integration cost
DESCRIPTION
Integration Cost. Integration Cost in RPS Calculator. RPS Calculator Valuation Framework. While “Integration Cost” is included in NMV formulation, the Commission stated that the Integration Adder in LCBF is valued at $0/ MWh - PowerPoint PPT PresentationTRANSCRIPT
INTEGRATION COST
Integration Cost in RPS Calculator• While “Integration Cost” is included in
NMV formulation, the Commission stated that the Integration Adder in LCBF is valued at $0/MWh
• Some parties have suggested that a non-zero “Integration Adder” is needed to compare fairly among renewables, but there is little consensus on how it should be calculated or what impacts it should include
• A non-zero “Integration Adder” suggests that other components of NMV do not capture the full costs and benefits of renewables upon the system
RPS Calculator Valuation Framework
Levelized Cost of Energy
Transmission Cost
Capacity Value
Energy Value
Net Resource Cost
Integration Cost*
−
=
−
+
++
*Not currently quantified in RPS Calculator
Defining “Renewable Integration”
• There is no standard definition of “renewable integration”
• Many factors could be included under the scope of the costs of integrating higher penetrations of renewables to the system:– Saturation effects – Addressed in Version 6.0
• Declining ELCC with penetration• Declining dispatch savings with penetration• Curtailment of renewable output due to renewable output shapes
– Flexibility effects – Proposed for Version 6.2• Costs of additional ancillary services needs• Costs of increased plant cycling and ramping• Curtailment of renewable output due to lack of power system flexibility• Cost of procuring new flexible capacity resources
SATURATION EFFECTS
Declining Capacity Value Saturation Effect: as the penetration of a resource grows, the “net peak” shifts away from
the time that it produces, reducing its marginal impact on reliability
Treatment in RPS Calculator: capacity value of new resources is calculated based on Effective Load Carrying Capability (ELCC), which accounts for the reliability impact of the existing portfolio
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10
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60
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Load
(GW
)
Hour
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0 6 12 18
Peak
Loa
d Re
ducti
on (G
W)
Installed Solar PV Capacity (GW)
Declining Energy Value Saturation Effect: as the penetration of a resource grows, renewable generation will
displace conventional generation from increasingly efficient, low cost resources
Treatment in RPS Calculator: reduction in system operating costs for each increment of renewables calculated by comparing net load with a “stack” of gas generators
CAISO market prices increase
with the amount of load served by gas
generation & imports
Data Source: CAISO OASIS & Daily Renewables Watch, 2010-2013
Increasing Overgeneration Saturation Effect: as the penetration of a resource grows, curtailment of renewables occurs
when total must-run production exceeds load plus export capability. This could occur even if generators were highly flexible.
Treatment in RPS Calculator: marginal curtailment for each renewable resource type approximated by comparing net load in each month-hour with an assumed minimum level of thermal generation, assuming no ramping or start constraints.
33% RPS 40% RPS 50% RPS
Saturation Effects in RPS Calculator
• Version 6.0 accounts for the major impacts of saturation on resource value– Declining energy value, declining capacity value, overgeneration
• The marginal value of each resource type decreases as more is added to portfolio– Declining returns with scale encourages portfolio diversity
• Additional functionality to account for impacts such as flexibility needs is planned for Version 6.1.
