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The magazine for the international power industry July-August 2013

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Nuclear usionLooking beyond fssion

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3/56www.PowerEngineeringInt.com 1Power Engineering International July-August 2013

POWER ENGINEERING INTERNATIONAL

Contents

JULY-AUGUST 2013///VOLUME 21///ISSUE 7

2 Industry Highlights

4 News Analysis

8 News Update

44 Diary

46 Project & Technology Update

52 Ad Index

Features

12 Causing a frisson over fusion

With several projects well underway, harnessing nuclear

usion to generate power could be a lot closer to ruitionthan anticipated.

28 Realising a renewable energy dream

With technology prices dropping and internationalagencies backing low-carbon solutions, is sub-Saharan

Arica set or its long-awaited renewables boom?

34 Trigeneration: A technology for the times

As trigen technology wins devotees around the world, wehighlight its success stories and examine its most notable

ailure.

38 Pump up the volume

Advanced coatings can boost the perormance o apump beyond its as new and can maintain this standard

throughout its lie with minimal maintenance.

POWER-GEN Europe Best Paper Award Winners

Articles based on two o the six winning papers rom this years

POWER-GEN Europe Best Paper Awards are eatured.

16 A new market design for Europe?

New technology and market mechanisms can helpEuropes electricity system cope with the growing role o

renewables while ensuring adequacy o capacity.

22 FEM helps ease generator repair

Modelling o a stator casings destructive vibration allowedits modifcation on-site, a reft that was o short duration and

minimum complexity.

On the coverThe target chamber o the US National Ignition Facility. The holes in the

chamber provide access or the laser beams and viewing ports orthe diagnostic equipment. p.14

Credit: Lawrence Livermore National Laboratory

Free Product InfoYou can request product and service inormation rom this issue. Simply click on the link below that will provide you access to supplier companies websites,

product inormation and more http://pei.hotims.com

I you are considering suppliers or buying products you read about in PEi, please use this service. It gives us an idea o how products are being received to help us continuallyimprove our editorial oering and it also lets our advertisers know that you are a PEi reader and helps them to continue supporting the ree distribution o your magazine.

Trigen system in Sydney. Find out why the

Australian city has become the poster child

or trigeneration. p.34
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4/562 Power Engineering International July-August 2013 www.PowerEngineeringInt.com

Industry Highlights

Renewables will surpass gas

and nuclear by 2016. That is the

somewhat surprising headline

fnding o the International Energy

Agencys report published late June.

According to the report, renewable power

generation will increase by an astonishing

40 per cent in the next fve years, making

up almost a quarter o the global power

mix by 2018.

According to the IEAs second Medium-

Term Renewable Energy Market Report, twomain actors are driving this positive outlook

or renewable power generation. The frst is that

investment and deployment are accelerating

in emerging markets and the second is the

growing need or energy diversifcation and

local pollution concerns.

Certainly evidence o the ormer is plentiul.

One recent example is the latest MENA

Renewables Status Report, which ound that

investment in the renewable energy sector

the Middle East and North Arica increased

by 40 per cent rom 2011 to 2012, despite aworldwide decline over the same period.

It is o no surprise that the IEA expects

the majority (two-thirds) o this emerging

market growth to come rom China. Despite

what appears to be a slowing (or it is a

rebalancing?) o its economy, China recently

announced an ambitious plan to essentially

quadruple its installed solar power capacity to

35 GW by 2015. Some arguably cynical reports

suggest that this initiative has been devised by

Beijing to help soak up the countrys sizeable

share o the global glut in solar technology

and thereby protect its domestic industry.

Arica also looks set to beneft rom

renewable energy. On his recent three-country

visit US President Barack Obama pledged

$16bn o American unding to double Aricans

access to electricity, with a strong ocus on

renewable energy development. In this issue,

we explore what is said to be a renewables

boom in sub-Saharan Arica, especially in

smaller-scale projects that are helping to

bring light to rural communities.

As youd expect the IEAs renewable

energy report is not all good news, with a slow-down in growth anticipated in more mature

markets, most notably Europe and the US. It

cautions that renewable energy development

is becoming more complex and aces

challenges in terms o governmental policy,

especially in a number o European countries.

I you are a power generator with a mixed

eet o both conventional and renewable

energy you will be all too amiliar with these

challenges.

You only have to look at some recent

headlines to get some idea o the challenges

acing those participating in the European

renewable sector. For example, Dong Energyrecently sold its Danish onshore wind power

business as part o a plan to ocus solely

on oshore wind. This may well be a smart

move by the Danish utility in light o the June

announcement that the European Union has

awarded a welcome 1m in unding towards

a detailed study or the ongoing initiative to

build an oshore grid between Scotland,

Northern Ireland and Ireland.

E.ON, Germanys largest utility by sales, has

withdrawn rom the Pelamis marine energy

project at the European Marine Energy Centrein Scotland. According to a spokesperson,

the decision was taken because o the slow

progress in wave technology development

and a shit in the utilitys ocus towards more

mature renewable technologies. Is this an

indication that novel renewable and low-

carbon technologies with huge potential but

little tested will lose out to more conventional

renewables in the continuing uncertainty over

renewable energy policy?

Furthermore, Germanys RWE has pulled

the plug on its Tilbury biomass-conversion

project in the UK, which it started in 2011 and

would have made it the largest biomass-

only power plant in the world. According to

RWE, it decided to halt work on the biomass

plant whilst options on project easibility are

assessed and reviewed. RWE may well be

thanking its lucky stars considering the recent

announcement by the British government.

It is proposing to cap subsidies or bespoke

biomass burning plants to 400 MW per plant

and end subsidies by 2027 or existing stations

combusting biomass. It does make one

wonder what Drax thinks o that, consideringits 700 million investment in converting three

o its six boilers to 100 per cent biomass.

Renewable powerwill increase by anastonishing 40 percent, making up

almost a quarter ofthe global power mixby 2018 and driven byemerging economiesDr. Heather JohnstoneChie Editorwww.PowerEngineeringInt.com
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News Analysis

Strike prices unveiled, a shale boom predicted,

regulator warnings and tabloid hysteria Kelvin Ross

examines 24 hours in the evolving UK energy market

ELECTRICITY TO BE RATIONED. That was the

headline on the front page of UK middle-

market tabloid newspaper the Daily Mail

earlier this month.

Britain could face a return to Seventies-

style power rationing to prevent blackouts the

paper told its readers.

The story appeared the morning after a

busy 24 hours for the UK energy industry, a day

dubbed Super Thursday. The governments

Department of Energy and Climate Change

(DECC) revealed some long-awaited details

of its Electricity Market reform package by

publishing draft strike prices for various forms

of renewable energy, the British Geological

Survey published a report on the potential

reserves of shale gas in Britain, and energyregulator Ofgem issued a warning over

electricity supply.

It was this last report that prompted

the Daily Mails screamer headline and it

is the latest of many occasions in recent

months when energy has grabbed the front

page, sometimes with measured reporting,

sometimes not.

