Global PV Demand Drivers 2
Where is the Problem? Load is stochastic, variable and uncertain PV solar output is also stochastic, variable and uncertain Supplies can also be stochastic Need to know size, probability and duration of any shortfalls in both capacity and ramping capability System needs flexible capacity to deal with the increased uncertainty and variability 4
Where is the Problem? The penetration of Solar PV will continue to increase as more countries adopt Renewable Portfolio Standards (RPS) and continue to enforce more stringent targets 5
The Anatomy of the Duck 6
Implications for the Power Market Solar PV complicates the power market clearing process (Day-Ahead, Hour-Ahead, Real-Time) Solar PV suffers from lack of dispatchability Current practices treat Solar PV energy outside the market process Solar PV puts substantial downward pressure on market clearing prices (the number of negative prices is increasing) The transmission grid is becoming increasingly congested 7
Key Tools Available to the Power Market Change the Power Market design rules to accommodate solar PV Invest in flexible generation (gas fired power plants) Implement demand response Develop storage facilities Curtailment of Solar PV Improve transmission planning and expansion 8
Power Market Design Rule Changes Develop Ancillary Services products for better balancing, better price signals, better incentives (Performance based Frequency Regulation service, Ramping products, Load Following, etc.) Allow very large negative bids to clear the market Develop better forecasting tools for load, solar PV, ramping requirements, etc. Develop Intra-Hour Scheduling financially binding Markets (every 15 minutes) Develop centralized Capacity Markets that reward flexible generation to ensure security of supply (i.e., we cannot rely on scarcity pricing) 9
Performance based Frequency Regulation Traditional approaches typically include a capacity payment (usually based on shadow price) an energy payment (for the net energy injected/withdrawn in/from the system) The new market design a capacity payment (usually based on shadow price) Mileage Payments adjusted for accuracy 10
Performance based Frequency Regulation We replace the net energy payments by a mileage payment for the ACE correction provided 11
Expected Flexibility Deficiency Function The EFD surface is built as a function of ramping and reserve policies. These are optimized within the MIP-based Unit Commitment Scheduling problem 12
Solution Methodology of the Flexibility Problem Separate power flows for each time interval from the economics Iterate with optimization engine Execute modified Monte-Carlo simulations using minute-by-minute Solar PV data The math here is very complicated Optimization Engine Schedules PTDFs Loss marginal rates Power Power Flows Power Flow Power Flow Power Flow Flow 13
Flexible Capacity Expected Results Flexibility violations that may occur, because the penalty cost of these violations is less than the commitment of additional resources Optimal levels of reserves and ramp-rate capability based on ramp/reserve policy in each Power Market determined by the Regulator and policy makers Economic pre-curtailment of Solar PV that avoids flexibility violations and/or commitment of excessive fast-ramping generation Requirements for flexible capacity Optimal Procurement decisions 14
Solar PV Curtailment Could Play a Significant Role Scheduled curtailment of Solar PV can help position conventional resources to meet ramping requirements How does the cost of curtailment compare to the cost of procuring new flexible resources? Optimization Engine Schedules PTDFs Loss marginal rates Power Power Flows Power Flow Power Flow Power Flow Flow 15
Proposed Metrics with High Solar Penetration Resource Adequacy metrics: LOLP, LOLE, EENS Flexibility Deficiency metrics: Expected Ramp Not Served (ERNS) Expected Regulation not Served, etc. Flexibility Shortage Induced Curtailment How does the cost of curtailment compare to the cost of procuring new flexible resources? 16
Demand Response: Power Markets in Pain Price Marginal Wholesale Rate Power Demand (MW) If we could use just 5% less power for the current hour. No Price-Sensitive Demand -> Inefficiency, Everyone Pays For 17
Demand Response: Energy Demand Cloud Energy Demand Cloud Price Sensitive Special Programs Distributed Generation Reliability Signaled Renewable Choice Energy Storage Electric Vehicles Affinity Programs Demand Monitoring & Feedback over Internet Broadband/Cellular Individual Wireless Controllers Home/Facility Management Systems Smart Buildings, Commercial & Industrial Electric Vehicle Chargers Smart Appliances Distributed Energy & Storage TODAY FUTURE DR client is ~10kb virtually any embedded device can run it 18
Demand Response Software in Devices INTERNET WiFi Router 80% of US households have broadband (as of 2011*) Today - Retrofit External Load Controller OEM Products to Seed Market Future - Embed Internal Load Controller 19
Storage Technologies Storage is the game changer Pumped Hydroelectric Storage is important but is highly site-constrained Other technologies that have shown promise are a) Compressed Air Electric Storage (CAES), flywheels, hydrogen electrolysis Plug-In-Electric Vehicles in Vehicle-to-Grid (V2G) mode (could serve as a major distributed storage resource) Problem: What is the value proposition? Develop incentives mechanisms to account for risk and reward sharing (need a regulatory framework) 20
Transmission Capacity New transmission capacity is required Implement technologies to permit increased utilization of the existing transmission infrastructure Dynamic Thermal Rating Power Flow Controls (FACTS devices) Fault current controllers Intelligent protection systems (adaptive relaying) Advanced stochastic modeling and planning tools Increased reliance on DC links 21
The LAGIE Deficit RES and Cogeneration Special Account: Income Income from weighted average cost of thermal generating units (new Law activated at 9 th May 2013) Income from auctions for emission rights (Δημοπρασίες Δικαιωμάτων Εκπομπών Ρύπων) Income from Special Levy for lignite production (Ειδικό Τέλος Λιγνίτη), equal to 2 /MWh, about 50-55 million per year (depending on the actual production of lignite units) Income from Special Levy on public television (Τέλος ΕΡΤ), about 75 million per year Income from Special Solidarity Levy (Έκτακτη Ειδική Εισφορά Αλληλεγγύης), about 250 million per year Direct Income from the customers, through the Special RES tax (Ειδικό Τέλος Μείωσης Εκπομπών Αερίων Ρύπων, ΕΤΜΕΑΡ) Expenses Payments to the RES and cogeneration producers, based on Feed-in Tariffs (FiTs) The income is less than the expenses, due to the high FiTs of RES Deficit in LAGIE RES and Cogeneration Special Account 22
Ways to Eliminate the LAGIE Deficit Identify which portion of the deficit is directly related to RES and have the government pay for it because it is responsible for the problem Increase the Special RES tax that is imposed directly to the ratepayers Make a new deal with the PV producers extending their contracts (e.g. to 25 or 30 years) and decreasing their FiTs (in a level acceptable by the Banks) A combination of the above measures is needed, since each measure (taken alone) cannot decrease significantly LAGIE Deficit Other important measures: a) political stability, b) stable regulatory environment, c) completion of the liberalisation of the market, d) flexibility in financing and e) guarantees 23
Conclusions High penetration of Solar PV creates major power market challenges The issues involved can be viewed as a coordination problem at multiple scales in both space and time The problems are solvable but the solutions are neither trivial nor cheap The infrastructure upgrade costs in the legacy power system and the public s willingness to socialize these costs could emerge as an important issue The power market response involves solutions including a) power market design changes, b) demand response, c) Storage technologies, d) PV curtailment, e) flexible market products 24
Thank you for your Attention alexp@eccointl.com 25