MIT - WIND POWER DEVELOPMENT IN SPAIN (2009)

Luis AtienzaChairman & Chief Executive Officer

Boston - April, 3rd 2009

MIT ENERGY CLUB

Wind energy development in Spain

www.ree.es

Index

Present Spanish energy outlineThe Spanish electricity sectorWind power in Spain todayCornerstones of the Spanish leadership in wind energy

RegulationSystem operation: challenges and solutions

Wind development driving forces

Closing remarks


RED ELÉCTRICA DE ESPAÑA

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Present Spanish energy outlineHigh external energy dependency (84% in 2008).High electricity consumption growth rates, 70.6% between 1996 and 2008:

Significant growth of the economic activity (57.8% between 1996 and 2008).

Limited improvements in energy efficiency.

Increase in CO2 emissions (52,6% between 1990 and 2007).Spain is also a peninsula electrically speaking, with weak electrical interconnections with the European Union.

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Import Capacity/Installed Capacity (%)

Goal established by European Council (Barcelona 2002): International Capacity al least 10% in 2005



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The Spanish electricity sector (I)

REE: TSO (System Operator and Transmission Network Owner)Principles of behavior:

Independence

Transparency

Neutrality

Listed company (80% floating)

1st TSO in the world. Founded in 1985Ownership unbundling of the transmission system.Operates coordinately the generation and transmission systems.Key figure in making the development of wind energy feasible.



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The Spanish electricity sector (II)

Distribution Network < 132 kV

Demand bids

Accepted bidsTechnical constraints

Energy flowsCommunications

Consumers under approved tariffs

Suppliers and market price consumers

Distribution companies

Generators

Transmission Grid · REE System Operator · REE

Market Operator · OMEL

International Exchanges · REESpecial Regime

TSO (foreign)

Demand bids

Outages



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Annual Consumption in MWh 1996-2008.

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Nuclear Coal Fuel-Gas Hydro Combined Cycle Other Special Regime Wind

Installed Power in MW 1996-2008.

The Spanish electricity sector (III): Load and installed capacityPeak demands in MW 1996-2008.

2535727369

2948431247

33236

3549037600 38210

43708 45450

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/1996

16/12

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/2007

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173,058

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233,551

252,878266,486

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MW

h

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Electricity production mix in 2008.Hydro-power

7%Nuclear

20%

Coal16%Fuel-Gas

1%

Combined cycle32%

Wind power11%

Rest special regime

13%

The Spanish electricity sector (IV): Installed capacity1 and production 2008

Technology MW %Hydro-power 16.657 18,5Nuclear 7.716 8,6Coal 11.357 12,6Fuel-Gas 3.585 4,0Combined cycles 21.570 23,9Total (ordinary regime) 60.885 67,6Wind power generation 16.189 18,0Rest of special regime 12.998 14,4Total (special regime) 29.187 32,4

Total 90.072

Installed capacityHydro-power18%

Nuclear9%

Coal13%

Fuel-Gas4%

Wind power18%

Rest special regime

14%

Combined cycle24%

1 Wind power installed capacity updated in march 2009



Installed Power Special Regime

Energy produced in 2008

55,516.189Wind1

29.1873.553

6.1673.278MW

Total Special Regime12,2Other

21,1Cogeneration11,2Solar

%Tecnology

44,931.112Wind

69.25515.304

20.5902.249GWh

Total Special Regime22,1Other

29,7Cogeneration3,3Solar%Tecnology

Other12%

Wind56%

Cogeneration21%

Solar11%

Other22%

Cogeneration30%

Solar3%

Wind45%

Source CNE. Data Feb. 2009.

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1 Wind power installed capacity updated in March 2009



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Installed Wind power generation evolution 1996-2008

15,576

9,653

8,304

6,138

4,927

3,442

2,2981,525

798428183

11,099

13,908

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Wind Power in Spain today: installed capacity

Renewable Energy Plan for Spain (August 2005): ~20,000 MW by the year 2010.

Official Network Planning for 2016 contemplates ~29,000 MW.

Further increase expected for 2020 for compliance with proposed EC initiatives (20% of primary energy must come from renewables, which for the electricity sector represents an objetive of 40% from renewables).