So what was in these reports and DECC

announcements and what did the power

industry make of them? Is it all doom and

(literally, as the Mail would have us believe)

gloom, or are there reasons to be upbeat

about the British power sector.

What Ofgem actually said was this: that

electricity supplies are set to tighten faster

than previously expected in the middle of this

decade. It stated that the risk to electricity

supplies is projected to increase from thecurrent near zero levels, although it added

and heres a rather vital caveat that it does

not consider disruption to supplies is imminent

or likely, providing the industry manages the

problem effectively.

Ofgem chief executive Andrew Wright said

the report highlights the need for reform to

encourage investment in generation.

He said Britains energy industry is facing

an unprecedented challenge to secure

supplies and added that it would be prudent

to consider giving National Grid additional

tools now to procure electricity.

Ofgem believes these tools would give

network operator National Grid the option to

buy extra demand-side response and reserve

generation to balance the electricity network.

Dr Monica Giulietti, Associate Professor of

Global Energy at Warwick Business School,

has studied UK energy prices for more than

a decade and says Ofgems warning is the

latest of several alerts.

There have been warnings the gasreserves are getting tight in the UK as its

storage capacity is a lot smaller than the rest

In the dark on thereality of blackouts
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News Analysis

o Europe, she says. Plus there is also an issue

with the decline in gas production rom the

North Sea. A change in demand will see the

energy companies rely on the spot market

and import gas, which is subject to variations

in price. With such low reserves the UK might

have to import more.

The Ogem report came a day beore the

government made key announcements on its

Electricity Market Reorm. It revealed the strike

prices or renewable energy that it proposes to

pay under its contracts or dierence schemeand also outlined details o its planned

capacity market.

Contracts or dierence orm a key plant

o the governments Electricity Market Reorm.

Varying in amount or each orm o power

generation, they guarantee to pay generators

a fxed sum or strike price or the electricity

they generate.

The government revealed fgures covering

each year rom 2014 to 2019. For projects with

a potential deployment capacity o more

than 1 GW, the government plans to pay155/MWh or oshore wind in 2014, alling to

135/MWh in 2019; Onshore wind will get 100

rom 2014, dropping to 95 in 2019, while large

solar PV will receive 125 in 2014 and get 110

in 2019. Hydro and biomass conversion will get

the same amount or the 2014-2019 period:

95 and 105 respectively.

On the capacity market, the government

confrmed that subject to EU state aid

approval the capacity market will be

launched next year, with participants such

as existing generators and investors in new

plant bidding in auctions to provide the total

amount o electricity that the UK is predicted

to need rom 2018-2019.

Successul bidders will receive a steady

payment in the year they agree to make

capacity available. In exchange, they will

be obliged to deliver electricity in periods o

system stress or ace fnancial penalties.

Energy Secretary Ed Davey must have elt

he was directly answering Ogems concerns

when he said: Developers and investors have

been crying out or more details sooner, and

that is what we are giving them today.The announcements were welcomed

albeit with some key caveats by many in the

energy industry. Andrew Horstead, head o

commodities research at energy and carbon

management specialists Utilyx, said: This is

the frst real assurance that weve seen rom

the government to make a real and lasting

commitment to improving the UKs energy

inrastructure. The measures outlined should

fnally provide investors with the clarity they

need to commit unds or energy projects.

But he added that this will take time to get

through the legislative process and said he

believed it was highly unlikely that we will seethe real benefts o these plans until the latter

stages o the decade at the earliest, which

has serious implications or the countrys short

term energy needs.

Maria McCaery, chie executive o trade

group RenewableUK, said the publication o

the drat strike prices was a welcome step

orward in setting out how the long term

market is going to work.

However, she added that more details

do need to be set out. The most important

ingredient remains investor confdenceand that will take time to land. The secret is

consistent long term support and investors

seeing that government is behind renewables

and low carbon generation or the long term.

Paul Massara, UK chie executive o RWE

one o Britains Big Six power utilities said

a signifcant level o detail is not yet fnalised.

This, along with the overall complexity o the

proposals and the need to gain EU state aid

approval, means uncertainty remains.

And Katja Hall, chie policy director at the

Conederation o British Industry, said DECCs

announcements were a big step orward and

should unlock the private investment we need

to keep the lights on and costs down.

Shale gas

In what proved to be a bumper day or UK

energy announcements, the government also

published details o a report rom the British

Geological Survey on the potential volume o

shale gas in the north o England.

The BGS estimated there is likely to be some

40 trillion cubic metres (1300 trillion cubic eet)

o shale gas in the ground in this area afgure ar exceeding all previous estimates.

However, it should be noted that the fgure

relates to technically recoverable volumes

and not to commercially recoverable gas.

Emma Wild, head o the upstream advisory

practice at consultancy KPMG, was ar rom

bowled over by the BGS report and the

governments shale gas package.

She said what had not been addressed

was the high cost o operating in the UK, the

availability o alternative sources o gas supply

or UK power and how these actors contribute

to shale gas commerciality.

Thereore the likelihood o large scale

developments remains uncertain.

However, Dan Byles, chairman o the All-

Party Parliamentary Group on Unconventional

Oil & Gas, was much more upbeat. He said

the fgures in the BGS report confrm the UKs

potential to become a major global player in

the shale gas market.

Even i only ten per cent o what BGS

believes is there was extracted, this would

support the UKs gas needs or our decades

and the report only covers one part o the

country. Now we need to know how much

o this valuable resource we can extractand what it will mean or UK consumers and

industry.

The UK faces a veryreal energy crunchover the next fewyears to 2020

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News

EUROPE

Germanyss EnBW to shut down our plantsand mothball RDK 4German utility EnBW is to close our power

plants two coal, one gas and one co-

generation which have a combined output

o 668 MW.

And it is also planning a short-term

shutdown o RDK 4 in Karlsruhe, which it says

is hardly being utilised and is consequently

also unable to cover its ull costs.

The our plants being closed permanentlyare an oil fred co-generation unit and a gas

fred plant in Marbach and two coal fred

plants in Walheim. They will shut at the earliest

legally possible date according to EnBW.

Both coal plants were commissioned in

the 1960s, while the Marbach gas plant was

commissioned in 1971 and the cogen plant

went operational in 1975.

The company said the decision to close

the plants was taken as a result o rapid

structural change in the energy sector.

EnBW said: As a result o the marked

additional construction o renewable energy

sources, numerous ossil plant are exposed to

great commercial and fnancial pressure, and

requently continue to be operated solely as

marginal power plants. This is resulting in a

drastic all in revenue.

The company said older coal plants and

especially gas power stations can no longer

cover their ull costs given todays electricity

market prices, and can consequently not be

operated on a commercially viable basis.

Around 100 sta will be aected by the

closures and EnBW is in talks with them over

their uture.

EnBW is also in talks with Germanys Federal

Network Agency over RDK 4 at Karlsruhe. The

company said the gas and steam plant is

hardly being used and it plans to shut down

the plant on a short-term and provisional basis

as a consequence.

