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Advanced wind power technology

Advanced wind power technology. Wind power in electricity markets Santeri Oksanen Jaakko Jääskeläinen. Electric system Electricity markets Wind energy in the electricity market Subsidies Increasing wind Market adaption Capacity mechanism Demand side management.

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Advanced wind power technology

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  1. Advanced windpowertechnology Windpower in electricitymarkets Santeri Oksanen Jaakko Jääskeläinen

  2. Electric system • Electricitymarkets • Windenergy in the electricitymarket • Subsidies • Increasingwind • Market adaption • Capacitymechanism • Demand side management Structure of the presentation

  3. Production ≠ consumption • No storage in system impossible • As rotation, bothendsrotatesamespeed • Alternatingcurrent 50 Hz • Small imbalance Fluctuation in frequency • Largeimbalance  System shutsdown Electric system

  4. Electricitymarkets

  5. Demand and supplycurves for eachhour • Forms the equilibriumprice • However, at deliveryforecasts 12 … 36 hoursold • Difficult for wind SPOT market

  6. Elbas • Continuoustrade Essential for wind • Closes 1 hourprior to the delivery • Pricefluctuationincreasescloser to delivery • As forecastsgetmoreexact • Ability to settleimbalances on market • Regulation • TSOsbalanceduringdeliveryhour • Pricefluctuationfurtherincreased Elbasmarket + regulation

  7. Pricevariation

  8. Stubborn and moodynature • Difficult to predict the productionaccurately • Windenergyrequiresflexible and adaptingelectricitymarkets Windenergy in the electricitymarkets

  9. Intermittentnature • Producesenergyinstead of capacity • Each MW of windenergyrequiresanother MW of backuppower • Increasesfluctuation of the electricityprice • Non-existentshorttermmarginalcosts in production • Lowers the averageprice of electricity for about 2 €/MWh for each 10 TWh produced, whendemand and otherproductionformsstayuntouched Windenergy in the electricitymarkets

  10. Windenergy is subsidised to enhanceitsmarketpenetration • Feed-intariff in Finland and Denmark • Finland has a marketbasedfeed-intariff based on the quarterlyaverage of the spotprice (fixed 105,3 € for the first 3 years and 83,5 € afterthat) • Subsidisingleads to a higherwindcapacity, whichagainpushes the spotpricesdown Increasedneed for subsidies Subsidies

  11. Windenergyhasnon-existentshorttermmarginalcosts in production + SPOT price is the shorttermmarginalcost of the mostexpensiveproductionmethod = Supplyingallelectricitydemandwithwindenergy in Nordpoolleads to a nearorsubzeroelectricityprice  bad business Increasingwindenergyin the electricitymarkets

  12. Addingwindenergy in the marketsreduces the capacityfactor of traditionalpowerplants (condensingcoalplants in Finland), butdoesnotreplacethem Traditionalpowerplantsneed to allocate the investmentcosts to fewerrunninghourswithlowerelectricityprices The plantslosetheirfeasibilitybutarestillessential for the stability of the grid  bad business Increasingwindenergyin the electricitymarkets

  13. Goal: 50 % windby 2020 • Example with 2011 data: Wind * 2 • Peak consumption 6 GW • Residualconsumption • Consumption - windproduction • Hugevariation: -4000 … 5700 MW • Present: -650 … 5800 MW •  Addingfurther 4 GW windreducespeakresidualconsumptionbyonly 100 MW Increasingwind: Case Denmark

  14. Case Denmark: 50 % wind

  15. Hugeamounts of intermittentenergy in the grid is possible to manage, butitrequireseffort, designing and adaptation • Fewpossiblesolutions: • Storingelectricity • Largerelectricitymarkets • Capacitymechanisms • Demand side management Market adaptationmethods

  16. The ability to storeelectricitylongerperiodscosteffectivelywouldsolve the problems of intermittency • Sadly, the silverbullet of electricitystorage is stillunderconstruction • Sofar the mostfeasiblemethod is pumpedhydropower • Potentialsolution is fuelproductionwithelectricity, e.g. electrolysis and methanisation Storingelectricity

  17. The larger the electricitymarketsare, the moreunlikeit is thatit’swindyeverywhereornowhere • E.g. Denmarkssurpluswindproductioncanbeused in otherNordiccountries • Wide marketintegrationrequiresdevelopment and investments to the electricitynetworkinfrastructure Largerelectricitymarkets

  18. Somecountrieshavedividedorplan on dividing the traditionalenergy-onlymarket to separateenergy and capacitymarkets Capacitymechanism Source: Fortum

  19. In somecases the need for capacitymechanismderivesfromreducedfeasibility of the necessarytraditionalpowerplants • Trend: • 2000 Market basedelectricitymarket • 2010 Stronglysubsidisedintermittentrenewableenergyproduction • 2020 Traditionalpowerproductionsubsidisedwithcapacitymechanisms allelectricityproductionsubsidised? Capacitymechanism

  20. Possible to adjustdemand to matchvariableproduction • Systems with builtinstorage • Freezers, watertreatmentplants etc. • Onlyshorttermadjustment • Haspushedpeakpricedown on capacitymarkets in US Demand side management

  21. Windenergycapacity is on a steepupwardslopingtrendeventhoughitstillhasitschallenges • The currentelectricitymarketisn’tdesigned for vastshares of intermittentenergywith no marginalcosts • Increasingwindcapacitygrows the volatility of the electricitypricebutreduces the averageprice • Hugewindcapacity is possible to handle, butitrequiresmarketadaptation Conclusion

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