GRID INTEGRATION COST OF PHOTOVOLTAIC POWER GENERATION G. Strbac, D. Pudjianto, P. Djapic, J. Dragovic Energy Futures Lab

Installed capacity – End 2012: 69 GW – By 2020: 85 GW (NREAP) 250 GW (EPIA) – By 2030: 480 GW (EPIA) – By 2050: 560 GW – 820 GW (ECF) 4 OCTOBER 2013, PARISGRID INTEGRATION COST OF PV2 CONTEXT PV is a key technology for future low carbon energy systems ? Impacts on the European electricity system and system integration costs ?

COST OF PV While LCoE of PV is known, the impact and the integration cost of PV is less well understood PV cost = LCOE PV - Capital costs - O&M costs -Gen adequacy costs - Transmission costs - Distribution costs - Balancing costs - Losses Grid Integration Cost +/-

GRID INTEGRATION COST AND BENEFITS OF PV GENERATION PV & Generation adequacy –Ability of PV to displace conventional plant PV & network reinforcement –Significant penetration of small scale PV may trigger LV network reinforcements (voltage rise effect, phase imbalance) –Need to transfer significant PV energy from south to north may trigger transmission network reinforcements PV & Operating reserves –Variability and unpredictability of PV will increase the need for flexibility and balancing services PV & Network losses –PV generation could reduce / increase network losses Mitigation measures –Control of PV interface, demand side response, storage, voltage regulation

4 OCTOBER 2013, PARISGRID INTEGRATION COST OF PV5 CAPACITY VALUE OF PV Can PV contribute to the supply security during peak demand condition? Peak demand period PV and demand hourly profiles for the different seasons in the UK Zero capacity value case Potentially significant capacity value in Southern EU Mitigation measures: diverse RES portfolio, energy storage, demand response

4 OCTOBER 2013, PARISGRID INTEGRATION COST OF PV6 ADDITIONAL CAPACITY COST OF PV It reflects the cost of maintaining the capacity of incumbent generators Methodology to compute the back-up capacity cost of PV Cost of Gen technology used to maintain reliability of the electrical system Cost Ability of PV to displace capacity of gas fired plant Cost Load factor of PV Cost

4 OCTOBER 2013, PARISGRID INTEGRATION COST OF PV7 ADDITIONAL CAPACITY COST OF PV Northern Europe (UK) Southern Europe (Greece) Cost in Northern Europe is higher than in Southern Europe Low capacity credit as the cost driver in Northern Europe –Weak correlation between PV output and peak demand conditions Cost is negative in Southern countries for low penetration of PV DR reduces the additional capacity cost of PV

4 OCTOBER 2013, PARISGRID INTEGRATION COST OF PV8 ADDITIONAL CAPACITY COST OF PV No Demand Response Demand Response 2% PV penetration level 18% PV penetration level

GRID INTEGRATION COST OF PV9 EU GRID COST OF PV It reflects the cost of upgrading European Main Transmission System Target years –2020 (240 GW PV) –2030 (485 GW PV) Approach: –Increase PV capacity by x % EU: X%  5%, 10%, 15% Specific country  50% –Quantify  grid cost via DSIM EU Grid cost of PV =  grid cost /  PV energy 4 OCTOBER 2013, PARIS

GRID INTEGRATION COST OF PV10 INSTALLED CAPACITY OF PV PV capacity in 2020 (ref: EPIA) EU PV: 240 GW PV capacity in 2030 (ref: EPIA) EU PV: 485 GW

4 OCTOBER 2013, PARISGRID INTEGRATION COST OF PV11 INTEGRATED SOLUTION FOR GENERATION & TRANSMISSION INVESTMENT PROBLEMS Minimises the overall investment and operating cost of the system

4 OCTOBER 2013, PARISGRID INTEGRATION COST OF PV12 HIGH RES DRIVES EU-GRID REINFORCEMENT IN 2020 ENTSO-E 2020 PV Parity 2020 On top of ENTSO-E 2020, more gid reinforcement may be required if installed capacity of RES is higher.

