Integrating Variable Renewable Energy with the GridIntegrating Variable Renewable Energy with the GridIntegrating Variable Renewable Energy with the Grid

An ApproachAn ApproachAn Approach

ExcerptsExcerptsExcerpts

Disclaimer: The views and analyses represented in the document are excerpts from a detailed report prepared by

Mercados Energy Markets India Pvt. Ltd. (AF‐Mercados EMI) supported by Shakti Sustainable Energy Foundation

(Shakti). The views and analyses represented in the document do not necessarily reflect that of Shakti and Shakti

accepts no liability for the content of this document. Further, Shakti and AF‐Mercados EMI do not accept any

liability for the consequences of any actions taken on the basis of the information provided.

Integrating Variable Renewable Energy with the Grid

An Approach

Excerpts from a report supported by

Shakti Sustainable Energy Foundation

and prepared by

Mercados Energy Markets India Pvt. Ltd.

March 2013

Table of Contents

1. Background: India's Energy Realities 1

2. The Challenge: Integrating Variable Renewable Energy (VRE) Efficiently 2

2.1 Short‐Term Issues 3 ‐ 6

2.2 Long‐Term Issues 6

3. The Solutions: Smart Imperatives for Integrating VRE with the Grid 7

4. Implementation Roadmap 16

1

1. Background: India's Energy Realities

India's substantial and sustained economic growth is placing enormous demand on all of its

resources and demand for electricity has been

growing on a fast rate, and consequent deficits in

supply. In addition to pervasive shortages, about

40% of the population does not yet have access.

Excessive dependence on fossil fuels and limited

domestic availability has resulted in close to 30 GW

of stranded generation capacity. Further,

increasing reliance on fuel imports has led to a

severely adverse Balance of Payment situation that

has contributed to a steep fall in the value of the

rupee. India continues to experience power deficit

in terms of energy and peak demand requirements

which leads to indiscriminate load shedding or

over‐drawl from the grid, causing instability and

security concerns.

Increasing demand for electricity and supply deficit

also has commercial implications and contributes

to the rising price of electricity. The condition is

particularly severe in the Southern Region (SR)

which is impacted by transmission congestion. While the average price in the rest of the country was

Rs. 3.50 per kWh during 2011‐12 and Rs. 3.78 per kWh in 2012‐13, the price in the Southern Region was

Rs. 5.12 per kWh and Rs. 7.95 per kWh respectively. Figure 2: Average RTC Prices in Southern Grid in

2011‐12

The situation further gets exacerbated in the Southern Region grid during the non‐wind months

wherein due to low wind generation the prices in the Southern Grid become exorbitantly high. As is

indicated from Figure 2, the average price for Southern Grid during March 2011 (low wind) was Rs.

10.41 per unit whereas in July 2011 (high wind), it was Rs. 5.30 per unit. Thus, renewable generation

could and shall play a critical role in

determining electricity prices in short

term day‐ahead electricity markets.

The potential impact of renewable

power production in reduction of

electricity prices, ability to reduce inter‐

regional congestion and improve

availability of energy has led to an

increasing interest in and deployment of

large‐scale renewable energy.

1 Prices indicated here are for the S1 region of the Southern Grid comprising Tamil Nadu and Andhra Pradesh. Prices in the rest of the Southern Grid are typically in close alignment with S1 prices.

Figure 1: All‐India Peak and Energy Deficit – 2011‐12

Figure 2: Average RTC Prices in Southern Grid in 2011‐12

2

2. The Challenge: Integrating Variable Renewable Energy Efficiently

Variable Renewable Energy (VRE) resources like wind and solar present enormous opportunities to

meet India's energy deficits in a cost effective manner, but also present very significant challenges

on account of their intermittency, making load and grid management complex. Such intermittency

emanates from two main aspects ‐ variability and unpredictability.

Variability of VRE can be addressed through long term developments in storage, balancing and

spinning reserves and also by making demand more responsive through price signals.

