Managing Renewable Energy in Short-Term Power Markets

Snippet: Australia’s Renewable Energy Challenge: Curtailment and Opportunity Australia is rapidly shifting to renewable energy, but curtailment - spilling wind and solar power due to grid limitations - remains a challenge. In his article [1], Daniel Mercer of ABC News examines this issue and its implications for our energy future Key Takeaways: 1. Grid Infrastructure and Curtailment: Australia’s renewable energy grid is expanding rapidly, but without sufficient infrastructure upgrades, a significant portion of this clean energy is being wasted. Investing in modernisation could reduce curtailment and unlock the full potential of renewables. 2. Coal Plants as a Barrier: Coal plants, due to their inflexible design, continue to limit renewable energy integration. As these plants retire, renewables will have more room to grow, though careful management is needed to ensure a stable transition. 3. Rooftop PV’s Role in Curtailment: While coal plants' minimum operational levels limit the grid's capacity for renewables, rooftop solar PV increases curtailment by reducing operational demand during peak generation. This growing impact underscores the need for better grid management and energy storage solutions. 4. Energy Storage as a Key Solution: Storage solutions like large-scale to EV's and household batteries are essential to shifting surplus renewable energy to periods of high demand. This will improve renewable efficiency and help balance energy supply. 5. Economic Opportunities for Consumers: Curtailment presents opportunities for consumers to save on energy costs by adjusting their usage. Flexible consumption models could support grid stability and maximise economic benefits. 6. Market Reform for Renewable Growth: Australia’s energy market needs to adapt to the variability of renewables. Strategic market reforms could stabilise pricing, support renewable integration, incentivise the adoption of storage technologies and flexible loads. 7. System Design Challenges in Decarbonisation: Curtailment reveals the need for smarter grid management as Australia moves towards decarbonisation. Addressing these system design challenges could accelerate the country’s transition to a low-carbon future. 8. Aligning Climate Goals with Energy Efficiency: Reducing renewable energy waste through curtailment aligns directly with Australia’s long-term climate goals. Prioritising storage and grid improvements will strengthen the country’s sustainability efforts.    Curtailment poses challenges but also opportunities for Australia’s renewable sector. With investment in infrastructure, storage, market reforms, and flexible loads, the nation can better harness its renewable potential and meet its climate goals. References: 1. Australia 'wasting' record amounts of renewable energy as share of wind and solar soars by Daniel Mercer (Sat 06 Sep 2024) .. https://lnkd.in/g8-DmV-X

Thinking about the changing energy resource mix and how it impacts electricity prices. In pursuit of insights, it’s helpful to think through edge cases. One is a grid powered by 100% #renewableenergy and energy storage. A recent study by the Leibniz Information Centre for Economics looks at 2 markets, Texas (ERCOT) & Germany, and explores if energy-only markets can function with a resource mix of only #wind, #solar, Demand Response (DR) and storage. Will capacity mechanisms be needed in markets after the energy transition? Can a healthy market exist with energy storage as the only firm capacity? Yes, they conclude, energy-only markets remain perfectly viable even when exclusively #windenergy, solar, DR, and #energy storage. Using cost scenarios based on 2020 data and 2050 forecasts, they find average market prices in #ERCOT are reasonable and could become lower. What happens to the merit order (the electricity supply curve of suppliers in order of their marginal cost)? The figure below shows the new merit order for ERCOT and the residual demand / energy storage utilization. The merit order looks like today’s: relatively few hours have zero prices, a vast middle section has positive prices (mostly $40-$50/MWh), and peak price periods still exist and are an essential element for fixed-cost recovery. In the new merit order, storage plays a critical role because it often sets prices on both the buy and sell sides, thus sets the market price for #electricity. Other interesting ERCOT results: ·       Changes in wind and solar costs from 2020 to 2050 would raise the optimal capacity ratio of solar to wind capacity from about 0.6 to 2.0. ·       In 2050, solar’s share of ERCOT’s power output would need to increase from 3% to 61%, while wind output would need to increase from 23% to 39%. ·       The nominal capacity ratio of storage to wind + solar is about 0.28. Some limitations of the modeling: ·       No explicit transmission infrastructure in the model (i.e., no transmission constraints). ·       Ancillary services still need to be priced separately and are not considered. ·       The duration of storage (MWh) is not accounted for, only power capacity (MW). ·       No negative pricing was allowed. Two additional thoughts: In very high renewable, energy-only markets, where fossil fuel plants are not allowed or available, average energy prices should converge on the Levelized Cost of Storage (LCOS, i.e., the cost per cycle of storage needed to cover all costs and investment returns for the life of the project). Lazard’s most recent analysis shows stand-alone storage LCOS at $124/MWh for 100 MW/ 400MWh BESS, and this needs to – and will – come down in the next decade (it’s $60/MWh and $45/MWh respectively, for solar and wind hybrids). Also, curtailment (or negative pricing) is not necessarily a market flaw - it can offset lower and fewer peak pricing events by allowing #energystorage to charge at zero cost (or less).   References in comments.

