IEEJ：August 2017 © IEEJ2017

System Integration of Renewables
Simon Müller, Head of Unit – System Integration of Renewables Unit
IEEJ seminar,iTTokyo,
k7A
Augustt 2017

IEEJ：August 2017 © IEEJ2017

Outline• Overview of IEA work and introduction• Properties of variable renewable energy (VRE) and impact;system integration phasesh• Handling challenges during initial phases• Mastering higher shares – system transformation- System friendly deployment: system value and next generation RE policies- System and market operations / Additional system flexibility• Distributed energy resources – the future of local grids© IEA 2017

IEEJ：August 2017 © IEEJ2017

IEA System Integration of Renewables analysis at a glance• Over 10 years of grid integration work at the IEA- Grid Integration of Variable Renewables (GIVAR) Programme- Use of proprietary and external modelling tools for techno-economic grid integration assessment- Global expert network via IEA Technology Collaboration Programmes and GIVAR Advisory Group- Dedicated Unit on System Integration since June 2016
- Part of deliveringg the IEA modernisation strategygy201120142016

2017

Technical

Framework, Technology,
EconomicsPolicy

Implementation

2017

Progress &Tracking © IEA 2017

IEEJ：August 2017 © IEEJ2017

Variable Renewable Energy (VRE) on the rise
VRE share in annual electricity
yggeneration,, 2015-21
GERMANYUKEU
ITALY
AUSTRALIAMEXICOTURKEYFRANCEUSA
CHINA
BRAZILJAPANINDIA
CANADA
SOUTH AFRICA
KOREA
ARGENTINA
INDONESIASAUDI ARABIARUSSIAPV share2015

Wind share
2015

Additional
PV share2021
Additionalwind
i d share
h
2021
0%

5%

Source: Medium Term Renewable Energy Market Report, 2016

10%

15%

20%

25%

30%
© IEA 2017

IEEJ：August 2017 © IEEJ2017… leading to new challenges for energy security
New operational requirements
3 500

Net load =power demand
pminuswind and solar output

Power (MW)Limited
3 000
contribution topeak demand
p
2 500
2 000

Largerramps

1 500
1 000

Forecasterrors

500

Potential
over‐
0 generation
00:00

12:00

00:00

12:00
Demand00:00

12:00

00:00

12:00 00:00
Net load

12:00

Higher shares of variable renewables pose new challenges for power systems© IEA 2017

IEEJ：August 2017 © IEEJ2017

Variability – a familiar challenge
Exceptionallypy highg variability
y in Brazil,, 28 June 2010

Power systems already deal with demand variability; they have flexibility available from the start.
Source: ONS, Brazil© IEA 2017

IEEJ：August 2017 © IEEJ2017

Three main messages on system integration
1. Very high shares of variable renewables are technically possible
2. No problems at low shares, if basic rules are followed
3. Reaching high shares cost-effectively calls for a system-wide transformation

Remaining
Ri isystem

VRE

FLEXIBLE
Power system• Generation• Grids• Storage• Demand Side Integration© IEA 2017

IEEJ：August 2017 © IEEJ2017

System integration strategies key to use wind and solar effectively
Wind ppenetration and curtailment in selected countries, 2012-2015
WindW
ind penetration
penetrationlevel in the energylevel
mix ((leftinathexis)
energymix(left axis)

Cu
rtailment rate
Curtailmentrate(right(right axis)axis)
i )Grids+++o+oooooo

Generation+++++oo+o+-Operation++++++++++-

Curtailment levels are a good indicator for successful VRE integration – growing curtailment signals
shortfalls in power system flexibility© IEA 2017

IEEJ：August 2017 © IEEJ2017

Outline• Overview of IEA work and introduction• Properties of variable renewable energy (VRE) and impact;system integration phasesh• Handling challenges during initial phases• Mastering higher shares – system transformation- System friendly deployment: system value and next generation RE policies- System and market operations / Additional system flexibility• Distributed energy resources – the future of local grids© IEA 2017

