Self-consumption. Smart Utility Week Olivier Huet. Vienna November 5, 2015

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1 Self-consumption Smart Utility Week Olivier Huet Vienna November 5, 2015

2 1 What is self-consumption? Why is it developing? Definition : Self-consumption consist in consuming the energy that is generated by a single customer (residential, SME, industry) rather than injecting it in the network. Doing so, the customer targets to reduce its energy supply from the market and reduce its subscribed power, in an optimisation of its consumption profile (Demand Side Management)

3 Main drivers of self-consumption Costs of PV will continue to decrease, A steady decline of the generation costs for PV Source : EPIA In sunny region, generation cost has reached 38 $ /MWh A 20 years contract has been signed in September 2015 between NV Energy and First solar based on a 3,87 c$/ kwh in Nevada (100 MW thin layer farm).

4 Main drivers of self-consumption Electric supply market price range from 60 to 300 /MWh in Europe! Weight of taxes and the structure of tarif could play an important role in reaching grid parity breakpoint Source : European Commission (2 nd semester 2014) 4

5 Main drivers of self-consumption The question is not are we going to reach an economic financial grid parity by WHEN? Xxx : Xx : Xx : Xx 5

6 Main drivers of self-consumption What is a real economic grid parity? The Economic Grid Parity is different from the financial grid parity. With existing regulation, the price signal sent to customer include a greater economy than the one that should be reflected by an economic approach : a transfer of value from some customer to other customers. An economic approach should value the services brought by the grid and by the additional electricity in complement to self-generation. The services brought by the grid are : - a high avaibility (99.99 % of the time), - a technical service (voltage quality, constant frequency) - an access to the market for complementary supply

7 (Source : ADEME) Storage could play a major role If the cost is still high, economy of scale will continue to pull its costs down The french administration ADEME has conducted in 2014 a survey on storage in France : Comparison of costs of technology in /MWh un-stored The most economic storage remains hydro Diverse electric storage costs depending on its use The costs continue to decline with an acceleration of this cost reduction with potential technology rupture 7

8 What are motivational factors of customers? Environmental issues, take over control and costs matter! «more than one motivational factor, usually combining environmental concerns with cost reduction» Motivational factors of customers engaging in DSM Figure 5: Motivational factors Source : JRC report on the social dimension of Smart grids, 2013 Environmental concerns: from our survey, it emerges that the environmental factor is the m factor mostly used by projects. Several studies Smart Utility have Week highlighted 2015 that environmental conside 8

9 Regulatory framework should be steady and avoid illegitimate transfer of values! Regulatory Issues In most countries, an important part of taxes or network tariffs are calculated on the electricity delivered by customers. Applying such regulatory structure creates a transfer of value from non producing customers to self-generator/consumer. For self-consumption that needs network services, the connection of these sites create additional costs to the network (that are partially paid by other customers). Net Metering amplifies this transfer of value Call for a sustainable framework Europe : Net Energy Metering have been adopted in several countries but some are adapting or studying to withdraw these measures. USA : After the adoption of net metering, new regulatory measures introduce new network costs to self-consumption customers to bill a specific network charge * WA: 100 OR: 25/2,000* CA: 1,000* AK: 25* MT: 50* NV: 1,000* UT: 25/2,000* AZ: 125% WY: 25* CO: 120%* NM: 80,000* HI: 100* State-developed mandatory rules for certain utilities Net Metering / March 2015 ND: 100* NE: 25 MN: 40 IA: 500* WI: 20* KS: 15/100/150* MO: 100 OK: 100* AR: 25/300 No uniform or statewide mandatory rules, but some utilities allow net metering State policy applies to certain utility types only (e.g., investor-owned utilities) MI: 150* OH: no limit* IL: 40* IN: 1,000* LA: 25/300 KY: 30* GA: 10/100 VA: 20/1,000* NC: 1,000* FL: 2,000* U.S. Territories: American Samoa: 30 Guam: 25/100 Puerto Rico: 25/1,000/5,000 Virgin Islands: 20/100/500 Note: Net Metering rules a discussed in over a dozen s utility commissions across ME: 660* SC: 20/1,000* 44 States AS, Guam, have mand metering r State: kw limit residential/ kw li Note: Numbers indicate individual system capacity limit in kw. Percentages refer to customer demand. Some limits vary by customer type, technology limits might also apply. This map generally does not address statutory changes until administrative rules have been adopted to implement DC VT: 20/ NH: 1,0 MA: 60 RI: 5,00 CT: 2,0 NY: 10/ PA: 50/ NJ: no DE: 25/ MD: 2,0 WV: 25 DC: 1,0 9

