Distributed generation and d b ldistribution regulation
Rafael Cossent
May 5, 2014
Contents• What is DG?
Wh DG?• Why DG?
• Impact of DG on distribution networks
• DG and distribution regulation
C l i• Conclusions
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Distributed generation and distribution regulationMay 5, 2014
11
What is DG?
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What is DG?• Distributed generation are “generation plants connected to the distribution system” (EU Directive 2009/72/EC)
Source: ERGEG
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What is DG?• Typical technologies:
Combined Heat and Power Renewable Energy Sources (RES)(CHP)
Large district heating* Large industrial CHP*
Large hydro** Off-shore wind
Large-scale generation
Large industrial CHP Off shore wind Co-firing biomass in coal power plants Geothermal energy
Medium/ll l
Medium district heating Medium industrial CHP
C i l CHP
Medium and small hydro On-shore wind
Tid lsmall-scale generation(Distributed Generation)
Commercial CHP Micro CHP
Tidal energy Biomass and waste
incineration/gasification Solar PV
>50 MW; **>10 MW
)
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Source: DG‐Grid Project
What is DG?• Spain: 22GW of DG (21% of capacity) at the end of 2010
75%
100%
50%
75%
25%
0%
Cogeneration Solar PV CSP Wind power Mini‐hydro (≤ Medium hydro Others10MW) (>10MW,≤ 50
MW)
0‐1 kV 1 ‐36 kV 36‐72.5 kV 72.5‐145 kV 145‐400 kV
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Source: (Cossent et al., 2011)
What is DG?• Grid connection schemes
GD
GD GDGD
Dedicated line
GD GDGD
Dedicated grid
GD
Dedicated grid
GD
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Shunt connection
22
Why DG?
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Why DG?• Energy Policy: support of RES and CHP
Source: ETP‐Smartgrids
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Why DG?• Energy Policy: support of RES and CHP. EU overview
RES CHP DER total
35
40
city
(%)
20
25
30
ectri
city
cap
ac
10
15
20
hare
in to
tal e
le
0
5
k d y d y l K c y d
DE
R s
h
Austria
Belgium
Denmark
Finlan
dFran
ceGerm
any
Greece
Irelan
dIta
lyLu
xembu
rgNeth
erlan
dsPort
ugal
Spain
Sweden UK
Bulgari
a
Czech
Rep
ublic
Estonia
Hunga
ryLa
tvia
Lithu
ania
Poland
Roman
iaSlov
akia
Sloven
ia
10Instituto de Investigación TecnológicaEscuela Técnica Superior de Ingeniería ICAI
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Source: SOLID‐DER Project
Why DG?
Special regime generation2002
Special regime generation2012
40,000
2002
40,000
2012
25,000
30,000
35,000
a (GWh)
OTRAS
TRAT.RESIDUOS
RESIDUOS25,000
30,000
35,000
a (GWh)
OTRAS
TRAT.RESIDUOS
RESIDUOS
10,000
15,000
20,000
Energía v
endid
BIOMASA
HIDRÁULICA
EÓLICA
SOLAR TE
SOLARFV10,000
15,000
20,000
Energía v
endid
BIOMASA
HIDRÁULICA
EÓLICA
SOLAR TE
SOLARFV
0
5,000
0<=T<1 1<=T<36 36<=T<72,5 72,5<=T<145145<=T<=400Nivel de tensión T (kV)
SOLAR FV
COGENERACIÓN
0
5,000
0<=T<1 1<=T<36 36<=T<72,5 72,5<=T<145145<=T<=400Nivel de tensión T (kV)
SOLAR FV
COGENERACIÓN
CHP WindSolar PV
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Source: CNE
Why DG?• Consumer‐driven DG:
– Enhance quality of service and reduce the energy bill– Requires net‐metering ≠ off‐grid generation– Frequent in the US. Future in Europe?