Simultaneously, the challenge is to make the renewable energy more predictable, thus significantly

offsetting the impact of intermittency. This means that better forecasting is required in order to

allow system operators to schedule or plan how the energy can be used to help match the demand

profile and also plan for any system support in the form of ancillary services. Robust processes for

forecasting, scheduling and dispatch can help efficiently manage the physical operations of the grid

and also financial settlement processes, including through the Renewable Energy Certificates (REC)

route.

This report bases its principal conclusions on the analysis of experiences in Tamil Nadu (one of the

Southern states of India) and in the Southern Grid in India. Figure 3 below provides an illustration of

variability of wind generation in Tamil Nadu between months, and also between consecutive days in

the same month.

In supply strapped power systems such as India, variability of supply as well as demand is often

managed through load shedding, but this cannot be a sustainable long term solution. In any event,

shedding load has its limits and leads to adverse economic impact, both direct (use of inefficient and

high cost back‐up generation and storage) and indirect (severe loss of productivity).

The impact of integration of VRE on the power system can be categorised in short‐term and long‐

term effects. The short‐term effects are due to balancing the system at the operational time scale

(minutes to hours). The long term effects are related to the contribution VRE can make to the

adequacy of the system, which is its capability to meet peak load situations with high reliability.

Figure 3: Wind Generation in Tamil Nadu during 2011

2.1 Short‐Term Issues

Figure 4 below indicates the decisions that the system operator is required to take in managing the

system effectively.

The following sections briefly discuss the operational challenges faced by the system operator in

managing integration of VRE with the grid.

A. Voltage Management

In most of the Indian states, wind farms/generators are connected at the STU level (at 110/132 kV) or

at the distribution level (below 66 kV). Heavy reactive power drawls by these generators, pose

serious voltage management issues, the impact of which is also felt over long electrical distances.

The RE generation varies with the resource availability. This directly affects other generators that

have been connected to the system elsewhere, with the aim of providing balancing and operating

reserve. Unless the variation is balanced quickly, the voltages on the system vary. In cases when the

variations are large, limits may also be infringed. This affects the reliability and stability of the power

system.

B. Real Power Imbalance

Real time balancing of demand and supply to keep the power system “stable” and hence “secure” is

one of the primary responsibilities of the system operator. While uncertainty in demand always

poses a challenge, system operators world‐wide rely on spinning reserves or other real power

support services which trigger into operation within seconds of receiving command from the

system operator. Support of such services however needs to be procured in advance.

When demand cycles through the day, the system operators have a reasonable estimation of supply

requirements and keep such generators ready for operation during the day. However, more than

Figure 4: Challenges faced by System Operator in context of grid integration of RES close to real time

Voltage Management

Production from Gas and Hydro Resources (1-24

Discarded Wind (not accepted intoManagement

(Minutes)Hydro

Resources

(1-24

Hours)(not

accepted intothe grid)

Regulating Reserves (Minutes to Hours)

Transmission and Distribution Efficiency (1-

24 Hours)

Local Impact

System Impact

System Impact

Local / System Impact

2 Most of the wind generator systems currently used in India are induction generators. Squirrel Cage Induction Generators (fixed speed) are known to absorb heavy reactive power during start‐up and also during normal operation. Wind generators, during normal operation, may start‐up many times. The situation gets exacerbated during events of fault, when these machines consume large amounts of reactive power from the system. This may make recovery from the fault much harder. Solar projects can present similar voltage management problems due to the nature of output from the solar farm consequent to rapid insolation changes.and Andhra Pradesh. Prices in the rest of the Southern Grid are typically in close alignment with S1 prices.

3

variability, predictability of wind with manageable accuracy is a greater challenge than predicting

and managing uncertainty in demand or supply from conventional resources. For a system

operator, extent of “predictability” is of great importance for reliable and secure system operation

– whereby it is able to predict and thereby procure adequate balancing capacities.

It is important to note that size of the power system impacts management of variability. As the

system size becomes smaller, the extent of variation also increases. Because the output fluctuates

in a way that generators cannot control, there is a need for additional energy to balance supply and

demand on the grid on an instantaneous basis, as well as ancillary services such as frequency

regulation and voltage support. The smaller the power system, more is the need for such balancing

resources that can respond within a short time.

