28. February 2006 1Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Market Impacts of Large-Scale System Integration of Wind PowerJens Pedersen

Peter Børre Eriksen

Antje Orths

ENERGINET.DK

28. February 2006 2Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Outline

Introduction: Present Danish Situation

Investigations: Implementing more Windpower

Additional Costs …?

Balancing the System …?

Future Plans

28. February 2006 3Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

28. February 2006 4Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Power Balance 2004

720 MW DC

1200/800 MWAC

1000 MW DC

Sverige

600 MW DC

1700/1300 MW AC

60 kV

Consumption 1200 - 3650 MW

Central power plants (11) 3500 MW

Local CHP units (~ 600) 1600 MW

Wind turbines (~ 4000) 2400 MW

Consumption 800 - 2700 MW

Central power plants 4000 MW

Local CHP units 600 MW

Wind turbines 750 MW

Two synchronous areas:

West:

East:

4000 MW

1350 MW

28. February 2006 5Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

MW9,000

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

CentralLocal CHP Wind Consumption

Power Balance (Western Denmark)

28. February 2006 6Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Energy Balance 2004

28. February 2006 7Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Development of Energy Balance Western Denmark

Main Figures

-10

-5

0

5

10

15

20

25

30

1998 1999 2000 2001 2002 2003 2004

Year

TW

h

Consumption Production CHP Wind Exchange

Main Figures

-10

-5

0

5

10

15

20

25

30

1998 1999 2000 2001 2002 2003 2004

Year

TW

h

0

5

10

15

20

25

30

Consumption Production CHP

Wind Exchange Wind %

[%]

28. February 2006 8Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Additional System Costs …?

Balancing the System…?

Main Questions

28. February 2006 9Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Additional System Costs - Simulation of Ficitious Western Danish Power System -

Assumptions:

Isolated Power System (CHP and International Connections disregarded)

Production Mix adjusted depending on Amount of Wind Power (0% … 100%) with:

Same Security of Supply

Coal Fired Base Load Units (Utilisation Time >2000 h)

Natural Gas Fired Peak Load Units (Utilisation Time <2000 h)

Forced and Scheduled Outages included

5%, 30 years annuity=0,0651

CO2 Emission 6.7 €/ton

28. February 2006 10Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Production Mix at Different Wind Power Levels

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Energy from wind power in per cent of annual demand

MW

Wind Power

Base Load Units

Peak Load Units

Peak Demand

28. February 2006 11Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Utilisation Time for Base- and Peak Load Units

0

1000

2000

3000

4000

5000

6000

7000

8000

Hou

rs

MW

0%

50%100%

28. February 2006 12Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

How much Wind Power can be sold?

0

5

10

15

20

25

30

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Share of wind power (%)

TWh/year

Production Sold Surplus

Demand Side

of the

Residual

Market

(~8 TWh)

28. February 2006 13Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

13,14

26,325,49

12,76

6,58

0

0,811,27

1,51

0

5

10

15

20

25

30

35

40

1 2 3

%

TW

h

Wind Power Base Unit Peak Unit

0 50 100

26,3

Energy Production, Consumption and Overflow

0 0,91 8,13

Production

Side of the

Residual

Market

28. February 2006 14Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Cost related to Residual Production

0

200

400

600

800

1,000

1,200

1,400

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Share of wind power (%)

Mio

EUR

0

10

20

30

40

50

60

70

80

90

100EUR/MWh

Total costs

Extra costs in case of windpower production

Unit costs44 -> 80

EUR/MWh

266 Mio EUR

1157 -> 624

Mio EUR

28. February 2006 15Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Additional Costs related to Residual Demand … distributed on Wind Power

0

2

4

6

8

10

12

14

16

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%Energy from wind power in per cent of annual demand

EUR/utilised MWhwind power

Overflow worth 0 EUR/MWh

Overflow worth 13.3 EUR/MWh

28. February 2006 16Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Lessons learned (1/2)

The specific costs of the thermal power plants increase with increasing share of wind power

Large wind power penetration leads to additional costs of 6-13 €/MWh per utilised MWh wind power

Demand for peak load units increases: innovative approach needed

New demand types are needed to utilise the power overflow

Not considered

ancillary services including regulating power

transmission capacity

stability aspects

district heating which will increase the overflow

wind power installation cost

28. February 2006 17Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Additional System Costs …?

Balancing the System…?