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http://www.greenbrilliance.com
Why DG?• Utility‐driven DG:
– Possible in integrated utilities (distribution + generation)– Contribute to network operation (reduce losses, improve voltage, etc.)Alternative to network investments: cost savings or unfeasible– Alternative to network investments: cost‐savings or unfeasible reinforcements
Source: (Ilex‐UMIST,
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Source: (Ilex UMIST, 2004)
33
I t f DGImpact of DG on distribution networksdistribution networks
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Impact of DG on distribution networks
• Conventional scenario • Connection of DG
– Consumers only
– Predictable load
– New network users
– IntermittencyPredictable load
– Planned for peak‐load
Intermittency
– Planning: peak‐load and peak generation
– Unidirectional power flows
– Passively operated
peak generation
– Bi‐directional power flows
– Need for active operation
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Impact of DG: investment deferral• Transformer reinforcement vs. DG support
– Requires the active involvement of DG
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Source: (Trebolle et al., 2010)
Impact of DG: incremental investments
120%
130%
90%
100%
110%
ance
cos
ts [%
]
50%
60%
70%
80%
tmen
t+M
aint
ena
20%
30%
40%
50%
emen
ts in
Inve
st
0%
10%
Demand200871%
Demand202026%
Demand202092%
Demand2020162%
Demand20081%
Demand20201%
Demand202016%
Demand202033%
Demand200811%
Demand20207%
Demand202012%
Demand202021%
Incr
e
DG 2008 DG 2008 DG 2020medium
DG 2020high
DG 2008 DG 2008 DG 2020medium
DG 2020high
DG 2008 DG 2008 DG 2020medium
DG 2020high
The Netherlands Germany Spain
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Source: IMPROGRES Project
Impact of DG: variable energy losses
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Source: (Méndez et al., 2006b)
Impact of DG: voltage control• Voltage increases when DG connected at the end of the feeder– Conventional solution: connection rules that limit the size of DG
– Advanced solution: DG providing power factor or voltage control
MV feeder LV feeder
Min. loadPermissible voltage rise for embedded generation
Voltage
Max. load Allowable voltage variation
g
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Impact of DG: power supply interruptions• A fault occurs in the feeder circuit breaker A would open
– Conventional solution: breaker B must open to disconnect DGConventional solution: breaker B must open to disconnect DG for safety reasons
– Advanced solution: in islanded mode the load could be supplied by DG and continuity of supply would improve
D.G.
LOAD
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Impact of DG: protections• DG may increase short‐circuit power and alter fault currents
– Malfunctioning of protections devices, e.g. sympathetic trippingMalfunctioning of protections devices, e.g. sympathetic tripping
– May be needed to replace circuit breakers and other switching equipment, especially in urban networks
Icc Substation
A
LoadFault
Icc DG
B
L d
Icc DG
LoadDG
Sympathetic tripping of breaker B
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Impact of DG: other• Power quality
– The connection or disconnection of DG can produce voltage voltage variationsvariations outside allowed range
– Wind power variations in weak networks can produce flickerflickerPower electronics of PV or wind generation inject harmonicsharmonics– Power electronics of PV or wind generation inject harmonicsharmonics
•• IntermittencyIntermittency worsens some of the previous problems
Weekly production of a 5kWp PV unit
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DG d di t ib tiDG and distribution regulationregulation
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DG and distribution regulation• Role of regulation in this new context:
1. Adapt DSO remuneration DSO remuneration to DG impact while encouraging efficient network planning
2. Encourage innovationinnovation by DSOs
3. Design DG‐compatible regulatory incentive regulatory incentive schemes
4 Provide efficient economic signals to DGeconomic signals to DG units4. Provide efficient economic signals to DG economic signals to DG units
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Distribution regulation: DSO remuneration• Remuneration may depend on energy distributed (price caps)
– DG can reduce energy distributed (net‐metering), thus jeopardizing DSOs
• Solution: revenue decoupling. revenue decoupling. Harder in integrated companies
Common
Demand
Common meter
Demand meter
DG meter
G G
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Distribution regulation: DSO remuneration• Short‐term: compensate DSOs for DG incremental costsincremental costs
S l lt ti• Several alternatives:
