status of power system transformation policy, market and ... · increasing variability: flexible...

IEA 2019. All rights reserved.

Status of Power System Transformation – Policy, market and regulatory frameworks to support power system flexibility

Zoe Hungerford, Energy Analyst, IEA

New Delhi, 05 September 2019

IEA


Key transition challenges in different phases of integration

Key challenges in each phase that should be addressed for moving up to higher phases of

variable renewable energy (wind and solar) integration

1 Phase 1. VRE has no noticeable impact at the all-system level.

Phase 6. Seasonal or inter-annual

surplus or deficit of VRE supply6

Need for seasonal storage and use

of synthetic fuels or hydrogen

Phase 5. Growing amounts of VRE surplus

(days to weeks)5

Coping with longer periods of

surplus or deficit of energy

Phase 4. The system experiences periods where VRE

makes up almost all generation4

Ensuring robust power supply

during periods of high VRE

generation

Phase 3. VRE generation determines the operation pattern of the

system 3

Accommodating greater variability

of net load and changes in power

flow patterns on the grids

2 Phase 2. VRE has a minor to moderate impact on system operation

Minor changes to operating

patterns of the existing

system

Key transition

challenges

Source: World Energy Outlook 2018

Key

characteristics

of variable

renewable

energy

integration

phases


Globally most regions remain in phases 1 or 2. India’s rapid energy transition already places some states in phases 2 or 3, while global examples of regions in phases 3 and 4 demonstrate a diversity of measures that can accelerate VRE integration.

System integration: different phases

% V

RE o

f an

nu

al ele

ctri

city

gen

era

tio

n

0%

10%

20%

30%

40%

50%

60%

70%

Phase 1 - No relevant impact on system Phase 2 - Minor to moderate impact on system operation

Phase 3 - VRE determines the operation pattern of the system Phase 4 - VRE makes up almost all generation in some periods

Phase 5 - growing amounts of VRE surplus Phase 6 - seasonal or inter-annual surplus or deficit of VRE supply


Some states in India are already seeing renewables integration phase 3, where VRE generation determines the operation of the system, and can be expected to enter higher phases in the coming years. Flexibility options are key to managing

increasing variability: flexible power plant operation, transmission, demand side response and energy storage.

System integration: different states in India are in different VRE phases

Tamil Nadu

Gujarat

Andhra Pradesh

Karnataka

Rajasthan

Maharashtra

Madhya Pradesh

TelanganaPunjab

Kerala

0%

10%

20%

30%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

VR

E s

ha

re o

f e

ne

rgy

ge

ne

rate

d (

full

20

18

)

VRE share of installed capacity (March 2019)

VRE shares in generation and capacity, with bubble size based on total generation

Phase 3

Phase 2

Phase 1


Flexibility options for VRE integration

Flexibility resources can mitigate the challenges from VRE integration in different phases and

allow the system to integrate more VRE


Very high shares of wind & solar PV require reforms to attract investment at unprecedented level in

grids & interconnections, flexible power plants, affordable storage & demand-side response

Flexibility is the cornerstone of tomorrow’s power systems

All sources of flexibility

needed

6

5

2

1

Mobilise existing power system

flexibility

4

3

Targeted investment in

flexibility needed

Phases of integration with variable renewables share, 2017

Integration phase

Wind and solar PV share of generation

0% 10% 20% 30% 40% 50% 60% 70% 90%80%

India

China

United States

European Union

United Kingdom

Germany


Denmark

Canada


Very high shares of wind & solar PV require reforms to attract investment at unprecedented level in

grids & interconnections, flexible power plants, affordable storage & demand-side response

Flexibility is the cornerstone of tomorrow’s power systems

All sources of flexibility

needed

6

5

2

1

Mobilise existing power system

flexibility

4

3

Targeted investment in

flexibility needed


Integration phase

Wind and solar PV share of generation

0% 10% 20% 30% 40% 50% 60% 70% 90%80%

IndiaChina

United States

European Union

Germany

United Kingdom


Denmark

Canada


India – Production cost modelling to assess flexibility requirements

• Modelling of India’s future power

system to assess system flexibility

requirements

- Four main flexibility resources: Power

plants, Grids, DSR, Storage

- Detailed transmission elements and flow

limits,

• The system uses more of its overall

flexibility potential during times of

high ramping requirements

• Generation remains the largest source

of short-term flexibility

- Also contribution from DSR, storage and

grid

Source: World Energy Outlook 2018, https://www.iea.org/weo2018/

https://www.iea.org/weo2018/


The institutional context defines the set of instruments available to boost power system flexibility.

