New Evolution of Power Markets Evaluating The Impacts of a Low...

34
Evolution of Power Markets Evaluating The Impacts of a Low Carbon Future usa.siemens.com/digitalgrid Unrestricted © Siemens Industry Inc. 2017

Transcript of New Evolution of Power Markets Evaluating The Impacts of a Low...

Page 1: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Evolution of Power Markets

Evaluating The Impacts

of a Low Carbon Future

usa.siemens.com/digitalgridUnrestricted © Siemens Industry Inc. 2017

Page 2: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 2

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Agenda

Topics to be covered today

• Introduction

• Background

• Our Approach

• Option Delineation Energy Mix Consideration

▪ Utility Scale Renewable

▪ Distributed Energy Resources (DER)

▪ Flexible Gas Fired Generation

• Gas Forecast

• Demand Forecast

• Results: Transmission & Distribution Impacts

• Results: Market Impacts

• Conclusions

Page 3: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 3

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Introduction

Characteristics of a low Carbon Future

Climate Change is driving policy worldwide for societies to reduce

their Carbon Footprint

• The electric industry is a lead contributor to this reduction in two

important ways:

• Change of the supply energy mix:

▪ Utility scale renewable resources & storage.

▪ Distributed Energy Resources & Storage.

▪ Low Carbon conventional Generation

• Change in the consumption:

▪ Transportation Electrification (EV, Mass Transit)

▪ Heat Pumps and elimination of heating oil

▪ Energy Efficiency

These changes will dramatically impact how our industry

will look in the not distance future

Page 4: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 4

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Over 65 GW of Capacity Announced to be Retired

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

ERCOT FRCC MISO NewEngland

New York PJM SERC SPP California NWPP RMRG SWRG

Coal Gas Oil Nuclear Other Solar Water Wind

Announced Generation Capacity Retirements

Page 5: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 5

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Over 90 GW of Generation Capacity under Development

with 42 GW under Construction

0

5,000

10,000

15,000

20,000

ERCOT FRCC MISO New England New York PJM SERC SPP California NWPP RMRG SWRG

MW

Gas Oil Nuclear Solar Water Wind

Generation Capacity Under Development ( 90 GW)

Generation Capacity Under Construction (42 GW)

0

5,000

10,000

15,000

ERCOT FRCC MISO New England New York PJM SERC SPP California NWPP RMRG SWRG

MW

Gas Oil Nuclear Solar Water Wind

Page 6: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 6

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Electricity Demand Plateau:

Total Electricity End-Use Demand, 1950-2016

• Source: US Energy Information

Administration

• Data is for all 50 states and the District of

Columbia

• US electricity demand peaked in 2007

• The Great Recession, which officially started

in December 2007, was initially blamed for

the slowdown in electricity consumption.

• Continued stagnant grid served growth has

since is due to:

• Efficiency standards

• Demand side management and demand

response

• Behind the meter generation0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

GW

h

Page 7: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 7

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Falling Energy Demand Forecasts, NYISO

• Data is from NYISO “Gold Book”, 2013-2017,

“Baseline Forecast”

• These baseline forecasts include the load-

reducing impacts of energy efficiency

programs, building codes, and appliance

efficiency standards

• The 2013 and 2014 Gold Books reference

increased load in the Baseline Forecast due

to electric vehicles. This language was

dropped after 2014.

• Beginning in 2014, NYISO explicitly mentions

that the Baseline Forecast is net of retail or

behind-the-meter solar PV. (The word “Solar”

does not appear in the 2010 Gold Book.)

• Over the period 2013-2017, projections for

2020 energy have fallen 7.5%.

