Large scale renewable energy integration – the policy perspective

System and market integration is becoming a critical priority for renewable energy policy.
Published: Tue 20 Sep 2016

As the penetrations of solar and wind energies grow, so too are the challenges for integrating these variable renewables to the transmission and distribution grids. Maintaining the balance between supply and consumption becomes more difficult, putting grid reliability, operations and stability at risk and potentially creating barriers to further deployment.

Wind and particularly solar are currently the fastest growing sources of electricity globally. In 2015 their additional generation met more than 90% of incremental demand for electricity, according to the International Energy Agency (IEA). Since 2008 the average cost of solar has decreased by almost 80% while that of land-based wind has decreased by 35%.

SolarPower Europe’s Global Market Outlook records 229GW of commissioned PV worldwide at the end of 2015. Growth is being driven by emerging markets in Asia, particularly China and Japan, and the US, while Europe has just surpassed the 100GW mark. An installed capacity of over 600GW is anticipated by 2020. If the pace is maintained, solar power could become the world’s largest source of electricity by 2050.

With these developments, solar and wind are entering what the IEA calls the “next generation” of deployment. Previously the main priorities were technology learning and cost reduction. Today they are “technologically mature and economically affordable.” As such, the issue of system and market integration is becoming a critical priority for renewables policy and energy policy more broadly.

System integration of renewables

The ability to integrate an increasing share of solar and wind to the power system depends on the interaction of two main factors. These are the properties of the generation, including factors such as weather patterns, their size and the power converter technologies used; and the flexibility of the system into which they are integrated, including demand patterns and seasonal variations.

How these factors interact is impacted by policy, market and regulatory frameworks, which differ between systems. However, according to the IEA, a growing body of experience shows a common pattern of challenges which enables best practice principles to be identified.

Through a ‘systems’ approach to the issue, the IEA in a new study identifies three main areas for action.

  • System-friendly deployment in order to maximise the net benefit of the wind or solar power for the entire power system and to enable the renewable to facilitate its own integration. Factors include the use of the renewable to provide system services such as balancing, the proximity of the deployment to the demand, the renewable technology mix and the plant design criteria.

In this context the IEA also calls for a shift away from use of the ‘levelised cost of energy’ for economic assessment and instead to use the ‘system value’. Defined as the overall benefit arising from the addition of the renewable source to the power system, the system value takes account of both positive and negative effects of the addition. For example, positive effects could include reduced fuel costs, reduced CO2 and other emissions costs, reduced need for other generation capacity and reduced losses. On the negative side are increases in some costs, such as higher costs of cycling conventional power plant and for additional grid infrastructure, as well as curtailment of renewable output due to system constraints. The short and long term system values should be distinguished.

  • Improved operating strategies in order to maximise the contribution of existing assets and ensure security of supply. These include advanced renewable energy forecasting and enhanced scheduling of power plants. Where liberalised wholesale markets are in place, this may require an upgrade of market rules and products. In heavily regulated systems, action will need to target operational protocols and key performance indicators (KPIs) for system and power plant operators.
  • Investment in additional flexible resources such as demand side resources, electricity storage, grid infrastructure and flexible generation. At some point even in concert system-friendly deployment and improved operating strategies will be insufficient to manage high shares of solar and wind in the long term. That point, at which investment in additional flexible resources becomes necessary, depends on the system context. In all systems, however, an increase in flexible resources will become a cost-effective integration strategy and will require additional investment. An appropriate mix of resources should be made.

Focus on Denmark

As part of its analysis the IEA conducted several country case studies, of which Denmark is one.

Denmark is a leader in wind power deployment and system integration. It routinely utilises advanced system operation techniques, including dynamic use of abundant interconnection capacities with neighbouring countries as well as very flexible operation of thermal generation. Interconnection is particularly valuable in the region because it links diverse power systems with different characteristics, e.g. wind in Denmark and hydro power in Norway. [Engerati-Denmark On Target for 85% Renewables by 2040]

The Danish electricity system operated without any participation of its central generation units for the first time in September 2015. Newly installed advanced grid support technology (synchronised condensers) was used to maintain grid stability under these conditions.

Denmark has reached a stage of renewable integration where periods of abundant renewable generation – often exceeding domestic power demand – are becoming increasingly common. Consequently, measures to boost the system value of the renewables are quite advanced compared to other regions of the world.

Some of the actions taken include:

  • The current support scheme for wind power plants has been designed to promote the use of larger rotors
  • Further upgrades of interconnection capacities with Germany and the Netherlands are planned, which will help smooth wind power fluctuations via geographical aggregation and the linking of diverse resources
  • System operation and wholesale power market design in Denmark have been systematically adapted to deal with high levels of variable renewables
  • Consumers may opt for variable tariffs that are linked to wholesale price levels. However, Danish energy prices are among the most heavily taxed in the European Union, reducing the effectiveness of real-time price signals and a possible misalignment of economic incentives. A review of taxation could help reflect the system value, in particular of distributed resources.
  • The Energy Strategy 2050 has been developed to reach 100% renewables by 2050. 

For more on the various aspects of large scale renewable integration, join Engerati’s In Focus Renewable Integration - Solar & Wind.

Further reading IEA: Next Generation Wind and Solar Power

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