• Partial cost passpass‐‐throughthrough:
• DG‐related revenue driversrevenue drivers:
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Distribution regulation: DSO remuneration• Short‐term: compensate DSOs for DG incremental costsincremental costs
OFGEM’ h i th UK• OFGEM’s approach in the UK
Source: (OFGEM, 2009)
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Distribution regulation: DSO remuneration• Long‐term: integrate DG integrate DG efficiently
Cost assessments with DG:– Cost assessments with DG:• Adding DG variables in frontier models (SFA, DEA)Second stage regressions• Second stage regressions
• Use of bottom‐up benchmarking (e.g. reference reference network models)network models)network models)network models)
– Innovative remuneration schemesremuneration schemesf• E.g. Menus of contracts
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Distribution regulation: DSO innovation• Longer regulatory periods
–Uncertainty vs. efficiency incentivesUncertainty vs. efficiency incentives–– CAPEX vs. OPEX CAPEX vs. OPEX solutions
• Specific incentives to innovateincentives to innovate (smarter grids):– Input based:
• Subsidies (UK‐LCNF), • Higher rate of return (Italy‐extra WACC)
–Output based:• Hosting capacity for DG in distribution grids (Italy)F t UK RIIO l ti• Future UK RIIO regulation
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Distribution regulation: regulatory incentives• Reference losseslosses
– Traditionally based on historical valueshistorical values–– Directly comparedDirectly compared among distribution firms
• DG impact:• DG impact:– It is not captured not captured by historical values– Can be very different among distribution areasdifferent among distribution areasy gg
• Reference values should be modified accordingly:LAF (RU): Subtract losses caused by DG is remote areas– LAF (RU): Subtract losses caused by DG is remote areas
– RNM (Spain): loss coefficient specific to each DSO– DEA (Norway): include DG and losses as variablesDEA (Norway): include DG and losses as variables
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Distribution regulation: regulatory incentives• Incentives to improve continuity of supplycontinuity of supply
– Reliability usually measured considering only consumers But DGReliability usually measured considering only consumers. But DG is also affected by interruptions
– Measurement should incorporate DG incorporate DG units as a network userpp
• Direct compensations– E.g. In Italy, MV DG units connected are compensated if the g y, pnumber of interruptions exceeds a certain threshold
• DG‐integrated reliability indices
unitsDG customers ofnumber Totaldurationson interruptiDG Customer
DGSAIDI
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Distribution regulation: regulatory incentives
Scenario DG capacity [MW]
Nº DG DG size[kW] DG location
0 0 0 0T1 250 cons
T5 – 250 cons.5 km
T6 – 250 cons.5 km
T7 – 250 cons.5 km
0 0 0 0 ‐1 1 8 125 T1‐T82 5 400 12.5 T1‐T83 5 400 12.5 T2,T6‐84 5 4 1250 T2,T6‐85 1 4 250 T2,T6‐86 5 400 12 5 T1 T3 T5
1 2
T1 – 250 cons.5 km
T2 – 250 cons.5 km3 4
5 6 7
8
6 5 400 12.5 T1, T3‐T57 5 4 1250 T1, T3‐T58 5 4 250 T1, T3‐T59 1 1 1000 T110 1 1 1000 T8
T3 – 250 cons.5 km
T4 – 250 cons.5 km
T8 – 250 cons.5 km
Scenario ∆SAIFI ∆SAIDI ∆ASIFI ∆ASIDI1 0% 0% 0% 0%2 0% 0% 0% 0%3 ‐0.04% ‐0.03% ‐3.33% ‐2.86%4 3.33% 2.86% 10% 8.57%5 0.04% 0.03% 10% 8.57%6 0 04% 0 03% 3 33% 2 86%6 0.04% 0.03% 3.33% 2.86%7 ‐3.33% ‐2.86% ‐10% ‐8.57%8 ‐0.04% ‐0.03% ‐10% ‐8.57%9 ‐0.03% ‐0.03% ‐10% ‐10.95%
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10 0.02% 0.02% 5.56% 5.56%
Distribution regulation: signals for DG
•• Connection charges Connection charges for DGOne off charge at connection
DeepDeep
– One‐off charge at connection
– Trade‐off: efficient location incentive vs. transparency/non‐discrimination
ShallowishShallowish– Two main approaches:• A) Shallow chargesShallow charges
ShallowShallow
) gg• B) Deep chargesDeep charges
GG GG
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Distribution regulation: signals for DG• Firm vs non‐firm network access
Real‐time management
E.g. Germany
DSO can limit injections to 70% of
t d itC ti t i t rated capacityConnection constraints
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Distribution regulation: signals for DG•• UseUse‐‐ofof‐‐System charges System charges for DG
– Periodical charges to recover allowed annual revenuesPeriodical charges to recover allowed annual revenues
– Conventionally: only paid by consumers
– New context: paid by all network users, including DGincluding DG• Cost reflective, i.e. either positive or negative• Discrimination per location and time
– Economic signal for efficient location and operationg p• Connection and UoS should be designed coherentlydesigned coherently
