technical, economic and environmental benefits of...

Microgrids Workshop - Paris, January 2010

Christine Schwaegerl

© Siemens AG 2009

. All rights reserved.

Technical, Economic and Environmental

Benefits of Microgrids Operation

Paris, January 29


© Siemens AG 2009. All rights reserved.

Agenda

• Definition and Clarification of Microgrid Concept

→ What is a Microgrid?

How is it different from concepts like VPP?

• Justification of Microgrid Deployment

→ Why is Microgrid needed?

What kind of benefits can it offer?

• Market and Regulatory Settings for Microgrids

→ How can a Microgrid become profitable?

Who owns/operates it?

• Control Elements and Control Methods of a Microgrid

→ How is a Microgrid operated? Is islanding preferable?

• Setup of European Microgrid Study Framework

• Methodology for Simulation and Analysis

• Summary of Evaluation Results

→ What are the quantified benefits of Microgrids?



Pecularities of

Microgrids


What is a Microgrid?

Microgrid on Different Scales

Microgrid

Controller

Carbon Credit

Electricity

Microgrid

Controller

Micro-

SourceDSM

Load

Carbon Credit

Electricity

Building-Level

Microgrid

Grid-Level

Microgrid

Feeder-Level Microgrid


Summary of Microgrid Stakeholders


Why Microgrids? Microgrid as an Aggregator of

Both Supply- and Demand-Side Players

Local Balancer

Back-feederMicro

Sources

Wholesale

Market

LoadDSM

Storage

Wholesale

Market

Microgrid OperatorSupply Side Demand Side

Aggregator and Control Centre

that optimises outputs of multiple units

Competitive Retailer that could provide

lower tariff and better carbon footprints

Microgrid as

Microgrid integrates supply-side and demand-side players

-> interest allocator to minimise total social cost

summed from all involved entities


Who will develop a Microgrid?

Who will own or operate it?

Investments in a Microgrid can be done in multiple phases by

different interest groups: DSO, energy supplier, end consumer, IPP

(individual power producer) all could take part in the process

The operation right of Microgrid will be mainly decided by the

ownership of Micro-Sources, thus four general conditions could

happen:

DSO owns the MS units (DSO Monopoly)

End consumers own the MS units (Consumer Consortium)

IPP’s own the MS units (Free Market)

Energy supplier owns the MS units (traditional approach)


Typical Microgrid Ownership Models

Local Balancer

Micro-

Generators

Storage

Units

Back-Feeder

DSO

DSM Loads

Passive LoadsWholesale

Market

Microgrid Operator

As cash flow in

financial market

As internalized

financial entry

As cash flow in

service market

As internalized

service entry

Notes

Local Balancer

Micro-

Generators

Storage

Units

Back-Feeder

Local Prosumer Consortium

DSM LoadsDSO

Wholesale

Market

Microgrid Operator

As cash flow in

financial market

As internalized

financial entry

As cash flow in

service market

As internalized

service entry

Notes

Passive

Loads

Free Market

‚Prosumer‘ Consortium

DSO Monopoly

Energy Supplier

Back-FeederLocal

Balancer

Micro-Generators

Storage Units

Wholesale

Market

DSM Loads

Passive Loads

DSO

Microgrid Operator

As cash flow in

financial market

As internalized

financial entry

As cash flow in

service market

As internalized

service entry

NotesLegend


Comparison with VPP Concept

Three main differences between Microgrids and VPP concept :

Size (small vs. anything from small to large)

Locality (local concern vs. traditional power trading strategy)

Demand Interest

(end consumer interest expressed somehow vs. only DSI remuneration)

End

Consumer

Micro-

Source

Microgrid

Operator

7 € 70 kWh

0.1

€/kWh

Energy

Market

0.15 €/kWh

4.5 €

30 kWh

16.5 € 100 kWh

5 €

Profit

0.165

€/kWh

End

Consumer

Micro-

Source

Energy

Retailer

10.5 € 70 kWh

0.1

€/kWh

Energy

Market

0.15 €/kWh

15 €

100 kWh

20 € 100 kWh

5 €

Profit

0.2

€/kWh

VPP

Operator70 kWh

7 €

3.5 €

Profit

Microgrid Business Case Virtual Power Plant Business Case

Microgrid Benefit Over VPP due to Intermediary Reduction



Potential Microgrid

Benefits


Economic

Benefits

Environmental

Benefits

Technical

BenefitsPeak Load

Shaving

Local Market

Value

Voltage

Regulation

Energy

Loss

Reduction

Reliability

Enhacement

Aggregation

Platform Value

Network

Hedging Value

GHG Reduction

Consumer

Micro-

SourceDSO

Microgrid Benefits by Criteria and Recipient

Identification of Microgrid benefits is a

multi-objective and multi-party coordination task


How to identify Microgrid benefits?