150,000

155,000

160,000

165,000

170,000

175,000

GW

h

2013

2014

2015

2016

2017

Page 8: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 8

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Falling Energy Demand Forecasts, CAISO

• Data; CA Energy Commission, Staff Reports

2013: CA Energy Demand (CED) Updated

Forecast, 2015-2025, December 2014

• 2014-15: Staff Report: CED 2016-2026,

Revised Electricity Forecast Volume 1:

Statewide Electricity Demand and Energy

Efficiency, January 15, 2016

• 2016-17: CED 2018-2028 Preliminary

Forecast, August 9, 2017

• Most recent year (2017) forecasts are lower

due to:

• “Additional utility efficiency program

impacts”

• “Forecast electric vehicle consumption dips

below that in the previous forecast”

• “Higher forecast for photovoltaic (PV)

systems”

290,000

295,000

300,000

305,000

310,000

315,000

320,000

325,000

2020 2024 2025 2026 2027 2028

GW

h

2013 2014

2015

2016

2017

Page 9: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 9

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Our Approach

Forecasting the future is always challenging

We use a holistic approach

• Formulation of Scenarios

▪ Base Case / BAU

▪ Increase Utility Scale Renewable

▪ Distribution Side Focus ; DER

▪ Increase gas supply (new pipes / LNG) + CCPP

▪ Demand Side Focus: increased electrification / EE

• Delineation of Options (Performance, Location, CapEx,

timing)

▪ Options are used in the optimization process

▪ Reflect current and projected conditions

▪ Options for each of the elements; DER, Renewable, EE,

etc.

• Optimization and Assessment

▪ Stochastic versus deterministic.

▪ Costs and results

▪ Do we reach the target and if not what is the gap?

▪ CapEx

Not all scenarios reach the policy objective…

but the cost are different

Policy objective targetMM

Sh

ort

To

n o

f C

O2

pe

r ye

ar

Page 10: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 10

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Our Approach

Overall Process

AURORAxmp® as a Modeling FrameworkGPCM Modeling Framework

PROMOD

PROMOD®IV as a Modeling Framework

Transfer

Limits

Delivered

Fuel Prices

Power

Generation

Three interlinked models are used

• The Gas Pipeline Competition Model: Provides delivered prices at sites to Aurora and PROMOD considering exiting and

forecasted pipelines and forecasted gas prices at supply level.

• AURORAxmp®: Zonal model that provides optimal generation expansion to meet given objectives; e.g. clean energy

penetration. Used gas prices from the GPCM and updates on transfer limits from PROMOD.

• PROMOD®IV: Nodal model, detailed dispatch, transmission congestion assessment based on AURORA’s expansion plan.

Page 11: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 11

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Stochastic Market Simulations Quantify Uncertainty

Siemens Energy Business Advisory’s approach produces an intuitively believable range of market outcomes, and

decision makers understand that the average of all potential outcomes – the “Expected Value” - is the best estimate of

future outcomes. This Expected Value includes “extrinsic value”.

Page 12: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 12

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Delineation of Options

Renewable: the New Normal for a Post Carbon Economy

And large amounts of renewable penetration; 40%, 50% … 100% are target

Page 13: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 13

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Delineation of Options Renewable Resources

• To assess impact we need assess what resources

are likely to be added to the system to achieve

compliance.

• We start by a review of Interconnection Queues

▪ Projects with signed ISA added to AURORA and

PROMOD

▪ Facility Study Level assessed some also added

▪ This is unlikely to produce the levels of renewable

generation that we would need.

▪ PJM queue for example had 4.4 GW of projects with

signed ISA that were not suspended and even

considering those the value increased to 8.9 largely wind.

▪ A recent study identified over 30 GW of renewable in one

state for the required levels of penetration.

26%

74%

solar

wind

PJM Queue

8.9 GW Renewable with ISA signed

40%, 50% … 100% Penetration will fundamentally change the grid

Page 14: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 14

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Delineation of Options

Renewable Resources; New Builds

We need to know location… utility scale but also DER

• Identify areas for project development

▪ These are areas where renewable is likely to be located

▪ The evaluation is based on resource maps (mesoscale information)

▪ High level assessment of Land availability for development.

