U.S. Wind Integration Studies and Doing a Wind Integration Study

1. U.S. Wind Integration StudiesandDoing a Wind Integration Study Kevin Porter Exeter Associates, Inc. Energy Foundation Wind Integration Meeting July 2, 2010

2. Purpose of Presentation • Determine whether there is interest in learning more about how to do a wind integration study. • Determine whether there is interest in holding a workshop on wind integration study methods in Beijing in December. • Consider interest in conducting a wind integration study in China. Exeter Associates, Inc.

3. Overview of U.S. Wind Integration Studies Exeter Associates, Inc.

4. Overview of U.S. Wind Integration Studies • Several utilities, states and regional transmission organization have conducted wind integration studies, generally before large-scale wind development has occurred • Over a dozen such wind integration studies since the late 1990s, and more are planned • Actual operating experience has been limited, therefore studies have been prospective – modeling a potential future power system with certain amounts of wind generation • Studies focused on reliability, operational and economic impacts of higher levels of wind penetration • Every U.S. wind integration study is different, but some common themes are emerging • Studies have evolved from whether it is possible to incorporate wind to how and at what estimated cost • As experience is gained, studies are starting to focus on potential solutions to integrating higher levels of wind generation Exeter Associates, Inc.

5. Integration Cost Estimates • Wind integration studies have found cost will generally be under $5.00/MWh for wind capacity penetrations up to 20%; • Most of these costs are from unit commitment; • Pacific Northwest wind studies have tended to show costs up to $10/MWh – • No sub-hourly scheduling or markets • Greater reliance on regulation versus spinning or non-spinning reserves • Tends to increase costs • U.S. has more flexible power system than China Exeter Associates, Inc.

6. Wind Integration Costs Dependent on Several Factors • Size of the balancing area • Large balancing area makes it easier to integrate wind, as there will be a deeper stock of generation to draw from • Subhourly markets access the flexibility inherent in many conventional generators and reduces reliance on regulation in following wind’s variability • Resource mix • A resource mix with more flexibility in ramping up and down and operating at different dispatch points will make wind integration easier • Depth and type of ancillary services • A well-functioning and deep market for ancillary services (present in most regional transmission organizations) will make it easier and less expensive to integrate wind • The geographic concentration of wind projects • Greater spatial diversity of wind projects can lessen the variability in wind output and lower wind integration costs Exeter Associates, Inc.

7. Key Results from Major Wind Integration Cost Studies Exeter Associates, Inc.

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9. Solutions: Implement a Wind Forecasting System • In general, wind forecasting is vital once wind penetrations by energy reaches 10% • Lower if balancing area is small or if resource mix is not overly flexible • Although wind forecasting is not perfect, today’s state-of-the-art wind forecasts will be helpful to grid operators • Potential large savings in unit commitment and fuel consumption costs • Promise for future performance improvements in wind forecasting • Several grid operators in the United States are implementing wind forecasting • Evolution towards central wind forecasting and away from decentralized wind forecasting Exeter Associates, Inc.

10. Western Wind and Solar Integration Study (2010) • “Using state-of-the-art wind and solar forecasts and unit commitment is essential and would reduce annual WECC operating costs by up to $5 billion ($4 billion in 2009 $) or $12-20/MWh ($10-17/MWh in 2009$) of renewable energy, compared to ignoring renewables in the unit commitment process.” • “Perfect forecasts would reduce annual costs by another $500 million ($425 million in 2009 $) or $1-2/MWh ($0.9-1.7/MWh in 2009 $) of renewable energy, Exeter Associates, Inc.

11. Solutions: Develop More Flexible Electricity Markets • Operational flexibility valuable to operators but of little value to power suppliers unless they are somehow compensated • Market and policy changes will likely be necessary • Expanding ancillary service markets • Incentives for greater generator flexibility (existing and new plants) • Changes to market requirements,(e.g., load following is not a compensated ancillary service) • Make changes to accommodate wind ramps, which more closely resemble large load ramps • More closely aligned with 10-30 minute non-spinning and supplemental reserves; current rules require these to be in-service for 1-2 hours when wind ramps can occur over several hours • Forces operators to use more expensive regulation service instead • Multiple ways to do this, depending on electricity system structure Exeter Associates, Inc.