4 OCTOBER 2013, PARISGRID INTEGRATION COST OF PV13 INCREASING THE CAPACITY OF EU GRID IS VITAL FOR PV PV Parity 2020PV Parity 2030

4 OCTOBER 2013, PARISGRID INTEGRATION COST OF PV14 EU GRID COST OF PV The cost is relatively modest; it increases with higher PV penetration Increase in PV installed capacity from the ref. case  grid cost (M€/year)  annual energy output (TWh) Additional EU Grid cost (€/MWh) EU : 5% EU : 10% EU : 15% Spain:50% Italy:50% France:50% Germany:50% EU : 5% Higher penetration likely to incur higher cost The additional grid cost is modest

4 OCTOBER 2013, PARISGRID INTEGRATION COST OF PV15 BALANCING COST OF PV It reflects the increased op. cost due to add. balancing&reserve services Balancing cost of PV =  system operating cost (with – without reserve for PV) / PV production System operating cost Fuel price, no load cost and start-up cost, carbon price Cost of balancing is relatively modest: 2020: € 0.5/MWh 2030 €1.04/MWh * Assuming full integration of EU balancing market Interacted with reserves for Unplanned outages Uncertainty in load (very good forecast) Uncertainty of other RES outputs (e.g. wind)

4 OCTOBER 2013, PARISGRID INTEGRATION COST OF PV16 DISTRIBUTION NETWORK COST OF PV It reflects the cost of upgrading distribution networks driven by PV Networks are based on Generic Distribution System (GDS) model and comprise of low voltage (0.4kV), medium voltage (10-35kV) and high voltage ( kV) lines and transformers 15 types of networks –differ by capacity and voltage levels; –network types with different mixture of overhead and underground lines, thus representing rural, suburban and urban networks Year-round analysis

4 OCTOBER 2013, PARISGRID INTEGRATION COST OF PV17 REPRESENTATIVE LV NETWORKS Calibration of LV Generic Distribution Networks ParameterUrbanSemi-urbanSemi-ruralRural Consumer density (per km 2 ) LV substation density (per km 2 ) LV length density (km per km 2 ) UrbanSemi-urbanSemi-ruralRural

4 OCTOBER 2013, PARISGRID INTEGRATION COST OF PV18 COST OF UPGRADING DISTRIBUTION NETWORK DUE TO PV High penetration level Detailed reinforcement cost allocation on all voltage levels and transformers

4 OCTOBER 2013, PARISGRID INTEGRATION COST OF PV19 DISTRIBUTION NETWORK COST OF PV No Demand Response Demand Response Low/medium PV penetration level 18% PV penetration level

4 OCTOBER 2013, PARISGRID INTEGRATION COST OF PV20 IMPACT OF PV ON LOSSES Loss reduction can be achieved by deploying PV

4 OCTOBER 2013, PARISGRID INTEGRATION COST OF PV21 IMPACT OF PV ON LOSSES Case studies on European countries General trend: losses decrease up to 8%-14% PV penetration then start to increase

4 OCTOBER 2013, PARISGRID INTEGRATION COST OF PV22 COST OF LOSSES ATTRIBUTED TO PV No Demand Response Demand Response 18% PV penetration level 2% PV penetration level * Average electricity price: €50/MWh

4 OCTOBER 2013, PARISGRID INTEGRATION COST OF PV23 GRID INTEGRATION COST OF PV No Demand Response Demand Response 18% PV penetration level 2% PV penetration level

Additional generating capacity cost is the major cost for integrating PV in Northern Europe –Northern Europe ~ 14 €/MWh –Southern Europe : lower cost, even benefits when PV penetration is low. With higher PV penetration cost increases. Addition EU Grid cost of PV –Low (<€0.5€/MWh) in 2020 and it increases to €2.80/MWh in 2030 –Complex interaction Balancing cost of PV –Low (€0.5 €/MWh) in 2020 and it increases to €1/MWh in 2030 Additional distribution network cost of PV is the second major component –Cost in Southern Europe is much lower than cost in Northern Europe –Magnitude of cost up to €9/MWh 4 OCTOBER 2013, PARISGRID INTEGRATION COST OF PV24 CONCLUSIONS/1 The cost is modest but increases with higher PV penetration

The cost in Northern Europe is higher than the cost in Southern Europe -Northern Europe : up to €26/MWh (2.6 ct/kWh) -Southern Europe: up to €20/MWh Demand Respond reduces the integration cost of PV –Maximum cost down from €26/MWh to €21/MWh (20% savings) Distribution network losses –For small levels of penetration, PV reduces network losses. Higher PV penetration may increase network losses –Southern Europe benefits given its load characteristics (peak PV coincides with peak demand) –Reduction in losses from 0.25% up to 0.75% of annual energy demand –Savings: €2.5/MWh to €5.6/MWh but the value diminish with higher PV penetration 4 OCTOBER 2013, PARISGRID INTEGRATION COST OF PV25 CONCLUSIONS/2

GRID INTEGRATION COST OF PHOTOVOLTAIC POWER GENERATION G. Strbac, D. Pudjianto, P. Djapic, J. Dragovic Energy Futures Lab