (2) Potential Regulatory position: 1., Supporting system operation; providing ancillary service (Frequency control) (partially replacing spinning reserve of generators and DSR in market based competition) Require level playing field allowing storage technology to participate on TSO tenders (amendment of present Grid Code is necessary) 2., Aiming the Optimisation of distribution system operation and network development/upgrade as Fully integrated network components (regulated activity) require special regulatory support Voltage control/regulation Peak load management in the TSO/DSO system Mobile reserve capacity (keeping continuity of supply parameters!) Transmission and distribution grid investment deferrals and optimization of scheduling Reduction of network losses 39

40 Evaluating potential interest of market parties to invest, develop, operate or manage energy storage facilities Are the new players (others than the companies of the energy supply chain) active enough on the wholesale and reserve markets with this capital intensive storage technology? Who are the potential players? 40

41 Some examples of potential players with storage technology Created and backed by two industry powerhouses

42 Regulatory Dilemma supporting new innovative technologies, like battery storage Should the Regulatory Authorities accept part of the cost and risk of the development (utilization) of new, innovative technologies (e.g. battery storage) through network tariff regulation? Advantage: optimized network operation and development + smart network/system could incorporate more renewable and could provide better service to end-users Disadvantage: network tariff increase in transition period Should the Regulatory Authorities support market players with storage technologies? Are the new players active enough on the wholesale and reserve markets with this capital intensive technology? Should the Regulators allow energy companies competing with storage technology (until the market liquidity increasing)? 42

43 Potential Conclusions and Thoughts System operators should be incentivized to use innovative solutions Network development alternatives should be considered Power electronics, storage systems Advanced controllers, smart grid applications There are technical ways to ensure and monitor the purpose of an application storage should be considered as a fully integrated network component Flexibility markets need further cooperation between stakeholders especially between the TSO and the DSO 43

44 Storage Regulation Agenda Why we need storage technology in different segments of the electricity supply chain? Storage technologies and potential applications Proposed new EU regulation of storage (different arguments of the debate) Hungarian regulation of storage Some Hungarian Case Studies of application 44

45 Hungarian Act 86/2007 on Electric Energy (VET) Storage definition: VET 3. 70a.) Electricity storage facility shall mean an equipment used for storing electricity by way of physical or chemical means, meaning that it converts and stores in-put electricity, then releases it back to the electricity system minus technical waste; Establishment license: VET 74. (1) The activities specified below may be performed in compliance with and in possession of the appropriate authorization [ ]: l) the operation of an electricity storage facility with a nominal output capacity of 0.5 MW or more. Network user: VET 3. 50) Network user shall mean a person linked to the public utility system directly or indirectly for the purpose of input into and off take from the electricity transmission system, including recharging point operators and authorized operators of electricity storage facilities; 45

46 Hungarian Act 86/2007 on Electric Energy (VET) DSO can establish (may not exceed a nominal output capacity of 0.5 MW) storage facility: VET 33/C. (1) The authorized distributor may install and operate - in accordance with the lowest cost principle - an electricity storage facility integrated into the distribution network with a view to optimizing distribution activities. (2) The electricity storage facility installed and operated by an authorized distributor may not exceed a nominal output capacity of 0.5 MW. Authorization for the Storage of Electricity: VET 90/C. (1) Except where otherwise provided, the provisions of this Act and other legislation adopted under authorization of this Act relating to power plants shall apply to electricity storage facilities mutatis mutandis. (2) Authorization for the storage of electricity is granted for an indeterminate period of time. 46

47 Hungarian Act 86/2007 on Electric Energy (VET) Storage facility can sell the storaged electricity: VET 4. (2) A producer shall be authorized to sell - under authorization - in the case referred to in Subsection (1): a) electricity of his own production; Storage supplying electricity directly to users shall be treated as electricity traders: VET 4. (3) Producers supplying electricity directly to users shall be treated as electricity traders supplying electricity directly to users, with the exception of the obligation for requesting authorization pertaining to trade in electricity. 47

