Integration of Power-to-Gas Conversion into Dutch Electricity Ancillary Services Markets

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ENERDAY 2018 Technische Universität Dresden April 27 th, 2018 12 th International Conference on Energy Economics and Technology Market and Sector Integration National and European Perspective Integration of Power-to-Gas Conversion into Dutch Electricity Ancillary Services Markets VÍCTOR GARCÍA SUÁREZ JOSÉ L. RUEDA TORRES BART W. TUINEMA ARCADIO PERILLA GUERRA MART VAN DER MEIJDEN

AGENDA THE POTENTIAL OF POWER-TO-GAS FOR THE NETHERLANDS POWER-TO-GAS CONVERSION: PEM ELECTROLYSERS DUTCH ANCILLARY SERVICES MARKETS CASE STUDY: GRONINGEN-DRENTHE-OVERIJSEEL AREA (2030) 2 17

FROM 2019: COBRAcable FOR SURPLUS OF DANISH WIND ENERGY GREEN POWER FROM GERMANY NORTH SEA OFFSHORE WIND FARMS ELECTROLYSER ELECTRICITY NATURAL GAS SOLAR FARMS H 2 UNDERGROUND GAS STORAGE H 2 CH 4 HOUSEHOLDS FUEL CELLS INDUSTRY H 2 TRANSPORTATION Adapted from: http://tso2020.eu/ 3 17

USAGE OF NATURAL GAS IN EUROPE 1 st in gas installed capacity (54%) 1 st in electricity produced with gas (45%) 1 st in gas consumption per capita (1180 m 3 ) World leading chemical industry cluster 1 st in total gas consumption (80,500 Mm 3 ) Generation mix based on coal and renewables 3 rd in gas installed capacity (32%) 3 rd in electricity produced with gas (40%) 2 nd in total gas consumption (76,700 Mm 3 ) Generation mix dominated by nuclear power Marginal use of gas for electricity production Low usage of gas power plants (15%) Last overall in total gas consumption - Top-6 EU Countries with Highest GDP in 2017-2 nd in gas installed capacity (35%) 2 nd in electricity produced with gas (42%) 3 rd in in total gas consumption (64,500 Mm 3 ) 4 17

POWER-TO-GAS CONVERSION: PEM ELECTROLYSERS SPECIFICATIONS Size of individual stack 3 MW System efficiency of 75 85 % Power setpoint change within 1 second Startup and shutdown within minutes CAPITAL COST (CAPEX) 1000 /kw at 1 MW scale in 2018 500 /kw at 10 MW scale by mid 2020s ONGOING / PLANNED PROJECTS TSO 2020 1 MW pilot station (NL) Shell / ITM 10 MW refinery (DE) McPhy 13 MW methanation (AT) Gasunie 20 MW station (NL) PEM = Polymer Electrolyte Membrane - Reference data taken from different manufacturers - Electrolyzer sample image retrieved from Nel Hydrogen - LIFETIME 80,000 hours for the stack 20 30 years for the rest of the plant POTENTIAL USES FOR POWER SYSTEMS Frequency regulation Renewables curtailment reduction Congestion management Voltage control 5 17

DUTCH ANCILLARY SERVICES MARKETS PREQUALIFICATION, MARKET MECHANISMS AND FUTURE FRAMEWORK OF:» BALANCING MARKETS (FCR and afrr)» VOLTAGE CONTROL» CONGESTION MANAGEMENT ASSESSMENT OF THE TECHNICAL ADEQUACY OF PEM ELECTROLYSERS BUSINESS MODEL OF ELECTROLYSERS AS ANCILLARY SERVICES PROVIDER 6 17

FREQUENCY CONTAINMENT RESERVE (FCR) PARTICIPANTS: Generators Loads PREQUALIFICATION:» Complete bid activation within 30 sec.» Provision for 30 min. for a ± 200 mhz deviation» Linear frequency-power characteristic BIDDING RULES:» Symmetric bid» Bid 1 MW» Bid Prequalified MW MARKET TYPE: Organized capacity market» ± 110 MW [1]» Weekly auction SETTLEMENT RULE: Pay-as-bid PRODUCT RESOLUTION: Weekly [1] Online trading platform at regelleistung.net / 30% Dutch exclusive and 70% auctioned together with the following TSOs: 7 17

AUTOMATIC FREQUENCY RESTORATION RESERVE (afrr) PARTICIPANTS: Generators Loads PREQUALIFICATION:» Complete bid activation within 15 min.» Minimum ramping of 7% of the bid per min.» Control by Load Frequency Control (LFC) BIDDING RULES:» Symmetric bids» Bid 1 MW» Bid 999 MW MARKET TYPE: Single-buyer bilateral market» ± 350 MW» Mandatory daily bids SETTLEMENT RULE: Pay-as-bid PRODUCT RESOLUTION: Monthly / Weekly» Voluntary capacity bids» Asymmetric bids allowed Daily bid ladder» Activation by merit order» Energy remuneration Marginal price 15-Minute (PTU) 8 17

BALANCING MARKETS: THE ROAD TO 2025 FCR:» Daily auction frequency» Product resolution of 4 hours» Marginal pricing settlement rule» Introduction of asymmetric bids afrr:» Full activation time of 5 or 7.5 minutes» Gate closure times closest to real-time» Increased imbalance netting through IGCC [1]» Unified European market model» Energy activation by a common merit order list» Cross-border marginal pricing settlement rule Involved TSOs: [1] International Grid Control Cooperation 9 17

