EEA Conference & Exhibition 2016, 22 – 24 June, Transpower’s Approach to Renewable Generation and Smart Grid Technologies in the NZ Power System

Author(s): Jamie Jordan PE, Tim Crownshaw, Nyuk-Min Vong, Gari Bickers Transpower Limited

Presenter(s): Jamie Jordan PE and Tim Crownshaw

Abstract With the anticipated increase in renewable generation and smart grid technologies, Transpower is assessing the impacts of these technologies on the NZ transmission system including its future ability as system operator to continue to meet the Principal Performance Objectives. The initial focus of these studies is on solar PV generation.

The present levels of installed solar PV generation are relatively low and have no impact on system operations. However the possibility of accelerated uptake has prompted Transpower to start an investigation into the system impacts, limits and response to progressively higher levels of solar generation.

The increase in inverter based generation in the power system (replacing conventional synchronous generators) can alter the dynamic behavior of the power system. The variability and intermittent effects of solar generation can cause operational issues for grid management. This is often cited as a major impediment to high levels of PV penetration into existing grid systems.

This paper presents Transpower’s program to study the impact of renewable and emerging technologies on the operation of the New Zealand power system. The initial focus is on the assessment of the variable and intermittent nature of solar PV generation on power system operation.

1 Introduction With the anticipated increase in distributed, non-dispatchable, renewable generation, primarily solar photovoltaic (PV), and other smart grid technologies in the New Zealand, Transpower is assessing the impacts of these technologies on the power system and its ability to continue to meet the Principle Performance Obligations (PPOs) in its role as system operator. This assessment will also provide useful context for the future development of the Electricity Industry Participation Code (EIPC), including the system operator PPOs. New Zealand generated approximately 80% of electricity supply from renewable sources in 2015. By April 2016, New Zealand’s installed solar PV capacity has grown to 37 MW with generation from residential, commercial and industrial sites [1]. At typical solar capacity factors, this installed capacity amounts to around 0.1% of the national energy demand. As such, the present installed solar PV capacity is well below the level that could compromise Transpower’s ability to operate the power system securely and economically, with the existing tools and policies. A rapid global transition to renewable energy resources such as solar PV has accelerated the deployment of these technologies, as well as fostering large investments in innovation. The continued growth in PV manufacturing capacity and uptake around the world has driven equipment and installation costs to decline markedly. This will have a positive effect in encouraging continued solar PV uptake in New Zealand, even without subsidies or incentive schemes. The other key drivers of solar PV uptake include consumer preference for energy independence, environmental factors and the relative ease of solar PV inclusion in new buildings. The integration of high levels of solar PV into the New Zealand power system will impact both system operations and market dynamics, as it is non-dispatchable and can be highly intermittent. The possibility of accelerated uptake has prompted Transpower to start an internal investigation into the system impacts and associated limits to progressively higher levels of solar generation. While other technologies, particularly battery storage, will also have a significant impact on the New Zealand power system, the form and dynamic behaviour of these is much more uncertain at the present time. As such, high solar PV penetration is currently a prudent baseline to study with regard to future outcomes and system implications. The first section of this paper introduces the program of work that Transpower is undertaking to study the impacts of solar PV generation. The rest of the paper presents progress to date in developing core study methodologies. This includes creating PV generation profiles from regional solar irradiance data, which will be used at various stages in the project to study impacts on the NZ power system. Finally, the approach for determination of overall system capacity for PV generation, using a market system based analysis, is then discussed.

Solar PV Investigation Project The New Zealand power system has a number of challenging features, not the least of which is being an isolated system with a high proportion of electricity generated from renewable sources such as hydro, geothermal and wind generation. The possibility of a significant share of solar PV generation in the future generation mix may require changes to the existing

2 network equipment, operational processes, electricity market design, EIPC and standards in order to:

