Modelling and analysis of flexibility in power system with high penetration of renewables

Abstract

This dissertation focuses on the modelling and analysis of the flexibility issues of power systems, arising from the high penetration of Renewable Energy Sources (RES). The analysis of flexibility issues in this dissertation includes the presentation of a proposed typology of the different types of flexibility needs of the system and the corresponding metrics. In addition, a part of the thesis focuses on the development of a capacity expansion model and a model simulating the operation of wholesale electricity markets. The development of simulation models allows us to study and investigate questions related to the flexibility needs of the power system through the evaluation of model-based results. Although the term flexibility is systematically used only in recent years, the need for a power system to be flexible always existed, as variability and uncertainty are inherent features of the system. In a pre-renewable era, the challenges of the power system were mainly related to the variability and uncertainty of electricity demand levels and the unplanned outages of power plants and/or interconnectors. The penetration of variable RES (e.g. wind turbines, solar PV etc.) into the system increases variability and uncertainty, as their generation depends on weather conditions and thus is non-dispatchable. In power systems with high RES penetration, different types of variation occur differentiated by their timeframe (from minute to minute up to seasonal). Thus, the flexibility needs of a system require different types of flexible reserves, each coping with different needs of the system (short-term, multi-hour and long-term). Each flexibility reserve type calls upon different resources depending on their technical characteristics and competitiveness. In the present dissertation, we define flexibility as “the ability of the system to respond to both predictable and unpredictable changes in electricity production and demand, in such a way that certain predetermined reliability criteria are met and unnecessary curtailment of either demand or variable RES-based electricity generation is avoided". Electricity systems and electricity markets face a period of transition due to the need for drastically reducing emissions, in order to boost climate action. The penetration of Renewable Energy Sources (RES), which have zero carbon footprint, in power generation systems creates a number of challenges both at the technical level and at the level of organization, operation and regulation of electricity markets. Already in several power generation systems, but especially in the systems of the future, the penetration of RES units has significantly changed the net load curve, which the remaining resources of the system are called upon to cover. Due to the change in load curve, flexible power plants face more frequent starts and shutdowns, operate more frequently at partial operational levels and are often called upon to provide ramping for balancing purposes. The flexibility of the system, in terms of the available pool of flexible resources, is significantly affected by the market design of the wholesale electricity markets. Several electricity market practices, which currently prevail, can be identified as market distortions hindering market efficiency and limiting the pool of competitive flexible resources. Some feature of the market design, which play an important role for coping with the increased flexibility needs in a cost-effective way is the full use of interconnectors and their participation to all stage of the markets, as well as the integration of the market stages. In addition, the penetration of RES and the flexibility needs of the system due to their variable production increases the importance of balancing and reserve markets. The integration of different market stages through the integration of technical limitations of the system in pure energy markets and the optimal use of interconnections through their participation in all stages of the market creates great opportunities for cost savings and for coping with flexibility needs in an optimal way. In addition, increasing the hours of surplus production of RES units at low demand hours requires the development of storage facilities and other demand-response mechanisms in order to avoid large quantities of RES generation curtailment and also to facilitate their penetration into the power generation system. In RES-based systems, the long-term flexibility needs of the system highlight the importance of using storage technologies with multi-day and inter-seasonal storage cycle, such as Power-to-X units. The role of storage plants in variable RES-based power systems becomes indispensable. However, the coupling of electricity markets, which allows for an increase in cross-border electricity exchanges and can provide balancing services, may replace the use of storage units. This dissertation concludes that the interdependence of the enhancement of cross-border flows and the operation of storage units shows both features of substitution and complementarity. This relationship depends on a number of conditions, such as the degree of uniformity or differentiation of the power generation mix of each system, the cumulative supply curve of each market and the geographical location of storage units. In any case, despite the increase in the fluctuation of wholesale electricity prices due to the penetration of variable RES, the increased level of market coupling, which can be achieved through the optimal use of interconnections, leads to the convergence of electricity prices across markets. Due to this, the recovery of capital costs of storage units cannot be ensured in the wholesale electricity markets, but additional remuneration schemes are required. One way to ensure that investment expenditure of storage plants can be recovered is to integrate such plants to flexible RES-based portfolios that can offer competitive prices and form bilateral contracts with a number of consumers. The significant reduction in investment costs in RES technologies makes them extremely competitive sources of electricity generation. However, in the formation of a portfolio based on RES, it is necessary to have a resource of flexibility, which will be able to offer services balancing and managing the variability and uncertainty of RES production. The large drop of RES capital costs and the possibility of generating renewable-based electricity at a small scale, make RES-based portfolios among the most attractive ones, from a cost perspective. The competitive costs of RES-based portfolios, even at smaller scales, has overturned the traditional business model of large-scale electricity supply portfolios. The model-based results show that achieving economies of scale offers significant benefits in reducing the cost of balancing and reserves of a RES-based portfolio, but not in reducing energy costs. Therefore, the importance of wholesale markets, which offer balancing and ancillary services, becomes more prominent and so does the need to redesign the structure of wholesale electricity markets in the context of systems with high RES penetration. Moreover, the significant shift of power generation costs from operational expenditure (OPEX) to capital expenditure (CAPEX) implies the need to redefine the methodology of calculating electricity tariffs at the retail level.