Impact of Saturation on Value (33%)
$0
$20
$40
$60
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$100
$120
PPA Price CapacityValue
OperationalValue
CurtailmentCost
Net Cost
$/M
Wh
Solar
$0
$20
$40
$60
$80
$100
$120
PPA Price CapacityValue
OperationalValue
CurtailmentCost
Net Cost
$/M
Wh
Wind
$0
$20
$40
$60
$80
$100
$120
PPA Price CapacityValue
OperationalValue
CurtailmentCost
Net Cost
$/M
Wh
Baseload
$0
$20
$40
$60
$80
$100
$120
PPA Price CapacityValue
OperationalValue
CurtailmentCost
Net Cost
$/M
Wh
Solar
$0
$20
$40
$60
$80
$100
$120
PPA Price CapacityValue
OperationalValue
CurtailmentCost
Net Cost
$/M
Wh
Wind
$0
$20
$40
$60
$80
$100
$120
PPA Price CapacityValue
OperationalValue
CurtailmentCost
Net Cost
$/M
Wh
Baseload
Marginal Resource Cost at 0% RPS(shown as a reference)
Marginal Resource Cost at 33% RPS• 40% solar• 40% wind• 20% baseload
Figures are illustrative of
model functionality –
not an RPS Calculator result
Capacity and operational
values decline slightly at 33%
$0
$20
$40
$60
$80
$100
$120
PPA Price CapacityValue
OperationalValue
CurtailmentCost
Net Cost
$/M
Wh
Solar
$0
$20
$40
$60
$80
$100
$120
PPA Price CapacityValue
OperationalValue
CurtailmentCost
Net Cost
$/M
Wh
Wind
$0
$20
$40
$60
$80
$100
$120
PPA Price CapacityValue
OperationalValue
CurtailmentCost
Net Cost
$/M
Wh
Baseload
Impact of Saturation on Value (40%)
$0
$20
$40
$60
$80
$100
$120
PPA Price CapacityValue
OperationalValue
CurtailmentCost
Net Cost
$/M
Wh
Solar
$0
$20
$40
$60
$80
$100
$120
PPA Price CapacityValue
OperationalValue
CurtailmentCost
Net Cost
$/M
Wh
Wind
$0
$20
$40
$60
$80
$100
$120
PPA Price CapacityValue
OperationalValue
CurtailmentCost
Net Cost
$/M
Wh
Baseload
Marginal Resource Cost at 0% RPS(shown as a reference)
Marginal Resource Cost at 40% RPS• 40% solar• 40% wind• 20% baseload
Rate at which operational
value declines increases
Figures are illustrative of
model functionality –
not an RPS Calculator result
Need to curtail renewables
imposes additional cost
$0
$20
$40
$60
$80
$100
$120
PPA Price CapacityValue
OperationalValue
CurtailmentCost
Net Cost
$/M
Wh
Solar
$0
$20
$40
$60
$80
$100
$120
PPA Price CapacityValue
OperationalValue
CurtailmentCost
Net Cost
$/M
Wh
Wind
$0
$20
$40
$60
$80
$100
$120
PPA Price CapacityValue
OperationalValue
CurtailmentCost
Net Cost
$/M
Wh
Baseload
Impact of Saturation on Value (50%)
$0
$20
$40
$60
$80
$100
$120
PPA Price CapacityValue
OperationalValue
CurtailmentCost
Net Cost
$/M
Wh
Solar
$0
$20
$40
$60
$80
$100
$120
PPA Price CapacityValue
OperationalValue
CurtailmentCost
Net Cost
$/M
Wh
Wind
$0
$20
$40
$60
$80
$100
$120
PPA Price CapacityValue
OperationalValue
CurtailmentCost
Net Cost
$/M
Wh
Baseload
Marginal Resource Cost at 0% RPS(shown as a reference)
Marginal Resource Cost at 50% RPS• 40% solar• 40% wind• 20% baseload
Figures are illustrative of
model functionality –
not an RPS Calculator result
Declines in operational
value continue
Costs of curtailment becomes
significant
FLEXIBILITY EFFECTS
Flexibility Effects in RPS Calculator
• Additional costs due to power system flexibility needs are proposed for Version 6.2 of the RPS Calculator– Costs of procuring additional ancillary services during system operations– Costs of increased plant cycling and ramping– Curtailment of renewable output due to lack of power system flexibility– Cost of procuring new flexible capacity resources
• These costs would be appropriate to include in an “integration adder”
Potential MethodologiesCost Category Potential Methodology
Costs of procuring additional ancillary services
• Statistical analysis of net load variation within operating hour to determine regulation and load following needs at various penetration levels
• Conventional production simulation analysis to estimate cost of procuring additional services
Costs of increased plant cycling and ramping
• Production simulation analysis to estimate cycling and ramping frequency at various penetration levels
• Literature review of effect on O&M costs & lifetime
Curtailment of renewable output due to lack of power system flexibility
• Stochastic production simulation analysis at various penetration levels to estimate the quantity of curtailment for a given fleet of dispatchable resources
Cost of procuring new flexible capacity resources
• Stochastic production simulation to evaluate cost-effectiveness of new flexible capacity resources relative to “default” curtailment solution