▪ PV Requires significant land, not subject to flooding and preferably

flat

▪ Typically 7 Acres per MW; i.e. a 90 MW plant can use 1 sq mile.

• Transmission limitations

▪ Areas with high potential may have limited transmission; e.g. Far

West Texas for Solar.

▪ We may define limits on maximum additions to the AURORA

expansion model.

▪ Regardless considering the shift in the generation mix investments

in transmission are unavoidable.

Page 15: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 15

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Delineation of Options

Economies of Renewable

• CapEx

▪ The reduction in Capital expenditure requirements for both wind and

solar technologies is unprecedented.

▪ Wind generation averages $ 1,500 / kW and we expect the cost

reduction trend to continue $ 1,300 kW

▪ The impact in solar PV is even more pronounced ; by 2015 NREL

benchmark (100 MW) had a price of $ 1.77 /Wdc in the 2016 update

this value dropped to $ 1.49 /Wdc and by 2017 the value is $ 1.11 we

expect in the long term values in the 0.8 to 0.9 range.

Renewable Performance is function of the two C’s; CapEx & Capacity Factors

Page 16: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 16

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Delineation of Options

Economies of Renewable

• Capacity Factors

▪ Capacity Factors keep increasing for both wind and solar.

▪ In the case of wind this is due to larger blades, taller towers, more

efficient designs for low wind speeds/

▪ For solar it is a combination of tracking and more efficient panels.

▪ Capacity factors for wind are a function of the wind resource but in

average they are in the 35% range

▪ We expect the trend to continue to 40%.

▪ PV capacity factors are also function of location and tracking

capabilities. Typically are in the 22% to 26% range.

▪ We expect the trend to continue to values in the 26% to 30% range.

Renewable is a function of the two C’s; CapEx & Capacity factors

Page 17: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 17

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Delineation of Options

Economies of Renewable

These trends make Renewable highly competitive

▪ Wind PPA Prices are reaching the $ 20/ MWh

▪ Solar costs for utility scale are reaching $ 50/MWh without ITC close to

$30 with ITC and projected to be $ 30/MWh without ITC

▪ Residential PV is in the $ 100/MWh and expected to drop to $ 50/MWh

▪ This prices make it competitive with gas (e.g. $ 30 /MWh for $ 4 /MBTU).

▪ The residential make it competitive with delivered power rates.

Renewable makes economic sense as well

Page 18: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 18

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Delineation of Options

Consideration for DER

Distributed Energy Resources introduce new effects that need to be

taken into consideration

• Reverse Power injection into transmission

▪ This was considered rare but it is projected to become a common occurrence

and reverse flows to be substantial.

▪ The transformation capacity at the substation can be the bottle neck and

consideration needs to be given to variability of PV + the load; reserve

margins are necessary.

• Variability of the PV

▪ Introduces voltage regulation and flicker / voltage dips so fast that cannot be

controlled by normal devices; fast devices are required or larger conductors

▪ Sustained changes result in frequent movement of transformer taps, voltage

regulators

• Can introduce voltage and over loading violations

▪ Localized overloads and low/high voltages

Load profile w/o Solar PV

Solar PV Output

Load profile w/ Solar PV

Minimum demand Maximum demandMaximum Solar PV

Page 19: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 19

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Delineation of Options

DER, Utility Scale & Storage

• To determine DER potential a Feeder Hosting capability study is necessary

▪ Starts from an assessment of what feeders can accept renewable (not LV network, land for 5 MW or larger)

▪ Determine the maximum renewable that can be interconnected without investments;

▪ Determine increases due to volt/VAr system, smart invertors

▪ Determine increases with reconductoring, direct connection to the substation, increase transformation HV/MV

▪ End result DER potential by transmission/distribution substation and associated CapEx.

• The DER potential complements the utility scale potential derived from the assessment of resource, land

and transmission.