The potential o a later recommissioning is

to be let open, added EnBW.

Conergy fles orinsolvencyConergy, once one o Europes largest solar

power companies, has fled or insolvency.

The German company has cited

inability to bring on board a new investor

as well as what it reerred to as an

unexpected delay in payment rom a big

project.

Philip Comberg, Conergy chie

executive, said in a statement: In the last 15months, we have presented two concrete

concepts on the investment by investors

to our lenders. We very much regret that

they repeatedly could not reach a reliable

agreement on a timely implementation o

the proposal.

He added: The management board will

now ully support the preliminary insolvency

administrator in order to hopeully secure all

jobs and to continue business operations

without any disruptions.

Conergy employs about 1,200 sta

globally 800 in Germany and about 400

in its international subsidiaries.

A global glut in supply combined with

plunging prices amid sti competition

rom Asia has brought down or seriously

debilitating some o the biggest names in

the sector in the past two years.

Spain closes second oldest nuclear plant

The Spanish government has closed down

the aging Santa Maria de Garona nuclear

power plant.

The plant is one o eight nuclear reactors in

Spain and is 42 years old the second oldest

in the country.

It was closed under an order issued by the

Industry and Energy Ministry but its operator

Nuclenor owned by Iberdrola and Endsea

said the closure was solely due to economic

reasons and not or technical or saety

concerns.

Spains Deputy Prime Minister Soraya SaenzSantamaria said Nuclenor has asked or the

plants operating license not to be renewed

but she added that the government has not

ruled out reactivating the plant at a later date.

The closure ends a prolonged period

o uncertainty over the uture o the plant.

Its licence renewal frst came up or review

in 2009 and the Nuclear Saety Council

recommended a 10-year extension be

granted.

However the then Socialist government

granted only a our-year licence extension to

this year. In January 2012 a new conservative

government removed the 2013 operational

limit with a view to allowing the plant to rununtil 2019, subject to Nuclenor renewing the

licence.

But Nuclenor delayed that application

until it had details o new government rules

and taxes, since it said it would have to spend480m on the plant to give it a 2019 shel lie, a

price it now seems was too high to pay.

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News

AFRICA

Continents biggestgas plant inaugurated

Aricas largest gas-fred power plant at

Sasolburg, outside Johannesburg, has been

ofcially inaugerated.

The Sasol plant is the largest power plant

running exclusively on gas engines on the

Arican continent, and the frst o its kind ever

in the Republic o South Arica.

The complete turnkey project packageat a demanding altitude o 1500 metres was

supplied by Wartsila on a ast-track basis with

perormance guarantees.

The Finnish company is also responsible or

the engineering, procurement, construction

and project management o the new power

plant, which is powered by 18 Wartsila 34SG

generating sets running on natural gas with

an operating capacity o 140 MW

The electricity produced by the plant will be

used on-site by Sasols chemical actory next

to the plant, with about hal o the production

being ed to the national grid.

Despite the high altitude o the Sasolburg

plant, the Wartsila gas engines are able

to operate with an extremely high level o

efciency.

The closed-loop cooling system used by

Wartsila also imposes a minimal demand or

water, which is an important actor in areas

such as this where water resources are limited.
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News

MIDDLE EAST

Middle East power sector at greatest risk of cyber attack

The energy sector in the Middle East is more

vulnerable to cyber attacks than anywhere

else in the world, according to DNV KEMA.

And the company has warned that a

cyber attack on crucial energy supplies and

transiting routes in this region would impact

the entire world.

DNV KEMA said that no regional cyber

security strategy has been implemented in the

Middle East, despite a rise in hacking attacks.

Until recently, most o these attacks

ocused on computers and websites, the so-

called ront doors to energy companies, but

DNV said that as viruses become increasingly

sophisticated, physical assets such as power

stations and power grids are also under threat.

Last year, Saudi Aramco and RasGas

reported cyber attacks while in Iran computers

at several nuclear power stations were

inected.

The Middle East is littered with gas and oil

installations and is planning to boost its energy

mix by introducing nuclear and renewable

energy power plants.Mohammed Ati, managing director o

DNV KEMA in the Middle East, said the regions

planned and existing cyber protection plans

are lagging behind the rest o the world. This is

a situation to really worry about, he added. A

cyber attack on crucial energy supplies and

transiting routes in this region would impact

the entire world.

He said awareness in the region o

cyber threats is insufcient in relation to the

technology developments and the level o

impact a cyber-attack could have on an

average Middle Eastern utility.

As cyber security threats are not restricted

to one single group, but can come rom

dierent corners such as governments,

activists and hackers, criminal and terrorist

organisations and even rom within, it is time

we all open our eyes and take appropriate

actions to protect our countries and guarantee

a sae and sustainable energy provision.

What is needed to remedy the situation,

said Ati, is national governments to develop

coherent cyber security strategies and plans,

supported by standards and regulations

across the major inrastructure sectors.

Sharing responsibility betweengovernments and companies in vital sectors

is a frst, necessary step in securing sae and

reliable cyber networks, he said.

DNV KEMA ound that inormation on

common cyber deense systems like SCADA,

Stuxnet and ISPs is increasingly becoming

publicly available both in and outside the

region. On top o this, industrial control systems

are all interconnected with corporate IT

networks and the internet, while at the same

time the interconnectivity o energy assets

such as power grids, is strongly increasing.

These developments, in combination with

insufcient awareness and the absence o a

cyber-deense plan, make the energy sector

in the Middle East vulnerable, more than

elsewhere, said Ati.

GDF Suez mulls Saudinuclear project

The chie executive o GDF Suez, Gerald

Mestrallet has revealed that the company is

considering involvement in a nuclear reactor

project in the Kingdom o Saudi Arabia.

The Saudi government is considering

building 17 GW o nuclear capacity by 2032.

Mr Mestrallet told Les Echos newspaper

that GDF is ready to cooperate, on the

condition that we are given the right amount

o room, and said that the company would

only ever be in a position to take on a nuclear

project by being a partner rather than sole

player.

We will never take an entire nuclear

project on our balance sheet, he said. We willalways be in partnerships, at least at the 50

per cent level.

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13/56

YELLOWSTONE POWER GENERATION PROJECT

INVITATION FOR EXPRESSIONS OF INTEREST FOR EPC CONTRACTOR FOR A 350MW

GAS-FIRED THERMAL POWER PLANT IN NIGERIA

Yellowstone Electric Power Limited (Yellowstone), an afliate o Quantum Power International Holdings Ltd (Quantum Power), wishes to invite interested

qualifed parties to express interest in providing engineering, procurement and construction (EPC services) necessary or the Turnkey implementation o

its 350 MW simple cycle gas fred power plant. The power plant shall be constructed near the town o Ajaokuta in Kogi State, Nigeria (the Yellowstone

Project).

Any party wishing to submit an Expression o Interest to provide EPC services or the Yellowstone Project (an Applicant) is hereby

encouraged to contact the Designated Representative listed below. Each Applicant will be supplied with detailed inormation regard-

ing the process or submission o an Expression o Interest, including the required supporting documentation. The deadline or receipt o

Expressions o Interest is September 2, 2013.

