ee w05.1 m_ 2. electricity generation _ part 4 (generation technologies)

1

2. Why coal rather than (new) gas

generatiors?

1.Why a diversity of generation

types?

3. Negative prices?

Different fixed & variable cost

profiles x

variability in demand

2

Previous lecture

9 12 15 170 24

1

2

3

TIME

Daily Demand in MW Load Curve

Daily variations (UK)

DURATION (%)100500

1

2

3

9 12 15 170 24

1

2

3

TIME

Daily Demand in MW

Daily Demand in MW

Daily Load-Duration Curve:Duration[y] = Pr[Demand > y]

Load Curve

DURATION (%)100500

9 12 15 170 24 TIME

1

2

3

1

2

3

Daily Demand in MW

Daily Demand in MW

Daily Load-Duration Curve:Duration[y] = Pr[Demand > y]

Load Curve

FIND THE MISTAKE!!!

DURATION (%)100500

9 12 15 170 24 TIME

1

2

3

1

2

3

Daily Demand in MW

Daily Demand in MW

Daily Load-Duration Curve:Duration[y] = Pr[Demand > y]

Load Curve

33.3

DURATION (%)100500

9 12 15 170 24 TIME

1

2

3

1

2

3

Daily Demand in MW

Daily Demand in MW

Daily Load-Duration Curve:Duration[y] = Pr[Demand > y]

Load Curve

33.3

A bit a difficult load-duration curve (and also

quite a-typical)

DURATION (%)100500

9 12 15 170 24 TIME

1

2

3

1

2

3

Daily Demand in MW

Daily Demand in MW

Daily Load-Duration Curve:Duration[y] = Pr[Demand > y]

Load Curve

How to get this more typical,

nicer LD curve?

DURATION (%)100500

1

2

3

9 12 15 170 24

1

2

3

TIME

Daily Demand in MW

Daily Demand in MW

Daily Load-Duration Curve:Duration[y] = Pr[Demand > y]

Load Curve

DURATION (%)100500

9 12 15 170 24 TIME

1

2

3

1

2

3

Daily Demand in MW

Daily Demand in MW

Daily Load-Duration Curve:Duration[y] = Pr[Demand > y]

Load Curve

DURATION (%)100500

1

2

3

Fixed cost per MWh

Variable cost per MWh

Baseload 40 0

Peaker 10 50

Daily Demand in MW D=3-2* Duration

Daily Load-Duration Curve:Duration[y] = Pr[Demand > y]

Technology Costs Table

0

60

40

Capacity factor

Baseload

Peaker

100%60%

10

(=8760 hours/year)

Fixed cost per MWh

Variable cost per MWh

Baseload 40 0

Peaker 10 50

0%

Cost/MWhScreening curve

(Capacity-cost based)

Technology Costs Table

Screening curve(Capacity-cost based)

Screening curve(Energy-cost based)

0

60

40

Capacity factor

Baseload

Peaker

100%60%

10

(=8760 hours/year)

Fixed cost per MWh

Variable cost per MWh

Baseload 40 0

Peaker 10 50

0%

Cost/MWh

Use baseload when capacity factor > 60%

Use peakers when capacity factor < 60%

Screening curve(Capacity-cost based)

Technology Costs Table

Install baseload when capacity factor > 60%

Install peakers when capacity factor < 60%

0

60

40

Capacity factor

Baseload

Peaker

100%60%

10

DURATION (%)100500

1

2

3

BASELOAD

D=3-2* Duration

1.8

PEAKER

Daily Demand in MW

60

Daily Load-Duration Curve:Duration[y] = Pr[Demand > y]

Screening curve(Capacity-cost based)

Nuclear

Oil

Old, inefficient plants (old Coal & OCGT)

Gas (CCGT)

Coal

Daily Load-Duration Curve:Duration[y] = Pr[Demand > y]

18Fixed cost per MWh

Variable cost per MWh

Baseload 40 0

Peaker 10 50

DURATION (%)

