distributed generation and dbdistribution regulation · what is dg? • distributed generation are...

Distributed generation and d b ldistribution regulation

Rafael Cossent

May 5, 2014

Contents• What is DG?

Wh DG?• Why DG?

• Impact of DG on distribution networks

• DG and distribution regulation

C l i• Conclusions

2Instituto de Investigación TecnológicaEscuela Técnica Superior de Ingeniería ICAI

Distributed generation and distribution regulationMay 5, 2014

11

What is DG?



What is DG?• Distributed generation are “generation plants connected to the distribution system” (EU Directive 2009/72/EC)

Source: ERGEG



What is DG?• Typical technologies:

Combined Heat and Power Renewable Energy Sources (RES)(CHP)

Large district heating* Large industrial CHP*

Large hydro** Off-shore wind

Large-scale generation

Large industrial CHP Off shore wind Co-firing biomass in coal power plants Geothermal energy

Medium/ll l

Medium district heating Medium industrial CHP

C i l CHP

Medium and small hydro On-shore wind

Tid lsmall-scale generation(Distributed Generation)

Commercial CHP Micro CHP

Tidal energy Biomass and waste

incineration/gasification Solar PV

>50 MW; **>10 MW

)



Source: DG‐Grid Project

What is DG?• Spain: 22GW of DG (21% of capacity) at the end of 2010

75%

100%

50%

75%

25%

0%

Cogeneration Solar PV CSP Wind power Mini‐hydro (≤ Medium hydro Others10MW) (>10MW,≤ 50

MW)

0‐1 kV 1 ‐36 kV 36‐72.5 kV 72.5‐145 kV 145‐400 kV



Source: (Cossent et al., 2011)

What is DG?• Grid connection schemes

GD

GD GDGD

Dedicated line

GD GDGD

Dedicated grid

GD

Dedicated grid

GD



Shunt connection

22

Why DG?



Why DG?• Energy Policy: support of RES and CHP

Source: ETP‐Smartgrids



Why DG?• Energy Policy: support of RES and CHP. EU overview

RES CHP DER total

35

40

city

(%)

20

25

30

ectri

city

cap

ac

10

15

20

hare

in to

tal e

le

0

5

k d y d y l K c y d

DE

R s

h

Austria

Belgium

Denmark

Finlan

dFran

ceGerm

any

Greece

Irelan

dIta

lyLu

xembu

rgNeth

erlan

dsPort

ugal

Spain

Sweden UK

Bulgari

a

Czech

Rep

ublic

Estonia

Hunga

ryLa

tvia

Lithu

ania

Poland

Roman

iaSlov

akia

Sloven

ia



Source: SOLID‐DER Project

Why DG?

Special regime generation2002

Special regime generation2012

40,000

2002

40,000

2012

25,000

30,000

35,000

a (GWh)

OTRAS

TRAT.RESIDUOS

RESIDUOS25,000

30,000

35,000

a (GWh)

OTRAS

TRAT.RESIDUOS

RESIDUOS

10,000

15,000

20,000

Energía v

endid

BIOMASA

HIDRÁULICA

EÓLICA

SOLAR TE

SOLARFV10,000

15,000

20,000

Energía v

endid

BIOMASA

HIDRÁULICA

EÓLICA

SOLAR TE

SOLARFV

0

5,000

0<=T<1 1<=T<36 36<=T<72,5 72,5<=T<145145<=T<=400Nivel de tensión T (kV)

SOLAR FV

COGENERACIÓN

0

5,000

0<=T<1 1<=T<36 36<=T<72,5 72,5<=T<145145<=T<=400Nivel de tensión T (kV)

SOLAR FV

COGENERACIÓN

CHP WindSolar PV



Source: CNE

Why DG?• Consumer‐driven DG:

– Enhance quality of service and reduce the energy bill– Requires net‐metering ≠ off‐grid generation– Frequent in the US. Future in Europe?



http://www.greenbrilliance.com

Why DG?• Utility‐driven DG:

– Possible in integrated utilities (distribution + generation)– Contribute to network operation (reduce losses, improve voltage, etc.)Alternative to network investments: cost savings or unfeasible– Alternative to network investments: cost‐savings or unfeasible reinforcements

Source: (Ilex‐UMIST,



Source: (Ilex UMIST, 2004)