C. Commercial Impediments To Real Power Balancing

Real power balancing is a problem for the system operator under two conditions: (a) when there is

an excess (above schedule) VRE generation; (b) when the VRE generation reduces below schedule.

When VRE Generation Increases: Problem of “Discarded Wind” in Tamil Nadu‐ The host utility

where the wind generator is located has no incentive to continue allowing the wind generator to

generate if the Unscheduled Interchange prices are below the Feed in Tariff (FiT). Thus, there could

be instances where the wind generator could be instructed to reduce/stop generation even when

the frequency is below 50 Hz, let alone instances when the frequency exceeds 50 Hz. As frequency

increases and if at the same time wind generation also increases, the utility is faced with an

operational decision which is modulated by financial considerations. When the frequency starts

increasing but is still below 50.2 Hz and the UI rates are lower than FiT rates / contract rates, then

SLDCs may be inclined to back down wind generators, since unscheduled drawal from the grid is

commercially more advantageous. Current UI rules encourage such deviant behaviour.

When VRE Generation Declines ‐ When the wind generation declines and there is fall in grid

frequency, the system operator can, in the absence of balancing reserves in its control area, either

continue to allow grid indiscipline and overdrawal at high UI rates or shed load – both costs to the

consumers in the state. The UI mechanism, with all its advantages, is also proving to be detrimental

to co‐operation between state utilities for offering help in balancing energy in such conditions.

D. Sub‐optimal Coping Strategies

At the State Load Despatch Centre (SLDC) level,

the sudden reduction in VRE based generation can

be balanced by ramping up existing thermal and

hydro resources – if available as spinning reserves

(secondary reserves) or by procuring power in the

short term markets.

Similarly, thermal / hydro generators have to be

ramped down when there is sudden ingress of VRE

based generation. In general, a number of states have limited options with them to cope with such

3 The “real time” energy prices in the Inter State Transmission System (ISTS) network are determined through an imbalance mechanism where the energy prices are regulated and are linked to grid frequency. These are referred to as the Unscheduled Interchange (UI) prices.

Figure 5.1: Wind Generation at TN SLDC

4

situations. The case in point is Tamil Nadu where

thermal resources are designed to serve constant

base loads; the SLDC is left with rather limited

options to balance load and generation. These

options include: (i) Ramping of tertiary reserves

such as Kadamparai Pumped Hydro Power Plants;

(ii) Load Shedding; and (iii) Heavy UI Drawals. The

above behavioural phenomenon is depicted

through Figures 5.1 to 5.3.

A comparison of actual v/s schedule drawal on 17

August and 18 August (Refer Figure 6) indicates

that probably, guided by the actual drawal on 17

August, TN SLDC scheduled a higher drawal on 18

August. However, because of high wind

generation on 18 August, TN ended up drawing

much less than its schedule. This has commercial

implications as well ‐ Tamil Nadu had to pay for the

scheduled energy but got reimbursed at a much

lower rate for under‐drawal (under the current UI

mechanism, based on the extent of under‐drawal).

The following inferences can be drawn from the above:

Procurement of power from tertiary reserves or from short term markets, loss of quality of supply

due to load shedding or UI drawls (which also compromise grid security) – all result in high costs that

have to be borne by the consumers in the host state.

Sudden ingress or withdrawal of VRE generation from the grid would require tertiary resources with

quick ramp rates for balancing. In the above examples, it can be seen that generation from pumped

hydro is one such source with UI being the other. Sudden loss of VRE can be made up by increasing

withdrawal from the grid. The UI mechanism thus provides perverse incentives for grid integration

of VRE based generation, and hence needs to be replaced by a more formal Ancillary Services

Mechanism/Market.