Based upon an evaluation o the Expressions o Interest received, Quantum Power and Yellowstone (in their sole discretion) will select those Applicants to be

invited to tender or EPC services or the Yellowstone Project. Successul Applicants will be issued a Request or Proposal (RP) and other bidding documents.

It is anticipated that the RP will be issued in September 2013.

Designated Representative:

Yellowstone Electric Power Ltd

76B Ebitu Ukiwe, Jabi

Abuja, Nigeria

Attention: Ms Sandy Eyal

Email: [email protected]

Please note that this is not an invitation to tender. Neither Quantum Power nor Yellowstone shall be responsible for the cost of any submission.

Any submission shall be at the cost of the Applicant. Yellowstone and Quantum Power reserve the right to accept or reject any submission.


LATIN AMERICA

Noja Power wins $12m deal or Brazilian grid

Australian switchgear engineers Noja Power

has won a $12m deal to boost the saety and

reliability o Brazils electricity supply.

The contract was awarded by Latin

Americas largest utility Eletrobras and will see

Nojas Brazilian arm install and link its OSM15

and OSM38 automatic circuit reclosers to six

operation centres.

Eletrobras will monitor and control the units,

optimising network operational characteristicssuch as protection and load shedding.

The deal comes as the Brazilian government

is encouraging Eletrobras to modernise

its electricity generation, transmission and

distribution inrastructure.

The government has implemented a

modernisation programme called Project

Energy+ which aims to greater integrate

renewable energy resources such as

hydroelectric, solar and wind into the countrys

energy mix.

In addition, grid improvements under the

project will reduce power loss, eliminating the

need to add more centralised conventional

generating capacity to meet increased

demand. As such, Brazil is expected to

cumulatively spend $27.7bn on smart grid

investments by 2022.Brazil is a rapidly developing country and

the government is encouraging power utilities

to upgrade their electricity inrastructure

to meet the needs o the uture, said Bruno

Kimura, Nojas managing director in Brazil.

He said Nojas automatic circuit reclosers

will be a undamental component o Brazils

new smart grid.

ASIA

Target date or frstoating nuclear plantRosatoms Akademik Lomonosov oating

nuclear power plant, the worlds frst, could be

up and running as early as 2016.

The 70 MW plant is designed to serve large

industrial projects, port cities and oshore gas

and oil-extracting platorms and has attracted

interest in China, Indonesia and Malaysia.

The plant will be situated in the town o

Vilyuchinsk o the Kamchatka region in FarEast Russia.

Akademik Lomonosov is a non-sel-

propelled vessel, which is 140m long, 30m

wide and 10m high and built at Sevmash

submarine-building plant in Severodvinsk.

. It will be equipped with a power unit o two

35MW KLT-40C nuclear reactors, or 300 MW o

heat and two steam-driven turbine units.

www.PowerEngineeringInt.com 11Power Engineering International July-August 2013

News
http://digital.powerengineeringint.com/powerengineeringint/20130708/TrackLink.action?pageName=11&exitLink=mailto%3Asandy.eyal%40quantum-power.comhttp://digital.powerengineeringint.com/powerengineeringint/20130708/TrackLink.action?pageName=11&exitLink=http%3A%2F%2Fwww.PowerEngineeringInt.comhttp://digital.powerengineeringint.com/powerengineeringint/20130708/TrackLink.action?pageName=11&exitLink=http%3A%2F%2Fpei.hotims.com

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14/56

H

arnessing nuclear usion has

been a dream o technologists

almost rom the moment that

nuclear processes taking place

within the sun were recognised

early in the 20th century.

The frst, unsuccessul attempts at usion

took place in the 1930s and the quest was

taken up again in the late 1940s. Since then

there have been a string o successul and

increasingly large usion reactors built. Today

there are 20 in operation around the world.

Since 1958, co-operation has been an

important eature o usion research and has

centred on reactors that utilise magnetic

confnement to contain the superheated

plasma at the heart o the usion process.

The latest, largest and most expensiveo these is the International Thermonuclear

Experimental Reactor (ITER - Latin or the

way), which is under construction in the

south o France. ITER is expected to be the

frst such reactor to be capable o delivering

more energy rom a usion reaction than

is used to generate the reaction in the frst

place, a key requirement i usion is ever to

serve as a viable power source. I it keeps to

schedule it will reach ull-scale operation by

2030 or beore.

Recently, however, an alternative approach

to usion has started to make headlines. This

is based on a completely dierent concept

called inertial confnement and i it can be

perected, it promises a demonstration during

the 2020s and commercial usion plants by

2030, sooner than the magnetic confnement

path can deliver.

Rather than being international, the most

advanced inertial confnement development

is being carried out in the US, where it has

emerged, almost unannounced, rom the

deence establishment. Like the magnetic

confnement approach, inertial confnement

has yet to produce more energy rom usion

than is used to achieve a usion reaction.

However, the US programme is confdent that

it will achieve this milestone in the near uture.

The fusion problem

Fusion is attractive because it promises almost

limitless energy rom a simple process that islargely ree o atmospheric emissions or toxic

by-products. The principle reactions that take

place within the sun involve hydrogen atoms

using to produce heavier atoms.

The mass o the resulting heavier atoms

is not the exact sum o the two initial atoms,

some mass has been lost and great amounts

o energy gained. This is what Einsteins

ormula E = mc describes: the tiny bit o lost

mass (m), multiplied by the square o the

speed o l ight (c), results in a very large fgure

(E), which is the amount o energy created by

a usion reaction.

There are two important usion reactions

in the sun and the stars. The frst involves

Nuclear fusion update

Harnessing nuclearfusion as a means ofpower generation has fordecades been the Holy

Grail for atomic scientistsacross the world, butthere are several projectsunderway that coulddeliver results much soonerthan anticipated, writesPaul Breeze.

The most difcultproject on earth

12 Power Engineering International May 2013 www.PowerEngineeringInt.com

Causing a usion risson: the ITER site in the south o France

Credit: ITER

12 Power Engineering International July-August 2013 www.PowerEngineeringInt.com

7/22/2019 pei20130708-dl


usion o two hydrogen atoms to generate a

deuterium or heavy-hydrogen atom. In the

second, deuterium and hydrogen atoms use

to create a helium atom.However it is a third reaction between

deuterium and the even heavier hydrogen

isotope tritium that interests usion scientists

because it proceeds more easily than the

other two and under relatively more benign

conditions. A usion reaction between these

two hydrogen isotopes produces one helium

atom and one neutron and it is the latter that

carries most o the energy released during

the usion process. That energy must then be

captured and used to generate electricity.

The potential is massive. The energy rom

one tonne o deuterium is equivalent to

3 x 1010 tonnes o coal. Unortunately the

prize is not easily won. The reaction will only

take place in a plasma at massively high

temperatures and in the case o inertial

confnement, under conditions o enormous

pressure. Reaching the conditions necessary

or usion to take place and then controlling

and maintaining them have been the

primary challenge o usion research.