🔌 Grid operators are implementing various strategies to manage the declining inertia caused by the increased penetration of variable generation (VG) resources, such as wind and solar. These strategies fall into three main categories: maintaining inertia, providing more response time, and enhancing fast frequency response. To maintain inertia, operators can ensure that a mix of synchronous generators is online to exceed critical inertia levels. Additionally, synchronous renewable energy sources and synchronous condensers can be deployed to provide inertia. To provide more response time, operators can reduce contingency sizes and adjust underfrequency load shedding (UFLS) settings. Finally, enhancing fast frequency response involves leveraging load resources, extracting wind kinetic energy, and dispatching inverter-based resources to improve the grid's ability to respond to frequency changes. 🍃 Extracted wind kinetic energy refers to the capability of wind turbines to provide fast frequency response (FFR) by utilising the kinetic energy stored in their rotating blades. This approach can be particularly effective in addressing the challenges posed by declining inertia in power systems with high wind penetration. By extracting kinetic energy, wind turbines can respond rapidly to frequency deviations, thereby helping to stabilise the grid. This method can be used in conjunction with other resources to enhance overall system reliability and maintain frequency within acceptable limits. 💡 High deployment of variable generation (VG) resources can be effectively managed by combining extracted kinetic energy from wind turbines and increasing output from curtailed wind plants. The figure below illustrates that when these two strategies are combined, they significantly mitigate frequency decline. The simulation shows that relying solely on extracted kinetic energy results in frequency falling below UFLS (underfrequency load shedding), while using only FFR barely avoids UFLS. However, when both methods are applied together, the frequency decline is minimal, demonstrating that these approaches can serve as viable alternatives to traditional inertia and primary frequency response from conventional generators. #gridmodernization #stability #gridforming #powerelectronics #renewables #cleanenergy #solidstate

Yesterday ~2.4GW of renewable output was switched off in the Irish market, just over 40% of what was available and over 50% of national demand at the time. How is the system balanced in these cases? By balancing the interconnectors UP and reducing exports to GB. With high renewables expected, prices in the DAM were so low that not a single CCGT unit was in the money. The SEM has strict set limits on how many thermal generators must be running at any one time, and safe to say that the conditions were not met when the system operators looked at the CCGT schedules post-DAM. IDA prices dropped even lower than the day-ahead, as both GB and the SEM saw a glut of renewables, so no CCGT units were scheduled through the wholesale markets at all. Over 1.3GW of CCGT generation across 7 units was therefore offered up in the balancing mechanism, enough to meet the set unit limits. Their combined output met more than 25% of system demand. A reduction in interconnector exports was required for system stability. If an interconnector trips while exporting, the whole volume would need to be found elsewhere in the balancing mechanism which would, in this case, include a lot of renewable downward dispatch. To guard against that, exports were reduced. Renewables are given priority dispatch in the SEM (for now). Even still, when the system is oversupplied they can be switched off, but always at a price of €0/MWh. Hence, imbalance prices snaped to €0/MWh for 10 hours, from 07:00 to 17:00. As we enter the summer months, similar behaviour can be expected more often. Look out for high renewables, thermal generation running through balancing, high scheduled interconnector exports that are pulled back in balancing and pricing spreads between wholesale and imbalance. Also check out what was happening on the GB side in a post from my colleague Noémie Baud #RenewableEnergy #Greenlink #PowerTrading #DownwardDispatch #Interconnector #SEM

Prolonged periods of negative prices and gird congestion: How should we deal with the increasing shares of solar in our power grids? Innovative actors in Germany show how energy storage can provide a solution for congestion management and energy shifting. 🌞 For context, Germany has 93 GW of solar installed today. In the summer, when the production of solar is the highest, the German load is around 75 GW. And the build out of solar is further accelerating. Solar integration creates two major challenges 💸 Negative Prices With too much solar in the system power prices go negative. Solar is no longer earning money when it is producing 🛑 Congestion Grids get congested during solar peak, especially on the lower voltage side. What is the solution? In short: Energy Storage In long: co-located storage for peak shifting and grid-based storage for congestion management ☀ 🔋 Co-located storage Integrating energy storage with renewable asset allows to store solar power during low or negative price periods and sell the power instead when prices are high, e.g. in the evenings. Statkraft is currently building the largest such plant in Germany (https://shorturl.at/jIadq) The 47 MW solar park will be complemented with a 16 MW /56 MWh battery system. Proud to say that we just announced to provide Statkraft with the battery system, which marks the 6th project in the third country between Fluence and Statkraft. 🛑 🔋 Storage for congestion management The German DSO Bayernwerke announced the tender fir a 5 MW / 20 MWh battery for congestion management in their medium voltage grid. (https://shorturl.at/gEjMS) The battery will help the DSO to manage congestion during peak production and replace the need for gris extension. This is the first time a German DSO makes use of the possibility to procure flexibility services under the German energy law (§14c EnWG). There are not a lot of details available yet, how the tender will be structured, but the DSO reserving ability to shift solar production into the battery to relieve the grid during peak solar production is most likely. On a funny sidenote, somebody from the German regulator had asked me a few weeks ago, how can we get more batteries into the distribution grid to support solar congestion management, and I told him §14c EnWG. Great to see it now actually happening. This energy peak shifting is thereby a different application than the German grid booster assets, which increase the line-rating of transmission lines by replacing the n-1 requirement in grid operations. But good to see, the second major way to use BESS for congestion management is now deployed in Germany for the first time as well. Finally, as a little blast from the past, what Bayernwerke plans to do now, UKPN executed already 9 years ago in Leighton-Buzzard.