1. WinDS-H2 MODEL Wind Deployment Systems Hydrogen Model Workshop on Electrolysis Production of Hydrogen from Wind and Hydropower Walter Short Nate Blair September 9, 2003 NREL  1617 Cole Boulevard  Golden, Colorado 80401-3393  (303) 275-3000 Operated for the U.S. Department of Energy by Midwest Research Institute  Battelle  Bechtel

2. Presentation Contents  Background  Representation of wind in WinDS  Representation of hydrogen in WinDS-H2 Questions that WinDS-H2 might answer System configuration Factors considered/Assumptions/Control strategy  Preliminary results  Conclusions  Additional Modeling Required

3. Background/Status  Initial WinDS model did not include H2 Under development since 2002 First results for wind electricity only available in May 2003  WinDS-H2 development began in June 2003 Initial version does not consider sources of H2 other than wind Have a few preliminary results today Seeking your input on how to improve our current approach

4. WinDS Model  A multi-regional, multi-time-period model of capacity expansion in the electric sector of the U.S  Designed to estimate market potential of wind energy in the U.S. for the next 20 – 50 years under different technology development and policy scenarios

5. WinDS is Designed to Address the Principal Market Issues for Wind  Access to and cost of transmission Class 4 close to the load or class 6 far away? How much wind can be transmitted on existing lines? Will wind penetrate the market if it must cover the cost of new transmission lines?  Intermittency How does wind capacity credit change with penetration? How do ancillary service requirements that increase non- linearly with market penetration impact wind viability How much would dispersal of wind sites help?

6. WinDS Addresses These Issues Through:  Many wind supply and demand regions  Constraints on existing transmission available to wind  Explicit accounting for regulation and operating reserves, wind oversupply, and for wind capacity value as a function of the amount and dispersion of wind installations  Tracking individual wind installations by supply/demand region, wind class and transmission line vintage

7. General Characteristics of WinDS  Linear program optimization (cost minimization) for each of 25 two-year periods from 2000 to 2050  Sixteen time slices in each year: 4 daily and 4 seasons  4 levels of regions – wind supply/demand, power control areas, NERC areas, Interconnection areas  4 wind classes (3-6), wind on existing AC lines and wind on new transmission lines  Other generation technologies – hydro, gas CT, gas CC, 4 coal technologies, nuclear, gas/oil steam

9. Updated Wind Resources with Fewer Land-Use Exclusions

10. Transmission in WinDS

11. Wind Intermittency in WinDS  Constraints Capacity credit to reserve margin requirement Operating reserve Surplus wind  Probabilistic treatment Explicitly accounts for correlation between wind sites Updated values between periods

12. Wind Contribution to Reserve Margin  Uses LOLP to estimate the additional load (ELCC) that can be met by the next increment of wind

13. Operating Reserve Constraint  Ensures adequate spinning reserve, quick- start capacity and interruptible load are available to meet normal requirements plus those imposed by wind

14. Surplus Wind

15. Wind Costs  Cost and performance vary by wind class, and over time according to user inputs or with learning PTC or ITC with start/stop dates, term, rate Capital cost can increase with rough terrain  Price penalty on capital costs for rapid national and regional growth  Financing explicitly accounted for  Transmission costs – Existing lines: $/kWh/mile or postage stamp New lines: $/kW/mile; penalties for rough terrain and dense population

16. Load Operating reserve Reserve Margin Forced Outages ImportsExports Planned Outages

17. Hydroelectricity in WinDS  No capacity expansion allowed  Retirements – both scheduled and unscheduled  Generation constrained by water availability (set to average over last 5 years)  Dispatched as needed for peaking power Not constrained by irrigation, recreation, environmental considerations, etc.

18. WinDS-H2  Modified form of the WinDS model that includes the on-site use of wind generated electricity to produce H2 through electrolysis  Status: Initial version under development Selected preliminary results available today Seeking your comments

19. Questions WinDS-H2 Can Help Answer  What is the market potential for H2 from wind – nationally? Regionally?  What improvements are required in electrolyzers, storage, fuel cells and H2 transport to make wind- H2 competitive?  Does the possibility of H2 production from wind increase the potential of wind power?  What will be the principal use of H2 from wind - H2 fuel or fuel-cell-firming of wind?  Will local H2-fuel demand spur much wind-H2?

20. Wind-H2 System Configuration Electrolyzer H2 Storage H2-fuel transport Fuel cell Transmission to Grid Compressor

21. H2 Factors Considered by WinDS-H2  H2 and fuel cells: Fuel cells contribute 100% to reserve margin Higher transmission line capacity factor Fuel cells contribute 100% to operating reserves Reduction in surplus wind  H2 transportation fuel production Transportation cost Local vs remote transportation fuel demand

22. Major Assumptions in WinDS-H2  Only new wind farms have the option to produce H2, because: Power purchase agreements Wind turbine and power controls Transmission requirements  There is a market for H2 fuel at a fixed price Market size varies with region  Fuel cells used only to fill-in behind wind

23. Control Strategy Summary  The fraction of each wind farm’s capacity dedicated to H2 production is the same from one year to the next  The fractions of H2 sent to the fuel cell and sold as fuel are the same from one year to the next for each wind farm  Size H2 storage for daily peak load use of H2 in fuel cell  Generate with the fuel cell only during daily peak load period to firm up the wind generation  Use fuel cell generation to provide operating reserve as required  Use electrolyzers to reduce/eliminate surplus wind generation

24. Base Case H2 Inputs ComponentCapital CostOperating CostEfficiency Electrolyzer$600/kW$0.10/Kg0.75 Storage$100/kg$0.10/kg1.0 Fuel Cell$600/kW$2/MWh0.5 Compressor001.0 Transport$0.001/Kg/mile

25. Base Case Capacity Results

26. Base Case H2 Inputs (cont’d)  Price of H2 fuel = $2.50/kg  Maximum regional demand for H2 fuel = 5 million kg

27. H2 Fuel Production Sensitivity

28. Sensitivity to H2 Component Capital Costs

29. Preliminary Conclusions  H2 can be modeled in the WinDS model  H2 from wind can be attractive at reasonable electrolyzer and fuel cell cost and performance  Wind market penetration may be increased if the cost and performance of the electrolysis- fuel cell cycle can be improved

30. Additional Modeling Required  Refine existing WinDS-H2 model  Implement consensus suggestions from this workshop – both data and model  Include competitive sources of H2 Distributed electrolysis Natural gas SMR Biomass Hydroelectricity