Identification of Microgrid benefit is both a problem of Microgrid design (i.e. siting and sizing of micro-sources) and a problem of Microgrid scheduling (i.e. real-time operation). Network planning (design, with impact on reliability) and network operation (scheduling) are no longer decoupled procedures for a Microgrid.

Additional investment in extra control, communication, and metering devices can be at least partially justified by the benefits evaluated from simulated grid operation conditions.

Optimum Microgrid operation is a multi-objective task likely covering one or more of economic, technical and environmental objectives.


Microgrid Operation Strategies

• Economic aspects involve interests of DSO, micro-source (MS) operator, and end customers

• Technical aspects appear mainly asconstraints

• Environmental aspects correspond to green-house gas (GHG) emission from MS

Economy

Environment

NetworkRelia-

bilityLosses

Grid Voltage & Loading,

MS Physical Limits,

Energy Balance (Island)

Outage

Cost

Loss Cost

Emission

Cost

MS Operation

Cost & Revenue

GHG

Emission


• The economic mode assumes MS are

operated with full liberty and bear no

grid or emission obligations.

• Main limitation comes from the physical

constraints of MS.

Economic

Environmental

TechnicalReliabilityPower

Loss

Grid

Voltage &

Loading

MS

Physical

Limits

Energy

Balance

(Island)

Outage

Cost

Loss

Cost

Emission

Cost

MS

Operation

Cost &

Revenue

GHG

Emission

Objective Function

Constraints

Economic Mode of Microgrid Scheduling


• The technical mode assumes DSO has

complete control over MS operation

and does not care for economics.

• Limitations from both MS (power/time)

and grid (voltage/loading) are

considered.

Economic

Environmental


Loss

Grid

Voltage &

Loading

MS

Physical

Limits

Energy

Balance

(Island)

Outage

Cost

Loss

Cost

Emission

Cost

MS

Operation

Cost &

Revenue

GHG

Emission

Objective Function

Constraints

Technical Mode of Microgrid Scheduling


• The environmental mode assumes MS

dispatch is solely determined by

emission

quota.

• Only MS physical limitations (power/on-

off

durations) are considered

Economic

Environmental


Loss

Grid

Voltage &

Loading

MS

Physical

Limits

Energy

Balance

(Island)

Outage

Cost

Loss

Cost

Emission

Cost

MS

Operation

Cost &

Revenue

GHG

Emission

Objective Function

Constraints

Environmental Mode of Microgrid Scheduling


• Combined mode converts technical and

environmental criteria into economic equivalents

• Limitations from both grid and MS are taken

as optimisation constraints

Economic

Environmental


Loss

Grid

Voltage &

Loading

MS

Physical

Limits

Energy

Balance

(Island)

Outage

Cost

Loss

Cost

Emission

Cost

MS

Operation

Cost &

Revenue

GHG

Emission

Objective Function

Constraints

Combined Mode of Microgrid Scheduling

Combined Mode as a multi-objective optimization procedure attempts

to achieve a best available solution that satisfies all economic,

technical and environmental requirements


Impact of Microgrid Control Strategy

Economica Aspect -- Sum Cost (€/MWh)

0

20

40

60

80

100

120

140

Combined Economic Technical Environmental

Environmental Aspect -- Emission Cost (€/MWh)

4,4

4,6

4,8

5

5,2

5,4

5,6

5,8

6

6,2


Technical Aspect -- Energy Loss(kW/hour)

0

1

2

3

4

5

6

7

8


Example Economic, Technical,

and Environmental Benefits

Combined mode as

best compromise


What makes Microgrid scheduling

task unique and difficult?

Intertwined/Conflicting interests from different entities: DSO, DER operator, regulator, consumer etc.New tools have been developed in Microgrids Project!

Different forms of network components (mainly belong to DER) to be monitored and controlled: dispatchable DG, intermittent RES, micro CHP, storage units (electrical and thermal), DSM-capable loads etc.

Complications due to simultaneous application of varied operation objectives and constraints (e.g. time-domain consideration vs multi-unit dimension)


Is local balancing (quasi-islanding) a preferable

option for Microgrids?

Different types of local balancing

Cumulative Annual

Energy Balance

Locally

Supplied

Demand

Energy

Import

Locally

Consumed

MS Energy

Energy

ExportLocally

Supplied

Demand

Energy Import

= 0

Locally

Consumed

MS Energy

Energy Export

= 0

=

==

Instantaneous Hourly

Power Balance

Only Statistically Balanced

Only instantaneous balance requires real time

balancing of load and generation within a Microgrid


Is local balancing (quasi-islanding) a

preferable option for Microgrids?

