1. Impact of wind energy on electricity markets J. Usaola (a), M.A. Moreno (a), G. Sáenz de Miera (b), J. Rivier (c), M. Bueno (a) (a) Department of Electrical Engineering. Universidad Carlos III de Madrid (b) Iberdrola(c) Iberdrola Renovables EWEC 2009. February 18, 2009. Marseille

2. 2 Effects considered in the study  The effects to be considered are due to the intermittent nature of the resource. They are:  Impact on balancing markets.  Impact on electricity markets’ price.  Impact on capacity prices.  Other effects on power system operation (response to voltage dips, contribution to ancillary services) have technological answers.  Subsidies are not considered as costs in the study.  Impact on grid development not considered in this study.

3. EWEC 2009. February 18, 2009. Marseille 3 Spanish figures for wind power and demand. Total demand (2008) 263961 GWh Hydro:8% Nuclear:22 % Coal:17 % Fuel/gas:1 % CCGT33 % Wind 11 % Other d.g.:13%

4. EWEC 2009. February 18, 2009. Marseille 4 Effect on balancing markets. Facts and definitions.  Types of reserves  Primary reserves (t < 30 sec)  Secondary reserves (30 sec ≤ t ≤ 15 min)  Tertiary reserves (15 min ≤ t ≤ hours) Gradient smaller than 1620 MW/hour Around 14000 MW installed – year 2007/8 Reserve margin in Spain: max ~ 1300 MW

5. EWEC 2009. February 18, 2009. Marseille 5 Effect on balancing markets.  Changes in wind energy in Spain:  Up to 1620 MW/h in 2007-8 with ~14 GW of wind energy.  Smaller than the morning rise ( ~ 4000 MW/h)  Both changes can join, which could put more stress on the system.  The main impact is on tertiary reserves.  Secondary reserves are not much affected, because of the temporal time schedule.  But the power is growing on…

6. EWEC 2009. February 18, 2009. Marseille 6 Balancing markets in Spain in the last years. Power. Secondary power reserves Secondary power prices

7. EWEC 2009. February 18, 2009. Marseille 7 Balancing markets in Spain in the last years. Energy. Energy of reserve used Energy reserve prices

8. EWEC 2009. February 18, 2009. Marseille 8 Effect on balancing market in Spain.  Negligible effects on secondary power reserve.  Small or negligible effect on:  Reserve consumption (of any kind).  Reserve prices (of any kind).  Penetration in terms of energy is about 10%.  Greater penetration could lead to greater figures.

9. EWEC 2009. February 18, 2009. Marseille 9 Effects on prices an capacity costs. Equilibria. Equilibrium without wind Situation with wind (transient) peak baseload  1 ACC (R/MWh) D 1 Load(MW) Price (R/MWh) VC B VC P D DLDL DPDP PBPB P 1 With wind No wind peak baseload  1 ACC (R/MWh) D 1 Load(MW) Price (R/MWh) VC B VC P D DPDP PBPB P 1

10. EWEC 2009. February 18, 2009. Marseille 10 Effects on prices an capacity costs. Equilibria.  Situation in the new equilibrium:  Same price levels than without wind.  Fuel costs have been reduced.  Capacity of peakers has been increased less than mean P wind Equilibrium with wind Mean P wind peak ACC (R/MWh) baseload  1 D 1 Load(MW) Price (R/MWh) VC B VC P D DPDP PBPB P P’ P P’ B With wind No wind 1 Capacity credit = 0

11. EWEC 2009. February 18, 2009. Marseille 11 Spanish situation. Price vs. Wind power  small decreasing influence “First approach” analysis Average wind power 2950 MW Wind power in peak: 1239 MW Fuel/gas peakers 2007: 4810 MW Capacity payment in Spain in 2007: 3.62 €/MWh Average DM price 2007: 40 €/MWh Year 2007

12. EWEC 2009. February 18, 2009. Marseille 12 Conclusion.  Important components of wind power effect on electricity markets:  Impact on prices  no impact in equilibrium, decrease in short term  Impact on balancing markets  increase of tertiary reserves  Impact on capacity payment  increase up to the mean wind power  Effects on Spanish system seem to have been small:  No great changes in reserves market, no apparent relation with wind.  Slight decrease in price  difficult to prove. Evidence with a 10% penetration seems to show that impact is smaller than forecasted. However there are not two equal power systems

13. EWEC 2009. February 18, 2009. Marseille 13 Thank you for your attention