 Provide adequate grid flexibility and generation responsiveness to deal with the variable and intermittent nature of non-dispatchable solar PV generation.  Introduce new equipment and operational measures to ensure adequate grid stability and control.  Improve national PV penetration forecasts, as future solar PV uptake is highly uncertain, and will be primarily installed in the distribution network which is outside the control of Transpower. The project is designed to study the possible impacts of high solar PV penetration on system operations and the dynamic stability of the power system. Such analysis is important for Transpower, to understand the potential issues arising from high solar PV penetration and to prepare to mitigate these. The study aims to establish the power system’s current ability to integrate increased solar PV generation successfully. The project will deliver possible mitigation measures, and a roadmap that will ensure as system operator, Transpower can manage the future power system and continue to meet its PPOs. The project can be broadly divided into five work streams. The first two work streams focus on finding system capability limits and the likely operational issues stemming from high solar PV penetration in the power system. Identified mitigation measures will be analysed to derive practical solutions to manage increasing solar PV penetration. The subsequent three work streams, which are not covered in detail in this paper, will evaluate the requirements to implement solutions in the real-time operational tools, the market system, and to ensure the appropriate policies and standards are in place to enable these solutions. The work flow of the project is depicted in Figure 1. Each work stream is described briefly below.

Figure 1: work flow for the solar PV investigation project

Work Stream 1 – System operation This work stream investigates the challenge to maintain the balance between power demand and supply when a high penetration of non-dispatchable solar PV supply is included. The ability of the power system to provide enough flexible generating capacity to regulate the variable and intermittent nature of solar PV will be analysed.

3 The effect of inverter based solar PV output reducing conventional synchronous generators in the supply mix will be studied, to identify the ability of the power system to manage frequency and voltage.

Work Stream 2 – System stability Solar PV is inverter connected generation which can be highly controllable but exhibits different electrical characteristics to conventional synchronous generators. These differences can impose either positive or negative impacts on system stability. This work stream will identify the time-dependent impacts on the power system with regard to maintaining voltage stability, transient stability and small signal stability.

Work Stream 3 – Market system This work stream will investigate the prerequisites to facilitate an efficient, competitive energy and instantaneous reserve markets with large amounts of non-dispatched solar PV generation incorporated. Market design will need to account for appropriate price signals for sufficient flexible generation to be available for dispatch, and adequate ancillary services to maintain system stability.

Work Stream 4 – Real-time operation This work stream will investigate the requirements for real-time operational tools, to ensure sufficient functionality and situational awareness for system coordinators to efficiently and securely operate the power system. The present operational practices will also be reviewed to ensure they are fit for purpose.

Work Stream 5 – Policy and standards This work stream will investigate the adequacy of existing EIPC regulations, internal operational policies and industry standards to allow Transpower to continue to meet its PPOs as the system operator, as the penetration of solar PV increases in the power system. The challenge is to develop an effective operational and regulatory framework to enable the successful integration of distributed non-dispatchable renewable generation in the New Zealand power system.

Data Preparation for Work Streams 1 and 2 This section explains the data preparation performed to develop Grid Exit Point (GXP) level solar PV profiles used in work streams 1 and 2 to investigate the potential impacts of solar PV generation on the New Zealand grid. A high level flow chart of the data preparation process is shown in Figure 2 below and further explained in the following sections.

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Figure 2: overview of data preparation for GXP solar PV generation profiles

Normalised regional PV generation profiles The normalised PV generation profiles, in generated Watts per installed Watt for each council region (example shown in Figure 3), were sourced from the Electric Power Engineering Centre (EPECentre), University of Canterbury. These profiles,

 are used to establish the characteristic PV profile for each GXP,  are derived from the previous sixteen years of monitored solar irradiance data,  reference the nearest National Institute of Water and Atmospheric Research (NIWA) meteorological station with valid data,  are given at a 10 minute time resolution, and  assume solar PV installations are installed with a North orientation and a 30 degree tilt.

Figure 3: example profile of five days normalised regional PV data

Regional distribution factors Total national solar PV capacity installed (the primary decision variable to be modified) is disaggregated to council region level using static regional distribution factors. The 2015

5 Census regional population data available on the Statistics New Zealand website [2] is used to calculate the regional distribution of solar PV using the following equation.

푅푒푔푖표푛푎푙 푝표푝푢푙푎푡푖표푛푥 푅푒푔푖표푛푎푙 푃푉 푥 = 1 ∙ 푁푎푡푖표푛푎푙 푃푉 ∑16 푅푒푔푖표푛푎푙 푝표푝푢푙푎푡푖표푛푥

Regional PVx: The regional factor giving the proportion of total national PV capacity installed in each region (x).