Main Questions

28. February 2006 18Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Keeping the system in balance

Sources for imbalance

Load Generation

Emergency plan

Handles

AGC NOIS a.c. tie lines

28. February 2006 19Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

The Challenge of Wind Power Forecasting

“Fresh breeze”means somewhere

between 200 and 1 600 MW

A deviation of just ±1 m/s may have an impact of ± 320 MW (With a 2 374 MW installed base).

28. February 2006 20Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Obligation of Providing Regulation Reserve, Western Denmark

Primary Regulation Reserve: + 30 MW

Automatic Regulation Reserve: + 140 MW

Manual Regulation Reserve:

Upward Regulation: up to 670 MW

Downward Regulation 200 MW

Regulating power bids from DK, N, S and D are available in the Nordic real time market

Local scale CHP- units (787 MW) have access to the market (from 2005.01.01)

~ 60 Mio € / a

28. February 2006 21Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Regulating Power

Daily input for Nord Pool day-ahead-planning to be submitted at noon (difference between three months` forecast and day-ahead forecast)

The TSO must provide regulating power for deviations between day-ahead-plans and real-time conditions in real-time-market

Main reasons for deviations: Errors in wind power forecasts (…storm)

deviations from market players`s plans

outages

Sources: Domestic spinning reserves

purchase with Sweden and Norway

Difficulty: – not stochastically independent

28. February 2006 22Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Regulating Power and Prices in the Real-time Market in Denmark West, December 2005

Regulating power and prices in the real-time market in Denmark WestDecember 2005

-700

-500

-300

-100

100

300

500

700

01.12 04.12 07.12 10.12 13.12 16.12 19.12 22.12 25.12 28.12 31.12

-140

-100

-60

-20

20

60

100

140

Activated regulating power, MWh/hAddition to price - upward regulation, EUR/MWh Deductions from the price - downward regulation, EUR/MWh

Upward regulation

Downward regulation

EUR/MWhMWh/h © Energinet.dk

upward regulation 53 GWh; av. price 10,86 EUR/MWh

downward regulation 55 GWh; av. deduct. price -9,73 EUR/MWh

28. February 2006 23Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Computed power imbalance for Horns Reef A+B

28. February 2006 24Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Lessons Learned (2/2)

Various challenges concerning System Balance:

Wind Forecasts have to be improved

More Domestic Regulation Reserves have to be activated

Danish Interconnection will reduce Reserve Costs

Reduction of Positive Power Gradients from Wind Farms will

help Keeping the Schedules

28. February 2006 25Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Future Plans

Activation of Domestic Regulation Capacity

(Local CHP<10MW acting on price signals)

Promotion of Demand Response

Implementing Autonomy by Redesign of the System

Architecture (Direct Communication with local Generation)

Add more Transmission Capacity

Take Part in ETSO / UCTE wind study

28. February 2006 26Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Horns Rev

Thank you !

www.energinet.dk

28. February 2006 27Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Production capacities / voltage level (Western DK, 01.01.2005)

400 kV (TSO)

International

1,488 MW 4 Primary Power Stations

150 kV (Transmission Company) 1,914 MW 5 Primary Power Stations 160 MW 80 Wind Turbines

60 kV 589 MW 16 Local Plants (18 Gen)

41 MW 34 Wind Turbines

10-20 kV (Distribution Undertaking)

Low Voltage

1,093 MW 543 Local Plants (734 Gen)

2,179 MW 4,047 Wind Turbines 2 MW 1,000 PV units

International

International

MW units

7,466 MW

28. February 2006 28Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Priority production Commercial production

Demand - peak load

Demand - off-peak load

Price

MWh

Supply

Pp

Po

Priority local CHP andwind production

Wind Commercialproduction

Demand - peak load

Demand - off-peak load

Price

MWh

Supply

Localproduction

Pp

Po

Local CHP and wind productionintegrated into the electricity market

Com.prod.

Present and Future Handling of DG within Denmark

=> smaller difference between peak-load and low load prices

increase of price stability

28. February 2006 29Market Impacts of Large-Scale System Integration of Wind Power - EWEC 2006, Athens

Demand and Supply Curve for Different Elasticity Coefficients due to Grade of Demand Response

Peak demandLimited DR

€/MWh

Supply

MWh

Peak demandHigh DR

Off-peak demandLimited DR