Magnetic confnement

When matter is heated to temperatures that

approach anywhere near those o the sun,

the material becomes a plasma in which the

individual atoms disintegrate into a sea o

atomic nuclei and electrons that are bound

by electromagnetic interactions.

It was recognised early on in usion

research that such a material state could not

be contained using conventional materials

and the idea o magnetic containment was

born. This proved much more difcult to realise

that had been expected and it was Russian

scientists that eventually solved the problemwith a toroidal magnetic confnement which

they called a tokamak. Although exploration

o other approaches continued, this become

the de acto design or a usion reactor.

The two largest usion reactors in operation

today are the Joint European Torus (JET) at

Culham in the UK and the Tokamak Fusion

Test Reactor (TFTR) at Princeton in the US. Both

started experimenting with deuterium-tritium

(DT) uel during the 1990s, and in 1997 JET set

the current record or the largest amount o

power generated by a usion reactor 16 MW.

The reactor consumed more than

16 MW to achieve this record although the

ratio o power in to power out (the gain o

the reactor), at 0.7, was close to the break-

even target. However, JET could only sustain a

plasma burst or 5 seconds beore its ancillaryservices started overheating.

Both JET and TFTR are experimental, pilot-

scale usion reactors and achieving break-

even is a matter o scale. It requires a big

reactor to achieve a gain o much more than

one and get signifcant power generation.

That will be the job o the next usion reactor

based on the tokamak design, ITER.

However the work at the smaller reactors is

ar rom over. JET is being upgraded to extend

its operating range to carry out more pre-ITER

experiments, particularly on plasma stability.

The plasma in the tokamak ows along

lines o magnetic orce. The temperature at

the centre o the JET plasma reached 170 x

106 C. Inside the hottest regions the plasma

is bubbling like a boiling liquid and this

creates eddies that make it both unstable

and inefcient. Controlling and reducing the

turbulence inside the plasma is one o the

keys to an efcient usion reactor and work

at JET rom 2015 to the end o the decade

should help advance the understanding o

plasma turbulence.

There are also design problems that

have yet to be solved beore ITER can start

to operate, such as the material used or the

lining o the reactor chamber. In JET, these

are carbon tiles, but the carbon absorbs

tritium so an alternative must be ound. The

avoured replacement is beryllium tungsten

and this will be tested at JET. Further work

on the operating modes or the reactor will

also help ITER. In essence, JET is the model

or ITER.

ITER has had a long gestation. It was

conceived in 1988 under the auspices o the

International Atomic Energy Authority and

initially involved the EU, Japan, Russia and theUS. An engineering design was completed in

2001, the Cadarache site selected in 2005

and the ITER agreement was signed in 2007

by the now seven members, ollowing the

addition o China, India and South Korea.

The project will have a plasma volume o

800m3, ten times larger than JET and it will have

a thermal power output o 500 MW, which is

30 times larger than JET has achieved. It is

hoped that at this size, the reactor should

be able to achieve a gain actor o ten, so

50 MWth will drive an output o 500 MWth.

However, ITER is not a commercial

demonstration project. It has been designed

to prove that it can generate 500 MW o

usion power or 400 seconds. A commercial

plant will need to be able to operate round

the clock or weeks i not months on end.

I it was being designed today, then

perhaps ITER would have been more

ambitious, but most o the basic parameters

were set during the 1990s when the costs and

risks involved in trying to build a plant that

would generate electricity seemed huge.

So the plant will be virtually commercial size

but will not have steam or turbine generators.

More signifcantly, it will not have a ull-sized

system or capturing the energy generated

by the usion reactions in the plasma. There

will be test modules within the reactor shroud

but the ull energy capture system will have to

wait or the frst demonstration plant.

So ITER is another experimental reactor, but

even so it is probably the most challenging

project being built on the earth today, at least

Some 633 of these massive stainless steel forgings will benecessary for the construction of the ITER vacuum vessel sectors

Credit: ITER

Nuclear usion update

7/22/2019 pei20130708-dl


Nuclear usion update

in the opinion o Michel Claessens, head o

communication and external relations or the

Ofce o the Director-General at ITER.

With seven members and a total o 34

countries that will jointly build the project,

many o the components will not be built

by one abricator but by manuacturers

in dierent countries. Scheduling the

construction and maintaining the level o

quality control or a project o this complexity

will be a Herculean task. But i all this can be

mastered then in theory the frst experiments

will take place at ITER in 2020.

Inertial confnementWhile the research into usion based on

magnetic confnement edged orward there

was, behind the acades o deence research

establishments in the US and elsewhere a

completely dierent approach to the usion

being pioneered. However the deence-

related nature o much o this work has meant

that until very recently little was known about

what is called inertial confnement.

While a reactor such as ITER will contain

a plasma that maintains conditions or

usion continuously within its heart, inertialconfnement instead uses a series o small,

discrete usion reactions, each producing a

burst o energy. This has been likened to a

piston engine in which energy is generated

is a series o small impulses rather than in a

continuous stream.

The concept is relatively simple i

developing it into a commercial power station

design is not. A small capsule containing a

ew hundred micrograms o a DT mixture is

subjected to a massive pulse rom a system

o multiple lasers ocused onto its surace. The

laser energy striking the surace o the capsule

causes the outer surace to explode in a pulse

o x-rays and this creates an equal and opposite

shock wave which travels into the capsule,

heating and compressing the DT mixture to the

point where the usion reaction takes place at

its centre.

Once the usion reaction starts it radiates

outwards through the whole capsule,

travelling aster than the material itsel can

expand so that the whole charge o uel is

consumed and energy released. The inertia

consequent on the mass o the atoms o the

DT mixture prevents them rom expanding as

ast as the usion ront advances, hence the

name inertial confnement.

It is possible to imagine this being

achieved in a single shot experiment but toturn the concept into a power station, the

process must be repeated endlessly. For a

practical plant there would be about 15 o

these usion explosions each second. Yet this

is exactly what a major programme in the US

is proposing. What is more, the US government

has built a plant, called the National Ignition

Facility (NIF) that has the capability to prove

the practicability o the process.

The new road to usion

NIF is an expensive and ambitious projectthat has come about partly as a result o the

Comprehensive Test Ban Treaty designed to

eliminate nuclear weapons testing.

The acility will provide experimental data

to support this treaty which is why it has been

able to attract $5 billion o US government

unding. However, NIF will also have two

other purposes as a tool or undamental

scientifc research and to prove the viability

o power generation rom usion based on

inertial containment.

The heart o NIF is its laser system. The

acility has 192 lasers which are capable

o delivering as much as 5 MJ o energy in

20-nanosecond pulses. So ar it has operated

at 1.8 MJ, equivalent to a power delivery o

500 TW. The lasers initially generate inra-red

light but this is converted, frst to visible light

and then to ultra-violet beore it strikes thetarget. That target is a tiny capsule called a

hohlraum which is about 2 mm in diameter

and contains 150 mg o the DT mixture. It is

this tiny charge that is subjected to around

500 TW o power.

The importance o NIF rom a power

generation perspective is that the laser power

is o the scale necessary to build a 1000 MW

power station. It can thereore simulate at ull

scale the capacity or inertial containment to

deliver energy or electricity generation.