Three levels of self-sufficiency can be found with a Microgrid:

Level 1: Free Exchange

Power (kW)

Time (h)

Microgrid Load

Demand

Micro-Source Capacity

Locality Level 1: Free Exchange

Micro-Source

Operation Range

Potential Causes:

Free Market Setting

and IPP Owned MS

Pure Economically

Driven Microgrids

Real Time Pricing






Level 2: Strict Generator or Strict Consumer

Power (kW)

Time (h)

Microgrid Load

Demand


Locality Level 2: Strict Consumer

Micro-Source

Operation Range

Potential Causes:

Banned Energy

Export from

Microgrid

Long Term Low to

Medium Import

Price (Real Time)






Level 2: Strict Generator or Strict Consumer

Level 3: Local Balance (minimizes both import and export)

Power (kW)

Time (h)

Microgrid Load

Demand


Locality Level 3: Local Balance

Micro-Source

Operation Range

Potential Causes:

Physical Island

without Grid

Connection

Forced Economic

Island Due to

Prejudiced Prices

Political Goal of

Achieving Zero

Carbon Emission



Setup of the

European Microgrid

Study Framework


European Network Data Collection

Topology Information

GermanyDenmark

Greece

Italy

Portugal,

rural UK

Poland

the Netherlands

Macedonia

Portugal,

urban


National energetical, economical,

and emission data

Percentage of Electricity Production from Different Energy Resources

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

DK DE GR IT NL PL PT UK MK

Other

Pumped

StorageGeothermal

Solar

Biomass

Wind

Hydro

Nuclear

Gas

Oil

Coal

Countrywise Installed Capacity and Annual Electricity Consumption

0

20

40

60

80

100

120

140

DK DE GR IT NL PL PT UK MK

GW

0

100

200

300

400

500

600

700

TWh

GW

TWh

Countrywise Wholesale Electricity Price and GHG Emission Level

0

10

20

30

40

50

60

70

80

90

100

DE DK GR IT MK NL PL PT UK

Euro/MWh

0

100

200

300

400

500

600

700

800

900

kgCO2_eq/MWh

WS price

Emission

Retail Tariff Structure of Examined Countries

0

5

10

15

20

25

30

DE DK GR IT NL PL PT UK MA

€ct/kWh

taxes

grid_meter

wholesale

DK Denmark

DE Germany

GR Greece

DE DK GR IT MA NL PL PT UK

IT Italy

NL Netherlands

PL Poland

PT Portugal

UK United Kingdom

MA Macedonia


Case Study Network Data

Countrywise Power Loss Ratio from LV Distribution Grids

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%


Rural

Urban

Annual Average Load Factors of Tested Grids

0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

DE DK GR IT_R IT_U MK_R MK_U NL PL PT_R PT_S PT_U UK_R UK_U


Stochastic Modelling of RES, CHP, and Electricity Markets


Mapping of European RES Resources

Solar

Potentials

Wind

Potentials


Countrywise Potential Full Load Hours of PV and Wind Turbines

0

500

1000

1500

2000

2500


h/a

PV_FLH

WT_FLH

National differences in potential full load hours of PV and WT

each with a maximum of 50 % performance variation

Stochastic Modelling of RES and CHP Output


Projected MS Generation Costs

A general convergence of generation costs from different MS technologies

has been assumed for the period 2010-2040

2010 Scenario, Forecasted MS Generation Cost

0

5

10

15

20

25

30

35

40

45

50

1 10 100 1000 10000 kW

€ct/kWh

PV

WT

Hydro

Biomass

Microturbine

Fuel Cell

Solar Thermal


0

3

6

9

12

15

18

21

24

27

30

1 10 100 1000 10000kW

€ct/kWh

PV

WT

Hydro

Biomass

Microturbine

Fuel Cell

Solar Thermal


0

2

4

6

8

10

12

14

16

18

1 10 100 1000 10000kW

€ct/kWh

PV

WT

Hydro

Biomass

Microturbine

Fuel Cell

Solar Thermal


0

2

4

6

8

10

12

14

16

18

1 10 100 1000 10000kW

€ct/kWh

PV

WT

Hydro

Biomass

Microturbine

Fuel Cell

Solar Thermal


Typical Microgrid Buildups for 2010, 2020,

2030, and 2040 Scenarios

Penetration levels of different MS technologies in examined Microgrids

grids (per questionnaire data)