IEEJ：August 2017 © IEEJ2017

Properties of wind and solar and their impacts

Low short runcostNonsynchronousUncertainty

Stability

Reserves

Seconds
Stability

Locationconstrained

Modularity

Transmission
gridDistribution
gridYears>100km<<1km

Profile / utilisation

Location

Modularity

Variability

Short termchanges

Abundance

BalancingScarcity

Assetutilisation

The different properties of variable renewable energy lead to different impacts on the power system.
© IEA 2017

IEEJ：August 2017 © IEEJ2017

Different Phases of VRE Integration
PhPhaseD
Description
i ti

1

VRE capacity is not relevant at the all-system level2

VRE capacity becomes noticeable to the system operator

3

Flexibility becomes relevant with greater swings in the supply/demand balance

4Stability becomes relevant. VRE capacity covers nearly 100% of demand atcertain times

5

Structural surpluses emerge;
electrification of other sectors becomes relevant

6

Bridging seasonal deficit periods and supplying non-electricity applications;seasonal storage and synthetic fuels© IEA 2017

IEEJ：August 2017 © IEEJ2017

Outline• Overview of IEA work and introduction• Properties of variable renewable energy (VRE) and impact;system integration phasesh• Handling challenges during initial phases• Mastering higher shares – system transformation- System friendly deployment: system value and next generation RE policies- System and market operations / Additional system flexibility• Distributed energy resources – the future of local grids© IEA 2017

IEEJ：August 2017 © IEEJ2017

Phases 1 & 2: Getting Wind and Solar Onto the Grid
Myths related to wind and solar integration
1. Weather driven variability is unmanageable

New Publication released
March 2017

2. VRE deployment imposes a high cost on conventional plants
3 VRE capacity requires 1:1 “backup”
3.
backup4. The associated grid cost is too high
5. Storage is a must-have
6. VRE capacity destabilizes the power system© IEA 2017

IEEJ：August 2017 © IEEJ2017

Focus on Phase 2 of VRE integration• First instances of gridcongestion• Incorporate VRE
forecast in scheduling& dispatch of othergeneratorst• Focus also on systemfriendly VRE
deployment

Priorities
i i i ffor VRE Integrationi – Phaseh2
Is the grid still sufficientfor continuing VRE
deployment?

Is VRE reflected insystem operation?

Is grid connection
code appropriate?

Develop or upgrade
grid code

Ensure visibility andcontrollability of power
plants; Implement VRE
forecast system

Is VRE deployed in asystem‐friendly way?

Improve operations;
Consider gridexpansion

Manage VRE
deployment locationand technology mix

Successful integration of increasing shares of wind and solar PV plants

Issue

ActionOutcomeYes

NoAction
taken

Source: IEA 2017, Getting wind and sun onto the grid

Updated system operations, sufficient visibility & control of VRE output becomes critical in Phase II© IEA 2017

IEEJ：August 2017 © IEEJ2017

Outline• Overview of IEA work and introduction• Properties of variable renewable energy (VRE) and impact;system integration phasesh• Handling challenges during initial phases• Mastering higher shares – system transformation- System friendly deployment: system value and next generation RE policies- System and market operations / Additional system flexibility• Distributed energy resources – the future of local grids© IEA 2017

IEEJ：August 2017 © IEEJ2017

Phases 3 & 4: System transformation
Policy and market framework

Level off VRE penetration

System‐friendly VRE
deployment

Flexible resources
planning & investments

Distributed resources
integrationSystem services
Generation time profile
Technology mix

Grids

GenerationStorage

Location
Integrated planning

Actions targeting VRE

Demandshaping

System and market operation
Actions targeting ooverall
erall systems stem

Integrating large shares of VRE requires system transformation© IEA 2017

IEEJ：August 2017 © IEEJ2017

System transformation requires holistic approach

Policy, market
and regulatory
frameworks

Information & coordination

Institutional
CapitalEconomic
Electricity

Technical• Institutional – defining roles
and responsibilities• Economic –market design,
regulation, planning
frameworks• Technical – operation ofpower system,
ysafeguarding
ggreliability

Policies, markets and regulatory frameworks link technical, economic and institutional aspects© IEA 2017

IEEJ：August 2017 © IEEJ2017

Recent publication: Status of Power System Transformation 2017
• Overview of trends and developments in the power
sector- System Integration of Renewables- Future of local grids• Provides over two dozens of best practicepexamples for integrating wind and solar power• Introduces a framework for assessing powersystem transformation, applied to case studies- Indonesia, South Africa, Mexico, Australia© IEA 2017

