flexibility for variable renewable energy integration in the ......flexibility for variable...

Flexibility for Variable Renewable Energy Integration in the Nordic Energy System

Danish & Nordic perspectives

Klaus Skytte [email protected] Head of Energy Economics and Regulation DTU Management Engineering Systems Analysis Division FLEXe workshop 22 September 2015 Majvik Kirkkonummi

mailto:[email protected]

DTU Management Engineering, Technical University of Denmark

Agenda

■Motivation ■Nordic perspectives ■System integration ■Denmark as case - Energy Concept 2030 ■From technical to realisable flexibility

potentials ■Challenges

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Motivation

The new electricity systems: From centralised and fossil-intensive systems to sustainable and integrated

Increasing shares of variable renewable energies (VRE)

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Wind production share in DK-West

Total support and integration costs expected to increase Trend to more market integration and need of more flexibility Technological and smart technologies exist. Need for REthinking the

framework conditions to support these + bussines cases Market integration with electrification of gas, heat and transport sectors

⇒Research is needed for analysing the effects of different regulatory framework conditions, both qualitatively and quantitatively

Wind power provided a world record 41.2% of Danish electricity consumption for first 6 months of 2014 The night of Friday, July 10 2015 wind produced 140 per cent of Denmark's electricity consumption

Identify and assess regulatory and technical pathways towards coherent Nordic energy systems in 2050 based on strong interaction between different energy markets that ensure resilience, sustainability and efficiency.

Presenter

Presentation Notes

These renewables do not come into the systems by themselves, but due to a number of policy efforts --> Due to the highly ambitious political targets for RES, total support payments are expected to increase. This makes it ever more important that adequate mechanisms and levels are implemented. Adequate support: How to design the most optimal framework conditions - both with respect to investors (WT owners), TSO's and for sociaty When we look at support mechanisms in Europe, we can see that the use of support schemes in Europe are rapidly changing… TRANSITION: And that brings me to my RESEARCH QUESTIONS


Global vs Nordic energy-related CO2 emissions

Carbon-neutral scenario (CNS): 85% reduction of (energy- and process related) CO2 emissions by 2050 relative to 1990

IEA NETP senarios

Presenter

Presentation Notes

NETP presented three Nordic scenarios based on the IEA’s global 4C and 2C scenarios. 2DS = 70% from 1990.�The Carbon Neutral Scenario describes an 85% reduction from 1990, representing national climate goals for 2050, in a world heading for the global 2C scenario. CNS= DK 100% RE, FI 80%, IS 50-70%, NO carbon neutral, SE no net emissions. Combination of forecasting (current policies, concrete plans) and backcasting (optimal pathways to 2050 goal)


Nordic electricity system 30 years ahead in terms of CO2 intensity

Nordic CO2 emissions from electricity and heat generation

Presenter

Presentation Notes

bioCCS by 2035 contributes to negative emissions in CNS


Nordic electricity generation in the Carbon-Neutral Scenario

63% RES-E 83% CO2 free



Presenter

Presentation Notes

In order to reach the target: 40% generation increase, compared to 100% globally. But only about a 15% increase in Nordic demand. Growth in demand due to transport electrification, more el in heat and industry. Counteracted by EE measures. Up to a 10-fold increase in wind generation from 3% of total generation in 2010 to 25% in 2050 40GW of Nordic wind capacity in 2050. From 6GW in 2010. Requiring 10 000 new onshore turbines, 3 000 new offshore turbines We need to install 1GW a year to 2020 (2011 and 2012 were on track), and 1.4GW a year after that. Majority in DK and SE (100GWh a year split between them) with 25GWh split between FI and NO. Most offshore in DK. All scenarios lead to decarbonisation ********* bioCCS by 2035 contributes to negative emissions in CNS Public acceptance issues paramount Especially wind power is deployed. If lower cost for solar photo voltic, then more solar PV instead of Off-shore wind COST: it would cost 400 b USD in 4DS, = 0.7% of cumulative GDP. CNS would cost 40 b USD more, but we would earn 90 b USD in el export and fuel savings, making CNS 50 b USD cheaper than 4DS. 60% in gereration, 40% in infrastructure.


6 GW Nordic wind capacity in 2010

40GW of Nordic wind capacity in 2050. Requiring 10 000 new onshore turbines, and 3 000 new offshore turbines We need to install 1GW a year to 2020 (2011 and 2012 were on track), and 1.4GW a year after that.

