ambitious objectives and rapid transition a case study …
TRANSCRIPT
AMBITIOUS OBJECTIVES
AND RAPID TRANSITION
A Case Study on California
Electricity Market TransitionSeptember 2017
FARHAD BILLIMORIA
ENERGY SYSTEMS,
UNIVERSITY OF MELBOURNE
15TH IAEE EUROPEAN CONFERENCE
SEPTEMBER 2017
AGENDA
1. Background and Framework
2. Three dimensions of transition
3. Assessing the Californian transition
4. Managing interactions
5. Conclusions and Further Work
MOTIVATION
1. Development of an conceptual framework that provides a top-down
assessment of electricity market transition
2. Integration of social, operational and technology development
implications
3. Assess the risks of energy transition and guide policy-maker focus
Literature Review
• Energy change as ‘socio-technical’ transition (Kern 2008; Geels 2004)
• A co-evolutionary approach to energy transition (Foxon 2010;
Meadowcroft 2009)
• A multi-dimensional concept across political, social and economic
grounds (Geels 2011)
Technology –
Bridging the gap
AN INTEGRATED FRAMEWORK FOR DRIVING
ELECTRICITY MARKET CHANGE
o Electoral and consumer attitudes
o Political and institutional mandates
o Expectations for energy reliability,
security and affordability
Political mandates
and policy goal
setting
Operational grid
management and
models for service
provision
o Electricity security and reliability
management
o System capacity and balancing
o Network reliability
o VRE impacts on security / reliability
o Commercial business model
adaptation
o Technology as a driver and ‘enabler’ of integration
o Commercialisation timescale
o Market impacts
o Funding of technology development
Strengths Weaknesses
Opportunities Threats
SWOT
CALIFORNIA ELECTRICITY TRANSITION: AMBITIOUS OBJECTIVES
Incentive Mechanisms:
• RPS – 25% by 2016 50% by 2030 100% by 2045?
• AB32 - GHG abatement 40% below 1990 by 2030, GHG Cap-and-Trade program
• Tax Credits & Accelerated Depreciation for renewables – expiring soon but for solar
• Environmental regulation – State and Federal
• Technology Grants & Guarantees
2016
Renewable28%
Non Renewable
60%
Large Hydro 12%
2020
Non Renewable
70%
Renewable30%
2030
Non Renewable
50%
Renewable50%
2030 - SB 100
Non Renewable
40%
Renewable60%
2045 - SB 100
Renewable100%
SB100
STRONG MANDATES FOR RAPID TRANSITION…
Evidence of strong demand for
‘environmental goods’ (Kahn, 1997)
DRIVE THE INSTITUTIONAL MISSION
“Lead the transition to a low carbon grid” - CAISO
“Promote California’s environmental sustainability goals” – CPUC
“Committed to reducing environmental impacts of energy use” – CEC
Managing an accelerated pace of transition..
A look back to the California Energy Crisis…• First to rollout retail market reform• Aggressive timeframes• “Crisis by design” (Ruff, 2001)• Reforms halted and wound-back
Relationship between operational grid management on political mandates
RampingFrequency Response
GRID OPERATIONS NEED TO BE MONITORED
Renewable Integration Issues
Variability and Uncertainty
Inverter-Dominated
Grids
System Capacity ROCOF and InertiaSystem StrengthTransient Stability
Voltage Stability
Black Start
Fault Ride-Through
Source: California Energy Commission, GE Western Wind and Solar Integration Study
Resource Adequacy
Storage Capacity
Procurement
SYSTEM RESPONSES AND RISKS
Flexible Capacity
Ancillary Services
Load Serving Entities (LSE)Energy
Flexible Ramping Product
California – Imported Generation
Neighbouring States: Renewable Goals • Oregon – 50% by 2040
• Nevada – 40% by 2030
• Arizona – 15% by 2025
Primary Frequency Response
CPUC Regulation
CAISO Markets
SWOT ANALYSIS: POLICY SETTINGS
Strengths Weaknesses
Political mandates supportive of
acceleration
Institutionally embedded
environmental goals
Historical experience: stop-start
approach to regulatory reform
Transition dependent on ongoing
subsidy/incentives
Opportunities Threats
Emergence of new business
models
Evolution of new market designs
Setting a global example for
energy transition
Consumer impacts of higher
energy prices
Electricity unreliability and
security issues
Federal state environmental
conflicts
SWOT ANALYSIS: GRID OPERATIONS
Strengths Weaknesses
Early identification of problem by CAISO
Regulatory structure gives CAISO ability
to drive market design change
Value put on flexible capacity
Dispatchable reserve margins remain
strong
High degree of interstate interconnections
Increasingly weak frequency performance
Duck curve impacts: more balancing and
flexible generation
Risk of over-generation
Higher costs for consumers
Limited transparency into the price of
capacity
Opportunities Threats
Opportunity to be global pace-setter
Future system services markets
Integration of demand response
Expansion of balancing areas
Renewable integration costs
Accelerated pace of change too fast for
industry and regulatory response
Fossil fuel retirements may strain capacity
reserves
Frequency control and reserve
management
Reduced deliverability of interconnection
SWOT ANALYSIS: TECHNOLOGY ENABLEMENT
Strengths Weaknesses
Strong track record of
innovation
Commercial and academic
R&D programs
Technology developing to deal
with variability / intermittency
Cross subsidies
ISO operating frameworks
Opportunities Threats
Inverter-led grid integration Technology funding models
Commercialisation timeframe
INTERACTIONS NEED TO BE CONSIDERED
Consumer opinion,
political mandates
and policy goal
setting
Operational grid
management and
models for service
provision
Technology
enablement
Consumer opinion
Institutional mission / vision
Costs: system, retail, wholesale
Cross-subsidy
Reliability (perception/actual)
Pace of regulatory change
Government relations
Political mandate
Reliability – capacity, ramping
Security - frequency control, inertia, transient stability
Participant economics and business model change
Environmental, physical and technical constraints
Interconnection – constraints, flows, future direction
Integration costs
Markets vs central planning
Secure and Reliable Grid Operations
Operational frameworks for new technology
Cost and subsidies
Timeframes and commercialisation
Technology gaps and funding direction
Funding models
Technologies for inverter dominated grids
Technology enablement
CONCLUSIONS
• Presented a framework for assessing energy market transition based on
policy setting, grid operations and technology enablement
• Observed strong interactions and co-dependence between each dimension
of transition
o Timeframes vs market design
o Long term reliance on inter-connections
o Challenges of an inverter-led grid
o Funding and commercialisation
• Further work:
o Conceptual Practical scoring methodologies
o Transition management framework integrating policy, operations & technology