Figure 5.2: Geneneration by Kadamparai Hydro Power Plant

Kadamparai generates more during 1‐13 hours, reduces generation post 13 hrs. Generation

picks up on 18/08/2011 when wind generation is lower than it was on 17/08/2012

Figure 5.3: Load Shedding Profile

Lower wind generation on 17/08/2011 is made up through load shedding

Figure 6: Schedule Vs Actual Drawal of TNEB for 17.08.2011 and 18.08.2011

5

Beyond the above costs, the cycling of thermal generators may also impose huge costs on the state

generators, especially when VRE penetration increases– which ultimately is borne by the state

consumers. Here again, two broad types of costs are involved (a) variable costs due to efficiency

loss and (b) increase in life‐cycle costs due to increased wear and tear.

2.2 Long‐term Issues

A. Transmission Capacity Expansion

Integration of VRE generation in the grid requires balancing reserves that ideally should be able to

replace VRE generation when the latter reduces and should have the ability to reduce generation at

a rate which matches ingress of VRE based generation. This requires investment in transmission

capacity (especially because VRE are location dependent and may be far from load centres),

reactive power resources to support the flow of power over long lines and reactive power

resources to support inductive power requirements of wind generators. While transmission

capacity is required to balance the variations in active power output, reactive power resources are

required more “locally” to prevent excessive losses in the grid.

The Grid collapses in July 2012 – while not at all linked or attributed to VRE – highlighted the

vulnerability of the inter‐state network to external events/disturbances. The intra‐state network is

relatively weak, and requires strengthening and augmentation. The augmentation plans need to

specifically be looked from the perspective of integration large scale VRE as well.

B. Generation Planning

With increasing incorporation of VRE into the system, the generation planning will also require a

modified approach. Planning only for requisite MW capacity may not be sufficient for system

adequacy, stability and security, if such generation is not flexible to respond to system variability.

The above calls for incorporation of adequate “flexibility” in the system as one of the planning

criteria besides the MW capacity required in the system.

6

3. The Solutions: Smart Imperatives for

Integrating VRE with the grid

India's advantage is in learning from global

research and development, which is already

happening in VRE heavy power systems, but

aligning them to the Indian structure and realities.

The Indian power system has several advantages,

including a large, frequency‐integrated grid

(Southern Grid is to be integrated with the rest in

the foreseeable future), a tiered management

system and also a strong inter‐state transmission

backbone. The measures proposed for India need to derive advantages from this structure.

3.1 Voltage Management

Figure 7: Smoothening effect of FACTS devicesGlobally transmission voltage is controlled through a

combination of generator excitation systems, transformer tap‐changers, static reactive devices and

increasingly, Flexible Alternating Current Transmission System (FACTS) devices. FACTS devices

combine modern power electronics and control techniques with capacitors, inductors and

transformers. In the Indian context the most important FACTS device would be Static Var

Compensators (SVC)/ STATCOM. The characteristics of VRE would require voltage stabilisation too

rapid for transformer tap‐changers and too large for many generator excitation systems leaving

FACTS as one of the most suitable option. Figure 7 indicates the smoothing effect of FACTS devices.

In order to encourage investment in such devices there needs to be a mechanism for determination

and sharing of the costs of voltage and reactive power management. Most modern wind turbines

have a voltage or fault ride through facility which improves output. However, regulations and the

grid code would need to be amended to enforce the same for existing wind farms as well. The

existing IEEE Application Guide for IEEE Std 1547™, IEEE Standard for Interconnecting Distributed

Resources with Electric Power Systems could be adapted for India.

Currently older and less efficient wind turbine generators are considering repowering their turbines

in order to improve efficiency and plant load factor. Repowering should be considered as a new

installation and function as per grid interconnection standards which require features such as

variable speed, full scale frequency converter, Low Voltage Ride Through (LVRT), reactive power

and voltage control.

Regarding recovering the cost of SVCs/STATCOMs and the procurement of reactive power, a state

level reactive power pricing mechanism will need to be developed. Since states like Tamil Nadu with

an abundance of VRE potential would be generating to support other states in meeting their

Renewable Purchase Obligations (RPOs), the costs of procurement of reactive power would have

to be accounted for through various mechanisms such as recovery through inter‐state assets and

the point of connection costs or ancillary services which are discussed below.