2010 Penetration Levels of RES and Heat-Driven CHP Units

0,00%

5,00%

10,00%

15,00%

20,00%

25,00%

30,00%

35,00%

40,00%

DE_U DE_R DK_U DK_R GR_U GR_R IT_U IT_R MA_U MA_R NL_U NL_R PL_U PL_R PT_U PT_R UK_U UK_R

CHP

Hydro

WT

PV


0,00%

10,00%

20,00%

30,00%

40,00%

50,00%

60,00%

70,00%

80,00%


CHP

Hydro

WT

PV


0,00%

20,00%

40,00%

60,00%

80,00%

100,00%

120,00%


CHP

Hydro

WT

PV


0,00%

20,00%

40,00%

60,00%

80,00%

100,00%

120,00%

140,00%

160,00%


CHP

Hydro

WT

PV


RES and CHP

Energy in

Annual Local

Microgrid

Demand

Microgrid

Dissemination

Ratio in

National Grids

Typical Microgrid Buildups for 2010, 2020,

2030, and 2040 Scenarios

Annual RES&CHP Share in Micogrid Local Energy Consumption

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%


2010

2020

2030

2040

Micogrid Dissemination Ratio in National Grid

0%

5%

10%

15%

20%

25%

30%

35%

DE_P DE_O DK_P DK_O GR_P GR_O IT_P IT_O MA_P MA_O NL_P NL_O PL_P PL_O PT_P PT_O UK_P UK_O

2010

2020

2030

2040


Technical Annex 3

Microgrid Scheduling via Genetic Algorithm and Heuristic Search

Hours in Day

DG Unit Serial

as DG off (0) state

as DG on (1) state

as minimum on/off

duration limits of DG



Simulation Results Reliability

Technical, environmental, economic benefits

Social benefits


0

100

200

300

400

500

0 2 4 6 8 10Number of Microsources in Network

Co

sts

(Eu

ro/a

)

Interruption CostInvestment CostTotal Cost

Evaluation of Costs for

Microgrid Reliability Improvement

0

100

200

300

400

500

99,995 99,996 99,997 99,998 99,999 100,000Reliability (%)

Co

sts

(Eu

ro/a

)

Interruption CostInvestment CostTotal Cost

Minimum total reliability cost

when interruption cost and

investment cost arrive at an

optimized reliability index!

Assumption:

DG availability = 100

%


Economic Benefits from Reliability

Improvement under Microgrid operation

-400

-200

0

200

400

600

800

1000

99,995 99,996 99,997 99,998 99,999 100,000

Reliability (%)

Benefi

ts (

Euro

/a)

average outage costsminimum outage costsmaximum outage costs

Economic benefits due to Microgrid operation concerning reliability

strongly increase with increasing customer outage costs;

especially for commercial and industrial customer segments

Assumption:

DG availability = 100 %

€/kW Min

€/kWh

Average

€/kWh

Max

€/kWh

Residential 0 0.5 1.5 5

Agriculture 0.5 2 5 10

Industry 3 5 10 25

Commercial 2 5 10 30

Specific interruption costs of

customer segments


Economic benefits comparison

of European countries concerning reliability

Economic benefit depends on

total demand and system

unavailability, higher economic

benefit is achieved with higher

specific interruption cost

System unavailability in different

countries decreases with

installed DG penetration,

especially when system

availability is low

Optimum DG penetration level

increases with raising interruption

cost

Germ

any

urban

Ger

man

y

urba

n

Hollan

d

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

0 2 4 6 8 10 12

Unavailability Q before DG installation [1/a]

Q a

fter

DG

insta

llaiton [

1/a

]

1000

1500

2000

2500

3000

3500

1600Econom

ic b

enefit

[Euro

/a]

Italy

urban

Portugal

rural

Italy

rural

0 200 400 600 800 1000 1200 1400

PLoad .Q [kW/a]

Average cost model

Maximum cost model

Minimum cost model

Assumed interruption costs

0

500

the

Nether-

lands

Italy

rural

Italy

urban

Portugal

rural

Germany

urban

the Netherlands

Germany urban


Simulation Results to evaluate technical,

environmental and economic benefits

Variety of impacts needs to be considered for benefits evalution

Standard Test Conditions (STC)

1. Real-time and directional (flexible) price setting scheme

2. Mid-level wholesale market price

3. Dispatchable MS and Storage/DSM units available

4. Optimal MS unit allocation

5. Combined operation mode


Standard Test Conditions Results:

Balancing and Energy Results

• Majority of examined Microgrids are able to supply up to 80%-90% of their own needs by 2040;

• Full load hours of dispatchable MS units are closely linked to national electricity price levels;

• Most countries are able to withdraw from RES financial support schemes by 2030 or 2040;