IEEJ：August 2017 © IEEJ2017Outline• Overview of IEA work and introduction• Properties of variable renewable energy (VRE) and impact;system integration phasesh• Handling challenges during initial phases• Mastering higher shares – system transformation- System friendly deployment: system value and next generation RE policies- System and market operations / Additional system flexibility• Distributed energy resources – the future of local grids© IEA 2017

IEEJ：August 2017 © IEEJ2017

System friendly VRE deployment• New phase of wind and solar deployment:- Low-cost- Technologicallygy mature• Requires new policies to achieve integration:- Focus on generation cost no longer enough- Policies
li i needd to consider
id system-wide
id iimpact• Case studies with specific recommendations:- Brazil, China, Indonesia, Mexico, South Africa• Strong focus on country implementation

Next generation wind and solar PV need ‘next generation policies’ focusing on system value andnot just costs© IEA 2017

IEEJ：August 2017 © IEEJ2017

Factoring in valueLess useful:
Lower value

More useful:Higher value

The value of electricity for the powersystem depends on where, when andhow it is generated.
Low value electricity

High value electricity

When

When electricity is abundant

When electricity is most needed

Where

Far awayy from demand

Close to demand

HowNo additional system services

Provides additional services forsystem© IEA 2017

IEEJ：August 2017 © IEEJ2017

Going beyond generation costs – system value• Installation costs• Operation and maintenancecosts (fuel,(f l emissions)i i)• Financing cost
• …

SV+LCOE-• Reduced fuel and emission costs• Reduced costs/ need for other generation
capacityi• Possibly reduced grid costs and losses• Increased operational costs for other powerplants• Additional grid infrastructure costs• Curtailment

LCOE and System Value (SV) are complementary:
LCOE focuses on the level of the individual power plant, while SV captures system-level effects© IEA 2017

IEEJ：August 2017 © IEEJ2017

Implications for deployment priorities

Traditional approach

Next generation approach

When is electricity
produced?

Not considered

Optimised:O
i i d bestbmix
i off windi d andd solar;
ladvanced power plant design; strategicchoice of location

Where is electricity
produced?

Best resources, no matter
whereOptimised: trade-off between cost of grid
expansion and use of best resources

How is electricity
produced?

Do not provide systemservices

Optimised:i i d betterbmarketk rulesl andd advanced
dd
technology allow wind and solar power tocontribute to system services

Next-generation wind and solar power require next generation polices.
© IEA 2017

IEEJ：August 2017 © IEEJ2017

Example of next generation policy priorities
Action area24/7

Policy example

Integrated planning: wind and solar
embedded in energy strategy

Denmark: integrated
energy strategy

Location: siting VRE closer to existing
network capacity and/or load centers

Location: new auction
design for wind and PV

TTechnology
h lmix:i balanced
b ld mix
i off VRE
resources can foster lasting synergies

TTechnology
h lmix:i Integrated
I tt dResource Plan

Optimising generation time profile:design of wind and solar PV plants

California: incentive to
produce at peak times

System services: wind and suncontribute to balance system

System services: wind active
on balancing market

Local integration with other resources
such as demand‐side response, storage

Australia: policies forself‐consumption© IEA 2017

IEEJ：August 2017 © IEEJ2017

Outline• Overview of IEA work and introduction• Properties of variable renewable energy (VRE) and impact;system integration phasesh• Handling challenges during initial phases• Mastering higher shares – system transformation- System friendly deployment: system value and next generation RE policies- System and market operations / Additional system flexibility• Distributed energy resources – the future of local grids© IEA 2017

IEEJ：August 2017 © IEEJ2017

System operation and market design
Efficient operation of thepower system• Ensuring least-cost dispatch• Trading close to real time
• Market integrations
gover large
g regional
gareasUnlocking flexibility from allresources• Upgrade planning and system service markets• Generation, grid, demand-side integration and storage

Security of electricity supply• Improve pricing during scarcity/capacity shortage• Possibly capacity mechanisms mechanism as safety-net

Sufficient investment inclean generation capacity• Sufficient investment certainty• Competitive procurement (with long-term contracts)