12. Solutions: Operate Over Larger Market Operation Areas • There are about 140 balancing areas in the U.S. with wide variations in size, generation resources, and load • Each must balance generation and load within its area • Larger balancing areas have more access to generating resources to provide ancillary services • Larger balancing areas can also take advantage of the geographic diversity of wind resources, helping to smooth wind variability • ISOs and RTOs naturally capture the benefits of large balancing areas • Smaller areas can gain some of those benefits through sharing agreements such as the ACE Diversity Interchange that pools area control error among utilities in the western U.S. Exeter Associates, Inc.

13. Less than 1/3 of regulation is necessary if sub-hourly scheduling is utilizied Exeter Associates, Inc.

14. Wind Integration Costs Lower in Larger Balancing Areas

15. Summary • Wind contributes about 1-2% of total U.S. electricity generation as of 2008 • A number of utilities are adding significant amounts of wind capacity • Over a dozen wind integration studies have been conducted to assess the technical ability and feasibility to incorporate wind energy • In general, studies have progressed from “can it be done” to “how and at what cost” • The studies have found that large interconnected power systems can accommodate high levels of variable energy by: • Implementing a wind forecasting system • Acquiring flexible generating resources • Instituting new operating strategies for minimum load hours and other high risk periods; and • Creating larger balancing areas, new market rules, and grid codes Exeter Associates, Inc.

16. Doing a Wind Integration Study Exeter Associates, Inc.

17. Typical Study Scope • Identify operational and cost issues from increasing levels of wind penetration • Usually multiple scenarios of base, 10%, 20%, 30% • Note: The study is about net wind impacts (load minus wind), not just wind alone, as the variations of load and wind partially cancel each other out • Determine scope of study (all of China, part of China) • If not modeling all of China, determine how to model areas external to study • All assumptions, data inputs, and study results should be public to encourage maximum participation and overall support of the study results Exeter Associates, Inc.

18. Typical Study Scope (2) • Identify changes in production costs (and cost volatility) from higher levels of wind penetration • Identify changes in requirements for reserves over multiple time frames • Consider whether existing generating resources (i.e., coal, natural gas, hydro) can accommodate higher levels of wind generation Exeter Associates, Inc.

19. What a Wind Integration Study Does Not Do (Unless Designed to Do So) • Additional maintenance and forced outages and derates • Degradation of heat rate from ramping, cycling and range of operation Exeter Associates, Inc.

20. Wind Integration Studies Generally Have Multiple Parts • Production cost modeling (for hourly simulations of power flows, costs and dispatch) • Statistical analysis (for determining hourly deviations in net load from adding wind, and for determining sub-hourly changes) • Load flow analysis • Transmission planning and siting Exeter Associates, Inc.

21. Organizational Set-Up • Study time-consuming and labor-intensive • Typical study time 1 year, and can take longer • Need single organization to lead and take responsibility • With help from other organizations and from Technical Review Committee • Consider who does the work • Could be done in-house but hard to juggle wind integration study with other responsibilities • Work typically is outsourced to multiple consultants • Power systems consultant • Transmission/load flows consultant • Wind resource and forecasting consultant Exeter Associates, Inc.

22. Technical Review Committee • Comprised of grid operators, government energy officials, renewable energy companies, renewable energy experts and/or consultants • Help design study objectives and approach and act as peer reviewers • Consider quarterly meetings, both in-person and by telephone • Provide education to all committee participants Exeter Associates, Inc.