100500

1

2

3

Daily Demand in MW

D=3-2* Duration

Load-Duration Curve

Technology Costs Table

Overview newly introduced curves & table

9 12 15 170 24

Daily Demand in

MW

1

2

3

TIME

Load Curve

0

60

40

Capacity factor

Baseload

Peaker

100%60%

10

0%

Cost/MWh

Screening curve(Capacity-cost based)

19

This lecture

20

DURATION (%)100500

1

2

3

BASELOAD

D=3-2* Duration

1.8

PEAKER

Daily Demand in MW

S50

0

0 1.81 32

DMAX

P

DMIN

Q

Supply & demand curve

Daily Load-Duration Curve:Duration[y] = Pr[Demand > y]

MC=0

MC=50

Uniformly distributed

21

Nuclear Coal Gas Oil Shortage

Exceptionally highVery highModerateLow

Load curve

00 05 07 10 13 15 18 24

Very Low

Low

Moderate

Very high

Exceptionally high

Very LowP

0

20

30

50

P=0

P=20

P=30

P=50 P=CAP

Hours

21

Price is set by the variable costs of the most expensive generator

needed to meet demand

Supply & demand curve

22

Optimal Dispatch of Peakers &

Missing Money

23

DURATION (%)100500

1

2

3

BASELOAD

D=3-2* Duration

1.8

PEAKER

S50

0

0 1.81 32

D

P=0

P=50 Fixed cost per MWh

Variable cost per MWh

Baseload 40 0

Peaker 10 5040%

60%

60

Daily Demand in

MW

πPEAKER=…πPEAKER=0 πPEAKER=…πPEAKER=0

P

Q

Daily Load-Duration Curve:Duration[y] = Pr[Demand > y]

Supply & demand curve

Technology Costs Table

24

D

S

$/MWH

50

0

PCap

Baseload plants (P=MC=0)

40%

Peaker plants(P=MC=50)

60-x%

0 1.81 32

Shortage!!(P=PCap)

x%

PCap =?PCap =VOLL

(Value Of Lost Load)

the “missing money” problemzero-profit condition

Supply & demand curve

25

S50

0

0 1.81 32

DP

P=0

P=50 Fixed cost per MWh

Variable cost per MWh

Baseload 40 0

Peaker 10 5040%

59.9%

PCAP=10.0500.1%

πPEAKER= 0 πPEAKER= 0 πPEAKER=

≈9hrs/year

zero-profit condition

πPEAKER=0.1% * 10.000= 10

Very high!

Total πPEAKER=0+0+10=10Zero-profit condition

Supply & demand curveTechnology Costs Table

26

S50

0

0 1.81 32

DP

P=0

P=50 Fixed cost per MWh

Variable cost per MWh

Baseload 40 0

Peaker 10 5040%

59.9%

PCAP=5500.1%

πPEAKER= 0 πPEAKER= 0 πPEAKER=0.001 * 500 = 0.5

Total πPEAKER=0+0+.5 = .5

Zero-profit condition

Supply & demand curveTechnology Costs Table

27

S50

0

0 1.81 32

DP

P=0

P=50 Fixed cost per MWh

Variable cost per MWh

Baseload 40 0

Peaker 10 5040%

58%

PCAP=5502%

πPEAKER= 0 πPEAKER= 0 πPEAKER=0.02 * 500= 10 Total πPEAKER=0+0+10=10Zero-profit condition