Presenter

Presentation Notes

number of Wind turbines today vs in 2050: 40GW of Nordic wind capacity in 2050. From 6GW in 2010. Requiring 10 000 new onshore turbines, 3 000 new offshore turbines We need to install 1GW a year to 2020 (2011 and 2012 were on track), and 1.4GW a year after that. Majority in DK and SE (100GWh a year split between them) with 25GWh split between FI and NO. Most offshore in DK. Public acceptance issues paramount


Key challenges

Energy Efficiency CCS

Infrastructure Biomass Supply

Electricity system integration

Presenter

Presentation Notes

The more we decarbonise, the more system integration is needed! Power can be balanced by heat prod, el transport, DSM in buildings, etc. Bio transport interacts w agri/forestry/industry


System integration

Presenter

Presentation Notes

More we decarbonise, more system is integrated Power can be balanced by heat prod, el transport, DSM in buildings, etc. Bio transport interacts w agri/forestry/industry


Hypotheses - System integration

There is a comparative advantage of combining different energy markets, both with respect to flexibility, but also with respect to synergy and economics. The Nordic power market is well functioning despite a few technical challenges. With the right coupling to the underlying national and local energy markets for heat, gas, and transport fuels, enough flexibility can be generated in a cost efficient way and so embrace a larger amount of VRE. Need for a holistic system approach to the Nordic Energy system with flexibility obtained across energy markets with respect to flexibility at the power markets.

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Energy concept 2030 DK - Scenarios for system development towards a RE-based energy system

Energy Concept 2030 DK - towards a RE-based energy system


Denmark situated in a windpower area Electricity

transmission

Gas transmission


Energy strategy in Denmark Political targets:

■ 2020: 50% of traditional electricity consumption covered by windpower (decision supported by 95% of parliament)

■ 2035: All electricity and heat based on renewable energy (Obs. the previous governmental position)

■ 2050: The total* energy supply based on renewable energy *Total energy system incl. transport, industry etc.

Wind power provided a world record 41.2% of Danish electricity consumption for first 6 months of 2014 The night of Friday, July 10 2015 wind produced 140% of Denmark's electricity consumption


Energy concept 2030 – Towards a competitive energy system based on renewables

Power Gas

Heat

Today 2050

Today Wind Bio Bio+ H2 Fossil

Heating Proces heat Electrical

services (Light, cooling, it, proces etc.)

Transport

Fuel

Energy ressources Energy system Energy services

Bio Wind PV Fossil

• System development towards a fossil free system is analysed

• In wind scenario a sustainable amount of biomass is estimated as the national bio- and waste ressources



RE-electricity ressources DK (potential and socio-economic cost of energy 2030 excl. integration)


A scenario example towards RE-based energy supply

P2G

HP Industry-

HP

EV/PHEV

HP


Ressources and cost for fuels (2030 if all biomass is allocated to fuels)


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40

60

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0 50 100 150 200 250 300 350 400 450 500

REg

as p

rce

(DK

K/G

J)

excl

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ean

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an

d u

pg

rad

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Fuel production (PJ)

Waste mun.

Energy- crops

Wood

Slurry etc.

Marg. bio etc.

Electrolysis (power 2 gas)

2013 2035 2050 Consumption of fuels (gas+liquids)

Natural gas + CO2 (2035)

Gasoil + CO2 (2035)

Straw

Today primary used for heat and CHP

A significant demand for fuels – biomass is essential for producing high amount of fuels

Fuels demand today would require more than 30 GW extra windpower if power-to-gas should deliver

Presenter

Presentation Notes

Fuels required for heavy transport, air and sea transport, certain type of high-temperature industrial process heating, and peak-load power plants. Long run average costs including investments + potentials for RE-gas productions EE and electrification implies a lower demand for fuels/gas in the future


Danish case (Energy Concept 2030) - Summing up


The vision is to make the total energy system independent of fossil fuels, and to make it competitive with a fossil reference A high degree of electrification and much more wind- and solar will be essential. A high integration with heat- and gas-system is mandatory to get flexibility and energy efficiency. Biomass to be used for CHP and boiler is the short term solution. The long term solution is to use biomass for fuel production (thermal gasification, anearob gasification) The integration of residues (fertilizer, char etc.) from RE-fuel production is a key activity in a sustainable use of biomass


Why increase transmission grid capacity?

