electricity distribution and embedded renewable energy generators
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Electricity distribution and embedded renewable energy generators. Martin Scheepers ECN Policy Studies. Florence School of Regulation, Workshop, November 24, 2006. Contents. Distributed generation: RES & CHP Impact DG on the DSO business - PowerPoint PPT PresentationTRANSCRIPT
www.ecn.nl
Electricity distribution and embedded renewable energy generators
Martin ScheepersECN Policy Studies
Florence School of Regulation, Workshop, November 24, 2006
2
Contents
1. Distributed generation: RES & CHP2. Impact DG on the DSO business
2.1 Integration of DG in electricity distribution networks
2.2 Reinforcement costs, energy losses and replacement of distribution assets
2.3 Remuneration of DSO costs2.4 DSO revenues and incentives2.5 DG providing ancillary services
3. What is the optimal amount of DG?
3
RES & CHP in EU-25 scenarios
Source: PRIMES
0%
10%
20%
30%
40%
50%
60%
Sha
re in
tota
l ele
ctric
ity
supp
ly
2000 2010 2020 2030
%-CHP %-RES %CHP %-RES
Base line scenario Policy scenariohigh RES & efficiency
1. Distributed generation: RES & CHP
4
Distributed Generation (DG)
Combined Heat and Power (CHP)
Renewable Energy Sources (RES)
Large-scale generation
• Large district heating*• Large industrial CHP*
• Large hydro**• Offshore wind• Co-firing biomass in coal
power plants• Geothermal energy
Distributed Generation (DG)
• Medium district heating• Medium industrial CHP• Commercial CHP• Micro CHP
• Medium and small hydro• Onshore wind• Tidal energy• Biomass and waste
incineration/gasification• Solar energy (PV)
* typical > 50 MWe
** typical > 10 MWe
1. Distributed generation: RES & CHP
5
Current DG share in total generation capacity
Source: DG-GRID/Risoe
1. Distributed generation: RES & CHP
6
Integration of DG in electricity distribution networks
Planning DG should be considered by DSOs when planning
the development of the distribution network (Article 14/7 of the EU Electricity Directive)
Operation DG could also be involved in the economic
efficient operation of the network by using active network management* resulting in lower costs* Also including demand side management
DG could provide ancillary services to DSOs
2. Impact of DG on the DSO business
7
Impact DG on Business Model DSO
Extensions/reinforce-
ments
Extensions/reinforce-
ments
Ancillaryservices
Ancillaryservices
Energy losses
Energy losses
O&M CostsO&M Costs
DSO(Distribution
System Operator)
DSO(Distribution
System Operator)
Connectioncharges
Connectioncharges
UoS chargesUoS
charges
Capital expenditures
Operational expenditures
Revenues
Consumer/DG Operator
Equipmentsupplier
TSO/DG Operator
UoScharges
(cascade)
UoScharges
(cascade)TSO
DG Operator/Large power producer
Consumer/DG Operator
Money flow
Extensions/reinforce-
ments
Extensions/reinforce-
ments
Ancillaryservices
Ancillaryservices
Energy losses
Energy losses
O&M CostsO&M Costs
DSO(Distribution
System Operator)
DSO(Distribution
System Operator)
Connectioncharges
Connectioncharges
UoS chargesUoS
charges
Capital expenditures
Operational expenditures
Revenues
Consumer/DG Operator
Equipmentsupplier
TSO/DG Operator
UoScharges
(cascade)
UoScharges
(cascade)TSO
DG Operator/Large power producer
Consumer/DG Operator
Money flow
DG
DGreinforcements
replacing distribution assets
DG
DGancillary services
energy losses
DGconnection costs
Source: Dispower/ECN
2. Impact of DG on the DSO business
8
Reinforcement costs related to DG
Rural network Type of DG:
‑ Intermittent: wind, small-hydro‑ Non-intermittent: CHP
Problems to solve: voltage rise
Urban network Type of DG:
‑ Intermittent: PV‑ Non-intermittent: CHP, micro-CHP
Problems to solve: fault level increase
2. Impact of DG on the DSO business
9
Analyses of effect of large DG penetration on reinforcement costsApproach Quantitative analyses of impact of high DG/RES penetration
on electricity networks in UK and FinlandParameters varied: Rural and urban networks Different DG penetration levels DG concentration, i.e. the amount of DG connected to
specific network areas and levels Non-intermittent production and intermittent productionAlternatives considered: Status quo, i.e. “passive” network management Innovative, i.e. “active” network management
2. Impact of DG on the DSO business
10
Ranges of incremental reinforcement costs rural network (UK case)Top → DG high concentrated; bottom → DG low concentrated
0
200
400
600
800
1000
1200
1400
2.5 5 7.5 10 Installed capacity (GW)
Cos
t (M
£)
Passive rural network Active rural network Source: DG-GRID/Imperial College
2. Impact of DG on the DSO business
11
Ranges of incremental reinforcement costs urban network (UK case)Top → DG high concentrated; bottom → DG low concentrated
0
200
400
600
800
1000
1200
1400
2.5 5 7.5 10
Installed capacity (GW)
Cos
t (M
£)
Passive urban network Active urban network Source: DG-GRID/Imperial College
2. Impact of DG on the DSO business
12
Average annual energy losses (UK case)Losses LV-network not included
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
0 2,5 5 7,5 10
DG capacity connected (MW)
Ener
gy lo
sses
Low/ Passive Low/ Active Low-medium/ Passive Low-medium/ ActiveMedium-high/ Passive Medium-high/ Active High/ Passive High/ Active
DG concentration / network management type
Source: DG-GRID/Imperial College
2. Impact of DG on the DSO business
13
Replacement of distribution network assets
DG penetration
Replacement value of DG(for the UK)
DG with low density in the network
DG with high density in the
network
2.5 GW 108 €/kW 110 €/kW
5 GW 110 €/kW 112 €/kW
7.5 GW 113 €/kW 97 €/kW
10 GW 113 €/kW 44 €/kW
Source: DG-GRID/Imperial College
2. Impact of DG on the DSO business
14
Impact on OPEX and CAPEXReinforcement costs At low DG penetration levels reinforcement costs are zero, but they will increase
progressively with higher DG penetration. Also “DG-density” causes cost increases.Energy losses DG may initially reduce energy losses, but with higher DG penetration losses will
increase.Replacement value of DG DG can replace distribution assets because the net (peak) load of the network will
decrease with increasing DG penetration. The replacement value decreases in case of high DG penetration in combination with high “DG-density”
Active network management Reinforcement costs can be reduced with “active network management” (incl.