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Wind Production Demand Wind Production/Demand

Wind power in Spain today: production records

Maximum: 11.203 MW (05/03/2009)Minimum last year: 204 MW (30/05/2008)

Maximum: 43% of demand (24/11/2008)Wind production peak : 10.273 MWDemand peak: 39.656 MW

Minimum < 1% of demand

MAXIMUM PRODUCTION DEMAND vs. WIND PRODUCTION

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Wind Production 24/11/2008 Demand 24/11/2008 Wind Prod./Demand

Maximum and minimum production Maximum and minimum demand coverage by wind energy



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1. RegulationExistence of incentives (bonus) that vary according to day-ahead market marginal prices constituting a floored payment system (black line). If market prices are high the wind power does not receive incentives.

Access and dispatching priority.

Impulse of the Regional Administrations.

Existence of a Transmission Network Planning taking into account electricity production criteria, to be developed by Red Eléctrica.

Cornerstones of the Spanish leadership in wind energy (I)

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(€/M

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Wind Market Price (€/MWh) Wind Bonus (€/MWh)

Base price paid to wind generation



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2. System Operation: Challenges1. Weak international interconnection.2. Production variability.3. Forecast difficulty.4. Geographical and proprietary dispersion.5. No contribution to system’s ancillary services.6. Electrical System load-generation balance in off-peak periods with high

wind production.7. Technological vulnerability (voltage dips which lead to sudden

disconnections).

Cornerstones of the Spanish leadership in wind energy (II)

Voltage(pu)

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start of disturbance

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Clearance of the faultFault length

Situations where generators

must remain connected

0,61ph and 2 ph faults

New “grid code”. Operational Procedure 12.3 Real Time Risk Assesment



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Wind ForecastReal Wind ProductionWind Market programConsumption

Off-peak load-generation balance with high wind production. An example:Low demand (~20 000 MW) with wind prediction error around 3 200 MW.Spanish system ran out of downward reserves very rapidly. As a last resort, the only solution to balance the system was to reduce wind production from 7:22 to 9:30 h.

Cornerstones of the Spanish leadership in wind energy (III)



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Wind prediction errors may be very large. Storm Klaus.On January 23rd and 24th 2009 the storm Klaus hit the Iberian peninsula. Some wind parks recorded winds up to 220 km/h.Most turbines in the north of Spain shut down due to their over-speed protection.Difference between real and scheduled wind production was greater than 7 000 MW.

Cornerstones of the Spanish leadership in wind energy (IV)

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2. System Operation: Solutions1. Proposals for changes in regulation by the TSO.

Adapting wind power generator technology to ease integration with the TSO leadership.

2. Creation of the Control Center for Renewable Energy (CECRE) → Supervision and control of generators in real time.

3. Maximize hydro-pump storage units possibilities as a System Operation tool.

4. Improvement in wind energy forecast.

5. International interconnections and transmission grid reinforcements.

6. Increase of real time demand side management (consumers participation in demand management, electric car in the future and others).

7. Performing system operation enhancing integration of these technologies.

Cornerstones of the Spanish leadership in wind energy (V)



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Cornerstones of the Spanish leadership in wind energy (VI)3. Wind development driving forces

1. Project financing.

2. Spanish leadership during early stages of technology development.

3. Strategic decision of Spanish companies.

4. Positive influence of wind farm benefits in the local economies:Creating local jobs

Economic returns to municipalities

5. Positive social perception of wind energy as a renewable energy resource.



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Closing remarks

Electricity is the key energy vector for integration of renewables. Wind energy leadership is possible due to:

Existence of REE as an independent TSO very much committed to the renewable technologies integration (CECRE).

REE transmission network investment Plan of more than 8.500 M€2008-2016.

Favorable regulation (sufficient and stable income)

Integration of wind power in the electric system poses significant challenges and requires innovative solutions.Social support and energy dependency push forward renewables.We can be more ambitious for the future. We are preparing ourselves for operating the electric system with more than 40% of renewables in 2020.



Thanks for your attention!

www.ree.es

MIT - WIND POWER DEVELOPMENT IN SPAIN (2009)

Technology

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