High penetration wind generation impacts on spot prices in the Australian national electricity market

This paper explores wind power integration issues for the South Australian (SA) region of the Australian National Electricity Market (NEM) by assessing the interaction of regional wind generation, electricity demand and spot prices over 2 recent years of market operation. SA's wind energy penetration has recently surpassed 20% and it has only a limited interconnection with other regions of the NEM. As such, it represents an interesting example of high wind penetration in a gross wholesale pool market electricity industry. Our findings suggest that while electricity demand continues to have the greatest influence on spot prices in SA, wind generation levels have become a significant secondary influence, and there is an inverse relationship between wind generation and price. No clear relationship between wind generation and demand has been identified although some periods of extremely high demand may coincide with lower wind generation. Periods of high wind output are associated with generally lower market prices, and also appear to contribute to extreme negative price events. The results highlight the importance of electricity market and renewable policy design in facilitating economically efficient high wind penetrations.     

Energy balance analysis of wind-based pumped hydro storage systems in remote island electrical networks

The introduction of pumped hydro storage (PHS) systems in isolated electrical grids, such as those found in island regions, appears to be a promising solution that is able to face both the high electricity production cost and the continuously increasing power demand encountered in these areas. In this context, the current work presents a methodology for the sizing of PHS systems that exploit the excess wind energy amounts produced by local wind farms, otherwise rejected due to imposed electrical grid limitations. The methodology is accordingly applied to the Greek island of Lesbos. Initially, a calculation of the wind power penetration ability to the local grid is carried out and the corresponding curtailments of existing and future wind farms are determined. An integrated computational algorithm is then presented which simulates the operation of the system during an entire year and gives in detail the hourly operational status as well as the various energy losses of the system main components. Based on the application results obtained, the ability of the wind energy to remarkably contribute to the electrification of the remote islands becomes evident.     

The impact of wind generation on the electricity spot-market price level and variance: The Texas experience

The literature on renewable energy suggests that an increase in intermittent wind generation would reduce the spot electricity market price by displacing high fuel-cost marginal generation. Taking advantage of a large file of Texas-based 15-min data, we show that while rising wind generation does indeed tend to reduce the level of spot prices, it is also likely to enlarge the spot-price variance. The key policy implication is that increasing use of price risk management should accompany expanded deployment of wind generation.     

Electricity market participation of wind farms: the success story of the Spanish pragmatism

In the last 10 years, more than 15 GW of wind power (Asociación Empresarial Eólica (Spanish Wind Energy Association), Nota de prensa (Press release) 17 de enero de 2008. http://www.aeeolica.org/doc/NP_080117_Espana_supera_los_15000_MW_eolicos.pdf) have been installed in Spain, of which more than 3.5 GW in 2007. Furthermore, plans are to reach 20 GW by 2010 and there are expectations of an installed capacity exceeding 40 GW by 2020. This article will present the innovative solutions for technical and economical integration that allow to reach such high level wind penetration objectives (the system peaks at around 44 GW and is almost isolated). It will be described how the regulation has evolved from a pure Feed-in-Tariff to a market+premium option, where technical and economic integration has been a priority. Today, approximately 97% of installed wind capacity accesses the Spanish wholesale electricity market. Market integration has been crucial, sending the correct signals to participants to look for the optimum technical solutions. Technical improvements have come from both wind power producers (fault-ride-through capabilities, visibility and controllability of wind power, power production forecasting, reactive power control) and the system operator (specific control centre dedicated to Renewable Energy Sources (RES), new security analysis tools, gaining technical confidence of wind capabilities).     

The costs and impacts of intermittency: An ongoing debate: "East is East,and West is West,and never the twain shall meet."

A recent issue of Energy Policy carried a new contribution to the ongoing debate over the implications of a high penetration of wind power for the UK electricity system [Oswald, J., Raine, M., Ashraf-Ball, H., 2008. Will British weather provide reliable electricity? Energy Policy 36 (8), 3202–3215]. That paper made a number of points that require comment or qualification, in relation to both system-wide impacts and the impact on conventional thermal generation. The purpose of this forum piece is to respond to these points, and to explain where we believe the Oswald paper risks repeating the mistakes of the past by interpreting data in a selective manner, or by erroneously singling out alarming sounding findings which do not reflect how electricity systems and markets operate. The latest EU renewable energy targets do imply a wind penetration level which is considerably higher than that which has hitherto been envisaged, and new research is require to understand the potential impacts. However, such research must be based on statistical or time series simulation modelling.     

Determining optimal electricity technology mix with high level of wind power penetration

Notwithstanding its variability and limited controllability, wind power is expected to contribute strongly to electricity generation from renewable energy sources in the coming decades. Treating wind power as non-dispatchable by subtracting its output from the original load profile, results in a net load profile, which must be covered by conventional power generation. The screening curve methodology is a first approximation to find the optimal generation technology mix, based on relative cost levels. However, increased variability of the net load profile, due to wind power generation, strongly influences system operation. Therefore a static linear programming investment model is developed to determine the optimal technology mix. This alternative methodology shows a reduced capacity of inflexible generation after including operational constraints to properly account for net load variability. In order to illustrate this methodology, an example is set up, showing the sensitivity with respect to ramp rates of conventional generation, transmission interconnection and energy storage. The comparison of those different sources of system flexibility suggests that energy storage facilities better facilitate the integration of wind power generation.     