Motivation for closer grid integration ■ Potential for green generation surplus in the

Nordics ■ Nordic hydro power can act as a very efficient

battery ■ Geographic smoothing effects for variable

generation ■ Resource sharing across regions for back-up

and ancillary services


Flexibility in transmission Example: Economic and climate effects of increased integration of the Nordic and German electricity systems Hourly modelling: Ex. Germany


Regulatory framework challenges Market integration and flexibility From passive to active dynamic generation / market actors

■ Act to negative prices at the spot market (day-ahead)

■ Case: Change in market design from 2009: negative prices at NordPool ■ Close down of wind turbines in hours with neg prices = saved costs

■ Active at the balancing markets Close down of wind = down regulation

Case Denmark: New wind turbines gets a Feed In Premium in certain full load hours (depending on size). When down-regulation, the not "used" full load hour with support can be used later.

Case Denmark: Some existing off-shore tenders have no incitements for WTs to be

active in down-regulation. One (Anholt) doesn't receive FIT when negative prices.

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Presenter

Presentation Notes

Dispatchable wind generation Negative prices is a signal from the market that there is excess production. Production in these hours means that you have to pay to "sell" your production. Down-regulation bid depends on how many full load hours with support the wind turbine has left as well as on the cost of capital (interest rate). The longer the period and the higher the rate, the higher the bid. For example: 22.000 flh with support, means 6-10 years of support. If you almost have used your flh with support, then your regulation bid will be close to zero. If you need to postpone your support in these horus for many years and at a high interest rate of your loans, then the bids will be higher


Managing Negative Spot Prices

Case: Sund & Bælt wind farm – 16. March 2014

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Managing Negative balancing Prices

Case: Down ward regulation – 9 August 2014

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Last year with active participation of wind turbines in ancillary service

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Activations where negative regulating prices are below -50 DKK/MWh.

• 25 times • 51 hours


From technical to realisable potentials

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Technical potentials Available potentials

TransportGasHeatElectricity

Barriers

Presenter

Presentation Notes

Theoretical potential: To derive the theoretical potential, general physical parameters have to be taken into account (e.g. based on the determination of the energy flow resulting from a certain energy resource within the investigated region). It represents the upper limit of what could be produced from a certain energy resource from a theoretical point-of-view, based on current scientific knowledge; Technical potential: If technical boundary conditions (i.e. efficiencies of conversion technologies, overall technical limitations as e.g. the available land area to install wind turbines as well as the availability of raw materials) are considered, the technical potential can be derived. For most resources, the technical potential must be considered in a dynamic context. For example with increased R&D expenditures and learning-by-doing during deployment, conversion technologies might be improved and, hence, the technical potential would increase; Realisable potential: The realisable potential represents the maximal achievable potential assuming that all existing barriers can be overcome and all driving forces are active. Thereby, general parameters as e.g. market growth rates, planning constraints are taken into account. It is important to mention that this potential term must be seen in a dynamic context – i.e. the realisable potential has to refer to a certain year; Realisable potential up to 2030: provides an illustration of the derived realisable potential for the year 2030.


Flexibility potentials

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MW

€/MW

without barriers

incl. present barriers / regulatory setup

with additional incentives

Remove barriers

add incentives

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Future Challenges The primary challenge The secondary challenges are to: a) Estimate the potentials and costs of flexibility in the Nordic power market created by the coupling of and increased interaction between different energy markets (electricity, heat, gas and transportation). Estimate the need for flexibility in the future Nordic power market. b) Identify and eliminate regulatory and technological barriers to intensified market interaction. Level playing fields for all flexibility options c) Develop coherent regulatory frameworks and market designs that facilitate energy market couplings that are optimal for the Nordic conditions in an EU context. Regulatory REthinking. Make RE market ready & Make markets RE ready Future market designs and business cases d) Adapt a high-resolution Nordic energy market model covering heat, power and transport for quantification of the impacts of different market couplings, regulatory frameworks and market designs. Estimate the cost and benefits of a coherent energy system framework.

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Identify and assess regulatory and technical pathways towards coherent Nordic energy systems in 2050 based on strong interaction between different energy markets that ensure resilience, sustainability and efficiency.

Flex4RES Flexibility for Variable Renewable Energy Integration in the Nordic Energy System

Nordic Energy Research Flagship project

September 2015 - March 2019


Thank you for your interest

Klaus Skytte Head of Energy Economics and Regulation System Analysis Division DTU Management Engineering Technical University of Denmark [email protected], http://www.sys.man.dtu.dk/


Last year with active participation of wind turbines in Day Ahead market.

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Protection against negative spot prices 17. august 2014. • Day Ahead trading resulted in negative spot prices

• Wind production was expected at high level • Wind production considerable lower than

expected • Wind turbines were used actively and did not

stop at all.

Hours

Presenter

Presentation Notes

den 17/8 var der brug for UP-regulering og derfor kom de ind i balancemarkedet

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