VOLTAGE CONTROL & CONGESTION MANAGEMENT PARTICIPANTS: Generators FACTS Loads PREQUALIFICATION:» Activation in 15 min. REACTIVE POWER MARKET: Single-buyer bilateral market» Based on local needs» Yearly tender SETTLEMENT RULE: Pay-as-bid PRODUCT RESOLUTION: Yearly» Mandatory provision for generators > 5 MW (Contracted service) PARTICIPANTS: Generators Loads CONGESTION MANAGEMENT: Single-buyer bilateral market» At TenneT s request SETTLEMENT RULE: Fixed fee PRODUCT RESOLUTION: No details» The reinforcement of the grid is the preferred action plan in to avoid future congestions 10 17

TECHNICAL ADEQUACY OF PEM ELECTROLYSERS FREQUENCY RESTORATION RESERVE (afrr) 1 MW active power steps by LFC Power setpoint change within 1 second FREQUENCY CONTAINMENT RESERVE (FCR) Power setpoint change within 1 second Inverse droop control: f [Hz] 50.2 50.0 49.8 P bid P bid CONGESTION MANAGEMENT Curtailable industrial load Interruptible load Fast ramping in both directions 0 P ref VOLTAGE CONTROL P nom P output [MW] Purely DC load Reduction of active power demand Use of converter at partial loading - Electrolyzer sample image retrieved from Nel Hydrogen - 11 17

Price [ /MW/h] Price [ /MWh] BUSINESS MODEL AS ANCILLARY SERVICES PROVIDER» The sale of H 2 (production with cheap electricity) and syngas is the main financial revenue source.» The provision of ancillary services adds extra revenue to the power-to-gas business model.» Most interest in short product horizons and capacity payments.» In the new framework, prioritization of FCR and voluntary bidding for upward regulation afrr. FCR price in the Dutch auction in 2017 Energy price duration curve for upward regulation afrr in 2017 Source: regelleistung.net Source: 23 21 19 17 15 13 11 FCR marginal price FCR average pay-as-bid price FCR minimum pay-as-bid price 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 Week 1000 800 600 400 200 0 0 3000 6000 9000 12000 15000 18000 Number of PTUs with Imbalance 12 17

CASE STUDY: GRONINGEN-DRENTHE-OVERIJSEEL AREA GRID TOPOLOGY ACCORDING TO TENNET S DEVELOPMENT PLAN FOR 2030 HIGH CROSS-BORDER POWER IMPORT AND LOW CONVENTIONAL GENERATION ISSUES TO BE INVESTIGATED:» PRELIMINARY ASSESMENT ON VOLTAGE CONTROL AND LIKELIHOOD OF CONGESTIONS» TECHNICAL IMPACT OF THE PARTICIPATION OF ELECTROLYSERS IN FCR» COMBINED OPERATION OF RENEWABLES AND POWER-TO-GAS 13 17

NorNed COBRAcable EEMSHAVEN WEIWERD VIERVERLATEN MEEDEN to GERMANY 380 kv 220 kv 110 kv to ZWOLLE 14 17

Nadir Frequency [Hz] Frequency [Hz] FCR PROVISION: EFFECTS ON FREQUENCY RESPONSE Frequency nadir for different allocations of FCR capacity 49.94 Frequency response for different allocations of FCR capacity 50.00 49.92 49.90 49.88 49.86 49.84 Only P2G 10 MW CCGT + P2G 49.82 Only CCGT 49.80 10 12 14 16 18 20 22 24 26 28 30 Total FCR Capacity [MW] 49.98 49.96 49.94 49.92 49.90 49.88 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Time [s] 30 MW P2G 20 MW P2G + 10 MW CCGT 15 MW CCGT + 15 MW P2G 20 MW CCGT + 10 MW P2G 30 MW CCGT EVENT: Loss of generation due to disconnection of wind turbines or sudden decrease of COBRAcable power import 15 17

Power [MW] INTERACTION WITH WIND ENERGY GENERATION Example of the coordinated operation between the wind park and the large-scale power-to-gas facility 600 500 400 Wind Power P2G Consumption P2G Capacity Grid Injection 300 200 100 0 0:00 2:00 4:00 6:00 8:00 10:00 12:00 14:00 16:00 18:00 20:00 22:00 0:00 Time [hrs] Maximum consumption during cheap electricity hours Shutdown during the most expensive electricity hours Operation at partial load output No grid injection for low wind power output 16 17

CONCLUSIONS TECHNICALLY, ELECTROLYSERS COULD PARTICIPATE IN FREQUENCY BALANCING MARKETS, VOLTAGE CONTROL AND CONGESTION MANAGEMENT ECONOMICALLY, FCR IS THE MOST ATTRACTIVE SERVICE DUE TO THE CAPACITY PAYMENTS AND SHORT PRODUCT RESOLUTION (FROM 2021) THE FAST DYNAMICS OF ELECTROLYSERS IMPROVE THE FREQUENCY RESPONSE OF THE POWER SYSTEM LARGE-SCALE POWER-TO-GAS CAN BECOME ONE OF THE POTENTIAL SOLUTIONS TO MITIGATE RENEWABLE ENERGY VARIABILITY 17 17

ENERDAY 2018 Technische Universität Dresden April 27 th, 2018 12 th International Conference on Energy Economics and Technology Market and Sector Integration National and European Perspective Integration of Power-to-Gas Conversion into Dutch Electricity Ancillary Services Markets VÍCTOR GARCÍA SUÁREZ JOSÉ L. RUEDA TORRES BART W. TUINEMA ARCADIO PERILLA GUERRA MART VAN DER MEIJDEN