Regional populationx: The number of people resident within each one of the sixteen defined council regions (x).

National PV: The primary study variable which sets the total national solar PV capacity installed. The underlying assumption in this calculation is that installed solar PV Watts per person will tend towards convergence between the various regions over time. This is considered a more likely end state than the current, highly localised uptake because,

 solar PV systems will become more economically competitive with grid supplied electricity as technology costs fall, prompting wider uptake, and  Electricity Distribution Business pricing regimes and PV connection application procedures are likely to become more standardized over time, in response to increasing volumes of solar PV capacity. The national solar PV capacity installed will be increased iteratively in the study, to the point where the physical power system cannot tolerate any further uptake. The product of the normalised regional PV profiles and the corresponding regional PV installed provides absolute regional PV generation profiles, given by the following equation.

푅푒푔푖표푛푎푙 푃푉 푔푒푛푥 (푡) = 푅푒푔푖표푛푎푙 푃푉푥 ∙ 푅푒푔푖표푛푎푙 푃푉 푔푒푛푛표푟푚,푥(푡)

Regional PV genx(t): The time dependent PV generation profile for the region (x).

Regional PV gennorm,x(t): The normalised time dependent PV generation profile for the region (x).

GXP distribution factors The regional PV generation profiles, in Watts, detailed above are further disaggregated to GXPs lying within each council region’s geographic boundaries. This allows the detailed modification of GXP level demand for study purposes. In order to relate regional PV generation profiles to GXP profiles a method to estimate GXP distribution factors within each region was developed. This method uses peak GXP level demand as a proxy for potential installed solar PV capacity in the distribution network behind each GXP. Peak demand is of primary significance for PV generation as it emphasises residential customers:

 Greater demand corresponds to a higher potential for PV installations (more rooftops, residents and businesses).  Residential customers contribute to demand to proportionately greater extent during peak demand periods, and are more likely to install solar PV systems.  Commercial and industrial sites will still be conservatively represented at their extant load levels during peak periods in most cases.

6 To determine GXP distribution factors, four years of cleaned gross electricity demand data for all conforming1 GXPs was used to extract a single peak value for each day per GXP, in MW. The peak values were then averaged and statistically validated to identify any data cleansing errors. Validation involved calculating the percentile value of all available demand data corresponding to the average peak daily demand for each GXP. Where the resulting percentile was not sufficiently high (> 75th percentile) the demand profile was inspected manually to confirm data quality. Manual adjustments were made to GXP distribution factors where required, based on knowledge of the underlying load at each location. GXP distribution factors for all non- conforming [3], injection only, primarily industrial or intermittent demand GXPs were manually set to zero. Solar PV capacity is either not expected at these nodes, or cannot be predicted with a reasonable level of confidence. The GXP distribution factors were calculated using the following equation, for n GXPs within each council region.

퐺푋푃 푎푣푒푟푎푔푒 푝푒푎푘 푑푒푚푎푛푑푦 퐺푋푃 푑푖푠푡푟푖푏푢푡푖표푛 푓푎푐푡표푟푦 = 푛 ∑1 퐺푋푃 푎푣푒푟푎푔푒 푝푒푎푘 푑푒푚푎푛푑푦 The product of the derived GXP distribution factors and the regional PV generation profiles provides the GXP PV generation profiles, in Watts, as given in the equation below where GXP y lies within region x.

퐺푋푃 푃푉 푔푒푛푦 (푡) = 퐺푋푃 푑푖푠푡푟푖푏푢푡푖표푛 푓푎푐푡표푟푦 ∙ 푅푒푔푖표푛푎푙 푃푉 푔푒푛푥(푡)

GXP PV generation profiles The final GXP PV generation profiles, scaled by a selected total national solar PV capacity, allows Transpower to derive net GXP demand with PV included for any day, season and trading period of the year for study purposes. GXP PV generation profiles are subtracted from metered demand by GXP to represent the residual demand expected in a high PV penetration scenario.

Work Stream 1 Dispatch Modelling This section covers the initial use of GXP PV generation profiles, for the purpose of defining system operation limits to the amount of solar PV generation than can be incorporated in the New Zealand power system. This is the first step in work stream 1, and will frame PV capacity assumptions in further work.

