Demand Response – A New Option for Wind Integration ? Demand Response for Wind Integration Demand Response – A New Option for Wind Integration ? Marian Klobasa, Dr. Mario Ragwitz Fraunhofer Institute for Systems and Innovation Research European Wind Energy Conference 2006 Athens, 2. March 2006 Fraunhofer ISI, March 2006

Demand Response for Wind Integration Outline Motivation for Demand Response Potentials for Demand Response Simulation of Wind Energy, Electricity System and Demand Impacts of Wind Fluctuation on Electricity Systems Fraunhofer ISI, March 2006

Benefits of Demand Response? Demand Response for Wind Integration Benefits of Demand Response? Improving of system reliability Peak load and balancing power can be reduced Efficient electricity use by increased transparency Reduction of price peaks and lower price volatility Increase of short term price elasticity and improvement of market-clearing Better market functioning Reduced risks for market actors Use of demand response as an existing resource might need lower investments than new generation capacity Studies gave evidence of substantial economical and technical potentials Demand response increases the possibilities for wind integration when balance between supply and demand is tightening Fraunhofer ISI, March 2006

Increased Elasticity can reduce Electricity Prices Demand Response for Wind Integration Increased Elasticity can reduce Electricity Prices €/MWh MWh/h Supply Curve Demand Curve Fraunhofer ISI, March 2006

Demand Response for Wind Integration Realistic Option? Experiences from Scandinavia and Germany 24 Jan 2000 (Price peaks up to 400 €/MWh) Demand response in Sweden 200-1000 MW, in Norway 800-1100 MW 5 Feb 2001 (Price peaks 240 €/MWh, 9 hours over 100 €/MWh) DR in Sweden up to 700 MW, in Norway up to 500 MW Winter 2002/03 (December-price level 90 €/MWh) Nordel: DR in Norway 800 MW, in Sweden 200 MW ECON: DR in Norway 1000 MW DR in Germany (2005): 200 MW contracted by SaarEnergie for minute reserve market Source: FinGrid, SaarEnergie Fraunhofer ISI, March 2006

Demand Response for Wind Integration Outline Motivation for Demand Response Potentials for Demand Response Simulation of Wind Energy, Electricity System and Demand Impacts of Wind Fluctuation on Electricity Systems Fraunhofer ISI, March 2006

Potential for demand response Demand Response for Wind Integration Potential for demand response Sector Appliances Electricity Demand [TWh] Demand Response [%] Max. power shift [MW] Basic Chemical Electrolysis 6,6 67 580 Basic Metal Electric Arc Furnace 6,8 50 400 Non-ferrous Metal 10,5 25 300 Pulp & Paper Pulper, Refiner, Stock Preparation 11,9 16 240 Food Retail Cooling devices 6,3 33 Food Industry Cold storage, Process cooling 5 325 Residential Cooling and freezing 18,6 780 Total 65,7 3025 Fraunhofer ISI, March 2006

Example steel production: electric arc furnace Demand Response for Wind Integration Example steel production: electric arc furnace Typical batch process Tap to tap time: 45 minutes Power Supply: 100 MW Capacity: 200 tons Yearly production 200 t furnace: 1,5 Mio. tons Steel price: 320 €/t (2003), > 500 €/t (2005) Turn over: 500 – 700 Mio. € Additional turn over in balancing market: 2,5 Mio. € Price for balancing power: 70 €/MW per day Price for balancing energy: 180 €/MWh Source: Stahl-Online Fraunhofer ISI, March 2006

Technical potential for demand response Demand Response for Wind Integration Technical potential for demand response Additional potential: Tertiary sector: 1 GW Refrigeration Air conditioning Residential sector: up to 9 GW Space heating, warm water other hours Fraunhofer ISI, March 2006

Prerequisites for demand response Demand Response for Wind Integration Prerequisites for demand response Technology: Adoption of existing I&C technology for demand response – innovation of I&C technologies is main driver for system optimisation. Development of suitable tariffs and business models (including extension of intraday markets). Consideration of customer behaviour, potential benefits and risk for electricity traders. Adoption of new demand response business option by energy and general management in industrial companies. Fraunhofer ISI, March 2006

Demand Response for Wind Integration Outline Motivation for Demand Response Potentials for Demand Response Simulation of Wind Energy, Electricity System and Demand Impacts of Wind Fluctuation on Electricity Systems Fraunhofer ISI, March 2006

