IEA© OECD/IEA 2018

Advanced Power Plant Flexibility

Carlos Fernández Alvarez – Senior Coal Analyst

Clean Coal Day in Japan - Tokyo, 11 September 2018

© OECD/IEA 2018

Climate policy strongly accelerates the historical trend of electrification

Rapid decarbonization of electricity opens new opportunities on a well-below 2° path.

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1970 1980 1990 2000 2010 2020 2030 2040 2050 2060

Sh

are

of

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icty

Historical

RTS

B2DS

© OECD/IEA 2018

Imagine an alternative universe where

In this case we would have a “copy paste” transition without needing to rethink grid operations

Large scale deployment of baseload

geothermal replaces baseload coal

Rapid progress with biogas provides low

carbon CH4 for gas turbines

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Instead, low carbon investment is increasingly dominated by wind and solar PV

Asymmetrical technological progress with wind and PV is driving electrification and necessitates a

system transformation

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variable renewables dispatchable renewables biofuels and renewable heat

Investment into non-hydro renewables, 2016

Solar PV

Wind

b$

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The headwind of the hydro and nuclear slowdown

New low-carbon investment covers only around half of the global electricity demand increase.

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Expected annual production from facilities starting construction

Wind and solar Nuclear and hydro

TWh

© OECD/IEA 2018

The four pillars of a successful renewable integration

Renewable integration calls for flexibility throughout the electricity system

Demand response

Storage

Transmission interconnection

Flexible generation

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Conventional capacity remains essential for supply security

Batteries and demand side solutions don’t fully replace conventional capacity

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Conventional capacity in the WEO sustainable development scenario

coal gas

GW

© OECD/IEA 2018

• Flexible power plants are a major source of flexibility in all power

systems

- Biggest source in several leading countries

- Key issues: minimum generation levels, start-up times, ramp-rates

• Significant barriers hinder progress:

- Technical solutions not always known

- Regulation and/or market design frequently favour running ‘flat-out’

- Contractual arrangements with manufacturers may penalise flexible

operating pattern

• Campaign launched at CEM8

System integration –boosting power plant flexibility

Example North-AmericaFrom baseload operation to

starting daily or twice a day

(running from 5h00 to

10h00 and 16h00 to 20h00) Source: NREL

© OECD/IEA 2018

Advanced Power Plant Flexibility Campaign

Campaign Co-leads

Participating CEM Members

Non-government partners

Now 14 partner countries and 14 industry and NGO partners – membership has increased throughout the duration of the campaign

© OECD/IEA 2018

Flexibility -Needed across a wide range of time scales

System flexibility addresses a set of issues, spanning timescales from subseconds to years.

Short-term flexibilityMedium-term

flexibilityLong-term flexibility

TimescaleSubseconds to

seconds

Seconds to

minutes

Minutes to

hoursHours to days Days to months Months to years

Issue

Address system

stability, i.e.

withstanding

large

disturbances such

as loosing a large

power plant

Address

fluctuations in the

balance of

demand and

supply, such as

random

fluctuations in

power demand

Manage ramps in

the balance of

supply and

demand,

e.g. increasing

electricity

demand

following sunrise

or rising net load

at sunset.

Decide how many

thermal plants

should remain

connected to and

running on the

system.

Managing

scheduled

maintenance of

power plants and

larger periods of

surplus or deficit

of energy, e.g.,

hydropower

availability during

wet/dry season

Balance seasonal

and inter-annual

availability of

variable

generation (often

influenced by

weather) and

electricity

demand

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Relevant dimensions for unlocking system flexibility

Technical, economic and institutional policy layers mutually influence each other and have to be

addressed in consistent way to enhance power system flexibility.

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Flexible thermal generation –business as usual already today

Power plant flexibility is a priority for the operation of Germany’s power system.

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1 5 9 13 17 21 26 30

GW

November 2017

Other

Pumped storage hydro

Natural Gas

Hard coal

Lignite

Nuclear

Conventional electricity generation in Germany in November 2017

Source: Agora (2018b), Die Energiewende im Stromsektor: Stand der Dinge 2017

Main technical

parameters

• Minimum output –

less shut-downs

and costs

• Ramp rate and

start-up time –

faster response

• Minimum up and

down times –

Flexible scheduling

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Power plant flexibility can enable existing assets to remain profitable in changing market conditions.

• Reduction of minimum

stable output levels from

35% to 26%

• Optimization of control

loops and operation modes

• Retrofitting with flue gas

dampers to regulate cooling

• Reduction of minimum

stable output level lead to

reduced number of start-

ups and shut-downs

associated with increased

costs

• Faster ramping rates: able

to ramp at 48MW/min and

up to 90MW/min under

special conditions

• Improved start-up:

Cold 20% faster

Warm 42%-50% faster

Hot 40 – 46% faster

Measures Results

Co-generation plant located in Hamburg

with 827MWe capacity.

Plant was unable to obtain sufficient

revenue from base-load operation under

changing market conditions.

Source: Case-study provided by MHPS,March 2018. Vattenfall (2016)

MoorFlexFlexible coal and co-generation

© OECD/IEA 2018

Policy guidelines for power plant flexibility

Following a set of best practice policy guidelines allows successful roll-out of power plant flexibility.