NIF started operating in 2009 and has

carried out a series o ignition experiments

since then. Ignition, in this context, is the point

at which the capsule o DT produces more

energy that the laser pumps into it.

During the frst experiments, the results

were around 50 to 60 times short o the

target required by ignition.Over the past

three years it has crept closer to the target,

which is now only a actor o two or three

away. Once ignition is reached, the usion

reaction becomes sel-sustaining because it

generates the energy necessary to maintain

the temperature and pressure required. Sowhile they cannot say when ignition will be

achieved, the scientists as NIF are confdent

that they will achieve it.

I ignition can be demonstrated, then

a power plant based on this principle is

possible. Work to defne what this power

station will look like has already started and

orms the basis o the Laser Inertial Fusion

Energy (LIFE) project. The design or the

LIFE plant has been developed through a

collaboration between technologists, electric

utilities, power plant vendors, regulators andenvironmental groups. Its aim is to build a

demonstration power plant within ten years

o ignition being achieved at NIF using

components that can be abricated today

by technology companies.

NIF will continue to be the benchmark or

testing LIFE concepts but the belie is that i

ignition can be achieved, then a LIFE plant

can be built. The demo plant would initially

be designed to produce 400 MW o electrical

power but with the ability to be scaled up to

1000 MW. Based on current estimates, this

plant could be operating in the early part

o the next decade, with commercial plants

available by 2030.

An artists concept o a LIFE power plant with the exterior cut away to show the usion chamberCredit: Lawrence Livermore National Laboratory

7/22/2019 pei20130708-dl


Nuclear fusion update

Visit www.PowerEngineeringInt.comor more inormationi

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I LIFE could achieve this target, then it

would be a remarkable milestone. Beore

that, however, there are some major hurdles

to cross. These include integrating all the

components o a LIFE plant rom the laser to

the uel delivery system to the heat extraction

and power generation. Operating the cycling,

piston engine type o ignition has yet to be

demonstrated at power plant scale. And

there is one technological hurdle that aces

both LIFE and the frst ull-scale usion power

plant based on magnetic containment the

design o the blanket system.

The blanket system is the layer that

surrounds the plasma chamber in the

case o a tokamak reactor and the ignition

chamber in a LIFE-style power plant. It has to

serve two unctions: the frst is to slow downthe very high energy neutrons that emerge

rom the usion reaction, absorbing their

energy and converting it into heat that can

be used to generate electricity. The second

is to manuacture tritium. Fusion reactors are

expected to breed their own uel and this will

take place inside the blanket.

Precisely what the blanket will look like

remains a matter or speculation but whatever

orm it takes, it will contain lithium because

this will be the source o tritium. When a lithium

atom is exposed to neutrons such as those

generated by usion o deuterium and tritium

it reacts to orm an atom o tritium and an

atom o helium.

This tritium must then be harvested rom the

blanket ready to provide uel or urther usion.

Liquid lithium could itsel orm the coolant

inside the reactor, cycling through a heat

exchanger to generate steam. Alternatively

some other coolant such as helium might

be used and the lithium contained within

a ceramic rather than in liquid orm. Molten

salts containing lithium might also be used.

The futureSo what does the uture hold or usion?

Optimistically, a usion plant based on inertial

confnement might deliver a commercial

plant by 2030, although based on experience

with other complex projects, the timeline is

likely to be a little longer than this.

Meanwhile, ITER hopes to demonstrate

commercial plant scale usion by around that

time too. I ITER progresses as expected then

work on the frst demonstration plant, reerred

to as DEMO in the usion industry, will be well

under way by then.

It is oten said that a commercial usion

plant is always 30 years away. While there is

clearly still a long way to go and nobody has

yet demonstrated that usion can produce

electricity rather than simply consuming it,

that threshold does seem palpably closer

today than at any time in the past.

The potential is

massive. The energyfrom one tonneof deuterium isequivalent to over3000 tonnes of coal.Unfortunately the prizeis not easily won

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7/22/2019 pei20130708-dl


New market design

Along with renewables

growing role in Europe

comes unprecedented

change in the regions

energy sector. System

operators are already

calling or fexibility rom thermal units to cope

with the variability o increasing wind and solar

production, and green energys low operating

costs and subsidies are causing turbulence

in electricity markets. Capacity rom thermal

units will clearly be necessary in the uture to

provide balance, but will markets be able to

deliver it?

Capacity mechanism designs presented

to date will not solve this problem. Market

mechanisms to attract capacity are still

unclear. Wrtsil has devised a market model

or the uture that will incentivise fexibility and

ensure adequacy o capacity. It is based on

two case studies that have shown the value

o fexibility in two large power systems: the UK

and the US state o Caliornia.Since renewables production generally

has eed-in priority, remaining capacity has

to adjust its output to balance total electricity

production and demand. System operators

need to have capacity available that can

respond quickly to changes in electricity

demand and output rom renewables, which

can be rapid.

The impact o the deployment o

renewables on electricity markets is severe.

Such sources generate electricity at low

marginal costs and thereore push thermal

capacity higher up in the merit order

or completely outside it. This means the

operating hours o thermal capacity all

and it generates less revenue. Subsidies or

renewables also depress electricity prices,

which makes the easibility o thermal plants

even more challenging. Thermal capacity is

still needed in a high-renewables system or

balance, but its protability is jeopardised.

Several EU Member States have stated

that plant closures and a lack o investment

in new capacity may prevent the market

rom bringing orward sucient capacity

under current market arrangements. Allowing

electricity prices to reach high levels at peak

times would be necessary to allow plants

running at low load actors to recover xed

costs. However, it is not simply capacity that is

required in a high-renewables system.

Without appropriate price signals, there

is an equally important concern around

missing fexibility. Systems require a

suciently fexible mix o capacity as well as

the right types o capacity.

The importance o fexibilityTransmission system operators (TSOs) and

other market players recognise the increasing

need or fexibility but the value o fexibility has

not been quantied or identied in market

arrangements. Wrtsil has conducted

several studies around this topic.

The rst step in the process is to dene the

uture power system architecture, which will

be based on objectives such as emissions,

reliability and costs, which policy makers set.

To determine how to achieve these objectives

requires the creation o several capacity

scenarios with dierent mixes o technologies.

The output o step one is an architecture that

can meet uture objectives.

The architecture provides input to the

second step o the process, i.e. the modelling

o power system operations, or despatch.

Despatch sotware PLEXOS was used in recent

studies o the UK and Caliornian systems.

Inputs or the model are the expected

capacity mix (including the capabilities

o these technologies), weather and load

data, system requirements (such as required

system reserves) and market operation, or

example how reserves are procured and at

what price. The tool optimises the generating

costs o a system in a chosen interval in line

with the trading blocks o the system, or

example every 30 minutes.