23. Scenarios • Include multiple scenarios of increasing wind penetration, by energy • Start with base year (i.e., current year or the last year with most complete set of data) • Include at least one scenario with very high wind penetration (e.g., 30% or 40%) • Consider scenarios focused on particular circumstances, e.g., geographically diversified wind, high offshore wind, high transmission, etc. Exeter Associates, Inc.

24. Scenarios • Include multiple scenarios of increasing wind penetration, by energy • Start with base year (i.e., current year or the last year with most complete set of data) • Include at least one scenario with very high wind penetration (e.g., 30% or 40%) • Consider scenarios focused on particular circumstances, e.g., geographically diversified wind, high offshore wind, high transmission, etc. Exeter Associates, Inc.

25. Scenarios (2) • Escalate generation (including wind) and load data by annual constant percentage to get to future year (e.g., 2%) • Don’t project too far out into the future, as it may be difficult to control all the potential variables • Studies typically forecast out 10 years • May need to add generation over study projection years to maintain reliability • U.S. studies typically add gas turbines as proxy Exeter Associates, Inc.

26. Sensitivity Studies • May wish to do several sensitivity studies • Different natural gas and coal prices • Different fuel mixes • Higher or lower projected electricity demand • More demand response • Plug-in electric vehicles • Different turnback capabilities for coal units • Differing levels of hydro flexibility • Varying accuracy levels of wind power forecast Exeter Associates, Inc.

27. Assumptions to Make • Projected future fuel costs for natural gas and coal • Expected future load growth • Projected future transmission grid • Projected generating capacity additions • Whether to include $/ton carbon dioxide adder or not Exeter Associates, Inc.

28. Data Needs • Multiple years (usually three) of time-synchronized wind and load data to capture inter-annual variability of load and wind • Use Numerical Weather Prediction models to recreate historical weather data Exeter Associates, Inc.

29. Examples of Wind Data • Wind speed data extracted from multiple-year model runs that are at wind turbine hub heights and converted to wind power using wind power curves • Output is typically 5-minute or 10-minute wind data • Tons of data • Use actual wind generation to verify modeled wind data • Need to factor in land use restrictions such as urban areas, national parks, environmentally sensitive areas, and other areas unlikely to be developed Exeter Associates, Inc.

30. Data Needs (2) • Sub-hourly load and generation data (minute-by-minute, 10-minute) for analysis of interesting periods (high wind, high load, high wind/low load, etc.) • Load forecasts for multiple years • This step always takes the longest, and the integration study cannot proceed without data Exeter Associates, Inc.

31. Wind Forecasts • Techniques for simulating wind power forecasts not well developed • Two basic methods • Impose random error on top of wind generation profiles • Match up with another wind forecast (covering same time frame) Exeter Associates, Inc.

32. Transmission • Need current and projected load flows for planned scenarios • Also need to decide whether to do detailed transmission study for low-voltage and high-voltage transmission levels, or do high-voltage schematic and assume low-voltage issues away Exeter Associates, Inc.

33. Wind Integration Costs • In general, defined as the increased system costs imposed by higher levels of wind generation, but different viewpoints on how to calculate wind integration costs • Two common methods: • Flat block, where a power system with wind is compared to a system with an energy-equivalent flat block, and the cost difference is the integration cost • System, focusing on wind’s impact on commitment and dispatch and wind’s net value from fuel savings and reduced wholesale prices • Newer, but still relatively untested, is using an “ideal wind block” (perfectly forecasted) instead of a flat block Exeter Associates, Inc.

34. Study • Inputs, assumptions, data should be public and transparent • Study results should also be made public • Non-disclosure agreements may be required to get access to sensitive data Exeter Associates, Inc.

35. Questions to Consider • Would a methods workshop in December be valuable? • Would it make sense to do a wind integration study in China? • If yes, how to begin? Exeter Associates, Inc.

36. Contact Information Kevin Porter Exeter Associates, Inc. 10480 Little Patuxent Parkway, Suite 300 Columbia, MD 21044 United States of America 1+410-992-7500 1+410-992-3445 fax kporter@exeterassociates.com