33

I t f DGImpact of DG on distribution networksdistribution networks



Impact of DG on distribution networks

• Conventional scenario • Connection of DG

– Consumers only

– Predictable load

– New network users

– IntermittencyPredictable load

– Planned for peak‐load

Intermittency

– Planning: peak‐load and peak generation

– Unidirectional power flows

– Passively operated

peak generation

– Bi‐directional power flows

– Need for active operation



Impact of DG: investment deferral• Transformer reinforcement vs. DG support

– Requires the active involvement of DG



Source: (Trebolle et al., 2010)

Impact of DG: incremental investments

120%

130%

90%

100%

110%

ance

cos

ts [%

]

50%

60%

70%

80%

tmen

t+M

aint

ena

20%

30%

40%

50%

emen

ts in

Inve

st

0%

10%

Demand200871%

Demand202026%

Demand202092%

Demand2020162%

Demand20081%

Demand20201%

Demand202016%

Demand202033%

Demand200811%

Demand20207%

Demand202012%

Demand202021%

Incr

e

DG 2008 DG 2008 DG 2020medium

DG 2020high


DG 2020high


DG 2020high

The Netherlands Germany Spain



Source: IMPROGRES Project

Impact of DG: variable energy losses



Source: (Méndez et al., 2006b)

Impact of DG: voltage control• Voltage increases when DG connected at the end of the feeder– Conventional solution: connection rules that limit the size of DG

– Advanced solution: DG providing power factor or voltage control

MV feeder LV feeder

Min. loadPermissible voltage rise for embedded generation

Voltage

Max. load Allowable voltage variation

g



Impact of DG: power supply interruptions• A fault occurs in the feeder circuit breaker A would open

– Conventional solution: breaker B must open to disconnect DGConventional solution: breaker B must open to disconnect DG for safety reasons

– Advanced solution: in islanded mode the load could be supplied by DG and continuity of supply would improve

D.G.

LOAD



Impact of DG: protections• DG may increase short‐circuit power and alter fault currents

– Malfunctioning of protections devices, e.g. sympathetic trippingMalfunctioning of protections devices, e.g. sympathetic tripping

– May be needed to replace circuit breakers and other switching equipment, especially in urban networks

Icc Substation

A

LoadFault

Icc DG

B

L d

Icc DG

LoadDG

Sympathetic tripping of breaker B



Impact of DG: other• Power quality

– The connection or disconnection of DG can produce voltage voltage variationsvariations outside allowed range

– Wind power variations in weak networks can produce flickerflickerPower electronics of PV or wind generation inject harmonicsharmonics– Power electronics of PV or wind generation inject harmonicsharmonics

•• IntermittencyIntermittency worsens some of the previous problems

Weekly production of a 5kWp PV unit



44

DG d di t ib tiDG and distribution regulationregulation



DG and distribution regulation• Role of regulation in this new context:

1. Adapt DSO remuneration DSO remuneration to DG impact while encouraging efficient network planning

2. Encourage innovationinnovation by DSOs

3. Design DG‐compatible regulatory incentive regulatory incentive schemes

4 Provide efficient economic signals to DGeconomic signals to DG units4. Provide efficient economic signals to DG economic signals to DG units



Distribution regulation: DSO remuneration• Remuneration may depend on energy distributed (price caps)

– DG can reduce energy distributed (net‐metering), thus jeopardizing DSOs

• Solution: revenue decoupling. revenue decoupling. Harder in integrated companies

Common

Demand

Common meter

Demand meter

DG meter

G G



Distribution regulation: DSO remuneration• Short‐term: compensate DSOs for DG incremental costsincremental costs

S l lt ti• Several alternatives:

• Partial cost passpass‐‐throughthrough:

• DG‐related revenue driversrevenue drivers:



Distribution regulation: DSO remuneration• Short‐term: compensate DSOs for DG incremental costsincremental costs

OFGEM’ h i th UK• OFGEM’s approach in the UK

Source: (OFGEM, 2009)



Distribution regulation: DSO remuneration• Long‐term: integrate DG integrate DG efficiently

Cost assessments with DG:– Cost assessments with DG:• Adding DG variables in frontier models (SFA, DEA)Second stage regressions• Second stage regressions

• Use of bottom‐up benchmarking (e.g. reference reference network models)network models)network models)network models)

– Innovative remuneration schemesremuneration schemesf• E.g. Menus of contracts



Distribution regulation: DSO innovation• Longer regulatory periods

–Uncertainty vs. efficiency incentivesUncertainty vs. efficiency incentives–– CAPEX vs. OPEX CAPEX vs. OPEX solutions