Load Side Self Supply Level under STC

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

DE_U DE_R DK GR_U GR_R IT_U IT_R MA_U MA_R NL PL PT_U PT_R UK_U UK_R

2010

2020

2030

2040

Micro-Source Side Self Supply Level under STC

80%

82%

84%

86%

88%

90%

92%

94%

96%

98%

100%

102%


2010

2020

2030

2040

Average Full Load Hours of Dispatchable MS Units under STC

0

1000

2000

3000

4000

5000

6000

7000

8000

9000


h/a

2010

2020

2030

2040

Average Premium Support Level Needed for Intermittent RES Units

-50

0

50

100

150

200

250

300

350


€/MWh

2010

2020

2030

2040



Technical Benefits

Ideal Annual Energy Loss Reduction Level under STC

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%


2010

2020

2030

2040

Ideal Voltage Variation Mitigation Level under STC

0%

10%

20%

30%

40%

50%

60%

70%

80%


2010

2020

2030

2040

Ideal Peak Loading Reduction Level under STC

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%


2010

2020

2030

2040

• The potentially extractable technical benefits (i.e. optimal MS allocation) from Microgrids seem to

be highest for loss reduction, followed by voltage regulation, and peak load support ranks last.

• This is due to assumed large intermittent RES shares compared to dispatchable MS units.



Environmental Benefits

• A general convergence

of Microgrid GHG

emission level to around

200 kg (CO2 eq)/MWh

by 2040 despite very

different starting points

in 2010

• Countries started with

high emission levels

could expect reduction

credits as high as over

50%, while countries

with lower initial figures

find comparatively

smaller credits by 2040.

Average GHG Emission Level per Microgrid under STC

0

100

200

300

400

500

600

700

800


kgCo2/MWh

2010

2020

2030

2040

STC Microgrid's Emission Saving Credit Compared to National Level

0%

10%

20%

30%

40%

50%

60%


2010

2020

2030

2040



Economic Benefit on Consumer Side

Ideal STC Consumer Benefit (per WMh) due to Retail Competition

0

5

10

15

20

25

30

35

40

45


€/MWh

2010

2020

2030

2040

Maximum Total Consumer Benefit (per WMh) under STC

0

10

20

30

40

50

60


€/MWh

2010

2020

2030

2040

Maximum Total Consumer Benefit (% of Original) under STC

0%

5%

10%

15%

20%

25%

30%

35%

40%


2010

2020

2030

2040

• Load side selectivity benefit level can be seen as extremely sensitive to national electricity prices

• The majority of maximum total consumer benefit results points to a potential cost saving range

from 7% ± 5% in 2010 to 25% ± 10% in 2040 (assuming zero MS profit)

Ideal STC Consumer Benefit (% of Original) due to Retail Competition

0%

5%

10%

15%

20%

25%

30%


2010

2020

2030

2040



Economic Benefit on MS Side

Ideal STC MS Benefit (per WMh) due to Market Selectivity

0

10

20

30

40

50

60

70

80


€/MWh

2010

2020

2030

2040

Maximum Total MS Benefit (per WMh) under STC

0

10

20

30

40

50

60

70

80

90


€/MWh

2010

2020

2030

2040

Maximum Total MS Benefit (% of Original) under STC

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%


2010

2020

2030

2040

• Maximum MS profit is closely linked to retail market price level, which yields high profits at 60-70

€/MWh for high-price countries and much lower results around 20 €/MWh for low-price countries

• Maximum total MS benefit stays largely constant despite scenario variations

Ideal STC MS Benefit (% of Original) due to Market Selectivity

0%

20%

40%

60%

80%

100%

120%


2010

2020

2030

2040


Sensitivity Analysis 1:

Wholesale Market Price Level

Three Wholesale Price Levels Assumed for Microgrid Evaluation

0

10

20

30

40

50

60

70

80

90

100

DE DK GR IT NL PL PT UK MA

€/M

Wh

high

mid

low

Simulation Results to evaluate technical,

environmental and economic benefits


Sensitivity Analysis 2:

Wholesale Market Price Level


Sensitivity Analysis:

Balancing and Energy Results

Changes in Average MS Full Load Hours under +/- 25% Market Price

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%


2010_low

2010_high

2020_low

2020_high

2030_low

2030_high

2040_low

2040_high

Changes in Average MS Full Load Hours under Constant/Uniform Pricing

-120%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%


2010_CP

2010_UP

2020_CP

2020_UP

2030_CP

2030_UP

2040_CP

2040_UP

Changes in RES Premium Support Level under +/- 25% Market Price

-25

-20

-15

-10

-5

0

5

10

15

20

25


€/MWh

2010_low

2010_high

2020_low

2020_high

2030_low

2030_high

2040_low

2040_high

Changes in RES Premium Support Level under Constant/Uniform Pricing

-10

-5

0

5

10

15

20


€/MWh

2010_CP

2010_UP

2020_CP

2020_UP

2030_CP

2030_UP

2040_CP

2040_UP

• Market price reduction always reduces MS full load hours, low-price countries are more sensitive

