Integrating Wind Power into the Integrating Wind Power into the Electric Power SystemElectric Power System

Michigan Public Service Commission Wind ForumMichigan Public Service Commission Wind ForumApril 25, 2007 Lansing, MichiganApril 25, 2007 Lansing, Michigan

Ed DeMeoEd DeMeoRenewable Energy Consulting Services, Inc.Technical Advisor, Utility Wind Integration Group

Michael MilliganMichael MilliganNational Renewable Energy LaboratoryConsultant, National Wind Technology Center

OverviewOverview

Integration Issues and Wind Integration Issues and Wind EconomicsEconomics

Electric Utility Planning and Electric Utility Planning and Operations: Wind Impacts OverviewOperations: Wind Impacts Overview

Wind Integration Perspective from Wind Integration Perspective from Around the NationAround the Nation

Environmental Issues: Impact on Environmental Issues: Impact on Wind Economics and IntegrationWind Economics and Integration

DeMeoDeMeo

MilliganMilligan

Milligan Milligan DeMeoDeMeo

DeMeoDeMeo

Key Integration IssuesKey Integration Issues

CostsCosts (capital, energy, O&M)

VariabilityVariability Impacts (ancillary services costs)

EnergyEnergy (fuel displacement) and CapacityCapacity

(serving demand growth) Contributions

EnvironmentalEnvironmental Considerations

Wind Energy Cost Trend

1979: 40 cents/kWh

• Increased Turbine Size

• R&D Advances

• Manufacturing Improvements

• Operating Experience

NSP 107 MW Lake Benton wind farm4 cents/kWh (unsubsidized)

2004: 3 - 5 cents/kWh (no subsidy)Today: Somewhat higher

increased commodity costs; unstable market conditions

2000:4 - 6 cents/kWh(no subsidy)

Natural Gas SituationNatural Gas Situation

“Today’s tight natural gas markets have been a long time in coming, and distant futures prices suggest that we are not apt to return to earlier periods of relative abundance and low prices anytime soon.”

– Alan Greenspan, Federal Reserve Chairman,

Testimony at Senate hearing, July 10, 2003

Wellhead gas costs - 2002-2003: $3 - $5/MMBTUWellhead gas costs - 2002-2003: $3 - $5/MMBTU

Current prices and projections exceed $6/MMBTUCurrent prices and projections exceed $6/MMBTU

Cost ComparisonCost Comparison

Wind total capital cost: about $1,600 kW today

Wind energyWind energy cost: about cost: about 5.5¢/kWh5.5¢/kWh (6.5¢ without PTC) (6.5¢ without PTC)

Includes 0.5 to 1.0¢/kWh for O&M

Wind energy costs are Wind energy costs are stablestable over plant lifetimeover plant lifetime

Natural-gas plant fuel cost (HR 7,000 - 10,000)

$/MMBTU: 2 4 6 8 10 gas cost

¢/kWh: 1.4 - 2 2.8 - 4 4.2 - 6 5.6 - 8 7.0 - 10 fuel only

Wind-gas synergyWind-gas synergy: save gas when wind blows; burn : save gas when wind blows; burn gas to maintain system reliability during low windsgas to maintain system reliability during low winds

Wind Variability ImpactsWind Variability Impacts

To what extent is wind energy value To what extent is wind energy value

reduced by increased operating costs for reduced by increased operating costs for

the rest of the power system?the rest of the power system?

How is the power system’s ability to reliably How is the power system’s ability to reliably

meet load demands affected by wind-plant meet load demands affected by wind-plant

output uncertainties?output uncertainties?

Time Frames of Wind Impact Match System Operation Tasks/cycles

Time (hour of day)0 4 8 12 16 20 24

Sy

ste

m L

oa

d (

MW

)

seconds to minutes

Regulation

tens of minutes to hours

LoadFollowing

day

Scheduling

• Power systems can already handle tremendous variability– Capacity value (planning):

based on reliability metric (ELCC=effective load carrying capability)

– Scheduling and commitment of generating units -- hours to several days -- wind forecasting capability?

– Load-following -- tens of minutes to a few hours -- demand follows predictable patterns, wind less so

– Regulation -- seconds to a few minutes -- similar to variations in customer demand

Days

UnitCommitment

Where Does Wind Data Come From?

• Meso-scale meteorological modeling that can “re-create” the weather at any space and time

• Model is run for the period of study and must match load time period

• Wind plant output simulation and fit to actual production of existing plants

Ponnequin PeetzPonnequin Peetz

Minnesota: Xcel

Colorado: Xcel

How is Regulation Impact Calculated?