Electricity System Simulation Demand Response for Wind Integration Electricity System Simulation Structure of simulation model Data for conventional power plants Installed capacity, fuel type, combined heat and power production, availability Electricity demand (incl. load curves) Wind generation (based on wind speed data) Simulation of power plant operation Determined by: variable costs, minimum operation time Results of simulation Fuel use, electricity production, CO2-emissions Basis for analysis of balancing strategies Fraunhofer ISI, March 2006

Simulation of power plant operation Demand Response for Wind Integration Simulation of power plant operation Wind generation Electricity demand shift potential Power plant database Prognosis Deviation Input data Operation of power plants Balancing Capacity Balancing Energy Simulation Fuel use, electricity production, emissions, costs Results Fraunhofer ISI, March 2006

Simulation of wind generation Demand Response for Wind Integration Simulation of wind generation Input data DWD-Data (3 years) for 180 locations Wind speed Pressure und Temperature Time interval 10 Minutes 10 Turbine types and power curves Spatial distribution => High resolution time series of wind generation Fraunhofer ISI, March 2006

Bottom up model for simulation of the load curve Demand Response for Wind Integration Bottom up model for simulation of the load curve Output Simulation of yearly load curves of 60 sectors in hourly time resolution and total load curve for Germany Data basis UCTE (12 month, 3 typical days, Base year 2000) VIK/VDEW Data ISI-Load profiles (typical days) Method Generation of load curves for 6 typical days Algorithm for generation of yearly load curves in hourly time resolution (basis are 6 typical days) Fraunhofer ISI, March 2006

Demand Response for Wind Integration Outline Motivation for Demand Response Potentials for Demand Response Simulation of Wind Energy, Electricity System and Demand Impacts of Wind Fluctuation on Electricity Systems Fraunhofer ISI, March 2006

Influence of wind power on power plant operation Demand Response for Wind Integration Influence of wind power on power plant operation Year 2020 Without wind generation Fraunhofer ISI, March 2006

Influence of wind power on power plant operation Demand Response for Wind Integration Influence of wind power on power plant operation Year 2020 With 39 GW wind generation Fraunhofer ISI, March 2006

Influence of wind power on power plant operation Demand Response for Wind Integration Influence of wind power on power plant operation Wind generation Year 2020 With 39 GW wind generation Fraunhofer ISI, March 2006

Additional balancing power Demand Response for Wind Integration Additional balancing power Fraunhofer ISI, March 2006

Additional balancing energy Demand Response for Wind Integration Additional balancing energy Fraunhofer ISI, March 2006

Additional balancing costs Demand Response for Wind Integration Additional balancing costs Calculation of balancing costs Costs approach: opportunity and part load costs Range: 30 – 400 €/MW per day Price approach: balancing market prices Range: 100 – 2000 €/MW per day Demand response costs starts at 70 €/MW per day. Additional balancing power of 6 GW up to 2020 could lead to an increase between 200 – 600 Mio. €. 1 GW demand response can lower this value by 25 %. Fraunhofer ISI, March 2006

Additional balancing costs Demand Response for Wind Integration Additional balancing costs Fraunhofer ISI, March 2006

Demand Response for Wind Integration Conclusion Increase of balancing power around 0,1 MW per MW wind energy with improved forecast tools. Balancing energy around 0,1 MWh per MWh wind energy with improved forecast tools. Technical potential for demand response is high. Demand response starts to be available at 70 €/MW per day and could lead to significant cost decreases. Furthermore demand response could compensate local fluctuations and could help to delay or overcome grid extension measures. Main challenge will be the development of markets and business models to transfer cost reductions to the customers. Fraunhofer ISI, March 2006

Demand Response for Wind Integration Acknowledgement Further Information: Wind integration supported by Demand Response, Final Report in Cooperation with Vienna University of Technology, Energy Economics Group www.eeg.tuwien.ac.at Project carried out in the framework of the program „Energy Systems of Tomorrow" – an initiative of the Austrian Federal Ministry for Traffic, Innovation and Technology (BMVIT). Marian Klobasa M.Klobasa@isi.fraunhofer.de www.isi.fhg.de/e/departm.htm Fraunhofer ISI, March 2006