• Specific incentives to innovateincentives to innovate (smarter grids):– Input based:

• Subsidies (UK‐LCNF), • Higher rate of return (Italy‐extra WACC)

–Output based:• Hosting capacity for DG in distribution grids (Italy)F t UK RIIO l ti• Future UK RIIO regulation



Distribution regulation: regulatory incentives• Reference losseslosses

– Traditionally based on historical valueshistorical values–– Directly comparedDirectly compared among distribution firms

• DG impact:• DG impact:– It is not captured not captured by historical values– Can be very different among distribution areasdifferent among distribution areasy gg

• Reference values should be modified accordingly:LAF (RU): Subtract losses caused by DG is remote areas– LAF (RU): Subtract losses caused by DG is remote areas

– RNM (Spain): loss coefficient specific to each DSO– DEA (Norway): include DG and losses as variablesDEA (Norway): include DG and losses as variables



Distribution regulation: regulatory incentives• Incentives to improve continuity of supplycontinuity of supply

– Reliability usually measured considering only consumers But DGReliability usually measured considering only consumers. But DG is also affected by interruptions

– Measurement should incorporate DG incorporate DG units as a network userpp

• Direct compensations– E.g. In Italy, MV DG units connected are compensated if the g y, pnumber of interruptions exceeds a certain threshold

• DG‐integrated reliability indices

unitsDG customers ofnumber Totaldurationson interruptiDG Customer

DGSAIDI



Distribution regulation: regulatory incentives

Scenario DG capacity [MW]

Nº DG DG size[kW] DG location

0 0 0 0T1 250 cons

T5 – 250 cons.5 km

T6 – 250 cons.5 km

T7 – 250 cons.5 km

0 0 0 0 ‐1 1 8 125 T1‐T82 5 400 12.5 T1‐T83 5 400 12.5 T2,T6‐84 5 4 1250 T2,T6‐85 1 4 250 T2,T6‐86 5 400 12 5 T1 T3 T5

1 2

T1 – 250 cons.5 km

T2 – 250 cons.5 km3 4

5 6 7

8

6 5 400 12.5 T1, T3‐T57 5 4 1250 T1, T3‐T58 5 4 250 T1, T3‐T59 1 1 1000 T110 1 1 1000 T8

T3 – 250 cons.5 km

T4 – 250 cons.5 km

T8 – 250 cons.5 km

Scenario ∆SAIFI ∆SAIDI ∆ASIFI ∆ASIDI1 0% 0% 0% 0%2 0% 0% 0% 0%3 ‐0.04% ‐0.03% ‐3.33% ‐2.86%4 3.33% 2.86% 10% 8.57%5 0.04% 0.03% 10% 8.57%6 0 04% 0 03% 3 33% 2 86%6 0.04% 0.03% 3.33% 2.86%7 ‐3.33% ‐2.86% ‐10% ‐8.57%8 ‐0.04% ‐0.03% ‐10% ‐8.57%9 ‐0.03% ‐0.03% ‐10% ‐10.95%



10 0.02% 0.02% 5.56% 5.56%

Distribution regulation: signals for DG

•• Connection charges Connection charges for DGOne off charge at connection

DeepDeep

– One‐off charge at connection

– Trade‐off: efficient location incentive vs. transparency/non‐discrimination

ShallowishShallowish– Two main approaches:• A) Shallow chargesShallow charges

ShallowShallow

) gg• B) Deep chargesDeep charges

GG GG



Distribution regulation: signals for DG• Firm vs non‐firm network access

Real‐time management

E.g. Germany

DSO can limit injections to 70% of

t d itC ti t i t rated capacityConnection constraints



Distribution regulation: signals for DG•• UseUse‐‐ofof‐‐System charges System charges for DG

– Periodical charges to recover allowed annual revenuesPeriodical charges to recover allowed annual revenues

– Conventionally: only paid by consumers

– New context: paid by all network users, including DGincluding DG• Cost reflective, i.e. either positive or negative• Discrimination per location and time

– Economic signal for efficient location and operationg p• Connection and UoS should be designed coherentlydesigned coherently



Source: Eurelectric, 2013

Distribution regulation: signals for DG• Change the role of DG provide ancillary servicesancillary services

– Voltage control firm capacity controlled islandingVoltage control, firm capacity, controlled islanding