• Based on actual high-frequency (fast) system load data and wind data

• If wind data not available, use NREL high-resolution wind production data characteristics

• Impact of the wind variability is then compared to the load variability

• Regulation cost impact of wind is based on physical impact and appropriate cost of regulation (market or internally provided)

Time (hour of day)0 4 8 12 16 20 24

Sy

ste

m L

oa

d (

MW

)

seconds to minutes

Regulation

tens of minutes to hours

LoadFollowing

day

Scheduling

–Realistic calculation of wind plant output (linear scaling from single anemometer is incorrect)

How is Load Following Impact Calculated?

• Based on actual system load data• …and wind data from same time

period– Meteorological simulation to

capture realistic wind profile, typically 10-minute periods and multiple simulated/actual measurement towers

– Realistic calculation of wind plant output (linear scaling from single anemometer is incorrect)

• Wind variability added to existing system variability

Time (hour of day)0 4 8 12 16 20 24

Sy

ste

m L

oa

d (

MW

)

seconds to minutes

Regulation

tens of minutes to hours

LoadFollowing

day

Scheduling

Implies no one-one backup for wind

How is Unit Commitment Impact Calculated?

• Requires a realistic system simulation for at least one year (more is better)

• Compare system costs with and without wind• Use load and wind forecasts in the simulation• Separate the impacts of variability from the impacts

of uncertainty

Days

UnitCommitment

How is Capacity Value Calculated?

• Uses similar data set as unit commitment modeling– Generation capacities,

forced outage data– Hourly time-synchronized

wind profile(s)– Several years’ of data

preferred• Reliability model used to

assess ELCC• Wind capacity value is

the increased load that wind can support at the same annual reliability as the no-wind case

0.04

0.06

0.08

0.10

0.12

0.14

LO

LE

da

ys/y

r800 900 1000 1100 1200 1300 1400

Load (MW)

Wind Plant Capacity Credit ExampleReliability Curves With/Without Wind

1,132 ELCC With Wind1,087 ELCC Without Wind

Wind Plant ELCC = 45 MW

High-Penetration Cases

• Minnesota PUC: 15-25% wind penetration (based on energy) (TRC)

• California Intermittency Analysis Project (Follow-on to earlier RPS Integration Study; team participation)

• Pacific Northwest: NW Wind Integration Action Plan (and Forum)– Idaho Power: about 30% (peak) (no TRC)– Avista: 30% peak (no TRC); some informal review at Utility Wind

Integration Group (UWIG)– BPA: analytical work in progress; integration cost is consistent with

others– Potential follow-on work to the NW Wind Integration Action Plan

(NWIAP) on regional basis– Northwest Wind Integration Action Plan:

http://www.nwcouncil.org/energy/Wind/Default.asp

Renewable Energy Studies in CA

• RPS Integration Cost Analysis: NREL, ORNL, Dynamic Design Engineering, California Wind Energy Collaborative for the CA Energy Commission– Used actual renewable generation, load, and

conventional data from ISO Power Information database• GE/Exeter/Davis Intermittency Analysis Project for

the Energy Commission– Analysis of future scenarios of renewable energy

• Both analyses looked at wind, solar, geothermal, and biomass

CA RPS Integration Cost Project

• Examining impacts of existing installed renewables (wind 4% on a capacity basis)

• Calculated regulation, load following impacts of all renewables

• Capacity value (effective load carrying capability, ELCC) for all renewables

• Regulation cost for wind $0.46/MWh

• Load following: minimal impact• Wind capacity credit 23%-25% of

benchmark gas unit

http://www.energy.ca.gov/reports/reports_500.html

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2002 2003 2004

EL

CC

% o

f R

ate

d C

ap

ac

ity

Wind (Northern Cal)

Wind (San Gorgonio)

Wind (Tehachapi)

0.00

0.10

0.20

0.30

0.40

0.50

0.60

2002 2003 2004 3-Yr Avg

Reg

ula

tio

n C

ost

$/M

Wh

Wind (Total)

System (Total)

Regulation and Capacity Value: RPS Integration Study

California Intermittent Analysis Project• Up to 24% wind (rated

capacity to peak)• Savings

– WECC nearly $2B– CA $760M

• Wind forecast benefit $4.37/MWh

• Regulation cost up to $0.67/MWh

• Unit commitment w/forecast results in sufficient load following capability (and no load following cost)

•http://www.energy.ca.gov/pier/notices/

Load Following Impacts in CA

• RPS Integration Cost Analysis found little discernable impact– Deep dispatch stack provided by market

• IAP found similar result– Deep CA dispatch stack, augmented by the

Western electricity market

Factors that Influence Integration Costs: Results and Insights

• Wind penetration• Balancing area (control area) size

– Conventional generation mix (implication for higher penetration and new balance-of-system capabilities