▪ 20 MW or more can be connected as well at distribution as determined by the hosting capability study

• Storage has the potential to mitigate impacts and facilitate integration

▪ Some studies start by considering storage penetration at the DER level and behind the meter as a resource.

▪ This can be complemented by storage as a means to solve regulation / congestion issues.

• Other Investments at the distribution level

▪ Regulation / Control of myriads of resources.

Page 20: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 20

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Delineation of Options

Conventional Generation - Simulating the Market

• Reserve margin based

▪ Utility approach

▪ Can be paired with a loss of load probability analysis

• Economic builds

▪ IPP approach

▪ Can be based on a utility or IPP cost of capital

▪ Ties to capacity prices in a cleared ISO auction

• Backup specifically for renewable resources

▪ High level: proportional additions based on ratio of renewable to fossil fast

ramping

▪ Rigorous: based on variability of renewable resources (more on this later)

Page 21: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 21

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Delineation of Options

Gas Simulations and Power and Natural Gas Market Balancing

Page 22: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 22

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Henry Hub Prices are Expected to Average $3 to 2020

as Production Gains Outpace a Rise in Demand

Countervailing forces are at work in the

U.S. gas market

• Exports (LNG, Mexico), power

generation demand, and industrial

demand are turning the Gulf Coast into

a premium demand market

• However, shale gas production growth,

declines in production costs, and build

out of transport capacity from

Utica/Marcellus will keep prices in

check in the short-term

• Longer-term, prices are likely to

average $4, the price ceiling at which

many conventional gas basins become

economic againSource: Siemens PTI EBA. Note: Inflation rate is 1.54% p.a.

Henry Hub Price History and Siemens EBA 17Q4 Forecast

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

$/M

MB

tu

Historical Futures Pace 2017$ Pace Nominal$

Page 23: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 23

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Electric Vehicles: the Demand Side Game Changer

An Analytical Approach to Impact and Strategic Support

MA3T Model

Federal and State

EV Adoption

Local EV Adoption

• Technology (costs, mark-ups, fuel economy, storage, range); Charging Infrastructure

(home, commercial, workplace availability and capacity); Fuel costs; Consumer

Preferences (technology attitudes, driving patterns, vehicle characteristics); Policy (Federal

& state incentives)

• Local policy support (i.e. incentives, parking, etc.)

• Local vehicle registration count and mix

• Local vehicle fleet size and mix

• Local driving patterns (i.e. distances, commuters, population characteristics and

preferences)

EV Impact on

Electricity Demand

& Investment

Key Inputs

• Utility base load forecast

• EV (BEV and PHEV) charging pattern and location forecast

EV Program Design

& Set-up

• Utility strategic plan and load targets, and current EV program efforts and results

• Program and component economic models

• Business model design, structuring, and transformation

Process

Utility Enabler

Assessment

• Feeder capability, communications systems, metering and billing systems, foundational

data

Page 24: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 24

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Electric Vehicle Demand Impacts – Preliminary Results

0

1,000,000

2,000,000

3,000,000

4,000,000

Number of PEV and HEV National Vehicle Sales

PEV HEV BNEF PEV

Next steps can include reducing these national projections to regional and utility level forecasts using location specific customer

choice models and other factors; assessing the implications for feeders and other distribution elements; and development of a utility

strategy to lead or respond to EV penetration.

Page 25: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 25

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Results

Market, Reserve, Transmission & Distribution Impacts

AURORAxmp® PSS®E and PROMOD®IV procedure:

• The policy targets, gas prices, demand forecast and resource options are modeled in AURORAxmp® that

produces the optimal compliant generation expansion plan. Provides market impacts (LMP’s, dispatches,

O&M costs, emissions, etc.)

• The new builds are added to strong busses (e.g. 230 kV and above) in the areas where they are located in

PSS®E and via contingency analysis a minimum set of reinforcements determined.

• PROMOD®IV determines congestion impacts at the bulk transmission level and at the sub- transmission /

substation level. Also provide market impacts

Some results and important findings are discussed next.