• Constant pricing could potentially increase MS full load hours but can also lead to zero MS

usage

• Provision of favorable (lower import) prices could potentially reduce MS full load hours


Sensitivity Analysis :

Technical and Environmental Benefits

Changes in Energy Loss Reduction under +/- 25% Market Price

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%


2010_low

2010_high

2020_low

2020_high

2030_low

2030_high

2040_low

2040_high

Changes in Energy Loss Reduction under Constant/Uniform Pricing

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%


2010_CP

2010_UP

2020_CP

2020_UP

2030_CP

2030_UP

2040_CP

2040_UP

Changes in Emission Saving Credit under +/- 25% Market Price

-15%

-10%

-5%

0%

5%

10%


2010_low

2010_high

2020_low

2020_high

2030_low

2030_high

2040_low

2040_high

Changes in Emission Saving Credit under Constant/Uniform Pricing

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%


2010_CP

2010_UP

2020_CP

2020_UP

2030_CP

2030_UP

2040_CP

2040_UP

• Voltage and loading related technical performance criteria are instantaneous in nature and thus

not affected by pricing levels or scheme, loss reduction credit is closely linked to self supply level

• Both pricing level and pricing scheme have small (< ±10%) impacts on emission reduction credit



Economic Benefit on Consumer Side

Changes in Consumer Benefit (Retail Competition) under +/- 25% Market Price

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

120%


2010_low

2010_high

2020_low

2020_high

2030_low

2030_high

2040_low

2040_high

Changes in Consumer Benefit (Retail Competition) under Constant/Uniform Pricing

-180%

-160%

-140%

-120%

-100%

-80%

-60%

-40%

-20%

0%

20%


CP

0

8

16

24

32

40

48

56

64

72

80

UP

2010_CP

2020_CP

2030_CP

2040_CP

2010_UP

2020_UP

2030_UP

2040_UP

Changes in Maximum Total Consumer Benefit under +/- 25% Market Price

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%


2010_low

2010_high

2020_low

2020_high

2030_low

2030_high

2040_low

2040_high

Changes in Maximum Total Consumer Benefit under Constant/Uniform Pricing

-80%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%


CP

0

2

4

6

8

10

12

14

16

18

UP

2010_CP

2020_CP

2030_CP

2040_CP

2010_UP

2020_UP

2030_UP

2040_UP

• Introduction of favorable prices (import and export) could drastically improve selectivity benefit on

consumer side under low-MS scenarios, such effects are much weaker as MS share goes up

• Wholesale price level has a moderate impact (20%-40%) on maximum total consumer benefit



Economic Benefit on MS Side

Changes in Maximum Total MS Benefit under +/- 25% Market Price

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%


2010_low

2010_high

2020_low

2020_high

2030_low

2030_high

2040_low

2040_high

Changes in Maximum Total MS Benefit under Constant/Uniform Pricing

-150%

-100%

-50%

0%

50%

100%

150%


2010_CP

2010_UP

2020_CP

2020_UP

2030_CP

2030_UP

2040_CP

2040_UP

• Wholesale price level has been revealed to hold a moderate impact (20%-60%) on maximum MS

profit margin

• Both constant and favorable pricing schemes undercut maximum MS profit margin at most times