The third step denes the value o fexibility

by comparing the results o dierent scenarios.

Power system modelling provides the system

operating costs and CO2

emissions as an

output or each scenario.

Dierent generating technologies have

dierent ways o providing fexible electricity.

Some can start up rom zero output and rampup within seconds. Others may take hours,

but can quickly fex their output up to meet

the system needs once they are generating

above a stable level. This is typical o large

units such as large combined-cycle gas

turbine (CCGT) or coal-red plants. Typically

these slower technologies provide a systems

fexibility requirement today.

Part-loading may have been eective

in the past but today it is not likely to be

the most ecient method o providing the

greater fexibility needed in the uture.

Part-loading generates extra costs

because o increased carbon costs,

reduced uel eciency, the greater number

How can the regions electricity system cope with the growing role o renewableswhile ensuring fexibility and adequacy o capacity? Matti Rautkivi andMelle Kruisdijk say innovative technology and new market mechanisms can help.

Europesbalancing act

7/22/2019 pei20130708-dl


New market design

o generators needed on the system, and

the costs o curtailing wind generation to

maintain system security.

Given these costs, i conventional sourceso fexibility are used in a system with a

high level o renewables, the ull benets o

decarbonisation may not be achieved and

consumers will pay higher prices.

Smart power generation (SPG) describes

power plants such as modern gas-red

types that are fexible and avoid the costs

associated with part loading. SPG can

provide savings or three reasons.

The rst is speed. From zero output, SPG

can respond almost instantaneously to

fuctuations in supply and demand, so they

do not need to be part-loaded.

The second is sustainability o output.

Unlike other ast-start technologies, SPG can

start up quickly and hold output without

needing to be relieved quickly aterwards.

Finally, SPG is ecient. Such plants incur

minimal costs or being on standby as reserve

but can deliver much needed electricity as

quickly as conventional fexible technologies

and even more quickly in some cases.

Valuing fexibility UK

August 2012 saw the UKs Department o

Energy and Climate Change (DECC) publish

an analysis that estimates how fexibility roma range o sources can generate signicant

savings to UK consumers, particularly in a

scenario o high wind penetration. These

sources include demand-side response

(DSR), increased interconnection, storage and

thermal generation.

Redpoint Energy and Imperial College

London ollowed the report with urther

analysis o the potential value o fexibility

through detailed modelling o the UK power

market and balancing costs. The ocus has

been on supply-side fexibility provided by

SPG. The results, however, are more generally

applicable to all sources o fexibility, whether

DSR, storage or interconnection.

The modelled scenarios are based on

projections by the DECC and National

Grid, the UK TSO, or demand and capacity

mix development by 2020 and 2030. Two

capacity mixes came under investigation in

the scenarios o high wind and base wind,

with and without SPG, or the years 2020 and

2030, as Figure 1 shows. In a No SPG capacity

mix, ecient gas generation capacity comes

rom a mixture o combined-cycle gas turbine

(CCGT) and some open-cycle gas turbine(OCGT) generation. In an SPG capacity mix,

4.8 GW o SPG replaces the same amount o

the most uel ecient CCGT capacity. SPG

has a slightly lower net electrical eciency

but superior fexibility compared with CCGT.

What is the impact o SPG on the provision

o system fexibility? Depending on the

case, SPG is the least cost option to provide

fexibility 3540 per cent o the time. With SPG

providing system fexibility in an optimal way,

more room is available or ecient CCGTs

and coal-red generation to run at ull load,

providing cheap electricity to consumers.

The analysis showed that, depending on

the wind scenario, fexible gas generation

could save the UK consumer between

380 million and 550 million ($566 million

and $820 million) per year by 2020 through

reduced balancing costs. By 2030, savings

range rom 580 million to 1.5 billion, as the

volume o wind in the system is expected to

increase urther.


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New market design

A comparison with the UK system-wide

generation costs is useul to give some

scale to the potential savings in balancing

costs. With an increasing amount o low-cost

renewables generating electricity at almost

zero marginal cost, the total generation

costs will all when the output o renewable

generation increases. However, the need or

balancing actions will increase accordingly,and these costs will have a signifcant role by

2030.

The savings potential o SPG is as high as

5 per cent in 2020, increasing to an impressive

19 per cent o total generating costs in 2030.

Valuing fexibility Caliornia

Caliornia aims to increase generation rom

renewables to 33 per cent by 2020. However,

this development has started a debate about

what exible assets will be required to secure

the reliable operation o the power system.Caliornias system will ace another issue

in the near uture when new environmental

regulation may orce the retirement o plants

with once-through cooling that total 12 GW in

capacity. The states system operator CAISO

concludes that 5.5 GW made up o equal

amounts o new CCGT and OCGT is required

by 2020 to secure reliability.

DNV KEMA Energy & Sustainability has

analysed the Caliornian system or 2020 by

using dynamic system modelling. The base

case or the power system modelling was the

Caliornian system or 2020 with a renewables

penetration o 33 per cent, made up o wind

and solar but excluding hydro, and 5.5

GW o new gas turbine plants, made up o

equal amounts o new CCGT and OCGT.

The alternative modelling scenario had the

same basic assumptions but 5.5 GW o SPG

replaced that amount o gas turbines.

By introducing 5.5 GW o SPG instead

o 5.5 GW o gas turbines in the system,

Caliornias consumers save around

$900 million per year, representing 11 percent savings in system-level generating costs.

Figure 2 shows the cost breakdown o the

total system operating costs or the modelled

scenarios.

The studies conducted by DNV KEMA,

Redpoint Energy and London Imperial

College make evident that the inclusion o

SPG in a generation portolio reduces total

system operating costs in systems with a high

penetration o renewables. This is because

SPG provides exibility at low cost.

In addition, by adding SPG to the capacitymix o a power system, other thermal plants

no longer need to run in part load and can

produced electricity at a higher efciency,

which reduces overall generation costs.

A system without SPG can provide

exibility by running plants at part load, but

such actions signifcantly increase costs to

consumers, as the studies show. The value

o exibility in the examined 60 GW UK and

Caliornia peak load systems with high

renewables penetration is greater than

500 million ($642 million) per year.

Translating this to a system the size o

Europes, the value o exibility is estimated

to be greater than 5 billion per year, even

by 2020. Consequently exibility should be

one o the key parameters in the design o a

uture power system and energy market.

A new market vision

In February 2013, the European Commission

asked or stakeholders inputs on potential

ways to secure capacity adequacy and

system reliability in a uture system with high

amounts o renewables. In a high-renewables

power system, exibility is no longer an

invisible and low-cost side product o power

generation but a key actor in power system

design and optimisation.

Although the studies o the UK and

Caliornian systems clearly indicate the

beneft o exibility in the capacity mix,

current market arrangements do not

reect the value o exibility or incentivise

investments in exibility. They also hide the

cost o inexibility within consumer bills and

consequently prevent investments in new

exible capacity. At the same time, energy-

only market setups are struggling to keep

capacity at adequately healthy levels.