implementation costs like ICT). However, in some high DG-penetration cases costs will be higher than passive network management.
Operational costs (i.e. energy losses, curtailment compensation, labour costs) will increase. This results in higher total costs in some cases.
Type of DG The type of DG (non-intermittent and intermittent) influences network capacity and
losses. Effects are different for rural and urban networks, also because of the different types of
DG connected.
2. Impact of DG on the DSO business
15
Remuneration of DSO costsExtensions/reinforce-
ments
Extensions/reinforce-
ments
Ancillaryservices
Ancillaryservices
Energy losses
Energy losses
O&M CostsO&M Costs
DSO(Distribution
System Operator)
DSO(Distribution
System Operator)
Connectioncharges
Connectioncharges
UoS chargesUoS
charges
Capital expenditures
Operational expenditures
Revenues
Consumer/DG Operator
Equipmentsupplier
TSO/DG Operator
UoScharges
(cascade)
UoScharges
(cascade)TSO
DG Operator/Large power producer
Consumer/DG Operator
Money flow
Extensions/reinforce-
ments
Extensions/reinforce-
ments
Ancillaryservices
Ancillaryservices
Energy losses
Energy losses
O&M CostsO&M Costs
DSO(Distribution
System Operator)
DSO(Distribution
System Operator)
Connectioncharges
Connectioncharges
UoS chargesUoS
charges
Capital expenditures
Operational expenditures
Revenues
Consumer/DG Operator
Equipmentsupplier
TSO/DG Operator
UoScharges
(cascade)
UoScharges
(cascade)TSO
DG Operator/Large power producer
Consumer/DG Operator
Money flow
Source: Dispower/ECN
2. Impact of DG on the DSO business
To guarantee non-discriminatory network access DG connection charges should be based shallow costs (direct costs of the connection).
DG UoS charges‑ should be cost reflective‑ preferably differentiated by
location and time of use‑ Might be positive (if network
costs are increased due to DG operation) or negative (if the savings are greater than the costs
16
DSO revenues and incentives Revenues DSOs revenues are determined by incentive regulation DG can have a negative effect on the DSOs revenues DSOs revenues should be calculated taking into account the
incremental effect on CAPEX and OPEX of different DG penetration levels, e.g. ‑ Allowance for DG in regulated asset base (RAB)‑ DSO benchmarking considering DG as cost driver‑ Tariff adjustment factor (ex post)‑ Allowance for a direct revenue driver
- e.g. TARt = TARt-1(1 + CPI – X) + € A/ kWDG + € B/ MWhDG
Incentives Negative effects on revenues should at least be neutralised (Temporarily) positive incentives could be used to promote DG
integration
2. Impact of DG on the DSO business
17
DG providing ancillary servicesAncillary services DSOs should be able to purchase ancillary services from DG
operators‑ e.g. voltage and reactive power support, energy losses,
congestion management, etc.
Islanded operation DG reducing the impact of network outages on customer
supply interruptions (i.e. improving quality of service) Requires active network management, local balancing, etc.
DG-DSO arrangements DG-DSO service contracts DG regulated payments
2. Impact of DG on the DSO business
18
Costs reductions expected with increasing RES
0.01
0.1
1
10
0.01 0.1 1 10 100 1000Cumulative Electricity Production (TWh)
Cos
t of E
lect
ricity
(ECU
(199
0)/k
Wh)
Photovoltaics (~65%)
Electricity fromBiomass (~85%)
Supercritical Coal (97%)
NGCC (96%)
Wind Power - Average (82%)
Wind Power - Best Performance (82%)
1985
1995
1980
1995
© OECD/IEA, 2001
3. What is the optimal amount of DG?
19
What is the optimal amount of DG?
Time /DG/RES share in load flow distribution grid
Dire
ct s
yste
m c
osts
0
Generation costs
Market & network integration costs, incl. innovations
Overall costs
Overall costs,incl. innvoations
Market & network integration costs
3. What is the optimal amount of DG?
Source: ECN
20
More information:
http://www.dg-grid.org
http://www.electricitymarkets.info/distributedgeneration/index.html
Thank you