Figure 7: Smoothening effect of FACTS devices

7

3.2 Integrated Generation And Transmission Planning

Integration of VRE requires system balancing reserves and network management resources. This

requires investment in flexible generation, transmission capacity and reactive power resources to

support the flow of power over long lines and to support the inductive power requirements of VRE

generators in an optimized manner. While transmission capacity is required to balance the

variations in active power output of wind turbines, reactive power resources are required more

locally to prevent excessive losses in the grid.

Generation capacity expansion planning in India is done by Central Electricity Authority (CEA) and

presented in the National Electricity Plan. The models are based on demand data as per the Electric

Power Survey. A load duration curve for all India is utilized to plan base load, intermediate and peak

load capacities. RE based capacities are treated as must run. The National Electricity Plan elaborates

the need for peak capacity and also highlights the characteristics of the same as: (i) Fast start up &

shut down times; (ii) Fast ramp up rate; (iii) Wide load range; (iv) Black start capability; (v) Un‐

restricted up/down times; (vi) Fuel flexibility; and (vii) Low emissions.

With increasing VRE penetration, the power system planning needs to adequately consider

extreme VRE conditions, including localised high VRE generation in low demand conditions, low

VRE generation in high demand conditions and rapid changes in net load. Transmission system

planning in India, as stated in the National Electricity Policy, is not based on an explicit consideration

of VRE capacities. Even as these issues have progressively come into the fore, (a separate Green

Corridor report has been prepared by Power Grid Corporation of India Limited), they need to be

integrated fully into CEA's perspective plans.

There is therefore a need for explicit consideration of RE capacity in the integrated transmission and

generation capacity expansion plan. Further, the models which explicitly model transmission

systems and conventional capacities required to balance variability in RE generation need to be

adopted by CEA.

3.3 Larger Geographical Control Area To Help Manage Variability

India's power system is concurrently managed by a large number of system operators. Active

management of demand as well as almost all VRE resources happen through the SLDCs. A sudden

reduction in VRE generation can be managed by the SLDC by ramping up existing thermal and hydro

resources (spinning reserves) if available or by procuring power in the short term markets. Similarly

a sudden increase in VRE generation would require the same thermal and hydro generators to back

down.

However in a state like Tamil Nadu, where all thermal resources are designed to serve constant base

load only, the SLDC is left with limited options to balance load and supply, such as ramping tertiary

reserves such as the pumped hydro plant at Kadamparai in Tamil Nadu, overdrawl and the UI penalty

or load shedding.

Global experience has shown that a larger control areas presents better opportunities for balancing

the loss or gain of VRE resources. For example, whilst there may be a lack of flexible gas fired or

hydro generation or even energy storage within Tamil Nadu, these resources may be available in the

neighbouring state of Andhra Pradesh. However, several technical and commercial factors impede

the utilisation of such resources.

8

Our analysis indicates that the cost of balancing can be considerably reduced when carried out over

the entire Southern Regional grid rather than just over the Tamil Nadu network. The three case

scenarios considered in this regard are:

Case 1: 100% of the capacity required to provide positive balancing energy is procured through

capacities committed to provide balancing services. These facilities remain available on standby

until required by the system operator. Such services are normally procured through Ancillary

Services Markets.

Case 2: 50% of the capacity required to provide positive balancing energy is procured through the

Ancillary Services Market and 50% from the intra‐day/day ahead energy market

Case 3: 100% of the capacity required to provide positive balancing energy is procured through the

intra‐day/day ahead energy market

The results of the above analysis are indicated in Table 1.

The following observations can be drawn from the table above:

With an increase in VRE penetration, the balancing costs increase and the balancing capacity

requirement increases

With a larger control area, the balancing costs decline and the balancing capacity requirements also

decrease

Procurement of balancing services across state borders present differing policy implications. In

more mature markets with low levels of VRE, balancing services are generally only necessary for

unplanned events such as power plant outages. Generally the amount of reserve capacity

contracted is large compared to the small amount of actual electricity required. Balancing services

are usually either provided nationally, or in the case of Germany as the responsibility of the four

regional Transmission System Operators (TSOs).