– Load aggregation benefits• Wind resource geographic diversity• Market-based or self-provided ancillary services• Size/depth of interconnected electricity markets• Unit commitment and scheduling costs tend to dominate• Realistic studies are data intensive and require

sophisticated modeling of wind resource and power system operations

Emerging Study/Methods Best-Practices

• Start by quantifying physical impacts• Divide the impacts by time scale corresponding to grid

operation cycles• Analyze cost impact of wind in context of entire system in

each time scale based on physical requirements– Load variability– Wind variability– System operator must balance TOTAL of all loads and

resources, not individuals• Capture wind deployment scenario geographic diversity

through synchronized weather simulation• Re-create “real” wind forecasts

Stakeholder ReviewEmerging Best Practices

• Technical review committee (TRC)– Bring in at beginning of study– Discuss assumptions, processes,

methods, data

• Periodic TRC meetings with advance material for review

• Examples in Minnesota, Colorado, California, New Mexico, and interest by other states

Minnesota 25% Wind Energy Minnesota 25% Wind Energy Penetration Study (MN DOC 2006)Penetration Study (MN DOC 2006)

For 3500 to 5700 MW of wind generation For 3500 to 5700 MW of wind generation delivered to MN load (15 to 25% of retail delivered to MN load (15 to 25% of retail electric energy sales in 2020)electric energy sales in 2020) An increase of 12 to 20 MW of regulating capacity

No increase in contingency reserves

An increase of 5 to 12 MW in 5 minute variability

Incremental operating reserve costs of $0.11 per MWh of wind generation in the 20% case

Minnesota 25% Wind Energy Minnesota 25% Wind Energy Penetration Study (MN DOC 2006)Penetration Study (MN DOC 2006)

Bottom Line: The addition of wind generation to supply Bottom Line: The addition of wind generation to supply 15, 20 and 25% of Minnesota retail electric energy sales 15, 20 and 25% of Minnesota retail electric energy sales can be reliably accommodated by the electric power can be reliably accommodated by the electric power systemsystem

The total integration operating cost for up to 25% wind The total integration operating cost for up to 25% wind energy is less than $4.50/MWh of wind generation. energy is less than $4.50/MWh of wind generation. Key drivers are:Key drivers are: A geographically diverse wind scenario The large energy market of the Midwest Independent System

Operator (MISO) Functional consolidation of balancing authorities Sufficient transmission (i.e. minimal congestion)

System Operating Costs Impacts: System Operating Costs Impacts: Results from Recent Studies (Results from Recent Studies ($/MWh)$/MWh)

Study

UWIG/Xcel

Pacificorp

BPA/Hirst

We Energies

Xcel/PSCO

Xcel/MNDOC

MN/MNDOC

MN/MNDOC

Penetra- Penetra- tion tion (%)(%)

3.53.5

2020

77

2929

1515

1515

2020

3434

Regula- tion

0

0

0.19

1.02

0.20

0.23

0.11

0.23

Load- Follow

0.41

1.6

0.28

0.15

0

0

0

0

Unit- Commit

1.44

3.0

1.40

1.75

4.77

4.37

2.00

4.18

Total Total ImpactImpact

1.851.85

4.64.6

1.871.87

2.922.92

4.974.97

4.604.60

2.112.11

4.414.41

Inte

grat

ion

Cos

t ($/

MW

h )

Wind Penetration (% of System Peak Load)

6

4

2

00 5 10 15 20 25 30

Range of System Operating Cost ImpactsRange of System Operating Cost Impacts

Studies Conducted To Date

1/2 ¢/kWh

All results to date fall within the crosshatched area

GE Energy/NYISO/NYSERDA GE Energy/NYISO/NYSERDA

New York Wind EvaluationNew York Wind Evaluation Comprehensive study Comprehensive study of wind’s impacts on transmission

system planning, reliability and operations

3,300 MW of wind in system serving 34,000 MW of customer load (10% wind penetration) (10% wind penetration)

Energy prices based on functioning commercial functioning commercial wholesale markets wholesale markets -- day-ahead and hour-ahead All previous studies based on operating costs only

Assumes wind is a price-takerAssumes wind is a price-taker Market (demand-supply balance) sets price; wind

generators are paid the market price

GE Energy/NYISO/NYSERDA GE Energy/NYISO/NYSERDA

New York Wind EvaluationNew York Wind Evaluation

Overall Conclusion: NY State power system can Overall Conclusion: NY State power system can reliably accommodate at least 10% wind (3,300 MW)reliably accommodate at least 10% wind (3,300 MW) Minor adjustments to planning, operation and reliability

practices

Total NY system (less wind) variable operating costsvariable operating costs (fuel, plant startup costs, etc.) reduced by $350 Mreduced by $350 M

State-of-the-art wind forecasting contributed $125 Mwind forecasting contributed $125 M of this reduction (about 80% of perfect-forecast value)

Electricity costs reduced statewide Electricity costs reduced statewide (0.18¢/kWh -- all kWh)

System transient stability improvedstability improved

Wind’s Contributions Wind’s Contributions to Electric Powerto Electric Power

Energy: displacement of fossil fuels

In most cases, this is the primary motivation. Previously existing power plants run less, but continue to be available to ensure system reliability.

