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Impact of Variable Renewable Energy on System Operations

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Impact of Variable Renewable Energy on System Operations GRID INTEGRATION SERIES: IMPACT OF VARIABLE RENEWABLE ENERGY ON SYSTEM OPERATIONS Scaling Up Renewable Energy June 2020 DISCLAIMER This publication was produced for review by the United States Agency for International Development. It was prepared by the Scaling Up Renewable Energy Project (Tetra Tech ES, Inc., prime contractor). The views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government. GRID INTEGRATION SERIES: IMPACT OF VARIABLE RENEWABLE ENERGY ON SYSTEM OPERATIONS Prepared for: Energy and Infrastructure Office U.S. Agency for International Development 1300 Pennsylvania Ave NW Washington, DC 20523 Submitted by: Tetra Tech ES, Inc. 1320 North Courthouse, Suite 600 Arlington, VA 22201 www.tetratech.com USAID TASK ORDER AID-OAA-I-13-00019/AID-OAA-TO-17-00011 DISCLAIMER This report was prepared by Tetra Tech ES, Inc., ICF (subcontractor), and IWE (subcontractor). Authors included Jairo Gutierrez, Adrian Paz, and Arai Monteforte from Tetra Tech; Sanjay Chandra and Rakesh Maurya from ICF; Pramod Jain from IWE; and Sarah Lawson, Jennifer Leisch, and Kristen Madler from the United States Agency for International Development (USAID). The views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government. CONTENTS EXECUTIVE SUMMARY 1 INTRODUCTION 4 POWER SYSTEMS WITH VARIABLE RENEWABLE ENERGY 6 VARIABILITY AND UNCERTAINTY IN ELECTRICITY SYSTEMS 6 FLEXIBILITY OF POWER SYSTEMS 7 OPERATING A SYSTEM WITH A HIGH SHARE OF VARIABLE RENEWABLE ENERGY 9 SELECTED COUNTRY EXPERIENCE 13 COLOMBIA 15 INDIA 16 MEXICO 19 THE PHILIPPINES 20 VIETNAM 22 CONCLUSIONS AND RECOMMENDATIONS 24 BIBLIOGRAPHY 27 ANNEX A. LIST OF INTERVIEWS 29 ANNEX B. COUNTRY SUMMARIES 30 COLOMBIA 30 INDIA 35 MEXICO 41 THE PHILIPPINES 45 VIETNAM 49 LIST OF FIGURES Figure 1. Seven Characteristics to Assess Readiness for Increasing Shares of VRE .......................................... 4 Figure 2. Four Phases of VRE Integration .................................................................................................................... 9 Figure 3. Transmission Grid in Colombia .................................................................................................................. 33 Figure 4. CREG 2020 Regulatory Agenda .................................................................................................................. 34 Figure 5. Power Procurement Planning in India ....................................................................................................... 38 Figure 6. Proposed Real-Time Market in India ......................................................................................................... 39 Figure 7. India’s Renewable Energy Integration Strategies ..................................................................................... 40 Figure 8. Structure of Mexican Wholesale Market .................................................................................................. 43 Figure 9. New Transmission Line Bids in Mexico .................................................................................................... 44 Figure 10. Philippines Electricity Market Operations Overview .......................................................................... 47 Figure 11. Philippines Renewable Energy Roadmap 2017–2040 ........................................................................... 48 Figure 12. Model for Power Market Participants in Vietnam’s Wholesale Electricity Market ...................... 50 Figure 13. Structure of Vietnam’s Wholesale Electricity Market ......................................................................... 51 LIST OF TABLES Table 1. VRE Integration Ranking ................................................................................................................................ 13 Table 2. Colombia's Ranking in Selected Characteristics ...................................................................................... 15 Table 3. India’s Ranking in Selected Characteristics ................................................................................................ 16 Table 4. Mexico’s Ranking in Selected Characteristics ........................................................................................... 19 Table 5. The Philippines’ Ranking in Selected Characteristics .............................................................................. 20 Table 6. Vietnam’s Ranking in Selected Characteristics ......................................................................................... 