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Rafael Cossent E. Lobato, L. Olmos, T. Gómez, F.M. Andersen, P.E. Grohnheit,

I NSTITUTO DE I NVESTIGACIÓN T ECNOLÓGICA. Barriers in the Implementation of Response Options Aimed at Mitigating Unpredictability and Variability of Wind Energy. Rafael Cossent E. Lobato, L. Olmos, T. Gómez, F.M. Andersen, P.E. Grohnheit,

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Rafael Cossent E. Lobato, L. Olmos, T. Gómez, F.M. Andersen, P.E. Grohnheit,

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  1. INSTITUTO DE INVESTIGACIÓN TECNOLÓGICA Barriers in the Implementation of Response Options Aimed at Mitigating Unpredictability and Variability of Wind Energy Rafael Cossent E. Lobato, L. Olmos, T. Gómez, F.M. Andersen, P.E. Grohnheit, P. Mancarella, D. Pudjianto, G. Strbac, A. van der Welle, F. van Oostvoorn European Wind Energy Conference Marseille, 18 March 2009

  2. Contents • Introduction • Response options to mitigate variability and unpredictability • Methodology • Barriers to the implementation of response options • Conclusions

  3. Introduction • Respond Project: Integration of intermittent DG/RES • Actions: • Response options: Mitigate variability and unpredictability • Barriers to the implementation of response options • Alternative regulatory framework and roadmap • Segments identified • Generation: Conventional and DG/RES • Demand of electricity • Markets: energy and AS; national and regional • Networks: Transmission and distribution

  4. Response options • Response options were analyzed for all segments • Prioritized based on: availability/feasibility, economic viability, potential, interaction with other options • More relevant: • Interconnection capacity • Demand response • Dispersion of intermittent generation among countries • Cheap storage technologies • Flexible generation mix • Real time information on intermittent generation by TSOs • Control systems including intermittent generation by TSOs • Distribution ANM, including DG and demand response

  5. Methodology • Questionnaires • Filled in by Respond partners. Consultation with national stakeholders (regulators, TSOs, DSOs, generators, associations) • Five countries: UK, Germany (D), Netherlands (NL), Denmark (DK) and Spain (SP) • Questions about: • Current situation. Is it in line with EU recommendations? • Barriers to increase the penetration of RES/DG • Specific proposals to remove barriers and comply with EU recommendations

  6. Barriers: RES/CHP generation • Efficient pricing mechanism of energy and AS • No location based charges/incentives for RES/CHP (SP, UK, NL) • No AS participation for FIT based RES/CHP (SP) • No compensation for load/frequency support for RES/CHP (NL, SP) • Support schemes that achieve diversification of the mix • No ToU based FIT for RES/CHP (SP, D) • No ToU based TGC for RES/CHP (UK) • Badly designed support mechanisms (SP, DK, D) • Improvement of capabilities of this generation • Technological barriers (regulation capabilities of units, etc.)

  7. Barriers: Conventional generation I/II • Incentives to provide reserves and balancing energy • Low market prices and complex criteria for regulation reserve provision by conventional generation (D) • No remuneration for primary regulation service (SP, UK) • Mechanisms to provide firmness in critical periods • No capacity payments to overcome market failures for firm capacity provision (D, UK, DK) • Use of economic incentives to install new generation capacity • Installation of non-efficient conventional capacity (D) • Extra payments outside the market to achieve the installation new capacity are not allowed (NL, UK)

  8. Barriers: Conventional generation II/II • Incentives to install new generation capacity • Installation of non-efficient conventional capacity (D) • Extra payments outside the market to achieve the installation new capacity are not allowed (NL, UK) • Wrong capacity payment incentives (SP) • Electric resistance heating banned (DK)

  9. Barriers: Demand I/II • Use of variable market prices and efficient pricing rules • Electricity price regulation is not efficient (night tariff, etc) (SP) • High excise tax for households (DK) • Variations in wholesale prices and AS cost transferred as mark-up to annual prices (All) • Deployment of metering and communication technology • Limited roll out of hourly meters (DK, D, NL ,UK, SP) • Lack of standardization of functionality, etc (D, NL) • Consumer acceptance of variable prices • Limited consumer response to variable prices (All) • Risk aversion by consumers. Want fixed tariff (All)