Wrtsil has studied several electricity

market models with the aim o developing

one that will incentivise exibility and ensure

capacity adequacy or a system with a highcontribution rom renewables. The market

model should secure capacity adequacy,

incentivise the right type o capacity and

lead to the least cost to consumer. Figure 3

shows the overall market model design that

will deliver this. It is based on two markets

existing next to each other.

The energy market, consisting o the

wholesale electricity markets (day-ahead,

intra-day and balancing markets), and a

fexibility market, establish a competitive

environment. A competitive capacity marketwould be introduced only i needed, to

secure capacity adequacy.

A competitive energy market orms the

basis o the market model. The objectives

o energy markets are to provide low-cost

electricity and low CO2

emissions in all

situations via competitive short-term markets.

Cost-reecting imbalance prices will

increase the imbalance exposure o all

market participants (where all participants

are responsible or balancing), which

incentivises balance at gate closure. Supply

and demand or energy closer to gate closure

is thereore expected to increase because

each market player, in order to reduce the risk

Figure 1: Capacity mixes or power system modelling in the UK, with base and high wind scenarios

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New market design

o out-o-balance penalties, will make eorts

to be in a balanced position at gate closure,

either through changed positions within its

own portolio o options such as changing

the outputs o its own power plants or DSR, or

through trading.

This development enhances the liquidity

in intra-day markets and provides additional

income or fexible assets through balancing

and intra-day markets because these units

will be in a position to supply energy shortly

beore gate closure. However, it would be

hard or even impossible or providers o

fexibility to capture the total value o fexibility

through energy prices alone. Thereore, in

addition to the energy market, we propose

the introduction o a market or fexibility.

A competitive fexibility market would be

a day-ahead option market or fexibility to

increase or decrease energy the ollowing

day. The fexibility market would replace the

existing procurement strategies o TSOs and

would make the procurement o system

services more transparent to market players.

TSOs would go to the fexibility market to

procure the fexibility, or reserves, requiredto satisy the needs o the system or the

ollowing day, when the volumes are not

locked away under long-term contracts.

The fexibility market would also be open

or market participants to procure fexibility

to hedge against intra-day prices and

imbalance exposure.

There are many key eatures to the fexibility

market. When it comes to buying fexibility, the

TSO would always procure it according to the

needs o the system. However, procurement

by market participants could reduce the

amount procured by the TSO.

Market participants determine their own

volume requirements depending on their

willingness to hedge against price risk, and

the TSO acts as a backstop in the day-ahead

auctions to ensure that the system has the

fexibility needed. The TSO procurement

strategy provides stable volumes and liquidity

in the fexibility market and makes known the

total volume o the fexibility requirement.


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Figure 2: Value o fexibility in Caliornia in 2020
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New market design

Another eature is that multiple products,

such as 5-minute or 30-minute ramping, are

defned by the TSO. This ensures the needs o

the system are met. All products require an

option to deliver an increase or decrease in

the physical energy in any uture settlement

period.

Also, the day-ahead timerame aligns with

the energy market or allows co-optimisation

with it and provides a daily reerence price

or dierent exibility products. A secondary

within-day market or participants and the

TSO allows them to trade their options as

more inormation emerges. Clear day-ahead

reerence prices can allow long-term fnancial

contracts to be struck between exibility

providers and market players or the TSO.

The option holder (i.e. market participant

or the TSO) may exercise the option by

calling or energy to be delivered prior to

gate closure. Sel-provided exibility must

provide inormation to the TSO within-day on

whether it wi ll be exercised. Ater gate closureany unused options would be exercisable by

the TSO in the balancing market.

Another key eature is cash ows. Flexibility

cleared through the day-ahead auctions,

other than sel-provided reserve, is paid the

market clearing availability ee per megawatt

or the contract period. A utilisation ee per

MWh is paid on exercise. Unused exibility

must be oered into the balancing market

at the fxed utilisation ee or despatch and

payment by the TSO.

Ensuring cost recovery is also important.

The option holder pays the availability ee

to the exibility providers. The availability ees

incurred by the TSO can be recovered via an

inormation imbalance charge levied on out-

o-balance market participants.

Finally there is the monitoring eature. The

TSO would certiy the physical capability o

capacity providers who seek to oer into the

day-ahead auctions. Any options exercised

would be notifed to the TSO in the same way

as physical energy.

A central capacity market would be

established i the energy and exibility

markets are not delivering investments or

are not able to keep existing plants in the

system. The purpose o the capacity market

is to ensure capacity adequacy by providing

so-called administrative capacity payment,

which compensates the missing money

rom market operations.

While uture energy and exibility markets

are volatile by their nature, investors may

require stable cash ows to be able to fnance

new projects. A capacity market could

enhance the bankability o new projects.

The capacity market, like any capacitymechanism, should concentrate on securing

capacity adequacy rather than speciying

what type o capacity is needed. It should

treat all orms o capacity on an equal basis.

Thus, a well unctioning energy market

together with a exibility market would reward

capabilities, while a capacity market provides

the all-in price required by investors to make

investments.

Change in market design needed

An increasing penetration o variable

renewable generation into a power system

changes its operations and impacts market

undamentals. But while system operators

are calling or exibility rom the generation

side, the thermal eet takes a big hit as

its operating hours are reduced while the

average electricity price is lower. The result isincreasingly uncertain market-based revenues

or thermal plants.

There are potential market-based

approaches to incentivise investments in

exibility. These approaches do not require

administrative cash ows but call or a

reallocation o system costs rom the TSO to

the market, making the cost o exibility visible

or market players. To develop a reliable,

aordable and sustainable power system

necessitates several actions.

Firstly, there must be an understanding

that more renewable generation has caused

dramatic changes in the energy market

environment. Secondly, there must also be

recognition o the value o exibility, which

must be made visible or market players

through cost-reective imbalance prices and

by developing short-term energy markets.

Thirdly there must be a transparent market

explicitly or exibility. This will enable efcient

procurement o system services and provide

clear market signals or investors in exibility.

Finally, new players must be able to enter

the market and new projects must be made

bankable by introducing a capacity market

i the energy and exibility markets are not

delivering investments.

To avoid the risk o locking in the wrong

type o capacity, it is important to take the frst

three actions beore considering the ourth.

Many market players are calling or a

market-based approach regarding the EU

electricity market structure. We hope we have

shown that it is possible to design a market

that provides investment signals or the right

type o capacity and ensures capacityadequacy at the same time.

Matti Rautkivi is general manager,

Business Development, Power Plants, and

Melle Kruisdijk is director, Market Development

Europe, and Business Development, Power

Plants at Wrtsil. For more inormation, visit

www.wartsila.com

This article is based on a Best Paper Awards

winner at POWER-GEN Europe 2013.

Visit www.PowerEngineeringInt.comor more inormationi

Figure 3: A new market design or a power system with high renewable energy integration
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