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Source: Eurelectric, 2013
Distribution regulation: signals for DG• Change the role of DG provide ancillary servicesancillary services
– Voltage control firm capacity controlled islandingVoltage control, firm capacity, controlled islanding
– Potential alternativesalternatives:• Mandatory requirementsy q• Incentive schemes• Bilateral agreements between DSOs‐DG• Local marketsLocal markets
Power factorPower factor range Bonus Penalty
0.98 lagging - 0.98 leading 0 3%leading0.995 lagging - 0.995 leading 4% 0
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Conclusions
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Conclusions (i/ii)•• DG is increasing DG is increasing mainly due to environmental and energy independence benefits: RES and CHP
• DG produces a significant impact on distribution networksimpact on distribution networks. This can be mitigated or improved through:This can be mitigated or improved through:– DG controllability and provision of network services
Active networks/smarter gridssmarter grids– Active networks/smarter gridssmarter grids
• Distribution is a natural monopoly: regulation should be regulation should be d dd d hadaptedadapted to this new context
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Conclusions (ii/ii)• Distribution regulation should address:
SO ii f G & ffi i– DSO remunerationremuneration: account for DG & encourage efficient network development
– Encourage innovationinnovation from DSOs
Adapt the design of regulatory incentivesregulatory incentives– Adapt the design of regulatory incentivesregulatory incentives• Include DG effect on reference losses• Incorporate DG to reliability measurementp y
– Provide efficient economic signals to DG economic signals to DG unitsC t fl ti U S h• Cost reflective UoS charges
• Transparent and non‐discriminatory connection charges• Provision of ancillary services by DG
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• Provision of ancillary services by DG
References• Cossent R., Gómez T. Frías P. “Towards a future with large penetration of distributed
generation: Is the current regulation of electricity distribution ready? Regulatory recommendations under a European perspective," Energy Policy. vol. 37, no. 3, pp. 1145‐1155 March 20091155, March 2009
• Cossent R., Gómez T. Olmos L. “Large‐scale integration of renewable and distributed generation in Spain: current situation and future needs" Energy Policy. vol. 39, no. 12, pp. 8078‐8087, December 2011
• de Joode J., Jansen J., van der Welle A., Scheepers M.”Increasing penetration of renewable and distributed electricity generation and the need for different network regulation”. Energy Policy. vol. 37, no. 8, pp. 2907‐2915, August 2009
• Eurelectric, “Network tariff structure for a smart energy system”. May 2013.
• González‐Sotres L., C. Mateo, T. Gómez, J. Reneses, M. Rivier, A. Sánchez‐Miralles. “Assessing the Impact of Distributed Generation on Energy Losses using Reference Network Models”. Ci è I t ti l S i Th El t i P S t f th F t I t tiCigrè International Symposium on The Electric Power System of the Future: Integrating Supergrids and Microgrids. Bolonia, Italia, 13‐15 September 2011
• ILEX Energy Consulting and UMIST, 2004. "A report for DTI on Ancillary Service Provision from Distributed Generation". September 2004Distributed Generation . September 2004
40Instituto de Investigación TecnológicaEscuela Técnica Superior de Ingeniería ICAI
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References• Méndez V., J. Rivier Abbad, J.I. de la Fuente, T. Gomez, J. Arceluz, J. Marín, A. Madurga,
"Impact of distributed generation on distribution investment deferral," International Journal of Electrical Power & Energy Systems. vol. 28, no. 4, pp. 244‐252, May 2006ª
• Méndez V., J. Rivier Abbad, T. Gomez. "Assessment of Energy Distribution Losses for Increasing Penetration of Distributed Generation," IEEE Transactions on Power Systems. vol. 21, no. 2, pp. 533‐540, May 2006b
• OFGEM, 2009. "Electricity Distribution Price Control Review 5 Final Proposals ‐ Incentives and Obligations". 7 December 2009.
• Trebolle D Gómez T Cossent R Frías P “Distribution planning with reliability options for• Trebolle D., Gómez T., Cossent R., Frías P. Distribution planning with reliability options for distributed generation," Electric Power Systems Research. vol. 80, pp. 222‐229, 2010
• Walling, R. A., Saint, R., Dugan, R. C., Burke, J. and Kojovic, L. A., 2008. "Summary of distributed resources impact on power delivery systems." IEEE Transactions On Powerdistributed resources impact on power delivery systems. IEEE Transactions On Power Delivery 23(3): 1636‐1644.
• IMPROGRES Project: http://www.improgres.org/
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