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Advanced wind power technology. Wind power in electricity markets Santeri Oksanen Jaakko Jääskeläinen. Electric system Electricity markets Wind energy in the electricity market Subsidies Increasing wind Market adaption Capacity mechanism Demand side management.
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Advanced windpowertechnology Windpower in electricitymarkets Santeri Oksanen Jaakko Jääskeläinen
Electric system • Electricitymarkets • Windenergy in the electricitymarket • Subsidies • Increasingwind • Market adaption • Capacitymechanism • Demand side management Structure of the presentation
Production ≠ consumption • No storage in system impossible • As rotation, bothendsrotatesamespeed • Alternatingcurrent 50 Hz • Small imbalance Fluctuation in frequency • Largeimbalance System shutsdown Electric system
Demand and supplycurves for eachhour • Forms the equilibriumprice • However, at deliveryforecasts 12 … 36 hoursold • Difficult for wind SPOT market
Elbas • Continuoustrade Essential for wind • Closes 1 hourprior to the delivery • Pricefluctuationincreasescloser to delivery • As forecastsgetmoreexact • Ability to settleimbalances on market • Regulation • TSOsbalanceduringdeliveryhour • Pricefluctuationfurtherincreased Elbasmarket + regulation
Stubborn and moodynature • Difficult to predict the productionaccurately • Windenergyrequiresflexible and adaptingelectricitymarkets Windenergy in the electricitymarkets
Intermittentnature • Producesenergyinstead of capacity • Each MW of windenergyrequiresanother MW of backuppower • Increasesfluctuation of the electricityprice • Non-existentshorttermmarginalcosts in production • Lowers the averageprice of electricity for about 2 €/MWh for each 10 TWh produced, whendemand and otherproductionformsstayuntouched Windenergy in the electricitymarkets
Windenergy is subsidised to enhanceitsmarketpenetration • Feed-intariff in Finland and Denmark • Finland has a marketbasedfeed-intariff based on the quarterlyaverage of the spotprice (fixed 105,3 € for the first 3 years and 83,5 € afterthat) • Subsidisingleads to a higherwindcapacity, whichagainpushes the spotpricesdown Increasedneed for subsidies Subsidies
Windenergyhasnon-existentshorttermmarginalcosts in production + SPOT price is the shorttermmarginalcost of the mostexpensiveproductionmethod = Supplyingallelectricitydemandwithwindenergy in Nordpoolleads to a nearorsubzeroelectricityprice bad business Increasingwindenergyin the electricitymarkets
Addingwindenergy in the marketsreduces the capacityfactor of traditionalpowerplants (condensingcoalplants in Finland), butdoesnotreplacethem Traditionalpowerplantsneed to allocate the investmentcosts to fewerrunninghourswithlowerelectricityprices The plantslosetheirfeasibilitybutarestillessential for the stability of the grid bad business Increasingwindenergyin the electricitymarkets
Goal: 50 % windby 2020 • Example with 2011 data: Wind * 2 • Peak consumption 6 GW • Residualconsumption • Consumption - windproduction • Hugevariation: -4000 … 5700 MW • Present: -650 … 5800 MW • Addingfurther 4 GW windreducespeakresidualconsumptionbyonly 100 MW Increasingwind: Case Denmark
Hugeamounts of intermittentenergy in the grid is possible to manage, butitrequireseffort, designing and adaptation • Fewpossiblesolutions: • Storingelectricity • Largerelectricitymarkets • Capacitymechanisms • Demand side management Market adaptationmethods
The ability to storeelectricitylongerperiodscosteffectivelywouldsolve the problems of intermittency • Sadly, the silverbullet of electricitystorage is stillunderconstruction • Sofar the mostfeasiblemethod is pumpedhydropower • Potentialsolution is fuelproductionwithelectricity, e.g. electrolysis and methanisation Storingelectricity
The larger the electricitymarketsare, the moreunlikeit is thatit’swindyeverywhereornowhere • E.g. Denmarkssurpluswindproductioncanbeused in otherNordiccountries • Wide marketintegrationrequiresdevelopment and investments to the electricitynetworkinfrastructure Largerelectricitymarkets
Somecountrieshavedividedorplan on dividing the traditionalenergy-onlymarket to separateenergy and capacitymarkets Capacitymechanism Source: Fortum
In somecases the need for capacitymechanismderivesfromreducedfeasibility of the necessarytraditionalpowerplants • Trend: • 2000 Market basedelectricitymarket • 2010 Stronglysubsidisedintermittentrenewableenergyproduction • 2020 Traditionalpowerproductionsubsidisedwithcapacitymechanisms allelectricityproductionsubsidised? Capacitymechanism
Possible to adjustdemand to matchvariableproduction • Systems with builtinstorage • Freezers, watertreatmentplants etc. • Onlyshorttermadjustment • Haspushedpeakpricedown on capacitymarkets in US Demand side management
Windenergycapacity is on a steepupwardslopingtrendeventhoughitstillhasitschallenges • The currentelectricitymarketisn’tdesigned for vastshares of intermittentenergywith no marginalcosts • Increasingwindcapacitygrows the volatility of the electricitypricebutreduces the averageprice • Hugewindcapacity is possible to handle, butitrequiresmarketadaptation Conclusion