Measures and regulation to increase generation flexibility and controllability for systems with large shares of variables RES-E Pierluigi Mancarella, Danny Pudjianto, Goran Strbac Imperial College London Poul Erik Grohnheit, Frits Møller Andersen Risø DTU, Technical University of Denmark RESPOND Special Session, EEM 09, Leuven, Belgium, 27 May 2009 © P. Mancarella, 2009

Contents Background issues Generation: main issues and barriers RES-E/DG Generation: general and country- specific recommendations Conventional Generation: general and country- specific recommendations Concluding remarks 2

Background: System & market impacts of RES & DG 1.Generation 2.Demand 3.System balancing 4.Trade 5.Networks WHOLESALE MARKET RETAIL MARKET Transmission HV Distribution LV Distribution Conventional Generation Conventional Generation MV Distribution DG 100 MW DG 100 MW DG 100 MW DG 100 MW DG 100 MW DG 100 MW DG 100 MW DG 100 MW DG 100 MW DG 100 MW DG 10 MW DG 10 MW DG 100 MW DG 100 MW DG 100 MW DG 100 MW DG <1 MW DG <1 MW TSO DSO Supplier Demand Power flow Market-based contracts, metering & settlement information DG 100 MW DG 100 MW DG 100 MW DG 100 MW RES >100 MW RES >100 MW

Background: Timescales for RES & DG impact Intermittent RES and DG entering the system will have an impact across system timescales RES & DG penetration will impact decisions and activities across operational and investment horizons Operation System balancing Emergency operation Network expansion Generation capacity investment Energy Trading Investment Utilisation of Conventional Generation

Generation-related issues RES/DG (CHP) generation: –Revision of support schemes and energy pricing mechanisms taking into account system conditions (proper internalisation of external effects) –Pricing mechanisms for ancillary services –Technical capabilities for enabling the system to deal with more RES/DG Conventional generation: –Provision of regulation reserves –Provision of sufficient generation capacity in critical periods –Investment in new generation capacity 5

6 Main barriers identified

RES/CHP Generation: Recommendations Short term implementation –Technical requirements such as fault ride through capability, ability to overtake voltage dips, and controllability for all larger wind turbines in national grid codes –Control centres for groups of wind turbines or contracts with commercial aggregators operating as Balancing Responsible Parties for all larger RES/CHP units –Trainings of small RES-E/CHP generators for market participation and dissemination of standardised software for operation and bidding on spot and balancing markets 7

RES/CHP Generation: Recommendations Medium-to-long term implementation –FIT to be replaced by premiums on market prices, in particular when penetration of intermittent generation has reached a certain level in areas with limited transmission capacity to larger electricity markets –Introduction of regional price areas to reflect permanent imbalances among regions within the same country –Support schemes for micro-CHP that encourage units with surplus capacity and heat storage, which allows on-off operation following electricity market prices 8

RES/CHP Generation: Recommendations Medium-to-long term implementation –Need for integrated design of energy and ancillary services markets or pricing mechanisms –Ancillary services should be priced according to the value they have from the system’s perspective -> further research –Enabling technologies such as heat storage or electric heat pumps should be further investigated and promoted 9

CHP systems could be potentially used as controllable if enough incentives were available in order to provide grid services -> internalization of externalities such as network benefits Aggregation and control of several DG units for distribution grid support -> investigation and deployment of enabling grid architectures such virtual power plants (VPP) and microgrids When some service cannot be directly provided (e.g., frequency response), contracting the service from other units should be made possible in order to overcome technical barriers 10 Further general indications to increase flexibility

RES/CHP Generation: Some country-specific recommendations 11

Conventional Generation: Recommendations Short-term implementation –Support schemes for maintaining existing conventional capacity should be considered together with schemes for RES –Criteria for licensing or tendering for new conventional capacity shall focus on locational issues –For instance, the existence of urban district heating grids or the potential for development of large urban grids from existing heating systems should be accounted for –Implementation of rules for competition among conventional and renewable technologies that address the targets of the European directives –Larger and more detailed information should be made available by the System Operator on historical series and “system outlooks” 12

Conventional Generation: Recommendations Short- and medium-term implementation –Adequate capacity type (e.g., peak plants rather than base-load) needs to be put forward, in case through suitable regulatory measures –Some investment in new capacity intensive base-load systems (e.g., nuclear, carbon capture and storage (CCS)) will be highly dependent on political decisions and strong support from the industry, so likely they will not be dependent on market incentives –If prices in the relevant markets are attractive enough, participation of generation for adequate firmness and investment can be achieved –Capacity payments outside the market implicitly boost additional capacity for system firmness 13

Conventional Generation: Some country-specific recommendations 14

Concluding remarks Spot and balancing markets are now found all over Europe, and these markets are developing continuously to meet the needs of the electricity system, including the new intermittent and distributed technologies However, several barriers still lie in the way of implementing market responses aimed at favouring the integration of these technologies This project has put forward some measures that should help overcome these barriers in those countries where the latter are perceived as real obstacles As presented later on, the measures to overcome the barriers identified here have been used to develop regulatory roadmaps to help authorities and institutions in decision making It is expected that the general indications provided will be useful also to the countries other than the partners in the RESPOND project 15

Thank you very much for your attention It’s now discussion time... and for anything.. 16

Measures and regulation to increase generation flexibility and controllability for systems with large shares of variables RES-E Pierluigi Mancarella, Danny Pudjianto, Goran Strbac Imperial College London Poul Erik Grohnheit, Frits Møller Andersen Risø DTU, Technical University of Denmark RESPOND Special Session, EEM 09, Leuven, Belgium, 27 May 2009 © P. Mancarella, 2009