High value wind: A method to explore the relationship between wind speed and electricity locational marginal price

Wind and solar resources are, by nature, spatially distributed and temporally variable. The process of siting generators that use these renewable resources and integrating them into the electricity system therefore raises different issues than the same process for combustion facilities does. A method for discovering wind power sites with the highest value to the electricity system was developed and is illustrated here using data for the state of Michigan. This method combines readily available hourly average 10 m wind speed data with wholesale electricity price data, as hourly locational marginal price (LMP). The 10 m wind speed data from 72 sites were extrapolated vertically to 80 m turbine hub height, converted to wind power density, and interpolated horizontally via kriging to reconstruct a continuous surface. LMP data from 178 generator nodes were allocated across space using Thiessen polygons. High LMP was interpreted as a signal of insufficiency or weakness in the electricity system, and wind energy was considered a possible remedy. The method, implemented in a GIS, identifies when and where peaks in LMP and wind power density co-occur and highlights these events as high value. As the drive to incorporate more renewable generators into the electricity system increases, this method will help locate the most desirable sites based on wind resource characteristics and the structure of the larger electricity system. Proposing a new way to think about the value of the wind resource to the electricity system is a primary contribution of this work.     

Sizewell: good value for consumers' money?

For consumers, the overriding issues in electricity policy are always likely to be those which affect prices, both in the near future and over the longer term. It is therefore the ‘need and economics’ part of the overall case for Sizewell that consumers’ representatives chose to scrutinize. This paper argues that there are no compelling short-term reasons to start construction of Sizewell at the earliest possible time. Further, long-term considerations suggest that there are good reasons not to make an early commitment to the Westinghouse fourloop design of PWR, either for Sizewell or for subsequent orders.     

Investigation of wind characteristics and assessment of wind-generation potentiality in Uludağ-Bursa,Turkey

In this study, wind characteristic and wind energy potential of the Uluda? skinning which is located in the south Marmara region of Turkey were analyzed using the wind speed data collected during the period 2000–2006. The wind speed distribution curves of Uluda?-Bursa were obtained by using the Weibull and Rayleigh probability density functions. The average Weibull shape parameter k and scale parameter c were found as 1.78 and 7.97 m/s for the period 2000–2006. The yearly mean wind speed in Uluda?-Bursa was obtained as 7.08 m/s for period of 7 years. A technical and economic assessment has been made of electricity generation from four wind turbines having capacity of (600, 1000, 1500 and 2000 kW). The yearly energy output, capacity factor and the electrical energy cost of kW h produced by the three different turbines were calculated. The cost of each kW h produced using the chosen wind turbines in Uluda?-Bursa were found to between 0.255 and 0.306 $/kW h.     

Pricing offshore wind power

Offshore wind offers a very large clean power resource, but electricity from the first US offshore wind contracts is costlier than current regional wholesale electricity prices. To better understand the factors that drive these costs, we develop a pro-forma cash flow model to calculate two results: the levelized cost of energy, and the breakeven price required for financial viability. We then determine input values based on our analysis of capital markets and of 35 operating and planned projects in Europe, China, and the United States. The model is run for a range of inputs appropriate to US policies, electricity markets, and capital markets to assess how changes in policy incentives, project inputs, and financial structure affect the breakeven price of offshore wind power. The model and documentation are made publicly available.     

Electrolysers as a load management mechanism for power systems with wind power and zero-carbon thermal power plant

For an isolated power system the deployment of a large stock of electrolysers is investigated as a means for increasing the penetrations of wind power plant and zero-carbon thermal power plant. Consideration is given to the sizing and utilization of an electrolyser stock for three electrolyser implementation cases and three operational strategies, installed capacity ranges of 20–100% for wind power and 10–35% for zero-carbon thermal power plant (as proportions of the power system’s maximum electrical demand) were investigated. Relative to wind-hydrogen alone, hydrogen yields are substantially increased especially on low-wind days. The average load placed on fossil-fuelled power plant is substantially decreased (while achieving a virtually flat load profile) and the carbon intensity of electricity can be reduced to values of <0.1 kg CO₂/kWh_e. The trade-offs between the carbon intensity of the electricity delivered, the carbon intensity of the hydrogen produced and the daily hydrogen yield are explored. For example (on the variable wind day for Strategy C with respective wind power and zero-carbon thermal power penetrations of 100% and 35%), if the carbon intensity of hydrogen is relaxed from 0 to 3 kg CO₂/kg H₂, the hydrogen yield can be increased from 435 tonnes to 1115 tonnes (which is the energy equivalent of 120% of consumer demand for electricity on that day). The findings suggest that the deployment of electrolysers on both the supply and demand-side of the power system can contribute nationally-significant amounts of zero or low-carbon hydrogen without exceeding the power system’s current maximum system demand.     