Source: Status of Power System Transformation 2018

Assess

system wide

flexibility

needs and

potential

Engage

stake-

holders

across wide

range of

areas

Enhance

use of

existing

flexibility

Unlock

latent

flexibility in

power

plants via

policy &

regulation

Incent

measures to

operate

plants more

flexibility

and retrofit

Roadmap

future

flexibility

strategies

as part of

planning

processes

short-term long-term

© OECD/IEA 2018

Consideration 1 - Assess

Building up a flexibility inventory can allow policy makers to see what options are available today and

how to plan for future flexibility requirements.

ASSESS

What are the near and long

term system requirements?

How flexible is the

system today?

Assess potential to unlock flexibility

through market rules and

regulations

Survey potential for retrofits and

operational changes in existing assets

Assess the landscape of

available technologies

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Consideration 2 - Engage

Domestic and international stakeholder engagement can help build momentum for embedding

flexibility in modern power systems.

• Disseminate high-quality data across various

stakeholder groups, including beyond direct system

operation

• Facilitate capacity building through international

exchange

• Promote domestic research through data sharing and

issuing public research grants

• Share experiences on system flexibility in national and

international forums

• Engage with plant operators and original equipment

manufacturers

AcademiaPlant

operators

Investors

Equipment

manufacturers

System

planners

International

best practice

© OECD/IEA 2018

Consideration 3 - Enhance

Enhancing system-wide flexibility requires coordinating technical options from operational changes to

demand-side measures

• Embolden system operators to engage in

“faster” power system operation

• Transition towards centralized VRE forecasting

systems

• Increase communication and coordination

between balancing areas

• Incentivise technologies that “flexibilise”

demand

• Adopt advanced strategies to increase available

grid capacity

Uncoordinated balancing areas

Coordinated

schedulingReserve sharingConsolidated

operations

Information

exchanges via

centralized or

bilateral exchange

Physical

consolidation under

vertical integration or

regional/independent

system operator

Coordination and

exchanges of information.

Financial transaction

volume depends on

frequency of exchanges.

Without coordination,

exchanges need to be

pre-negotiated bilaterally.

Figure adapted from NREL (2015) Balancing Area Coordination: Efficiently integrating Renewable Energy into the Grid, Greening the Grid

A. B. C.

© OECD/IEA 2018

Consideration 4 - Unlock

Unlocking flexibility from existing assets can be a cost-effective approach but should be informed by

cost-benefit analyses

• Review “must-run” requirements for power plants

• Oversee the review of electricity and fuel contracts to enhance flexibility through contract flexibility

• Allow VRE participation in reserve provision

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Generation/Load (MW) Core RE2

NUCLEAR COAL BIOMASS_WASTE OtherGas

CCGT HYDRO SOLAR WIND

OCGT DIESEL VRE curtailment Load

Net Load

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Plant and contract flex RE2

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1.0

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3.0

3.5

4.0

RE2 Plant andContractFlexibility

RE2 with 800MW battery

RE2 with allFlexibilityOptions

RE2 withFlexible EV

charging

RE2 withFlexible

IndustrialLoads

RE2 withPumped

Storage Hydro

Total savings per cost component

(THB billion)

Fuel Cost Ramp Cost Start & Shutdown Cost VO&M Cost

© OECD/IEA 2018

Consideration 5 - Incentivise

Introduce fair remuneration that accounts for the system value of flexibility

• Allow cost recovery for retrofit

investments

• Provide incentives that allow for

resilient, high-flexibility

components in new power plants

• Improve wholesale market design

• Implement market instruments

for all relevant system services

• Implement additional

mechanisms that appropriately

value capacity, flexibility and

other relevant resource attributes

In liberalized markets In regulated markets

© OECD/IEA 2018

Consideration 6 - Roadmap

Long-term system transformation is an iterative process.

It requires regular evaluation and update of system planning.

• Encourage the inclusion of flexibility

assessments in planned system adequacy

assessments

• Request state-of-the-art decision support

tools for long-term planning purposes

• Encourage the integration of generation

and transmission investment planning

• Assess costs and benefits of demand-side

resources and electricity storage options

Picture credit: Shutterstock

© OECD/IEA 2018

Key messages

• Increasing share of variable renewable generation sources requires increasing flexibility throughout the whole electricity system

• Grid integration, demand response, storage and flexible generation plants are the four pillars of successful renewable integration

• The role of existing thermal power plants is transitioning in many modern power systems toward more flexible modes of operation and, at times, reduced operating hours.

• Well-designed policy, market and regulatory frameworks critical to unlock power plant flexibility

- Improved market design and proper valuation of flexibility services

• Incorporating regular flexibility assessments into planning and strategy dialogues is key.

- Established decision support tools can be used to assess flexibility requirements, understand the value of proposed changes, and plan for the future

© OECD/IEA 2018

Status of Power System Transformation 2018

• The main findings of the APPF campaign

can be found in the 2018 PST Report

• This report was a collaboration between

the IEA and the US National Renewable

Energy Laboratory (NREL)

• To download the report go to the

following link

• https://webstore.iea.org/status-of-power-

system-transformation-2018

IEA© OECD/IEA 2018

Thanks!