10 Defining the regulatory framework Existing recommendations 1. EU Consultation on market design issued a report on best practices on Renewable Self-consumption 2. French ministery of energy conducted a national working group on self-consumption. Self-consomption represents a concept closely linked to the electric system and its balanced mecanism ( ) Two levers could contribute to its improvement : Incitatives to a good sizing of generation compared to local consumption need Measures to optimise profiles of generation and consumption to increase its synchronisation The report proposes that a label be defined to certify the compliance of selfconsumption installation (quality, maintenance and declaration for safety purpose) 10 20/10/2015

11 2 Case Studies of the integration of Self Consumption on distribution systems What are the consequences of self consumption on network costs?

12 Puissance (W) Puissance (W) Case study : residential customer equiped with Photovoltaic generation (without storage) Consommation Production Winter Summer Consommation Production Local generation does not reduce consumption peak (network has still to be design based on total delivered electricity) Most of local generation is fed in the network Peak injection could exceed consumption peak in Summer Sources : - Residential customer of the ERDF panel, yearlyconsumption of 4,7 MWh, flat tarif option 6 kva - Theoritical 5 kwc PV generation, Nice area - Yearly self-consumption rate of 44% 12

13 Puissance (kw) Puissance (kw) Case study : supermarket in the South of France with a 800 kwc PV generation Winter Consommation jour semaine Consommation dimanche Production Summer Consommation (soutirage sans autoconso) Soutirage avec autoconso Production Self-consumption has no consequences on network injection : Generation is entirely consumed locally Network has the same sollicitation as if there were no generation Source s : - Daily consumption of a supermarket in South of France - Theoritical PV generation in Nice area, 800 kwc - Self-consumtion rate of 94%,???? taux de couverture 23% Self-consumption decrease energy flow from the network : Network is less stressed (~8% less power injection) Comments. : A supermarket has more energy need in summer (cold, aire conditioning ) Network could be even less stressed if the superrmarket could reduce its energy at 8 pm, for instance in anticipating some of its need

14 Cases where generation have to be evacuated and where it could be consumed locally Some equivalent of capacity : 30 m2 of PV = 3 kw of generation = consumption of 15 lodging during off peak period Dense Urban Residential Neighborhood Rural MV LV High probability of local consumption MV Generation could be consumed on LV network or nearby substation 14 Generation must certainly be evacuated potentially at Primary Sub.

15 Technical and economical lessons on case studies Need additional injection capacity for the network No commitment in the reduction of consumption peak on the network Costs of distribution network increase Commitment to reduce the consumption peak on the network Uncertainties on the costs on distribution network? To create value on the network, selfconsumption have to commit a reduction of peak power (consumption, generation) If self-consumption/generation is designed or commit (smart equipment and contract) to avoid injection peak during low consumption period, the integration on the network will be facilitated (shorter delay and lower costs) Commitment / Design to avoid any additional injection stress on the network No significant consequences on network costs Network costs decrease AC A societal expectation on quality of supply : Network are designed to be available 99.99% of time and supply a voltage quality, Any substitute (blue square) have to be designed to meet these standards. 15

16 How to create the conditions for a sustainable and gridfriendly development of self-consumption / generation? Self-consumption shall develop in the coming years due to a lower costs of distributed generation and to new expectations of customers. It will grow quickly on areas where renewable energies are the most competitive. Self-generation could present opportunities to reduce the costs of integration of generation to local electric systems, at the condition that it reduces the maximum power delivered or injected to the network. Two solutions could allow such reduction : 1. incitatives for a coherency of generation capacity to local consumption profile, 2. optimisation of generation/consumption uses to guarantee synchronisation Some profiles of self-generation could be spontaneously more easily integrated to the electric system when there is a good synchronisation with consumption. For PV, the profiles of such customers are tertiary customers and industries. With the growing development of self-consumption/gen, regulation framework shall be adapted to avoid unexpected transfer of values and to accompany a legitimate customer need /10/2015