Pricing of externalities• Reflecting the full cost (i.e. environmental impacts)© IEA 2017

IEEJ：August 2017 © IEEJ2017

Example: shorter dispatch intervals in Texas
RRegulating
l ti
reserve requirement
it iin ERCOT beforeb fandd afterft reducing
d ididispatcht h iintervals
tl• Shorter dispatch intervals can lead to more efficient and cost-effective operation• In ERCOT, dispatch intervals were reduced from 15 to 5 minutes in 2010- Less regulating reserve requirements were needed© IEA 2017

IEEJ：August 2017 © IEEJ2017

Example: power plant flexibility
GGenerationtipatterntt
off coall plants
l t iin GGermany, MMay 2016
MW16 000
14 000
12 000
10 000
8 000
6 000
4 000
2 000
001 May

02 May03 May04 May05 May06 May07 MayPower plants are an important source of flexibility,evident in countries such as Germany, Denmark, Spain, the United States© IEA 2017

IEEJ：August 2017 © IEEJ2017

Why focus on power plant flexibility?
• Flexible power plants currently major source offlexibility in all power systems• Technicalhl potentiall is oftenfpoorlyl understood
dd and/or
dunderestimated• Significant
Si ifitbbarriers
ihihinder
d progress:- Technical solutions not always known- Market design favors running ‘flat-out’

Example North-America

From baseload operation to starting
daily or twice a day (running from 5h00
to 10h00 and 16h00 to 20h00)
Source: NREL

- Inflexible contracts with manufacturers• IEA coordinating new imitative to promote enhanced
power plant flexibility© IEA 2017

IEEJ：August 2017 © IEEJ2017

Examples of interventions to make coal plants more flexible
Enhanced output
p flexibilityy via multiple
p controls

Better monitoringg and control of combustion

Thermal power plants can be made more flexible via enhanced monitoring and control equipment.
Source: SIEMENS AG© IEA 2017

IEEJ：August 2017 © IEEJ2017

Outline• Overview of IEA work and introduction• Properties of variable renewable energy (VRE) and impact;system integration phasesh• Handling challenges during initial phases• Mastering higher shares – system transformation- System friendly deployment: system value and next generation RE policies- System and market operations / Additional system flexibility• Distributed energy resources – the future of local grids© IEA 2017

IEEJ：August 2017 © IEEJ2017

A paradigm shift - local grids in future energy systems

Past / present

Generation

Transmission

Distribution

Decentralisation
FutureCustomer

Energy flow
Data flow

Digitalization• High uptake of DERs are changing the way local grids are planned and operated• Successful transition rests on changes
g in three dimensions- Technical – more dynamic (bi-directional) energy flows require changes in system operations- Economic – High uptake of DERs raise the need for retail tariff reform. Consideration of timeand place can foster greater flexibility- Institutional - roles and responsibilities are changing. Better co-ordination between local gridand transmission system operators is key© IEA 2017

IEEJ：August 2017 © IEEJ2017

Value of solar PV approach

Accurately remunerating distributed generation requires a detailed understanding of its effects on thepower system.
© IEA 2017

IEEJ：August 2017 © IEEJ2017

Reforming electricity tariff design

Rise of distributed resources rasises importance of retail tariff design, in particular grid charges© IEA 2017

IEEJ：August 2017 © IEEJ2017

Putting together the pieces – towards a new paradigm?

Smart local grids, linking a diverse set of distributed resources across different sectors, may emerge asmain pillar of future energy systems.
© IEA 2017

IEEJ：August 2017 © IEEJ2017

Conclusion• Power systems experiencing technological, institutional and economic
innovations, combining to transform the sector.
• Marketk structures, regulations,lsystem operation andd technologicalh ll capabilities
blhave evolved to support power system transformation, including costeffective wind and solar integration.
- Better understanding of system operation at high VRE shares- Converging set of priorities for electricity market design- Emerging frameworks for managing decentralization and digitalization• Integration of distributed resources in smart local grids calls for tariff reformand changes in roles and responsibilities© IEA 2017

IEEJ：August 2017 © IEEJ2017

simon.mueller@iea.org© IEA 2017

Contact :report@tky.ieej.or.jp