Supply & demand curveTechnology Costs Table

28

S50

0

0 1.81 32

DP

P=0

P=50 Fixed cost per MWh

Variable cost per MWh

Baseload 40 0

Peaker 10 5040%

58%

PCAP=5502%

πPEAKER= 0 πPEAKER= 0 πPEAKER=0.02 * 500= 10

πBASE= 0 πBASE=0.58* 50 = 29

πBASE=0.02 * 550 = 11

Total πBASE=29+11 = 40

Zero-profit condition

Total πPEAKER=0+0+10=10Zero-profit condition

Supply & demand curveTechnology Costs Table

29

S50

0

0 1.81 32

DP

P=0

P=50 Fixed cost per MWh

Variable cost per MWh

Baseload 40 0

Peaker 10 5040%

58%

PCAP=5502%

πPEAKER= 0 πPEAKER= 0 πPEAKER=0.02 * 500= 10

πBASE= 0 πBASE=0.58* 50= 29

πBASE=0.02 * 550= 11

P¯=P¯=0.4* 0 + 0.58* 50 + 0.02 + 550=

≈180 hrs/year

P¯=0.4* 0 + 0.58* 50 + 0.02 + 550= 0 + 29 + 11 = 40

Total πPEAKER=0+0+10=10Zero-profit condition

Total πBASE=29+11=40Zero-profit condition

Supply & demand curveTechnology Costs Table

30

S50

0

0 1.81 32

DP

P=0

P=50 Fixed cost per MWh

Variable cost per MWh

Baseload 40 0

Peaker 10 5040%

60%-x

PCAP

Total πPEAKER=0+0+10=10πPEAKER= 0 πPEAKER= 0 πPEAKER=x * (PCAP – MCPeaker) =

10

Peaker

10

CAP

xP MC

Peaker

PeakerCAP

FCxP MC

Zero-profit condition

Supply & demand curveTechnology Costs Table

31

S50

0

0 1.81 32

DP

P=0

P=50 Fixed cost per MWh

Variable cost per MWh

Baseload 40 0

Peaker 10 5040%

58%

P=5502%

DURATION (%)100500

1

2

3

BASELOAD

D=3-2* Duration

1.8

PEAKER

60

Daily Demand in

MW

2

Shortage ≈180 hrs/year

Daily Load-Duration Curve:Duration[y] = Pr[Demand > y]

Supply & demand curve Technology Costs Table

32

BASELOAD

PEAKER

33

Price spike

Can be distinguished from market abuse?

34

What can we do about price-spikes?

- Lower the price-cap- Then we have lower but more frequent spikes

- Capacity payments

35

36

0 .2 0 .4 0 .6 0 .8 1 .0p r o b a b i l l i t y

2

4

6

d e m a n d

0 .2 0 .4 0 .6 0 .8 1 .0p r o b a b i l l i t y

2

4

6

d e m a n d

x~N(1,0.05)

x~N(1,0.1)

x=1

Each level * x

0 .2 0 .4 0 .6 0 .8 1 .0p r o b a b illity

2

4

6

d e m a n d

Daily Load-Duration Curve:Duration[y] = Pr[Demand > y]

Daily Load-Duration Curve:Duration[y] = Pr[Demand > y]

Daily Load-Duration Curve:Duration[y] = Pr[Demand > y]

370 .2 0 .4 0 .6 0 .8 1 .0

p ro b ab illity

2

4

6

d em an d

N: 1 unit

C: 1.8 unit

G: 0.2 unit

O: 2.2 unitTotal installed: 5.2 unit

Pr[D>5.2] =

= Pr[5x>5.2]

= Pr[x>(5.2/5)]

= Pr[x>(1.04]

≈ 21%

Daily Load-Duration Curve:Duration[y] = Pr[Demand > y]

Is the “energy-only” model valid?

39

Source: ERUJiří Krejsa

Yearly Load-Duration Curve:Duration[y] = Pr[Demand > y]

Installed power capacity 2011 (MW)Steam 10787,5 53,27%Nuclear 3970 19,60%PV 1971 9,73%Pumped-storage 1146,5 5,66%Hydro 1054,6 5,21%Gas 1101,7 5,44%Wind 218,9 1,08%Total 20250,2 100,00%

Source: ERU Jiří Krejsa

About 2x more capacity than peak demand!!!

• Remains of the good old times of electricity being run as state-owned Vertically Integrated Utilities (VIUs) (up to 2000)– Civil engineers “gold-plate” the system: excess generation

reserves for “just-in-case” disregarding the costs– Prices calculated as average costs + an uplift for capital expenses

• 1990-2000: Onset of liberalization, privatization and competition – Prices are marginal prices– Due to the excess capacity they are relatively low– Thus: no investment in new capacity

• Now: “sweating” the assets

Source: Helm, D. 2005. The assessment: the new energy paradigm. Oxford review of economic policy, vol. 21, no. 1