48 Storage Regulation Agenda Why we need storage technology in different segments of the electricity supply chain? Storage technologies and potential applications Proposed new EU regulation of storage (different arguments of the debate) Hungarian regulation of storage Some Hungarian Case Studies of application 48

49 Existing large scale storage projects in Hungary ELMŰ-ÉMÁSZ Energiatároló Kft. Sinergy Kft. Installed capacity 10 MW 7,425 MW Storage capacity 6,1 MWh 3,92 MWh Efficiency 89% 92% Batteries expected lifetime 10 years 10 years Location Budapest Budapest Date of commissioning Licence Issued Licencing procedure in progress 49

50

51 Main technical parameters of the Storage Project building blocks of the facility ~13 cm The smallest building block: cell Samsung product, SDI P3 type: Lithium technology 3.7 V 78 Ah 288 Wh 2.0 C-rate, charge and discharge as well 2.1 kg Special product developed for energy industry purpose 6000 cycle, 10 Years expected lifetime

52 Main technical parameters of the Storage Project building blocks of the facility The cells are collected into modules: One module contains 22 peaces of cells The cells are connected in series 81 V 6.3 kwh ~54 kg Each module has individual surveillance and remote control system (BMS) Each cell could be remote controlled

53 Main technical parameters of the Storage Project building blocks of the facility The modules are built into racks and are connected into strings: 16 modules in one string (connected in series; 352 cells in one string) 1300 V kwh 53

54 Main technical parameters of the Storage Project building blocks of the facility A racks are build into containers : standard 40 foot (12 m) containers 48 racks are installed in one container (624 modules) the containers are heat insulated, airconditioned, remote controlled and fire protected 54

55 Main technical parameters of the Storage Project inverters, transformers, control AC/DC és DC/AC conversion: inverters GE LV IEC-ESS type 1300V DC/ 690V AC, 1.25 MW (charging/discharging) Network connection: transformers 22/0.69 kv, 5 MVA, CG product Control: BMS, EMS, control centre Autonomous operation, full remote surveillance and control

56 Main technical parameters of the Storage Project interconnected system Main parameters of the installed storage system : All together cells MWh storage capacity (energy) 10 MW capability 8 MW primary reserve capability (FCR) The system could be extended into 12 MWh (12.5 MW capability) 56

57 Scenery of the Storage Project 57

58 Network operation related storage project - supporting Voltage Regulation Nominal capacity: 10 kw (BYD B-Plus 2.5 (24 pieces, Li-ion)) Useful storage capacity: 60 kwh Allowing additional solar installation on the given connection point

59 Network operation related Storage Project Hungary Low voltage grid; voltage fluctuations due to renewable generation and changing customer behaviour Household-size power plants are getting common in Hungary Overhead lines, ageing infrastructure 59

60 Network operation related Storage Project Hungary (cont.) Location: Levelek village Customer at the end of a long radial low voltage line Primarily enables extension of a Photovoltaic system (15+12 kw) Adaptively adjustable solutions based on grid side measurements Supply quality improvements Voltage control through flow control Asymmetry compensation Power factor correction Self-developed algorithms Open-source control system Complex objective functions Simulation testing possibility 60

61 Network operation related Storage Project Hungary (cont.) Battery-Box BYD B-Plus 2.5 (24 pc, Li-ion) LiFePO 4 technology, lower energy density (safety) Battery management, air conditioning (heating & cooling) Power Electronics 3 pcs. of SMA Sunny Island 6.0 H, 13,8 kw Remote monitoring, communication interfaces, Energy management system and monitoring 61

62 REKK 2018 Energy Storage Day Li-ion akkumulátoros villamosenergiatároló architektúra LUCZAY Péter energia nagykereskedelmi és virtuális erőmű irányítási igazgató

63 THANK YOU FOR YOUR ATTENTION! Gábor Szörényi W Web: