Experience of the use of smarter connection arrangements for distributed wind generation facilities By Karim L. Anaya and Michael G. Pollitt1 Electricity Policy Research Group University of Cambridge December 2012 Abstract The aim of this study is to explore different practices for accelerating the integration of generating facilities to the electricity network using smart solutions. Case studies from the United Kingdom, Ireland and Northern Ireland and the Unites States were selected. The paper assesses and compares the different Principles of Access that have been implemented in these countries, such as Last-in First- out (LIFO), Pro Rata and Market-based. The social optimality of these approaches is also discussed. The paper also evaluates how the risk (regarding curtailment and investment) is allocated between parties (distributor network operators, generators and customers). Even though the cases are diverse, important findings and lessons have been identified which may assist UK Power Networks to address the issue of increasing the connection of distributed generation while managing efficiently and economically energy exports from generators in the context of the Flexible Plug and Play Low Carbon Networks trial. 1 The authors wish to acknowledge the financial support of UK Power Networks via the Low Carbon Networks Fund’s Flexible Plug and Play Project. The views expressed herein are those of the authors and do not reflect the views of the EPRG or any other organisation that is also involved in the Flexible Plug and Play Low Carbon Networks (FPP) project. We are very grateful to National Grid, Southern California Edison and Smarter Grid Solutions for the provision of relevant information and helpful clarifications on the revision and analysis of the different case studies. In particular, the authors acknowledge valuable comments from Adriana Laguna, Edward Crosthwaite Eyre, Sotiris Georgiopoulos and Carina Correia. Final Report Version 17.12.12 EPRG – University of Cambridge Contents List of Figures .............................................................................................................................. iii List of Tables ............................................................................................................................... iii 1. Introduction ......................................................................................................................... 1 1.1 Background ............................................................................................................................. 1 1.2 The problem and an alternative solution ............................................................................... 2 1.3 Flexible Plug and Play Project ................................................................................................ 4 1.4 This report and its objectives .................................................................................................. 5 2. Understanding curtailment ................................................................................................... 6 2.1 Definition ................................................................................................................................ 6 2.2 Categories ............................................................................................................................... 6 2.3 Allocation Rules ....................................................................................................................... 7 2.4 Risk Allocation among generators ......................................................................................... 8 2.5 Social optimality: Marginal costs versus Average costs ..................................................... 10 2.6 Impact ................................................................................................................................... 11 3. Case Study Selection Criteria and Structure ......................................................................... 12 3.1 Selection Criteria ................................................................................................................... 12 3.2 Structure of the Case Studies ................................................................................................ 13 4. Case Studies ....................................................................................................................... 14 4.1 United Kingdom Case Study ................................................................................................. 14 4.1.1 Electricity Market .......................................................................................................... 14 4.1.2 Support Mechanisms for Renewables, Distributed Generation and Distribution Network Operators ....................................................................................................................... 15 4.1.3 Orkney ANM Project Case Study ................................................................................. 16 4.1.4 Connect and Manage Case Study ................................................................................. 21 4.2 Ireland and Northern Ireland Case Study ............................................................................. 24 4.2.1 Electricity Market .......................................................................................................... 24 4.2.2 Support mechanism for renewables in ROI .................................................................. 26 4.2.3 The Single Electricity Market Wind Curtailment in tie-break situations....................... 26 4.3 The United States Case Study ............................................................................................... 32 4.3.1 Electricity Market Structure in California...................................................................... 32 4.3.2 Support Mechanism for Renewables ............................................................................ 33 4.3.3 The Renewable Auction Mechanism (RAM) Programme ........................................... 35 Final Report Version 17.12.2012 i EPRG-University of Cambridge 5. Findings and Lessons Learned ............................................................................................. 42 6. Conclusions ........................................................................................................................ 47 6.1 Principle of Access (POA) ..................................................................................................... 47 6.2 Allocation of risks among the parties .................................................................................. 48 6.3 Key lessons relevant to UK Power Networks ...................................................................... 49 6.4 Next steps ............................................................................................................................. 51 References ................................................................................................................................. 53 Appendix: Acronyms .................................................................................................................. 59 Final Report Version 17.12.2012 ii EPRG-University of Cambridge List of Figures Figure 1: Example of risk allocation ........................................................................................................ 9 Figure 2: Optimal connection (MW) with fixed constraint (ignoring risk) ............................................ 10 Figure 3: New Proposal for wind curtailment under tie-break situations ............................................ 30 List of Tables Table 1: List of Case Studies .................................................................................................................. 12 Table 2: Summary of Generation Connection Categories .................................................................... 17 Table 3: Capacity connected, incentives and connection costs ............................................................ 19 Table 4: Summary of Options ............................................................................................................... 28 Table 5: Summary RAM 2 Pro Forma – SCE .......................................................................................... 38 Table 6: RAM 1 Results ......................................................................................................................... 39 Table 7: Curtailment Scenarios ............................................................................................................. 40 Table 8: Summary of Case Studies ........................................................... Error! Bookmark not defined. Final Report Version 17.12.2012 iii EPRG-University of Cambridge 1. Introduction 1.1 Background The important support that renewable power has received during the last few years has contributed to the expansion of decentralised planning and dispatch of renewable energy facilities. The connection of generation facilities to the distribution network is generally referred to as “distributed generation (DG)”2. There is no agreement in the definition and boundaries of distributed generation. It can vary across countries and regions as a result of differences in the operating voltage in which the connection is established and in the size of installed capacity3. The number of generators that are seeking to connect to