Successful renewable energy development in a competitive electricity market: A Texas case study

The development of renewable energy in markets with competition at wholesale and retail levels poses challenges not present in areas served by vertically-integrated utilities. The intermittent nature of some renewable energy resources impact reliability, operations, and market prices, in turn affecting all market participants. Meeting renewable energy goals may require coordination among many market players.     

Wind power in the Danish liberalised power market—Policy measures,price impact and investor incentives

Wind power has a strong position at the Danish electricity market, mainly caused by high feed-in tariffs in the 1990s. Investments in new wind-power installations on land, however, have declined dramatically after the Danish electricity market was liberalised in 1999. First, the paper describes how policy measures directed towards wind power have been redesigned to match the liberalised market. Then, we estimate the impact of the redesigned tariffs on the electricity prices. Finally, we assess whether the new tariffs make an incentive to invest in wind power. The paper concludes that the new tariffs not by itself make evidence for the actual Danish recession in new wind-power installations after the electricity reform. The main causes could include a combination of problems in spatial planning, high risk aversion of new wind turbine investors and perhaps more favourable support schemes in other countries.     

Winds of change: How high wind penetrations will affect investment incentives in the GB electricity sector

Wind power is widely expected to expand rapidly in Britain over the next decade. Large amounts of variable wind power on the system will increase market risks, with prices more volatile and load factors for conventional thermal plant lower and more uncertain. This extra market risk may discourage investment in generation capacity. Financial viability for thermal plant will be increasingly dependent on price spikes during periods of low wind. Increased price risk will also make investment in other forms of low-carbon generation (e.g. nuclear power) more challenging.     

Critical evaluation of financial supporting schemes for wind-based projects: Case study Greece

After a long stagnating period during the second half of the 1990s, the market of wind energy in Greece was described by remarkable but unstable growth rates that resulted in the operation of 1 GW of wind power by the end of 2009. Still though, penetration of wind energy is not the one anticipated. On the other hand, national targets regarding the Renewable Energy Sources’ (RES) contribution and existence of excellent wind potential areas across Greece challenge new wind energy investments. Acknowledging the unsteady development rates of wind power in Greece, efficiency of the State support mechanisms is currently investigated. Based on an analytical evaluation model, the investigation undertaken is extended to provide a detailed cost-benefit analysis of several wind energy case studies, including mainland and island applications as well as comparison with both conventional power stations and photovoltaic plants. For this purpose, the financial support provided by the State is directly compared with benefits accruing from the operation of wind parks, considering also the avoidance of social costs deriving from thermal power stations. Based on the results obtained, the beneficial characteristics of wind energy applications for the Greek society are clearly demonstrated, especially in the case of non-interconnected island grids.     

Wind power integration and power system flexibility–An empirical analysis of extreme events in Germany under the new negative price regime

In this article, the flexibility of the German power market with respect to the integration of an increasing share of electricity from renewable energy sources was analysed. Flexibility limiting system components, which cause negative prices, are explained and illustrated for the German market. The decision of the European Energy Exchange in Leipzig to allow negative price bids is then explained. The empirical data illustrate the flexibility of conventional generating capacities in Germany from October 2008 to December 2009. Of the 86 h of negative spot prices, 19 h were significantly negative, with prices of at least −100 €/MWh. These extreme hours were analysed in greater detail by the examination of different system components. Thereby, load, wind power infeed and conventional generation by fuel type were observed, as well as the market for negative tertiary reserve, as indicators for market tightness. Although the market situations were found to be severe, under the current conditions, it could have been much worse. In order to enable the market to clear at all times, policy recommendations are provided and long-run implications of an increasing RES-E share on the conventional generation capacity are discussed. The article concludes with an outlook on additional power system flexibility options.     

Short-term optimal wind power generation capacity in liberalized electricity markets

Mainly because of environmental concerns and fuel price uncertainties, considerable amounts of wind-based generation capacity are being added to some deregulated power systems. The rapid wind development registered in some countries has essentially been driven by strong subsidizing programs. Since wind investments are commonly isolated from market signals, installed wind capacity can be higher than optimal, leading to distortions of the power prices with a consequent loss of social welfare. In this work, the influence of wind generation on power prices in the framework of a liberalized electricity market has been assessed by means of stochastic simulation techniques. The developed methodology allows investigating the maximal wind capacity that would be profitably deployed if wind investments were subject to market conditions only. For this purpose, stochastic variables determining power prices are accurately modeled. A test system resembling the size and characteristics of the German power system has been selected for this study. The expected value of the optimal, short-term wind capacity is evaluated for a considerable number of random realizations of power prices. The impact of dispersing the wind capacity over statistical independent wind sites has also been evaluated. The simulation results reveal that fuel prices, installation and financing costs of wind investments are very influential parameters on the maximal wind capacity that might be accommodated in a market-based manner.