Currently in India balancing services are not provided by the system operator. Grid connected

entities such as state distribution companies and generators are required to remain committed to

their schedules or pay UI charges for any deviation. At this time the UI mechanism provides a

commercial process for balancing.

Maximum Volatility of VRE generation (High wind season)

Tamil Nadu Southern Region

% Penetration

Balancing Capacity

(MW)

Balancing cost (Rs/kWh) %

Penetration Balancing Capacity

(MW)

Balancing cost (Rs/kWh)

Case 1

Case 2

Case 3

Case 1

Case 2

Case 3

2012 34% 624 0.68 0.44 0.21 18% 334 0.30 0.20 0.11

2014 39% 835 0.72 0.48 0.23 22% 798 0.43 0.27 0.12

2016 45% 1,126 0.78 0.53 0.28 27% 1,112 0.44 0.28 0.13

2022 55% 2,533 1.20 0.89 0.58 35% 2,465 0.51 0.32 0.14

Table 1: Penetration levels, balancing capacity and associated costs

9

Globally, the recent wide‐scale deployment of VRE has prompted additional demand for reserve

and fast response operations. This need has arisen predominantly due to inadequate levels of

accuracy in day‐ahead forecasts for VRE. It has also led to the need for redesign of the power

markets and led to the introduction of robust capacity and ancillary services markets. If VRE has to

be integrated on a large scale, such re‐design (along with incentives for the resources capable of

providing such services) is essential and needs to be accelerated.

3.4 System Operation Redesign

Keeping in view the increasing deployment of VRE in the country, a paradigm shift is needed

in the operations of the system operator (SO). There is a need to introduce greater co‐

operation between SOs for RE, and integration of SO operations for RE corresponding to

the definition of balancing areas. Our analysis indicates a very different set of emergent

priorities between the National Load Despatch Centre (NLDC) and the SLDCs, as is depicted

below.Table 2: Differing priorities of System Operators

Factor

NLDC

Tamil

Nadu

(SLDC)

Gujarat

(SLDC)

Rank Rank Rank

Transmission Augmentation 3 3 3

Transmission standards of performance

(particularly at STU level) - - -

Designated Balancing Power 2 2 -

Larger balancing areas - 2 3

Centralised forecasting 2 1 2

Project level forecasting and scheduling of VRE 2 1 1

Factor NLDC

Tamil

Nadu

(SLDC)

Gujarat

(SLDC)

Demand Response 3 - -

Operator awareness of situation (rapid updates) 1 1 1

Ancillary Services Markets 1 - -

Standard and uniform Grid Codes/Connectivity

Denition - - -

Integration in operator decisions - - 3

More flexible power markets 2 - -

10

As is noteworthy from the table above that there is divergence of priorities between NLDC and the

SLDCs. While NLDC's focus combines market design and operations aspects, the SLDCs focus more

on the operations aspects. However, operator awareness was given the highest priority and

transmission augmentation is given the least priority by all categories.

In future, for large scale integration of VRE, the priorities must be reasonably aligned. This would

imply that the rules of engagement and also the incentives must have common threads. This will

require both commercial alignment as well as a common chain of control that focuses on VRE. This

could call for separate Renewable Energy Management & Control Centres (RMCs) to be instituted.

Such control centres would typically command a larger control area as compared to the present

mechanisms of state focused controls for VRE.

3.5 Overcoming Commercial Obstacles To Real‐time Power System Management

A. Addressing The Unpredictability Of VRE: Need For Forecasting And Planning

Many of the challenges related to integrating VRE can be addressed through better forecasting thus

providing improved visibility of output and a market design that addresses the unique

characteristics of VRE. Forecasts have two main purposes: scheduling to encourage efficient

competition in the wholesale market and security scheduling, ensuring that sufficient generation

capacity will be available in real time to meet demand.

Accurate forecasting will allow less conservative operating strategies to be adopted and the

economic benefits will easily outweigh any costs. The challenges at this time to better forecasting

are more commercial than technical, arising out of the way the VRE resources have been built and

managed in the legacy power system.