Changes in MS Benefit (Market Selectivity) under +/- 25% Market Price

-60%

-40%

-20%

0%

20%

40%

60%

80%


2010_low

2010_high

2020_low

2020_high

2030_low

2030_high

2040_low

2040_high

Changes in MS Benefit (Market Selectivity) under Constant/Uniform Pricing

-120%

-100%

-80%

-60%

-40%

-20%

0%

20%


2010_CP

2010_UP

2020_CP

2020_UP

2030_CP

2030_UP

2040_CP

2040_UP


Impact on Maximum Economic Benefits

Impact of Microgrid Operation Strategy

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

GR

IT_U

IT_R

MA

_R

NL_U

PL

UK

_R

UK

_U

PT

_U

PT

_S

U

PT

_R

DK

DE

GR

IT_U

IT_R

MA

_R

NL_U

PL

UK

_R

UK

_U

PT

_U

PT

_S

U

PT

_R

DK

DE

GR

IT_U

IT_R

MA

_R

NL_U

PL

UK

_R

UK

_U

PT

_U

PT

_S

U

PT

_R

DK

DE

Ec

on

om

ic b

en

efi

t

Economic

Option

Technical

OptionEnvironmental

Option

GR Greece

IT Italy

MA Macedonia

NL Netherlands

PL Poland

PT Portugal

DK Denmark

DE Germany

_U urban

_R rural


-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

GR

IT_U

IT_R

MA

_R

NL_U

PL

UK

_R

UK

_U

PT

_U

PT

_S

UP

T_R

DK

DE

GR

IT_U

IT_R

MA

_R

NL_U

PL

UK

_R

UK

_U

PT

_U

PT

_S

UP

T_R

DK

DE

GR

IT_U

IT_R

MA

_R

NL_U

PL

UK

_R

UK

_U

PT

_U

PT

_S

UP

T_R

DK

DE

En

erg

y L

os

se

s Economic

Option

Technical

Option

Environmental

Option

Potential Energy Loss Reduction



-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

GR

IT_U

IT_R

MA

_R

NL_U

PL

UK

_R

UK

_U

PT

_U

PT

_S

UP

T_R

DK

DE

GR

IT_U

IT_R

MA

_R

NL_U

PL

UK

_R

UK

_U

PT

_U

PT

_S

UP

T_R

DK

DE

GR

IT_U

IT_R

MA

_R

NL_U

PL

UK

_R

UK

_U

PT

_U

PT

_S

UP

T_R

DK

DE

GH

G R

ed

ucti

on

Economic

OptionTechnical

Option

Environmental

Option

GHG Reduction Credits



European Level Results:

Maximum Total Consumer Benefit

Around 35 ± 25 €/MWh maximum total consumer benefit can be expected at 90%

(load side) self supply level

Maximum Consumer Side Total Economic Benefit by Self Supply Level

0

10

20

30

40

50

60

70

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

€/MWh

DE_U

DE_R

DK

GR_U

GR_R

IT_U

IT_R

MA_U

MA_R

NL

PL

PT_U

PT_R

UK_U

UK_R

EU



Maximum Total MS Benefit

Around 60 ± 30 €/MWh maximum total MS benefit can be expected under all

conditions

Maximum Micro Source Side Total Economic Benefit by Self Supply Level

0

10

20

30

40

50

60

70

80

90

100

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

€/MWh

DE_U

DE_R

DK

GR_U

GR_R

IT_U

IT_R

MA_U

MA_R

NL

PL

PT_U

PT_R

UK_U

UK_R

EU



Maximum Network Loss Reduction Credit

Maximum Network Loss Reduction Credit by Self Supply Level

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

DE_U

DE_R

DK

GR_U

GR_R

IT_U

IT_R

MA_U

MA_R

NL

PL

PT_U

PT_R

UK_U

UK_R

EU

Around 70% ± 20% loss reduction credit can be expected at 90% self supply level

→ Actual value may be much lower under non-ideal MS allocation results



Maximum Voltage Regulation Credit

Around 50% ± 15% voltage regulation credit can be expected at 90% self supply level


Maximum Voltatge Regulation Credit by Self Supply Level

0%

10%

20%

30%

40%

50%

60%

70%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

DE_U

DE_R

DK

GR_U

GR_R

IT_U

IT_R

MA_U

MA_R

NL

PL

PT_U

PT_R

UK_U

UK_R

EU



Maximum Peak Load Reduction Credit

Maximum Peak Load Reduction Credit by Self Supply Level

0%

10%

20%

30%

40%

50%

60%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

DE_U

DE_R

DK

GR_U

GR_R

IT_U

IT_R

MA_U

MA_R

NL

PL

PT_U

PT_R

UK_U

UK_R

EU

Around 40% ± 12% peak reduction credit can be expected at 90% self supply level




Maximum GHG Reduction Credit

Maximum Microgrid GHG Reduction Credit by Self Supply Level

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

DE_U

DE_R

DK

GR_U

GR_R

IT_U

IT_R

MA_U

MA_R

NL

PL

PT_U

PT_R

UK_U

UK_R

EU

Around 55% ± 25% emission reduction credit can be expected at 90% self supply level



Projection of Required RES Support Levels

Red color refers definitive

need of financial support;

Yellow color refers to

marginal condition where

need for external support

is very small;

Green color refers to

complete RES entry into

free market within

Microgrids;

2010

L M H L M H L M H L M H L M H L M H L M H L M H L M H

PV

WT

SHP

CHP

PT UKIT MA NL PLDE DK GR

2020


PV

WT

SHP

CHP

UKDE DK GR IT MA NL PL PT

2030


PV

WT

SHP

CHP

DE DK GR IT MA NL PL PT UK

2040


PV

WT

SHP

CHP

PT UKIT MA NL PLDE DK GR

Most high-price countries will be able to withdraw financial supports for almost all RES

options except for PV by 2030; by 2040 even the PV support can be retracted.


