Work package 15 Economic impacts of the demonstration projects, barriers to scaling up and solutions

Main findings

Taskforce 1 (Demonstration projects 1 and 2): 'Contribution from variable generation and load to system services'

  • Twenties has overcome a major technical barrier preventing better use of wind generation. The capability of providing frequency and voltage control by wind farms makes it possible to reduce system operation costs and carbon emissions. However, such impact would be limited under certain system conditions, as shown in the performed analysis (Demonstration 1).
  • Virtual power plants reduced marginal electricity prices by 0.25-0.4% and brought about lower total system costs in the day-ahead market (Demonstration 2).

Taskforce 2 (Demonstration projects 3 and 4): 'Allow for offshore wind development'

  • New offshore network capacity that interconnects national networks allows local surpluses of wind power to be used elsewhere, reserve power to be held, and potentially cheap, zero carbon power to be used instead of more expensive higher-carbon fossil fuel plants (Demonstration 3).
  • 'High Wind Ride Through' controllers can help lower reserve requirements by 50% (Demonstration 4).

Taskforce 3 (Demonstration projects 5 and 6): 'Give more flexibility to the transmission grid'

  • Overhead Line Controllers (OLC) and Dynamic Line Rating (DLR) technologies have many bene-fts. They:
  • - Enable the system to be operated more eff-ciently (Demonstrations 5 and 6).

    - Bring down the costs of electricity supply by reducing the need for 'out-of-merit generation' (Demonstrations 5 and 6).

    - Avoid or reduce wind curtailment, contributing to a better and more efficient integration of wind power (Demonstrations 5 and 6).

Work package in detail

The goals of WP15 are to assess the local economic impact of each demonstration project, to perform an analysis of the joint impact of all the demonstrations in each task-force, to identify the barriers to scaling up the results, to propose solutions to overcome those barriers, and to see how the different project results could impact on each other.

In Task-Force 1, 'Contribution from variable generation and load to system services', which is made up of Demonstration projects 1 and 2, the economic impact assessment performed for Demonstration project 1 shows that if wind generators in Spain used active power control, there would be less need to commit extra conventional generation to comply with reserve requirements. This would avoid wind curtailment and slightly reduce system operation costs. Based on a sensibility analysis (one result varies when you modify any variable of the model), the economic impact may be higher on systems with a high share of wind power capacity, a low share of flexible pumping-storage facilities, and where the reserve's constraints highly influ-ence the resulting generation scheduling.

The study demonstrated that in most cases wind penetration will not be limited by the provision of voltage control by wind generators. This voltage control by wind farms causes a slight increase of active power losses in the wind farm grid that could be reduced by developing an optimised voltage control strategy.

The economic impact assessment for Demonstration project 2 showed that the implementation of the Virtual Power Plant (VPP) concept in the Danish system is expected to reduce marginal electricity prices by 0.25-0.4% and total system costs in the day-ahead market. However, the expected reduction of CO2 emissions is highly dependent on system configuration.

Offshore wind power development is at an early stage today. However, it will contribute massively to future European energy supply. The results of Task Force 2, 'Allow for offshore wind development', which is made up of Demonstration projects 3 and 4, suggest that new offshore network capacity which allows an increase in the exchange of power between different countries will be important for realising the full potential of new wind power developments. This new network capacity allows local surpluses of wind power to be used elsewhere, and allows reserve power to be held remote from a particular area. However, it might also allow cheap generation with zero carbon emissions in remote areas to be used instead of more expensive higher-carbon fossil fuel plants in a local area.

As offshore wind power is concentrated in relatively small geographical areas, extreme weather conditions can lead to large variations in offshore wind power production. WP15 shows that the new 'High Wind Ride Through' controllers explored in Demonstration Project 4 can help lower reserve requirements, reducing the maximum reserve to approximately 50% of the level needed previously.

In Task Force 3, 'Give more flexibility to the transmission grid', which is made up of Demonstration projects 5 and 6, the most significant economic benefit of Overhead Line Controllers (OLC) and Dynamic Line Rating (DLR) technologies tested in Demonstration projects 5 and 6 is relieving transmission congestions, which enables the system to be operated more efficiently. While Demonstration project 5 focused on the increase in net transfer capacities provided by the tested devices, Demonstration project 6 focused on local network effects. The economic impact assessment performed for each demonstration showed that OLC and DLR devices reduce the need for dispatching 'out-of-merit generation' (conventional generators which are run above what is economically optimal) in both cases, decreasing electricity supply costs. In areas with high wind potential these technologies avoid or reduce wind curtailment, contributing to a better and more efficient integration of wind power.

Despite the benefits of innovative system management approaches and the novel technologies demonstrated in the Twenties Project, some regulatory barriers still exist. One important barrier concerns the current design of day-ahead, intraday and balancing services market designs - their rules are not designed to integrate high shares of variable renewable generation. In general, three market aspects should be improved in order to favour a higher penetration of renewable generation: liquidity, flexibility and integration with other power systems' markets.

A major barrier to the development of offshore grids is related to the high investment need and cost allocation. To overcome this barrier the enhancement of the existing inter-TSO compensation mechanisms will be required as well the development of joint support instruments and targeted EU funding.

The adoption of grid technologies such as the ones tested in Task Force 3 include the establishment of economic (as well as environmental) criteria for assessing alternative solutions and the definition of standards for the use and control of these technologies. The latter is especially relevant when different TSO jurisdictions are affected, which will require the agreement of the TSOs involved.