System ramping capacity The most apparent challenge for Transpower in managing the power system in a high PV penetration scenario is the large and increasing requirements for generation ramping. This is

1 Conforming GXPs are defined in the EIPC, as per Clauses 13.27A to 13.27K. See [3] for details.

7 due to PV generation offsetting a large proportion of demand during sunshine hours. The effect will be most pronounced during the early evening period, as demand increases toward the evening peak and solar irradiance drops (see Figure 4 below). There must be enough flexible, dispatchable generation synchronised on the system and capable of increasing power output to maintain the balance between supply and demand. Failure to increase supply rapidly enough may result in insufficient instantaneous frequency reserve on the system (risking cascade failure in an under frequency event), or the need to shed load to retain reserve cover. Significant market impacts would also occur, with very high and volatile energy and reserve prices being particularly likely.

Figure 4: residual demand curves and evening maximum ramp rates in the NZ power system with various PV penetration levels In order to determine the New Zealand power system’s capacity to accommodate solar PV generation, the point where available generation ramping capacity is exhausted must be identified. This analysis covers a range of scenarios, representing various challenging system conditions (discussed in more detail below). Total national solar PV capacity (specified in Figure 2) is the primary study variable for this purpose. It is stepped up incrementally in order to increase the magnitude of GXP PV generation profiles, until the system is unable to dispatch generation to meet a 5 minute change in net demand, subject to generation ramp rate constraints. The next section will discuss this simulation process in more detail.

Market system replication Optimisation of generation dispatch and the balancing of supply and demand is carried out in the market system, using Scheduling, Pricing and Dispatch (SPD) software. SPD finds the least cost dispatch solution, subject to the transmission network configuration and ancillary service requirements. The market system also manages real-time dispatch, calculates nodal prices and produces forecast schedules.

8 For this investigation, the market system real-time processes are replicated using an SPD variant developed specifically for offline study. The study tool sequentially solves 5 minute intervals, with the dispatch solution from one interval supplying the initial conditions for the next. In this way, the behaviour of the power system can be tested over all selected study periods with varying levels of total national solar PV capacity installed. Net daytime system demand with a high penetration of solar PV capacity will be significantly lower than current observed demand. Therefore, all inputs will need to be re-examined for validity for all selected study periods. In particular, instantaneous reserve requirements are likely to change as less generation will be dispatched, lowering system frequency inertia. This is partially balanced by reduction in the large generator output needing to be covered by instantaneous reserves. The real market system uses an iterative process to evaluate system inertia and the corresponding instantaneous reserve required, via the Reserve Management Tool (RMT). System inertia is represented by Net Free Reserve (NFR) values for each island, risk class and reserve type. This iterative process cannot be easily replicated at the present time in offline study tools and as such, a statistical model must be employed to approximate NFR values for the study. Validation of these approximated values will be discussed below.

Selected study periods and assumptions All market system case files (consisting of SPD solve input and output data) are archived for future reference. For this study, five minute Real Time Pricing (RTP) case files were used for twelve selected study days. This selection covers all four seasons, representative days of the week, and a wide range of demand profiles and system conditions that can be expected on the power system. The specific dates selected for study are listed in Table 1 below.

Table 1: selected study dates for dispatch modelling

Day Summer Autumn Winter Spring Tuesday 5 Jan 2016 14 Apr 2015 28 Jul 2015 27 Oct 2015 Saturday 9 Jan 2016 18 Apr 2015 1 Aug 2015 31 Oct 2015 Sunday 10 Jan 2016 19 Apr 2015 2 Aug 2015 1 Nov 2015

As part of work stream 1, this study assumes a clear, sunny day over all 16 regions with each PV installation following an approximately parabolic generation profile (see Figure 5 below). This is a conservative, worst-case assumption with respect to system capacity for solar PV generation, as it results in the highest possible maximum rate of change in national residual demand.

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Figure 5: example of PV generation clear sunny day profile It is also assumed that hydrology is favourable and hydro generating capacity is cleared first in the market for both energy and instantaneous reserve, before other types of generation. Input offer information is adjusted to reflect this relative merit order for dispatch. This assumption is conservative, because hydro generators tend to have the highest offered ramp rates of all generation types in New Zealand. If base-loaded first, this ramping capacity will be less available to meet any marginal increase in demand.