Social benefits of Microgrids

Investigation on general social issues (addressed in the Lisbon Strategy) and

identifying the ways by which Microgrids influence these issues

More job opportunities in research, industry and SMEs

Remote areas electrification

Social cohesion and sustainable regional development

Investigation on social aspects of Microgrids based on the experiences from the test

locations – done with specially developed questionnaire

The companies are interested in further research on Microgirds and further field testing -

more job openings, R&D projects The chances are higher if environmental benefits are

described in a qualitative manner

The awareness of the Microgrids concept at the locations prior the field tests was low –

different events were organized by project partners to increase the awareness

The customers are interested in applying energy efficiency measures and emissions

reductions measures – increased possibility to apply Microgrids concept



Conclusion: how to increase the social benefits of Microgrids?

Social benefits of the Microgrids concept exist,

but it is not always easy to recognize them and value them appropriately.

The low awareness might result in:

Not using the full potential of the concept

Lower public acceptance

Limitation to further development and improvement of the concept


Non favorable attitudes

Bias on

investment

costs

Low awareness of microgrids

social benefits

Non favorable policies

towards DER and RES

Challenge to capture

benefits spread across

various stakeholders

Lack of

access to

relevant

information

Insufficient

attention to

energy use

Failure to

reflect costs

in energy

prices

Unwillingnes

s to accept

change of

daily habits

Biasing of

regulation

towards DER

in general

Cultural

values

Insufficient

recognition to

economic values

generated for

the electricity

systems

Lack of

support for

new

technologies

Ommitting

compensation

for external

effects

Support

measures

which are

not market

oriented

Not using the full potential

of the concept

Lower public acceptance of

the new concept

Stakeholders who

affect the general

acceptance in a

negative manner

Split incentives

ROOTS

PROBLEM

CONSEQUENCESLimitation to further

development and

improvement of the

microgrids concept

More favorable attitudes

Better

investment

opportunities

Better awareness of microgrids

social benefits

Improved policies towards

DER and RES

Captured benefits spread

across various

stakeholders

Open

access to

relevant

information

Raised

attention to

energy use

Reflected

costs in

energy prices

Willingness

to accept

change of

daily habits

Improved

energy

regulation

towards DER

Adding

new

cultural

values

Better

recognition to

economic values

generated for

the electricity

systems

Improved

support for

new

technologies

Provided

Ccompensation

for external

effects

Implement

market

oriented

support

measures

Relaxed relations

between

Stakeholders

through

Avoided split

incentives

Result 3

Result 2

Result 1



General Conclusions

Microgrid is capable of overcoming conflicting interests of different stakeholder

and achieving a global socio-economic optimum in operation of distributed

energy sources, however necessity for proper market, regulatory,

and design settings

Economic, technical, and environmental impacts of a Microgrid are intertwined

together as simultaneous outcomes of DG, storage, and DSM operation

decisions; thus extensive communications are needed among these individual

entities so as to maximize the potential benefits from a Microgrid.

Proper planning of a Microgrid requires knowledge and simulation of its actual

operating conditions; while in the mean time different planning decisions

(especially referring to DG/RES penetration level) will lead to different levels

of potential benefits that the Microgrid could bring about.


Summary of Economic Benefits from Microgrid

A Microgrid could potentially offer (single or multiple from list):

Price reduction for end consumers

Revenue increment for Micro Sources

Investment deferral for Distribution System Operators

Suggestions to achieve expected economic benefits:

Recognition of local (‘over-the-grid’) energy trading within a Microgrid

Application of real-time import and export prices for Microgrids

RES support scheme and favorable tariffs (optional)


Summary of Technical Benefits from Microgrid

A Microgrid could potentially offer:

Energy loss reduction

Mitigation of voltage variation

Peak loading (congestion) relief

Reliability improvement

Technical benefits can be either traded in a local service market between

MS and DSO or implemented as price signals

Needs to achieve expected technical benefits:

Optimum dimensioning and allocation of Micro Sources

Coordinated multi-unit MS dispatch based on real time grid condition


Summary of Environmental and Social Benefits

from Microgrid

Main environmental benefits:

Shift toward renewable or low-emission fuels used by internal MS

Adoption of more energy efficient technologies such as CHP

Main social benefits:

Raise public awareness and foster incentive for energy saving and

GHG emission reduction

Creation of new research and job opportunities

Electrification of remote or underdeveloped areas


Main Findings from WPG

1. Microgrid can be profitable to invest and operate if proper policy and

financial supports are available, given current situation in EU

2. Microgrid offers a local market opportunity for ‘over-the-grid’ energy

trading between Micro Sources and end consumers

3. Microgrid can maximize total system efficiency as it represents the

interests of Micro Sources, end consumers, and local LV grid as a whole

4. Microgrid allows for real time, multi-objective dispatch optimization to

achieve economic, technical, and environmental aims in the same time

5. Microgrid can accommodate different ownership models and provide

end consumer motivation where other concepts fail to do so

6. Microgrid can accelerate commercialization of RES units such as PV


Thank you for your attention !

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