A framework for forecasting and planning in India should be based on the following principles:

1. Ability to develop accurate real‐time production forecasts for any generator strongly correlates to

the availability of site‐specific and precise real‐time data.

2. RLDC/SLDCs must obtain accurate forecasts of RE production to maintain reliable and efficient

system operation.

3. Commercially responsive forecasting must be carried out at sub‐station level by scheduling

coordinated or aggregated RE.

4. Centralised forecasting must be done by the system operator also.

5. Forecasting charges availed by the RLDC/SLDC,

would be payable by all the VRE generators.

It may be necessary to combine centralized (by the

SO) and decentralised (by wind farm operators or

their agents) forecasts. Decentralised forecasts

will need to be paid for individually by the

generators and recovered from green power

benefits. For centralised forecasts the cost will

need to be recovered through the RLDC/SLDC

charge but levied only on the VRE resources.

Figure 8: Improvement in wing forecasting in the Spanish electricity markets

11

International experience demonstrates that over time it is indeed possible to reduce the forecasting

errors within very acceptable levels. A third party arrangement has emerged in the Spanish market

where specialised forecasting and aggregating services have evolved to bring about better

predictability. Over time, this has brought down the forecasting errors as shown in Figure 8. This

has also been demonstrated in the Indian market by entities working in the area of wind forecasting.

Alternatively, since decentralised and centralised forecasts play a pivotal role in grid integration of

VRE and benefit society as a whole, mechanisms for centrally procuring forecasts could be defined.

The cost in such case can be recovered as SLDC/RLDC charges.

B. Improving Visibility Of Resources: Data Collection And Procurement

Enhanced forecasting can be achieved only through better system visibility. The need for

centralized procurement of ancillary services for supporting VRE generation has already been

emphasised earlier in this report. RLDCs are best placed to coordinate such ancillary services in

coordination with the SLDCs. Therefore, there is a need for framing guidelines for improving

visibility, data collection and procurement. These guidelines should cover following aspects:

1. Physical site data

2. Meteorological and Production Data

3. Communication, Metering and IT infrastructure requirements

4. Frequency of data transmission

5. Data Security

Information disclosure requirements by VRE resources need to be included in the Grid Codes and

commercial contracts to allow for better information availability and consequently better

awareness on part of the SO.

C. Scheduling Mechanism – Day Ahead And Intra Day

A close to real‐time mechanism for scheduling already exists as the IEGC permits 8 schedule

revisions per day at 3 hrs notice and this offers an opportunity for wind generators to correct

themselves, as is shown in Figure 9.

Figure 9: Scheduling Mechanism

4 http://www.windpowerindia.in/presentations/ppts_wpi/Session_4B/Jeremy_Parkes.pdf

12

However, from the system operation perspective, the system operator needs to plan for capacity to

support the variability of VRE resources. Close to real‐time management required for such

situations requires a well functioning ancillary services mechanism/market or a demand response

program. For the ancillary services market to provide the functionality required, it is essential that

VRE resources schedule their output accurately. Hence, VRE generators must be responsible for

their schedules albeit with some relaxation due to the intermittent nature of their resources.

D. Energy Accounting Mechanisms For Imbalance

There are two types of costs that would need to be shared. These are the fixed costs associated to

capital expenditure and variable costs associated to balancing and system losses.

Fixed costs should be approved by Central Electricity Regulatory Commission (CERC) and recovered

through the Point of Connection (PoC) mechanism. Similarly costs associated to losses could be as

per the PoC mechanism. Once the market for ancillary services is established, the cost of cycling

would be reflected within the bid price of resources providing these services.

At this time, CERC has attempted to manage the cost of variability through the Renewable

Regulatory Fund (RRF). This mechanism has been modified to address various issues raised by the

grid constituents. However, a universally acceptable solution on sharing of the integration costs is

still elusive. As the penetration of VRE increases, (sometimes in unpredictable ways and places) the

new challenges continue to emerge.

