RENEWABLES AND RELIABILITY PSERC SUMMER WORKSHOP 2008 PSERC MARKET STEM: RENEWABLES AND RELIABILITY Tim Mount Cornell University tdm2@cornell.edu Page 1

OBJECTIVE AND OUTLINE OBJECTIVE OUTLINE To develop an economic/engineering framework for evaluating the ability of a transmission network to respond to contingencies without loss of load (i.e. maintain operating reliability). Use this framework to evaluate the effects of replacing existing coal capacity by an intermittent source like wind power. OUTLINE Present an example of how to evaluate the net-economic benefits of installing new wind capacity to replace existing coal capacity on an AC network, and in particular, to determine the effects on 1) average production costs, 2) the amount of reserve capacity needed to maintain Operating Reliability. Next Steps for PSERC Research Page 2

Wind Case Study using a 30-Bus Network Page 3

30-BUS NETWORK Wind farm Area 1 Urban Area 2 Rural Area 3 Rural High Load High Cost VOLL = $10,000/MWh Area 2 Rural Low Load Low Cost VOLL = $5,000/MWh Area 3 Rural Low Load Low Cost VOLL = $5,000/MWh Improved Tie Line Page 4

The Underlying Rationale for Doing this Case Study Area 1 represents an urban load pocket with high load, high cost generation, and high VOLL. Areas 2 and 3 represent rural areas with low load, low cost generation, and low VOLL. Transmission capacity into Area 1 from Areas 2 and 3 is relatively limited. Replace 35MW of coal capacity by 105MW of wind capacity at Generator 6 (Area 2) in increments. Page 5

Wind Scenarios Considered Forecasted Wind Speed Probability of Forecast Output (% of MW Installed) Output Probability (Conditional on Forecast) LOW (0-5 m/s) 11% 0% 66% 7% 26% 33% 5% 73% 3% MEDIUM (5-13 m/s) 46% 6% 24% 38% 20% 62% 18% 93% HIGH (13+ m/s) 43% 14% 4% 94% 100% 79% Page 6

Contingencies Considered 97% 3% All Equipment Failures are Specified at the Lowest Realization of Wind Page 7

Expected Production Costs per MW of Load Served (in different cases) Case 2: Tie Line L15 upgraded Case 1: Base Case Page 8

Expected Total Non-Wind Reserves (in different cases) Case 2: Tie Line Improved (Tie line between Area 1 and Area 2) Case 1: Base Case Page 9

Expected Total Non-Wind Reserves (for different wind forecasts in different cases) Low Med High Base Case Case Tie Line Improved Case 2 Page 10

Real Flow on the Tie Line (L15) between Area 2 and Area 1 by Contingency Base Case (tie line is NOT upgraded) Page 11

Shadow Price on the Tie Line (L15) between Area 2 and Area 1 by Contingency Base Case (tie line is NOT upgraded) Page 12

Conclusions Super OPF determines the optimal pattern of dispatch and reserves using co-optimization to minimize the expected cost, including the value of Load-Not-Served, for an AC network. Adding remote wind capacity to replace existing coal capacity lowers the expected cost of meeting load, by displacing more expensive fossil generation, until the transmission capacity becomes congested. The lower cost of generation is big enough to offset the higher cost of providing more reserves to maintain reliability with more wind capacity. The next step is to complete the simulations for points on the Load Duration Curve to determine whether the expected production costs for meeting load are sufficiently low to compensate for the capital costs of installing the wind capacity AND new transmission (or to determine the price of carbon that equates the costs). Some incumbent generators are going to be unhappy campers. Page 13

What will the Electric Delivery System Next Steps??? Reduce the Global Emissions of Carbon by 80% to Meet the Goals of Climate Change: What will the Electric Delivery System Look Like? Page 14

Current Federal Policy Initiatives Electricity Generation (40% of total direct energy) Nuclear Zero Emission Power (CCS)* Deep-Well Geothermal Large Scale Renewables Transportation (30% of total direct energy) Liquid Biofuels* Buildings (10% of total direct energy) Energy Star Appliances Keep the Existing Structure of Delivering Energy Services Central Power Plants Liquid Fuels for Transportation Page 15

It’s not Enough. What’s Missing? Generate Electricity from Distributed as well as Large Scale Renewable Sources ONE unit of electrical energy from a renewable source replaces THREE units of energy from coal in a power plant Switch Transportation to Electric Motors ONE unit of energy from a battery charged using a renewable source replaces FIVE units of energy from gasoline or E85 Use Geothermal Sink/Source with Heat Pumps for Cooling/Heating Buildings Replace the direct use of fossil fuels for heating by electricity from renewables and make air conditioning more efficient Page 16

Likely Implications Electricity will displace most Fossil Fuels for Delivering Energy Services. Fossil fuels coupled with Carbon Sequestration is an important exception. Wind, Solar, Fossil Fuels coupled with Carbon Sequestration (and Nuclear?) will be the Dominant Sources of Energy for Generating Electricity. Storage Devices (e.g. Batteries, PHEVs and Thermal Storage) will be needed to compensate for the Intermittent Supply from Renewable Sources Distributed Energy Resources and Dispatchable Loads will be More Important Components of the Electric Delivery System and Require SmartGrid Capabilities on MicroGrids. Aggregators will act as Single Customers on the Bulk Power Grid at the Substation Level. Page 17

New Structure for PSERC??? Three Modified Stems Bulk Power Systems Combine generation and transmission Distributed Systems Add an explicit focus on managing load response, and local sources of generation and storage Economics of Restructuring Measure the net-social value of new initiatives and design incentive mechanisms that are economically efficient and make all participants financially viable in the transition to a low-carbon economy Page 18

A New Objective for PSERC??? To Educate the Next Generation of Power System Engineers and Energy Economists to Facilitate the Creation of a Highly Electrified Delivery System for Energy Services that will be Essential for Enabling the Transition to a Low-Carbon Economy. This will only be possible if there is a reliable flow of good, well-funded research projects for students. This research will contribute to developing the new system capabilities needed to design and support a GREEN GRID FOR GROWTH, and this theme should be the over-arching “frame” for coordinating PSERC’s limited financial resources. Page 19