Michael Milligan WECC VGS Operating Workgroup Meeting Dec 2, 2010

1. Operating Reserves and Variable Generation: Research at NREL Michael Milligan WECC VGS Operating Workgroup Meeting Dec 2, 2010 NREL is a national laboratory of the U.S. Department of Energy Office of Energy Efficiency and Renewable Energy operated by the Alliance for Sustainable Energy, LLC

2. Purpose of presentation • Describe NREL’s work on reserves • Discussion of applicability to OWG • NREL is completing a methods review report; may be a springboard to WECC work and all/parts of the report can be incorporated into OWG report as appropriate • Initial paper presented at IEEE General Meeting: “Evolution of Operating Reserve Determination in Wind Power Integration Studies,” Ela, Kirby, Lannoye, Flynn, Milligan, O’Malley, Zavadil • Final lab report expected Feb 2011 • Other?? National Renewable Energy Laboratory Innovation for Our Energy Future

3. Overview of NREL’s work on reserves Lead International Energy Agency Reserves Working Group, Task 25 and recent conference paper Collaboration with MISO and University College Dublin on reserves project; recent IEEE paper Large-scale wind integration studies (EWITS, WWSIS) Ongoing work evaluating alternative BA cooperation approaches and reserve implication in the Western Interconnection Wind-provided regulation R&D&D project National Renewable Energy Laboratory Innovation for Our Energy Future

4. Does VG require a new kind of reserve? National Renewable Energy Laboratory Innovation for Our Energy Future

5. Wind drop-off looks different than a contingency event National Renewable Energy Laboratory Innovation for Our Energy Future National Renewable Energy Laboratory Innovation for Our Energy Future

6. VG influence “operating reserve” • With load alone we know when to expect changes • With VG there is a need for more potential movement from conventional units over many time scales • Fundamentals: • All variability within next 10 minutes covered by spin • Beyond 10 minutes can be covered by spin (more expensive) or non-spin (if available) • Maintaining balance at lowest cost National Renewable Energy Laboratory Innovation for Our Energy Future

7. Institutional/Scheduling rules matter: Inter-BA Wind Deliveries No Additional Capacity Required If The External BA Responds When Wind Drops Rather Than Waiting Until The Start of The Next Scheduling Interval Kirby, B.; Milligan, M. (2009). Capacity Requirements to Support Inter-Balancing Area Wind Delivery. 29 pp.; NREL Report No. TP-550-46274.

8. Reserve approaches and impacts are based on operating practice and institutional constraints Milligan and Kirby (2009). Capacity Requirements to Support Inter-Balancing Area Wind Delivery. 29 pp.; NREL Report No. TP-550-46274, and An Examination of Capacity and Ramping Impacts of Wind Energy on Power Systems, Kirby & Milligan, ElecJ Aug./Sept. 2008, Vol. 21, Issue 7, pp 30-42 National Renewable Energy Laboratory Innovation for Our Energy Future

9. Fast economic dispatch changes things… Milligan, M.; Kirby, B. (2010). Market Characteristics for Efficient Integration of Variable Generation in the Western Interconnection. 51 pp.; NREL Report No. TP-550-48192. Hourly scheduling/dispatch constrains units that may be capable of moving Economic signals at short time frames incent units that can physically and economically respond Variability is thus spread to more units Reserve profile changes National Renewable Energy Laboratory Innovation for Our Energy Future

10. Example from NREL EDT Analysis

11. Reserves issues • Fast energy markets can often “automatically” provide load following • Holding constant spin for VG is possible, but costly • Dynamic reserve is the standard: a static reserve for wind/solar is not rational or economic • How does one assess the level of reserve required if it is variable? • How much is spin? How much is non-spin? What is objective function and constraints of the reserve optimization problem? • Can “simple rules” be developed for operations? National Renewable Energy Laboratory Innovation for Our Energy Future

12. Questions • How do you determine the correct percentage of spinning and non-spinning for each category. Do these percentages change based on system conditions? • Might end up as more of an economic separation rather than reliability driven. • Spinning: High standby cost, low utilization cost. Non-spinning: Low standby cost, high utilization cost • What is the need for synchronization time for non-spinning reserve for each category? • Can reserve requirements for a specific area and hour change as you get closer in real-time as things become more certain • How to correctly quantify reserves with advanced stochastic unit commitment techniques? • How can different reserve categories be shared? (e.g. if all ramping reserves are used up can we use contingency reserves for a non-contingency?) • How soon should each reserve category be replaced? • Is there a f(x) for each reserve category? If so, what are the x variables? How do we determine their coefficients? Is the function linear or something else?