Modification of case files GXP level demand is modified for each 5 minute period over the day in all case files according to the equation below. This determines the sunny day residual load profile at each GXP, with the calculated regional and GXP distribution factors, and the assumed total national solar PV installed.

퐺푋푃 푛푒푡 푑푒푚푎푛푑푦(푡) = 퐺푋푃 표푏푠푒푟푣푒푑 푑푒푚푎푛푑푦(푡) − 퐺푋푃 푃푉 푔푒푛푦 (푡) Energy and reserve offers are also replaced with a generic structure representing the conservative generation merit order discussed above. All other case-specific data for the selected study days is retained as it occurred on the study day in question. This includes wind generation, interruptible load offer quantities and transmission outages.

10 Thermal generation analysis and adjustment Given the non-negligible start-up and shutdown costs for thermal generating units, the dispatched running times over the day indicated by initial RTP solve sequences are analysed for all thermal generators. This includes closed-cycle gas turbines, open-cycle gas turbines, coal-fired units and diesel units offered in the market. The Otahuhu B and Southdown stations, closed permanently in 2015, are not included in the study. Run time durations are evaluated with regard to likely participant behaviour, and selectively excluded if minimum run time assumptions are not satisfied by the initial SPD solutions for the study day. Input cases are then run a second time, to simulate market behaviour in the absence of the withdrawn thermal plant. The justification for this adjustment is that market participants are unlikely to offer thermal generating capacity if the forecast schedules indicate that run times are insufficient to recoup operating costs incurred by starting up and shutting down.

Final solve and NFR model validation SPD solves will be carried out for each study day, increasing total national PV installed until ramp rates become insufficient to meet the change in net demand within any 5 minute period. The final feasible PV level, in MW, will then be taken as the power system capacity for solar PV generation. This result will vary by day and by season, with the lowest value setting the effective overall system capacity. Approximated NFR information for each 30 minute trading period of the final feasible scenarios can be checked using an offline study version of RMT. This may identify instances where the NFR approximation is inaccurate, and where study periods need to be manually adjusted with new NFR values and re-run. Finally, each final feasible PV capacity scenario will be tested in a training environment fully replicating the live market system. This will validate the study results and help to identify any relevant operational issues arising from the relevant PV penetration level.

11 Summary In response to the anticipated increase in distributed, non-dispatchable, renewable generation in New Zealand, Transpower is progressing through the program of work described in this paper. This project will help to assess the impacts of solar PV technology on the power system, and on the ability of Transpower to continue to operate the power system prudently and meet its PPOs. The future appropriateness of the PPOs will also be assessed as part of this work.

The project has been split into five separate work streams, of which the first two are currently well underway, with the others scheduled to start after the completion of initial investigations. The work streams will study the impacts of non-dispatchable renewables on the New Zealand power system resulting from:  Intermittent PV generation  Reduction in system frequency inertia  Reduction in fault current availability  Dynamic inverter behaviour

As this paper outlines, while Transpower’s Renewables project is still at an early stage, preliminary work has advanced several core methodologies and significant findings are now within reach. The current level of grid-connected solar PV installed in New Zealand is low and of little concern for system operation. However, it is crucial to understand possible future impacts early to ensure successful integration of new technologies into the power system.

The learnings gained through this detailed investigation will be pivotal in steering the future form of the transmission system, electricity market design, industry regulations, policies and procedures into an era of increasingly decentralised supply and responsive consumer technologies. Ultimately, this understanding will facilitate an evolving power system which can continue to meet the changing needs of New Zealanders.

12 References

[1] Electricity Authority Te Mana Hiko, “Reports - Retail: Installed distributed generation trends,” Electricity Market Information Website, [Online]. Available: http://www.emi.ea.govt.nz/Reports. [Accessed 24th March 2016].

[2] Statistics New Zealand, “Population,” Statistics New Zealand, [Online]. Available: http://www.stats.govt.nz/browse_for_stats/population. [Accessed 13th March 2016].

[3] Electricity Authority Te Mana Hiko, “The Code, Part 13 - Trading arrangements,” 1st February 2016. [Online]. Available: https://www.ea.govt.nz/code-and-compliance/the- code/part-13-trading-arrangements/. [Accessed 29 April 2016].

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