22 Table 7. Suggested Studies ............................................................................................................................................. 25 ACRONYMS, ABBREVIATIONS, AND GLOSSARY OF TERMS AC Alternating current Automatic generation control, a technology used to control production levels of generators in AGC response to imbalances CAISO California Independent System Operator CEA Central Electricity Authority CENACE Centro Nacional de Control de Energía, Mexico’s system operator CREG Comisión de Regulación de Energía y Gas (Colombia) CREZ Competitive renewable energy zone DOE Department of Energy (United States) DR Demand response/load response DSM Deviation settlement mechanism EEX European Energy Exchange EIM Energy imbalance market ERAV Electricity Regulatory Authority of Vietnam ERC Energy Regulatory Commission ERCOT Electric Reliability Council of Texas EVN Electricity of Vietnam GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit GW Gigawatt IEA International Energy Agency IEGC Indian Electricity Grid Code kV Kilovolt kWh Kilowatt hour LBNL Lawrence Berkeley National Library (U.S. DOE) LMP Locational marginal price MEM Mexico’s wholesale electricity market MER Central American Regional Energy Electricity Market MISO Midcontinent Independent System Operator MW Megawatt NGCP National Grid Corporation of the Philippines NLDC National Load Dispatch Center NREL National Renewable Energy Library (U.S. DOE) NYISO New York Independent System Operator PJM Pennsylvania–New Jersey–Maryland Independent System Operator POSOCO Power System Operation Corporation, a central-level entity in India for system operations PPA Power purchase agreement, an agreement between the seller and buyer of power PV Photovoltaic, a solar panel to convert solar radiation into electrical energy RGMO Restricted governor mode of operation RLDC Regional load dispatch center RRAS Reserves Regulation Ancillary Services SIEPAC Panama and Central America Regional Market SLDC State load dispatch center, an entity in each state of India to balance load and generation SURE Scaling Up Renewable Energy (USAID project) UPME Unidad de Planeación Minero Energética (Colombia) USAID United States Agency for International Development VRE Variable renewable energy WESM Wholesale Electricity Spot Market EXECUTIVE SUMMARY Power systems are highly dynamic and are affected by a range of quickly changing factors, as well as by season and year. Adding renewable energy, which is itself variable in nature, to an already dynamic power system can pose challenges. However, variable renewable energy (VRE) can be effectively integrated into the grid if the power system has sufficient operational flexibility or the ability to respond to changes in electricity demand and generation. This paper looks at how improved operations can increase a power system’s flexibility to integrate large amounts of VRE. Specifically, it focuses on the planned addition of large-scale solar and wind energy generation in five developing countries: Colombia, India, Mexico, the Philippines, and Vietnam. The experiences of advanced national power systems with high shares of VRE provide a set of global best practices, from which seven characteristics can be used to assess the maturity of a power system in its ability to respond to the challenges of VRE integration: 1. Market protocols to access system flexibility 2. Clear dispatch rules for VRE 3. Grid code requirements for VRE 4. Long-term agreements for regional interconnection 5. Sufficient transmission capacity/planned investment 6. Ancillary services market products to reward flexibility 7. VRE forecasting integrated into system operations Most of the five focus countries are in the early stages of VRE integration. Therefore, at this point, they do not face any critical problems with respect to VRE integration. INDIA is a leader among the countries assessed, with an installed VRE capacity of 84.39 gigawatts (GW) with 37.28 GW of wind, 32.52 GW of solar, and the rest in biogas and small hydro.1 In January 2020, India announced a target of 450 GW of VRE by 2030. It has adopted enhanced grid codes for VRE to support grid operations and is implementing a comprehensive VRE forecasting framework, with penalties for large deviations and plans to reduce the forecast time block from 15 minutes to 5 minutes. Ancillary service markets were introduced in 2016, but these are very limited with participation of only slow tertiary services.2 India has increased its balancing area by synchronously interconnecting its five regional grids to make a single large grid, with scheduling and dispatch remaining a state-level responsibility. The country is working to adopt several planning and regulatory measures to achieve a target of 175 GW of VRE installed capacity by 2022. India
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