Electricity distribution and embedded renewable energy generators
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Electricity distribution and embedded renewable energy generators. Martin Scheepers ECN Policy Studies. Florence School of Regulation, Workshop, November 24, 2006. Contents. Distributed generation: RES & CHP Impact DG on the DSO business

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Electricity distribution and embedded renewable energy generators

Electricity distribution and embedded renewable energy generators

Martin Scheepers

ECN Policy Studies

Florence School of Regulation, Workshop, November 24, 2006


Contents

Contents

  • Distributed generation: RES & CHP

  • Impact DG on the DSO business

    2.1Integration of DG in electricity distribution networks

    2.2Reinforcement costs, energy losses and replacement of distribution assets

    2.3Remuneration of DSO costs

    2.4DSO revenues and incentives

    2.5DG providing ancillary services

  • What is the optimal amount of DG?


Res chp in eu 25 scenarios

1. Distributed generation: RES & CHP

RES & CHP in EU-25 scenarios

Source: PRIMES


Distributed generation dg

1. Distributed generation: RES & CHP

Distributed Generation (DG)

* typical > 50 MWe

** typical > 10 MWe


Current dg share in total generation capacity

1. Distributed generation: RES & CHP

Current DG share in total generation capacity

Source: DG-GRID/Risoe


Integration of dg in electricity distribution networks

2. Impact of DG on the DSO business

Integration of DG in electricity distribution networks

Planning

  • DG should be considered by DSOs when planning the development of the distribution network (Article 14/7 of the EU Electricity Directive)

    Operation

  • DG could also be involved in the economic efficient operation of the network by using active network management* resulting in lower costs

    • Also including demand side management

  • DG could provide ancillary services to DSOs


Impact dg on business model dso

DG

reinforcements

DG

DG

connection costs

replacing

distribution assets

DG

ancillary services

DG

energy losses

2. Impact of DG on the DSO business

Impact DG on Business Model DSO

Source: Dispower/ECN


Reinforcement costs related to dg

2. Impact of DG on the DSO business

Reinforcement costs related to DG

Rural network

  • Type of DG:

    • Intermittent: wind, small-hydro

    • Non-intermittent: CHP

  • Problems to solve: voltage rise

    Urban network

  • Type of DG:

    • Intermittent: PV

    • Non-intermittent: CHP, micro-CHP

  • Problems to solve: fault level increase


Analyses of effect of large dg penetration on reinforcement costs

2. Impact of DG on the DSO business

Analyses of effect of large DG penetration on reinforcement costs

Approach

  • Quantitative analyses of impact of high DG/RES penetration on electricity networks in UK and Finland

    Parameters varied:

  • Rural and urban networks

  • Different DG penetration levels

  • DG concentration, i.e. the amount of DG connected to specific network areas and levels

  • Non-intermittent production and intermittent production

    Alternatives considered:

  • Status quo, i.e. “passive” network management

  • Innovative, i.e. “active” network management


Electricity distribution and embedded renewable energy generators

2. Impact of DG on the DSO business

Ranges of incremental reinforcement costs rural network (UK case)Top → DG high concentrated; bottom → DG low concentrated

Source: DG-GRID/Imperial College


Electricity distribution and embedded renewable energy generators

2. Impact of DG on the DSO business

Ranges of incremental reinforcement costs urban network (UK case)Top → DG high concentrated; bottom → DG low concentrated

Source: DG-GRID/Imperial College


Average annual energy losses uk case losses lv network not included

2. Impact of DG on the DSO business

Average annual energy losses (UK case)Losses LV-network not included

Source: DG-GRID/Imperial College


Replacement of distribution network assets

2. Impact of DG on the DSO business

Replacement of distribution network assets

Source: DG-GRID/Imperial College


Impact on opex and capex

2. Impact of DG on the DSO business

Impact on OPEX and CAPEX

Reinforcement costs

  • At low DG penetration levels reinforcement costs are zero, but they will increase progressively with higher DG penetration.

  • Also “DG-density” causes cost increases.

    Energy losses

  • DG may initially reduce energy losses, but with higher DG penetration losses will increase.

    Replacement value of DG

  • DG can replace distribution assets because the net (peak) load of the network will decrease with increasing DG penetration. The replacement value decreases in case of high DG penetration in combination with high “DG-density”

    Active network management

  • Reinforcement costs can be reduced with “active network management” (incl. implementation costs like ICT). However, in some high DG-penetration cases costs will be higher than passive network management.

  • Operational costs (i.e. energy losses, curtailment compensation, labour costs) will increase. This results in higher total costs in some cases.

    Type of DG

  • The type of DG (non-intermittent and intermittent) influences network capacity and losses.

  • Effects are different for rural and urban networks, also because of the different types of DG connected.


Remuneration of dso costs

2. Impact of DG on the DSO business

Remuneration of DSO costs

To guarantee non-discriminatory network access DG connection charges should be based shallow costs (direct costs of the connection).

DG UoS charges

should be cost reflective

preferably differentiated by location and time of use

Might be positive (if network costs are increased due to DG operation) or negative (if the savings are greater than the costs

Source: Dispower/ECN


Dso revenues and incentives

2. Impact of DG on the DSO business

DSO revenues and incentives

Revenues

  • DSOs revenues are determined by incentive regulation

  • DG can have a negative effect on the DSOs revenues

  • DSOs revenues should be calculated taking into account the incremental effect on CAPEX and OPEX of different DG penetration levels, e.g.

    • Allowance for DG in regulated asset base (RAB)

    • DSO benchmarking considering DG as cost driver

    • Tariff adjustment factor (ex post)

    • Allowance for a direct revenue driver

      • e.g. TARt = TARt-1(1 + CPI – X) + € A/ kWDG + € B/ MWhDG

        Incentives

  • Negative effects on revenues should at least be neutralised

  • (Temporarily) positive incentives could be used to promote DG integration


Dg providing ancillary services

2. Impact of DG on the DSO business

DG providing ancillary services

Ancillary services

  • DSOs should be able to purchase ancillary services from DG operators

    • e.g. voltage and reactive power support, energy losses, congestion management, etc.

      Islanded operation

  • DG reducing the impact of network outages on customer supply interruptions (i.e. improving quality of service)

  • Requires active network management, local balancing, etc.

    DG-DSO arrangements

  • DG-DSO service contracts

  • DG regulated payments


Costs reductions expected with increasing res

3. What is the optimal amount of DG?

Costs reductions expected with increasing RES


What is the optimal amount of dg

3. What is the optimal amount of DG?

What is the optimal amount of DG?

Source: ECN


More information

More information:

Thank you

http://www.dg-grid.org

http://www.electricitymarkets.info/distributedgeneration/index.html


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