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Recommendations for Ancillary Service Markets Under High Penetrations of Wind Generation in New Zealand

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Recommendations for Ancillary Service Markets Under High Penetrations of Wind Generation in New Zealand GREEN Grid Report Recommendations for Ancillary Service Markets under High Penetrations of Wind Generation in New Zealand Josh Schipper1 Alan Wood2 Conrad Edwards3 Allan Miller4 1 EPECentre, University of Canterbury, Christchurch 2 Department of Electrical and Computer Engineering, University of Canterbury, Christchurch 3 System Operator, Transpower, Wellington 4 Allan Miller Consulting Ltd, Christchurch March 2019 Disclaimer The report has been developed for specific cases, defined in the report, and accordingly some assumptions have been made. The GREEN Grid Research team takes no responsibility for any errors or omissions in, or for the correctness of, the information contained in the report. This report has been reviewed by Ancell Consulting New Zealand. Citation and usage license To give attribution please use the following citation: Recommendations for Ancillary Service Markets under High Penetrations of Wind Generation in New Zealand, Green Grid report, 2019. This work is made available under the Creative Commons Attribution 4.0 International (CC BY 4.0) License. This means you are free to: • Share — copy and redistribute the material in any medium or format • Adapt — remix, transform, and build upon the material for any purpose, even commercially. Under the following terms: • Attribution — You must give appropriate credit, provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use. • No additional restrictions — You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits. For the avoidance of doubt and explanation of terms please refer to the full license notice and legal code. Acknowledgment: This work is part of the GREEN Grid project (officially titled “Renewable Energy and the Smart Grid”) funded by Ministry Business Innovation and Employment (MBIE) in New Zealand and co-funded by Transpower and the Electricity Engineers’ Association (EEA). For more information: https://www.canterbury.ac.nz/epecentre/research-and-innovation/green-grid/ Recommendations for Ancillary Service Markets under High Penetrations of Wind Generation in New Zealand ii Executive Summary This report analyses the demand for reserves, including Ancillary Services Frequency Keeping (FK) and Instantaneous Reserves (IR), under higher penetrations of wind generation in the New Zealand power system. Recommendations are made for the development of the Ancillary Service (AS) markets to ensure security of the power system under high wind penetrations, while achieving economic efficiency. The analysis centers around anticipating the dispatch of generation under eight scenarios of increasing wind generation. These scenarios are 500 MW to 4000 MW of extra wind generation in 500 MW steps above the current 690 MW of wind capacity. The scenarios were chosen in order to achieve 100% electricity generation from renewable resources, the maximum foreseeable installation of wind farms under current demand for electricity. Simulating the dispatch is modelled on historical data from 2013 to 2015 inclusive, which has sufficient data to accurately model the impacts, and a basis on which to compare the results of each scenario. The new dispatch determines the changes in the contingency risk, and the impact wind generation has on the inertia of the power system, and hence the demand for IR. This report focuses on wind generation without consideration of other forms of renewable generation, such as Hydro, Geothermal, Solar, and Biomass. This is for the express purpose of isolating the impacts of wind generation. It is expected wind generation is going to have the greatest impact on demand for reserve as New Zealand approaches 100% renewable generation. Future demand scenarios were not considered, again for the purpose of isolating the impacts of wind generation, and the understanding that the power system is most susceptible to frequency instability under lightly loaded conditions. Principal conclusions and recommendations are: • It is not economic to achieve 100% renewable energy from more wind generation alone. While trying to achieve 100% renewable, wind curtailment increases greatly during periods of high wind, and thermal generation is still required for days when there is no wind and a shortage of hydro storage. Wind curtailment reduces the incentive for further expansion of wind generation. • For 2013, minimum inertia in New Zealand reduces from 21,350 MWs in the historical scenario to 13,250 MWs for 4000 MW of extra wind capacity, 62% of the historical scenario. The years 2014 and 2015 showed a lower inertia for the historical scenario than 2013, but a higher inertia for the 4,000 MW scenarios; 14,180 and 15,700 MWs for 2014 and 2015 respectively. • Contingency risk from thermal generators in the North Island is expected to decrease, as wind generation replaces thermal generation. This effect is greater than the impact of reducing inertia, and so the demand for Fast Instantaneous Reserves (FIR) decreases. However greater HVDC transfers, in order to obtain the benefits of spatial diversification in wind energy production, increases HVDC pole risk considerably, creating a significant demand for FIR. Overall there is greater variation in FIR demand. • Increased HVDC transfers also increases bipole risk, which is an Extended Contingent Event (ECE), requiring a greater demand for Sustained Instantaneous Reserves, unless a greater amount of AUFLS (Extended Reserves) is obtained. Recommendations for Ancillary Service Markets under High Penetrations of Wind Generation in New Zealand iii • Wind variability is expected to increase governor action by 42% with an additional 4000 MW of installed wind generation. However, this is only slightly more than when an Electric Arc Furnace was in operation in Auckland. Total demand for FK is not expected to exceed 70 MW. Therefore total variability from wind and load, under high penetrations, is comparable to historic conditions before the operation of Pole 3, needing a similar requirement in governor action and FK. • During periods of low electricity demand, e.g. during the middle of the night, and high wind power output, there will be few hydro power turbines running to provide droop control. This condition may be unacceptable for normal frequency standards and a more active management approach may be required. A market based approach is recommended for achieving sufficient resource allocation. • Large wind speed fluctuations will need to be considered in the procurement of Sustained Instantaneous Reserves (SIR), as the demand from thermal generator risk reduces and cause these fluctuations to become the risk setter. • Development of the IR market should incentivise faster response over slower ones. In the situation where high HVDC transfer north causes the HVDC link to be the risk setter, the electricity market should firstly try to minimise transfer, then dispatch Interruptible Load (IL) over other reserves such as from hydro, which can then utilize its capacity for electricity generation. • The must-run market should be reformulated to manage the curtailment of wind generation. It may be necessary to prefer hydro and other synchronous generation above wind to ensure system inertia does not get too low. Recommendations for Ancillary Service Markets under High Penetrations of Wind Generation in New Zealand iv Contents Executive Summary ............................................................................................................................... iii Acronyms ............................................................................................................................................. viii 1. Introduction ..................................................................................................................................... 1 2. New Zealand Frequency Management ........................................................................................... 1 2.1. Asset Owner Requirements ..................................................................................................... 1 2.2. The Cost of Lost Load ............................................................................................................ 1 2.3. Procurement of Reserve .......................................................................................................... 2 2.3.1. Droop Response .............................................................................................................. 2 2.3.2. Frequency Keeping ......................................................................................................... 2 2.3.3. Instantaneous Reserves ................................................................................................... 3 2.3.4. Over-Frequency Reserve ................................................................................................. 3 2.3.5. Automatic Under-Frequency Load Shedding ................................................................. 3 2.3.6. Special Control Schemes ................................................................................................ 4 3. New Zealand Power System ........................................................................................................... 5 3.1. Rate of Change of Frequency.................................................................................................. 5 3.2. Generator Response
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