Enabling new services and roles may also require rethinking the institutional framework.

Identifying and engaging with the right actor at each level is key

Policy, market and regulatory frameworks (“How”)

Hardware and infrastructure (“What”)

Institutions and actors (“Who”)

Typical decision makers Categories of interventions Asset types

Energy strategies

Legal frameworks

Policies and programmes

Regulatory frameworks and decisions

Power sector planning exercises

Retail electricity pricing

Power market rules and codes

System operation protocols

Connection codes

Energy ministry

Regulatory agency

System operator, electric utility, standards body

Power plants Electricity networks

Energy storage Distributed energy

resources

Policy, market and regulatory

frameworks (“How”)

Hardware and infrastructure

(“What”)Institutions and actors (“Who”)

Energy ministry

Regulatory agency

System operator, electric

utility, standards body


Redefining grid codes, ancillary service prequalification requirements and remuneration schemes are needed to tap into the flexibility potential from VRE. This strongly depends on the institutional framework.

All power system assets can provide flexibility, including VRE

• Appropriate policy, market and regulatory frameworks can enable participation from

a broad range of power system assets.

- Example: Tampa Electric Company (USA) study on system integration of PV

0%

5%

10%

15%

20%

25%

0% 5% 10% 15% 20% 25% 30%An

nu

al P

rod

uct

ion

Co

st S

avin

gs

(%)

Solar Penetration Potential (%)

Full Flexibility Downward Dispatch Curtailable Must Take

Flexibility sources: power plants


Enhanced trade across regions can bring substantial cost savings and emission reductions

by sharing flexibility resources more widely.

Electricity networks remain a critical enabler of system flexibility

• Inter-regional and international coordination can yield significant economic benefits

- Example: IEA China Power System Transformation study (NPS scenario, 2035)

Potential for annual 36 bn USD system cost reduction (9%) with economic dispatch

0

5

10

15

20

25

30

35

40

45

Existing trade Flexible interregional

trade

USD

/MW

h

Fuel cost Other O&M cost Carbon cost CO2 emissions

Costs

3 750

4 000

4 250

4 500

Existing trade Flexible interregional

trade

Mt

CO2 emissions

Flexibility sources: grids


Solar parks in India remove connection risk, helping to eliminate delays and reduce costs. Hybrid projects incorporating wind or storage with PV systems to reduce variability and improve flexibility are also encouraged.

Coordinated grid and RE planning in solar parks in India has contributed to the 100 GW solar target

0.08

0.06 0.060.07

0.06

0.04 0.040.03 0.03

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

0.09

May 2015 Nov 2015 Dec 2015 Dec 2015 Jan 2016 Feb 2017 Apr 2017 May 2017 May 2017

AP AP AP AP RJ MP AP RJ RJ

Weig

hte

d A

vera

ge T

ari

ff in

EU

R/k

Wh

Flexibility sources: grids

Note: AP = Andra Pradesh, RJ = Rajasthan, MP = Madhya Pradesh; each tariff refers to a different project


Prequalification requirements and the design of flexibility services are key to enable battery storage in flexibility services. Benefit stacking can increase financial viability but requires further regulatory review.

Batteries are becoming a cost-competitive flexibility provider

• Changes to connection codes and market rules enable participation by energy storage resources.

• Regulatory innovation is needed to unlock multiple benefit streams for storage resources in a system-effective manner.