– Potential alternativesalternatives:• Mandatory requirementsy q• Incentive schemes• Bilateral agreements between DSOs‐DG• Local marketsLocal markets

Power factorPower factor range Bonus Penalty

0.98 lagging - 0.98 leading 0 3%leading0.995 lagging - 0.995 leading 4% 0



55

Conclusions



Conclusions (i/ii)•• DG is increasing DG is increasing mainly due to environmental and energy independence benefits: RES and CHP

• DG produces a significant impact on distribution networksimpact on distribution networks. This can be mitigated or improved through:This can be mitigated or improved through:– DG controllability and provision of network services

Active networks/smarter gridssmarter grids– Active networks/smarter gridssmarter grids

• Distribution is a natural monopoly: regulation should be regulation should be d dd d hadaptedadapted to this new context



Conclusions (ii/ii)• Distribution regulation should address:

SO ii f G & ffi i– DSO remunerationremuneration: account for DG & encourage efficient network development

– Encourage innovationinnovation from DSOs

Adapt the design of regulatory incentivesregulatory incentives– Adapt the design of regulatory incentivesregulatory incentives• Include DG effect on reference losses• Incorporate DG to reliability measurementp y

– Provide efficient economic signals to DG economic signals to DG unitsC t fl ti U S h• Cost reflective UoS charges

• Transparent and non‐discriminatory connection charges• Provision of ancillary services by DG



• Provision of ancillary services by DG

References• Cossent R., Gómez T. Frías P. “Towards a future with large penetration of distributed

generation: Is the current regulation of electricity distribution ready? Regulatory recommendations under a European perspective," Energy Policy. vol. 37, no. 3, pp. 1145‐1155 March 20091155, March 2009

• Cossent R., Gómez T. Olmos L. “Large‐scale integration of renewable and distributed generation in Spain: current situation and future needs" Energy Policy. vol. 39, no. 12, pp. 8078‐8087, December 2011

• de Joode J., Jansen J., van der Welle A., Scheepers M.”Increasing penetration of renewable and distributed electricity generation and the need for different network regulation”. Energy Policy. vol. 37, no. 8, pp. 2907‐2915, August 2009

• Eurelectric, “Network tariff structure for a smart energy system”. May 2013.

• González‐Sotres L., C. Mateo, T. Gómez, J. Reneses, M. Rivier, A. Sánchez‐Miralles. “Assessing the Impact of Distributed Generation on Energy Losses using Reference Network Models”. Ci è I t ti l S i Th El t i P S t f th F t I t tiCigrè International Symposium on The Electric Power System of the Future: Integrating Supergrids and Microgrids. Bolonia, Italia, 13‐15 September 2011

• ILEX Energy Consulting and UMIST, 2004. "A report for DTI on Ancillary Service Provision from Distributed Generation". September 2004Distributed Generation . September 2004



References• Méndez V., J. Rivier Abbad, J.I. de la Fuente, T. Gomez, J. Arceluz, J. Marín, A. Madurga,

"Impact of distributed generation on distribution investment deferral," International Journal of Electrical Power & Energy Systems. vol. 28, no. 4, pp. 244‐252, May 2006ª

• Méndez V., J. Rivier Abbad, T. Gomez. "Assessment of Energy Distribution Losses for Increasing Penetration of Distributed Generation," IEEE Transactions on Power Systems. vol. 21, no. 2, pp. 533‐540, May 2006b

• OFGEM, 2009. "Electricity Distribution Price Control Review 5 Final Proposals ‐ Incentives and Obligations". 7 December 2009.

• Trebolle D Gómez T Cossent R Frías P “Distribution planning with reliability options for• Trebolle D., Gómez T., Cossent R., Frías P. Distribution planning with reliability options for distributed generation," Electric Power Systems Research. vol. 80, pp. 222‐229, 2010

• Walling, R. A., Saint, R., Dugan, R. C., Burke, J. and Kojovic, L. A., 2008. "Summary of distributed resources impact on power delivery systems." IEEE Transactions On Powerdistributed resources impact on power delivery systems. IEEE Transactions On Power Delivery 23(3): 1636‐1644.

• IMPROGRES Project: http://www.improgres.org/



Instituto de Investigación TecnológicaSanta Cruz de Marcenado, 2628015 MadridTel +34 91 542 28 00Tel +34 91 542 28 00Fax + 34 91 542 31 [email protected]

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