Contrary to common lore, addition of a wind plant requires NO new conventional backup generation to maintain system reliability.

In many cases, natural gas is saved, reducing total system operating costs. In all cases, overall emissions are reduced.

Wind’s Contributions Wind’s Contributions to Electric Powerto Electric Power

Capacity: meeting new load growth Wind generally less effective in this respect than

conventional generation. Winds may be low during peak electricity demand periods.

But addition of a wind plant will allow some new load to be served. The amount depends on many factors. Examples:

New York about 10%Long Island about 40%Minnesota about 10%

With experience and over time, operating strategies and generation mix will evolve so that combinations like wind, hydro and natural gas will serve new load reliably.

IEEE Power Engineering Society Magazine, November/December 2005

Utility Wind Integration Group (UWIG): Operating Impacts and Integration Studies User Group

www.uwig.org

UWIG Summary: Key Points from IEEE Power Engineering Society Magazine, Nov/Dec 2005

www.uwig.org

Environmental Environmental TradeoffsTradeoffs

We need to evaluate environmental impacts on a relative basis.

No energy-generation approach is without impacts.

The choice is wind vs. something -- not wind vs. nothing.

“We can’t lose sight of the larger benefits of wind,” says Audubon Washington’s Tim Cullinan. “The direct environmental impacts of wind get a lot of attention, because there are dead bodies on the ground. But nobody ever finds the bodies of the birds killed by global warming, or by oil drilling on the North Slope of Alaska. They’re out there, but we don’t see them.”Audubon MagazineAudubon Magazine,

September 2006 feature article on wind power

Environmental Environmental Benefits of WindBenefits of Wind

No emissionsNo emissions of any kind during operation No SOx, NOx, particulates or mercury No contributions to regional haze No greenhouse gases

No toxic wastes or health impactsNo toxic wastes or health impacts Nuclear waste transport and storage unresolved Respiratory diseases of growing concern

No water consumption or use during operationNo water consumption or use during operation Water availability a looming crisis in the Western US

Environmental Environmental Benefits of WindBenefits of Wind

Global climate change concerns can no longer Global climate change concerns can no longer be ignored by any legitimate political entitybe ignored by any legitimate political entity Most environmental scientists view this as by far the

most serious environmental issue facing society Unavoidable evidence mounting Very few doubters remain

Not many arrows in the quiver to address this Not many arrows in the quiver to address this concernconcern

We need them allWe need them all

Wind energy is one of themWind energy is one of them

Paul Anderson, CEO of Duke EnergyPaul Anderson, CEO of Duke Energy(Southeastern Utility, Coal/Nuclear)(Southeastern Utility, Coal/Nuclear)

Lobbying for tax on carbon dioxide emissions

“Personally, I feel the time has come to act - to take steps as a nation to reduce the carbon intensity of our economy. And it’s going to take all of us to do it.”

– Paul Anderson, quoted in AP press release, published April 7,

2005

Wind Contributions in Europe Wind Contributions in Europe and the United States (2006)and the United States (2006)

GermanyGermany

SpainSpain

IrelandIreland

DenmarkDenmark

USAUSA

85,000

50,000

5,500

4,200

900,000

Generation Generation Total (MW)*Total (MW)*

Wind % of Wind % of ElectricityElectricity

Wind Wind (MW)(MW)

22,000

11,600

600

3,100

11,300

7

8

6

30

0.6

* Approximate values

Contrasting Approaches to Accommodating Contrasting Approaches to Accommodating Wind Power in Europe and in the U.S.Wind Power in Europe and in the U.S.

Europe Wind power is environmentally preferred. How can we best accommodate it within the existing power system?

U.S. OK, we’ll accept wind into the existing system, but it will follow our traditional rules and procedures.

A change in mindset is needed in the U.S. It will not come from within the power sector, whose responsibility is reliability, not change. Change, and the incentives to

enable it, must originate in the policy sector.

The Climate Change Threat Is A The Climate Change Threat Is A Major Business OpportunityMajor Business Opportunity

Technologies to reduce CO2 emissions are

needed worldwide

Industries producing them will provide employment and profits

Countries that produce them will enjoy export potential and trade-balance benefits

Countries that do not may miss out on one of the 21st Century’s best business opportunities

Bottom Line on Bottom Line on Wind PowerWind Power

Wind power is a very low carbon, affordable, domestic energy source

It can make a large contribution to the US economy -- 20% of electricity and more

As a responsible society, we need to use it -- and use our ingenuity to resolve the tactical issues it presents