• Example: Hornsdale Power Reserve participates in regulation, contingency reserve and energy markets in South Australia

FCAS: Frequency control ancillary services

Flexibility sources: energy storage


Modelling example – Potential role of thermal storage in India

• Potential solar PV curtailment due to expected high capacity in 2050

• Cooling demand is also expected to grow substantially

- Peaking in the evening when solar PV is no longer available

• Thermal storage could take advantage of surplus solar output to alleviate the strain of peak

cooling demand on the electricity system in the evenings

0

200

400

600

800

1 000

0h 6h 12h 18h 0h 6h 12h 18h

GW

ele

ctric

ity g

ener

atio

n

With thermal energy storage

0

200

400

600

800

1 000

0h 6h 12h 18h 0h 6h 12h 18h

Without thermal energy storage

Thermal power Other renewables Solar PV

Excess solar to pumped hydro Excess solar to thermal storage Demand met by thermal storage

Space cooling demand

Solar curtailment

Solar to storage


0

200

400

600

800

1 000

0h 6h 12h 18h 0h 6h 12h 18h

GW

ele

ctric

ity g

ener

atio

n


0

200

400

600

800

1 000

0h 6h 12h 18h 0h 6h 12h 18h


Thermal power Other renewables Solar PV

Excess solar to pumped hydro Excess solar to thermal storage Demand met by thermal storage

Space cooling demand

Solar curtailment

Solar to storage


Flexibility sources: energy storage

Source: The Future of Cooling, https://www.iea.org/futureofcooling/

https://www.iea.org/futureofcooling/


A new Clean Energy Ministerial horizontal accelerator focused on sector coupling will be considered in

2019 to broaden understanding and share experiences of this trend.

Sector Coupling addresses wider energy system decarbonisation

• Sector coupling efforts have the potential to enroll new flexible loads at scale to enhance power system flexibility.

• As all energy sectors are impacted there is a need for coordination of economic policies beyond the power system.

• For example hydrogen or ammonia can be produced using renewable electricity and used as fuels or directly (ammonia)

• Interlinkage of taxes and tariffs between various sectors of electricity, fuels, gas and bioenergy should not become barriers for wider system decarbonisation


Campaign brings together a broad spectrum of actors and experiences from across the globe

The Power System Flexibility (PSF) Campaign Network


Work on the campaign has been key to elevate innovative technical solutions to high-level policy

discussions

More than 2 years of continuous work on power plant and system flexibility

Focus on thermal power plant

flexibility for VRE integration

Focus on VRE, grids, demand response

and storage for system flexibility

Focus on digitalisation, market

design and sector coupling

Advanced

Power

Plant

Flexibility

Power

System

Flexibility

CEM 8 CEM 9 CEM 10


Status of Power System Transformation 2019

Focus on: Power System Flexibility

Co-authored by:

Available at:

https://webstore.iea.org/status-of-power-

system-transformation-2019

https://webstore.iea.org/status-of-power-system-transformation-2019


Conclusions and the way forward (1)

• With countries continuing to move to higher shares of VRE, policy maker engagement

with actors across the power system is a priority to unlock latent flexibility potential

and de-risk investments.

• The cooperation between India and the IEA is the strongest it has ever been. India

became an Association Country of the IEA in 2017. Some examples of the IEA’s work

programme in India are:

- Undertaking an In-Depth Review (IDR) of India’s energy policies with NITI Aayog and all

relevant Indian energy and environment ministries to be published in early 2020.

- Working with the Ministry of Petroleum & Natural Gas on oil stocks and emergency situations

in the oil market. And we have a number of current and future planned projects with the

Ministry of Power, and Ministry of Environment, Forest and Climate Change.

- Harmonising the Indian data system with NITI Aayog and 16 different data agencies in India

and making it compatible with the rest of the world.

- Working with the Bureau of Energy Efficiency on the priority area of energy efficiency

including cooling, electric vehicles, and energy efficiency in buildings.


Conclusions and the way forward (2)

• The IEA system integration team is looking forward to co-organising state level

workshops with NITI Aayog and other collaborators including state level

stakeholders and TERI and CER, in 2019 and 2020

- Aim to deepen understanding of renewable integration challenges currently

experienced at the state level

- Work together with states towards a future roadmap for successful integration of high

shares of renewables

• Please come and meet us if interested!

Edwin Haesen

Head of Unit,

System Integration of Renewables

Zoe Hungerford

Energy Analyst,

System Integration of Renewables

[email protected]

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