Renewable

Renewables and power markets

Challenges and prospects of integration

2016

Table of content:
-General problems and solutions of renewable energy (wind/solar)
integration in power markets
- Challenges
- Existing solutions
-Solutions adopted in different countries
- Spain
- Germany
- Future of Renewables in Europe
- US
- Current situation in Russia and perspectives
3

Renewables
challenges for power grid

Electrical stability
Balancing supply with demand
Maintaining adequate power to meet demand
Transmission grid issues

Inf. source : H. Chandler, System integration of Renewables, IEA 2011

Renewables
challenges for power market
Renewable electricity generation:
creates fluctuating spatial and temporal generation patterns in the
power system, resulting in
- dynamically varying demand for conventional generation
- complex congestion patterns in the transmission grid
creates new challenges for the forecast of power generation
resulting in new requirements for
- flexible intraday dispatch
- balancing products
impacts hourly electricity prices, based on the meritorder-effect
resulting in lower average prices and potentially increasing spreads
Inf. source : M. Ragwitz, Integrating renewables, energy markets and infrastructure , Fraunhofer ISI 2012

Renewables
general ideas for power market
Because wind and solar forecasts improve intraday, effective integration
requires optimization of generation, system services and transmission in
same time frame.
For short-term optimization, market designs need to improve and integrate
in a common platform the allocation of generation, transmission, and
system services
A market design with long-term viability provides framework to attract
innovation and investment in long-term viable technologies and systems.
Impact of RES-E on electricity prices needs to be taken into account for
future investment decisions.
Congestion management systems need to shift from heuristics to systematic
approaches and jointly address constraints within and between countries.
Inf. source : M. Ragwitz, Integrating renewables, energy markets and infrastructure , Fraunhofer ISI 2012

Renewables
concrete solution for power market

Shortening intervals

Feed-in-tariffs (FIT)
FIP

FIT Feed-in-Premiums (FIP)

Capacity market
Fixed -premium Cap&floor Sliding
Inf. source : M. Ragwitz, Integrating renewables, energy markets and infrastructure , Fraunhofer ISI 2012

Europe. Spain

Spain
20-20-20 Plan
Strong financial
incentives
Cost covered by tariff
(paid by consumers)
Rapid expansion
9

Spain

10

Spain
Increased costs
higher than
expected
30 billion Euro
deficit
Government
system operating
at a loss
11

Spain
Until 2012
Feed-in tariffs
Premiums

After 2012
Pay-back system designed
to allow facilities to cover
investment, operation and
maintenance fees
Allowed to compete in
regular market

12

Europe. Germany

13

Germany
20-20-20 Plan: 18%
Ambitious but costly
policy: price guarantee
Feed-in Tariffs (20 year
duration)

14

Germany

15

Future of Renewables in Europe

Problem:
Satisfying 90% of
demand:
Wind: 3-6 Euro/MW
Solar: 2Euro/MW

Solutions:

16

Future of Renewables in Europe

Problem:
Satisfying 90% of
demand:
Wind: 3-6 Euro/MW
Solar: 2Euro/MW

Solutions:
- Long term contracts

17

Future of Renewables in Europe

18

Future of Renewables in Europe

Problem:
Satisfying 90% of
demand:
Wind: 3-6 Euro/MW
Solar: 2Euro/MW

Solutions:
- Long term contracts
- Allow power price to
determine everything

19

Future of Renewables in Europe

Problem:
Satisfying 90% of
demand:
Wind: 3-6 Euro/MW
Solar: 2Euro/MW

Solutions:
- Long term contracts
- Allow power price to
determine everything
- Separate payment
systems
20

United States

21

United States.
General structure of power supply
ISOs & RTOs

Traditional
wholesale
electricity
market

Inf. source: http://www.ferc.gov/

22

United States.
General structure of power supply

Inf. source: Ph. Brown, U.S. Renewable Electricity: How Does Wind Generation Impact Competitive Power Markets?, 23
CRS 2012

United States.
California (CAISO)

The duck curve shows

steep ramping need and
overgeneration risk.