  10. Barriers: Demand II/II • Use of heat or electricity storage • Limited heat or electricity storage in consumer facilities (SP, D) • Electric heating replaced by others (in some cases by more efficient forms of storage, like in DK) • District heating has low acceptance (UK) • Efficient management of system security in the short run • No specific market for AS (DK) • Few industries suitable for interruptible contracts (DK) • Lack of technology for interruptible contracts and for participation in AS of small consumers (All)

  11. Barriers: National energy and AS markets I/II • Allowing market access to RES/DG • Lack of commercial aggregators for micro-CHP and heat pumps (All) • Curtailing RES/DG is regarded an option (SP, UK) • RES curtailed to provide negative reserve (D) • High transaction costs in markets (NL, DK) • Prediction of energy production • RES is not held responsible for deviations (D)

  12. Barriers: National energy and AS markets II/II • Use of gate closures that closer to real time • Division of responsibilities between the TSO and MO does not allow merging markets (SP) • Amount of time required for security studies (NL, SP though the time its takes is short) • Low liquidity of intraday markets (D)

  13. Barriers: Regional markets • Increase of interconnection capacity • Concerns about the impact of new lines on the environment (SP, UK) • Inefficient allocation of the cost of these lines (SP, UK) • Benefits of lines are widespread (SP, UK, NL) • Complexity of the process aimed at obtaining permits (SP, UK, D) • Lack of harmonization of national market rules (DK) • Coordination of the operation of national markets in a region • Inefficient allocation of capacity in the short and the long terms (lack of harmonization of rules) • Short term: Sp-F, D; long term: all

  14. Barriers: Transmission networks I/II • Locationally and temporally differentiated network charges • Volatility of charges (NL) • Perceived as unfair discrimination between agents (NL, D) • DG/RES production incentives render locational signals useless (SP) • Resulting increase in complexity of network regulation (UK) • Building new grid reinforcements • Impact of lines on health and the environment (NL, SP, D, DK) • Lack of efficiency of the allocation of the cost of new lines (UK) • Lack of efficiency of the use of transmission capacity (UK) • Disputable profitability of proposed new reinforcements (UK)

  15. Barriers: Transmission networks II/II • Implementation of efficient congestion management methods • Lack of compatibility of proposed schemes with national regulation (SP, NL) • Incentives from nodal/zonal prices to exercise MP (All) • Complexity of the resulting market clearing process (SP, NL)

  16. Barriers: Distribution networks I/II • Shallow connection charges + locationally and temporally differentiated UoS charges • Incompatibility with national regulation (NL) • Volatility of charges (NL) • Implementation of incentives to the DSO for ANM • Difficulty of computing the level of incentives in efficiency driven remuneration schemes (UK) • Difficulty of computing the effect of RES/DG on quality of service and losses (NL) • Lack of incentives for the DSOs to develop the required technology (NL, SP, D)

  17. Barriers: Distribution networks II/II • Incentives for DSOs to consider DG in network planning • Difficulty of computing allowed capex revenues and X factor considering DG (SP, NL) • Incompatibility between support schemes and controllability of DG/RES (SP, NL) • Provision of DSO AS by DG • Lack of market liquidity of AS markets (price not reliable) (UK, D) • Lack of incentives for DG to provide AS (UK, NL, SP) • Difficulty of changing network operation paradigm (All)

  18. Conclusions • Important barriers exist in every segment of the electricity system • Either in several countries or in a specific country • The Respond Project will further address: • Regulatory framework to implement response options (and overcome barriers) • Roadmap to progressively implement this framework

  19. For further information visit:http://www.respond-project.eu/ Alberto Aguilera 23, E-28015 Madrid - Tel: +34 91 542 2800 - Fax: +34 91 542 3176 - http://www.iit.upcomillas.es

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