Page 26: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 26

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Results

Reserve Impacts

▪ This is in general due to a combination of the capacity contribution of the

large amounts of renewable added + the required units to provide frequency

regulation, ramp capability and night peak support to back up variable

generation + units currently online that make enough profit to be kept online.

▪ This is inline with projections for the US

▪ This situation is likely to result in stable to lower capacity prices under

scenarios with high penetration of renewable.

19.0%

20.0%

21.0%

22.0%

23.0%

24.0%

25.0%

26.0%

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035

Demand Summer Capacity RM

Our studies regularly identify that reserve margins are maintained above the reliability targets

0%

5%

10%

15%

20%

25%

30%

35%

2017 Regional Reserve Margins

-

5.0

10.0

15.0

20.0

25.0

30.0

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Re

serv

e M

argi

n (%

)

Zone A

Zone B

Page 27: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 27

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Results

Reserve Impacts

▪ Renewable variability needs to be accounted for together

with of the load’s creating a total variability to be addressed.

▪ The standard formula for determining the Operating

Reserves is a constant K times the square root of the sum

of the squares of the variability of the load and the variability

of the renewable.

▪ For screening we use a percentage of the load served (1 to

3%) plus a percentage of the renewable online (5% to 10%).

▪ In the example to the left we used 3% and 10% to define the

requirements (red line – blue dots)

▪ It can be observed that thanks to the flexibility of the CC and

GT in this case the total output + spinning reserves (blue

dashed line yellow and red dots) is always above the

requirements with a minimum buffer of 4% in the peak day.

With high levels of renewable penetration the operating reserves need to be increased.

-

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

30,000.00

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Peak Day (July) (min buffer 4% @ hour 13)Solar DG

Solar Utility

Wind Off Shore

Wind Onshore

Other

Gas Other

Gas CC

Hydro

Coal

Nuclear

Total Output +Spin Reserve

Total Output + Op+Spin ReservesLoad + Required Operating ReservesTotal Output

Page 28: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 28

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Results

Market Impacts

There are a number of important market impacts in particular for areas were the renewable has high

penetration levels▪ We observe a decline in the LMP’s in these zones with high renewable penetration

and moderate increase in other in spite of the projected increase in gas prices.

-

10

20

30

40

50

60

70

2016 2018 2020 2022 2024 2026 2028 2030 2032 2034

Mill

ion

lbs

P3F1 Annual Emissions

FPM Emission NOX Emission SOX Emission

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

$35.0

$40.0

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

$/M

Wh

On-Peak Off -Peak

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

$45.00

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

$/M

Wh

▪ In the zones with high renewable there may

be a switch between on-peak and off-peak

prices becoming the later higher due to the

thermal generation at night

▪ There may be sustained reduction in

operating costs $/MWh due to the entry of

zero fuel cost generation

▪ The dispatch of thermal units steadily

reduces and if no limitations are put in the

program excessive cycling of coal and

nuclear units can be observed.

▪ There is a marked reduction of other

emissions in addition to the targeted CO20%

10%

20%

30%

40%

50%

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

20

26

20

27

20

28

20

29

20

30

Cap

acit

y Fa

cto

r

Gas CC

Page 29: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 29

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Results

Transmission & Distribution Impacts

▪ Congestion happens when the dispatch has to deviate from the least

cost to prevent and overload under contingency.

▪ In the figure L1 is a binding constraint for the loss of (FLO) L2. Similarly

La FLO of Lb

▪ With large levels of penetration the first effect we note is curtailment; that

is generation that cannot be delivered to the load due to binding

constraints (L1 and Lb as well as their reciprocals).

▪ This can result I high “Congestion Cost” also called Shadow Prices.

▪ Congestion results in separation of the LMPs and in some cases driving

they down to zero or negative values in zones with excessive generation.