Key driver new energy policy,

which includes:
- 50% of retail electricity from RES
by 2030
- New requirements for p. plant
regulation (costal water cooling)
- Policies to increase distributed
generation
- 1.5 mln of zero emission vehicles
24
Inf. source: What the duck curve tells us about managing a green grid, CAISO 2016
by 2025

United States.
California (CAISO). Action plan
Better coordination between day-ahead market and 15-minute
real-time market,
Flexible\fast ramping capacity,
Ancillary services and large and flexible energy storage capacity,
Integration of the distributed energy resources into the system.

Inf. source: Erdal Kara, Renewable Integration and Direction of the US Electricity Markets, EnerguBiz 2015

25

United States.
California (CAISO). Recipes
Day-ahead market

1 hour

15 minutes

Everybody:
aggregated rooftop solar, behind-the-meter batteries, plug-in electric vehicles and
fast-acting demand response systems,

can bid in its markets!

Energy Imbalance Market (EIM)
ISO advanced market systems automatically balance supply and demand for electricity
every fifteen minutes, dispatching the least-cost resources every 5-minutes
26

Renewables and power markets.

Current situation in Russia and perspectives

27

Current situation with renewables in Russia

Reasons:
1. Abundance of fossil fuels

2. No clear and consistent state policy

Sources: based on statistics BP. Statistical Review of World Energy 2015

National Research University - Higher School of Economics

28

Incentives for development

Russian power network

2/3 of the territory is out of the central

grid power supply

only 50% of cities and 35% of villages

are supplied with gas

regional deficit of energy supply

growing electricity tariffs and fuel prices

Sources: Large-scale integration of wind power in the Russian power supply, A. Badelin, University
29of Kassel

Wind and solar potential of Russia

Wind potential

Solar potential

Solar radiation:
northern part 810 kWh/m2 per year
southern part 1400 kWh/m2 per year

Gross potential 80*10^15 kWh per year

Technical potential 6,2*10^15 kWh per year
Economic potential 31*10^12 kWh per year

Gross potential 18,7*10^15 kWh per year

Technical potential 18,7*10^12 kWh per year
Economic potential 0.1*10^12 kWh per year

*Russian energy consumption 2015 1*10^12 kWh

Sources: IEA, Renewables in Russia. From Opportunity to Reality, 2008
http://minenergo.gov.ru/node/3851

30

Existing wind and solar plants

List of wind farms:

List of main solar plants:

Sources: GWEC, 2015

http://www.akm.ru/rus/news/2014/september/05/ns_4942545.htm

31

Renewables costs. Case study

Potential region villages on the Arctic ocean shore,
Yamalo-Nenets region
Comparison of the possible solutions:

Kosh-Agachskaya solar plant in Altai republic

Annual savings:
Energy 94 862 kWh
Diesel working time 4 700 h
Fuel 29 140 l
Money 1,8 million rubles
Sources:
32
http://energystock.ru/vetroelektrostantsii/arkticheskogo-ispolneniya, http://www.machinerytrader.com/
http://sibac.info/studconf/econom/v/29945; Russian solar power association, Russias solar power development, 2013

Renewables perspectives in Russia

Wind power advanced projects

Solar power advanced projects

Large-capacity projects on the central grid territory

Small-capacity projects in the remote regions
Sources: National Research University - Higher School of Economics
Renewable Energy status, potential and opportunities in Russia, 2015

33

Economic and market barriers for renewables development

Substantial quantities of conventional energy sources available in the country
Relatively low prices of conventional fuels on the territory with high demand
Monopolistic energy markets
High prices on the renewable energy technologies
Shortage of economic independence of Russian regions
Lack of established financing tools
Lack of investor confidence
Lack of success stories

Sources: Lighthouse, Quick Scan of Wind-, Solar Energy and CHP in the Russian Federation,34
2013
Large-scale integration of wind power in the Russian power supply, A. Badelin, University of Kassel

Thank you for attention!