International experience indicates that with the increased level of penetration of VRE, it has

become imperative to treat them at par with other resources in terms of systems operations and

market operations costs and processes, but with some important exceptions.

Firstly, to the extent possible, greater scheduling flexibility is permitted to VRE (this is also the case

in India). Secondly, they are provided with an incentive (or uplift) to manage the costs of deviations

from schedules. Subject to these specific exceptions, the VRE resources operate under the same

set of market rules as conventional power. This allows for smooth operations of the market and the

power system and encourages innovation and commercial discipline. With increase in VRE

penetration, it will be important for India to consider such explicit commercial rules instead of

overly socializing the costs, as is being currently envisaged.

E. Provision Of Flexibility In The System ‐ Demand Response And Energy Storage

As stated above, some RE sources being variable in nature, there is a need for the system to have

adequate level of flexibility to support the need for balancing power. Flexibility in the system can be

achieved on the demand side through Demand Response and on the supply side through Energy

Storage (can also act from the load side depending on the application).

13

5 DR is a consumer's ability to alter electricity consumption at their location when prices are high or the reliability of the grid is threatened. DR has the ability to provide support in short term power management that involves balancing real and reactive power generation and demand in real time.

Table 3: Applications to provide Flexibility in the System

Application Description

5Demand Response The Utilities in India usually resort to load shedding and UI drawals to manage real time imbalances of power. Alternatively, some states also purchase costly power in the short term markets to manage these imbalances. Such imbalance mitigation measures can be effectively managed through a robust DR program. In states like Tamil Nadu, Rajasthan, Gujarat etc, which are witnessing fast paced utilization of their Renewable Energy Potential (especially wind and solar), DR Programs can be effectively utilized to manage the variability in generation from such renewable sources of generation. Therefore, DR programs can be utilized by the distribution utilities to manage the power systems in short term and also obviate the need for purchase of costly short term power.

Energy Storage Energy storage owing to its multiple uses and configuration can support VRE integration in variety of ways. These include, load following and load leveling, balancing uncertainty through provision of reserves, smoothening generation output from plants, matching generation to loads through time shifting etc.

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Table 5 summarizes the key recommendations made in this report.

Tab

le 5

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ary

of

pro

po

sed

inte

rve

nti

on

s to

su

pp

ort

eff

icie

nt

VR

E In

teg

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on

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4. Implementation Road Map

The solutions stated above present a large and complex agenda. Large scale RE integration is also

unlikely unless the issues are addressed comprehensively. Basis the discussion presented in this

report, the proposed road map is presented in Table 6.

Better integration and management of VRE will be contentious. As penetration increases, the

magnitude of issues will increase. The solutions must proceed hand in hand to ensure that

generation and transmission infrastructure creation is well co‐ordinated. Most components of the

nine high power transmission corridors being developed in the ISTS are expected to commence

commercial operation by 2018. These physical developments at the inter‐state level need to be

backed up by policy and regulatory action based on robust commercial mechanisms.

Table 6: Proposed Implementation Road Map

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About the study

The study has been supported by Shakti Sustainable Energy Foundation and carried out by Mercados Energy Markets India Pvt. Ltd (www.mercadosemi.in).

About Shakti Sustainable Energy Foundation

Shakti Sustainable Energy Foundation works to secure the future of clean energy in India by supporting the design and implementation of policies that promote both the efficient use of existing resources as well as the development of new and cleaner alternatives. Shakti's efforts are concentrated in four specific areas: power, energy efficiency, transport, and climate policy. The organization acts as a systems

integrator, bringing together stakeholders in strategic ways to enable clean energy policies in these fields. It also belongs to an association of technical and policy experts called the ClimateWorks Network. Being a member of this group further helps Shakti connect the policy space in India to the rich knowledge pool that resides within this network.

Shakti Sustainable Energy Foundation | The Capital Court | 104 B/2 Fourth Floor, Munirka Phase III | New Delhi 110067 | India

T +91 11 4747 4000 | F +91 11 4747 4043 | www.shaktifoundation.in