▪ With high levels of DER we may start seeing congestion at the sub-

transmission level as illustrated by La/Lb

PROMOD®IV allows identifying the transmission impacts and these are driven by congestion,

Delivered80%

Curtailed20%

Delivered

86%

Curtailed

14%

L1

L2

La

Lb

L1 FLO L2 ( 400 M $)

La FLO Lb (18 M$)

Very Low LMP

Low LMP

High LMP

Page 30: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 30

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Results

Transmission & Distribution Impacts

PROMOD®IV allows evaluating solutions congestion

▪ Congestion is not new and has historically been addressed by

investments in transmission (e.g. ERCOT’s CREZ).

▪ Investment in transmission reduce or eliminate curtailment resulting in a

reduction in operating costs (conventional generation needs to run less)

and convergence of the LMP’s (lower payments by loads)

▪ This is used to assess the B/C ratios of new transmission facilities.

Delivered99%

Curtailed1%

Delivered

99%

Curtailed

1%

L1L2

La

Lb

L1 FLO L2 (1.0M $)

La FLO Lb (0 M$)L3

Average LMP

Average LMP

Average LMP

Page 31: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 31

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Storage: the Supply Side Game Changer

Energy Storage has the potential to:

• Reduce or eliminate congestion by allowing an smarter use of

the transmission system; i.e. storing the power that would be

curtailed for delivery at times when either the renewable output is

reduced (e.g. nighttime) or there is available transmission

capacity

• Reduce the variability of the renewable by compensating

production ramps in the positive and negative direction.

• Provide primary and secondary frequency regulation.

• On the DER side opens opportunities for the creation of self-

reliant microgrids for reliability and economic reasons.

• As cost of storage decline we expect to see an increased role of

this technology, just as wind initially and now PV have become

mainstream.

Delivered99%

Curtailed1%

Delivered

99%

Curtailed

1%

L1

L2

La

Lb

L1 FLO L2 ( 1 M $)

La FLO Lb (0 M$)

Average LMP

Average LMP

Average LMP

Page 32: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 32

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Storage: the Supply Side Game Changer

• Shown is a 25 MW 4 hour

duration lithium ion battery

using Aurora XMP software for

a recent project. This is a

winter profile shape.

Battery fully depleted

Battery fully charged

Page 33: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 33

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Conclusions / Observations

The changes that a low carbon economy is bringing to our industry are profound.

• Renewable generation PV and Wind are main stream; energy prices make it competitive and the state

mandates can make it an important if not the main energy contributor.

• The energy markets can be affected; on peak prices can be lower than off-peak prices, base load units

may see their capacity factors erode and behave more like peakers.

• The impacts in transmission can be significant and congestion can appear were we least expect it;

including at the sub-transmission level.

• Primary and secondary frequency regulation can be challenging and can be met with flexible generation

(CC) and/or energy storage

• Renewable at the distribution level (DER) is changing the way the distribution system is utilized; load

substations can become generation injections and DER + battery storage can transform the distribution

system into an interconnection of self reliant micro-grids.

In this presentation we discussed methods to analyze the impact of these changes and prepare as…

The Future ain’t what it used to be (Yogi Berra)

Page 34: New Evolution of Power Markets Evaluating The Impacts of a Low …energycentral.fileburst.com/EC/112917_Siemens_wc_slides.pdf · 2017. 11. 29. · Solar costs for utility scale are

Page 34

Unrestricted © Siemens Industry, Inc. 2017

11.29.2017 EM DG PTI

Contact page

Nelson J Bacalao

Senior Manager, Consulting

Siemens Power Technologies International

4615 Southwest Freeway, Suite 900

Houston, TX 77027, USA

Cell: +1 (713)-598-3856

[email protected]

Art Holland

Principal Consultant, Pace Global, a Siemens business

Siemens Power Technologies International

12700 Fair Lakes Circle, Suite 250

Fairfax, Virginia 22033

Mobile: 571.423.8781

[email protected]

usa.siemens.com/digitalgrid