Danish wind industry may need a new balancing act

Experience to date suggests that the ‘Danish wind case’ (ie a justification of the high proportion of wind power in the mix) could never be made without strong interconnections to the hydropower based Nordic system and to the European continental mainland. Depending on weather conditions the total output of all the country’s wind power plants can vary between zero and 3100 MW, swinging from limit to limit in only few hours. This variability and unpredictability is a major challenge for the national transmission system operator Energinet.dk. According to Kim Behnke, head of R&D, Energinet.dk, more than half of imbalance events have their origin in wind power, and failures in wind forecasting increase the imbalances in the power system in approximately 70 % of all one hour slots.

These power interconnections are used systematically to balance the Danish power system. Denmark imports and exports close to 10-11 TWh per year, nearly 30 % of annual consumption, and cross border interconnection provides most of the balancing of wind power in the current Danish system – at present 70 % of wind power variability is balanced through import/export (Figure 1). The remaining part is balanced through internal measures, typically the regulation of coal fired power generation. The problem with using conventional power units, says Kim Behnke, is that they are more costly and less environmentally friendly than using the Nordic hydro based electricity market to balance wind power production, .

The challenges associated with operating wind turbines in Denmark are amplified by the increasing amounts of wind power being installed in neighbouring countries, particularly Germany. There is competition currently for scarce balancing resources owing to limited HVDC transfer capability. The total transfer capability between the Nordic and the continental AC systems was 4.2 GW in 2008, considerably less than the combined wind power total. Therefore only a fraction of the necessary balancing services could be supplied from the Nordic hydro systems, and the bulk of the necessary support must be provided locally from continental thermal systems.

In the future, these problems will become more significant. In a new survey (from the EcoGrid.dk project) leading Danish researchers and energy experts estimate the generation of wind power in Germany to rise to between 32 and 59 GW in 2025. This means that the total Danish and German wind power capacity could increase from today’s 29 GW to 38.5 GW or even 65 GW in 2025 depending on which future course is taken from that range. With 50 % wind power, it is unlikely that Denmark can rely on international markets to provide operating reserves and sufficient balancing capacity to the same extent as today. Wind power’s contribution already covers the entire Danish electricity demand for a good proportion of the time (Figure 2). Therefore a ‘surplus’ of wind power will occur more frequently and increase significantly the need for balancing resources.

Effect on spot prices

A serious consequence of high wind power penetration has been increasing price volatility on the Nordic Power exchange ‘Nord Pool’. When there are curtailments some market players experience an unsatisfactory market service, claims Paul-Frederik Bach, an energy consultant and the author of a new spot price study, The Effects of Wind Power on Spot Prices, produced for the Renewable Energy Foundation.

When the wind is strong wholesale electricity prices drop dramatically. Statistics show that spot prices were zero during 85 hours in 2007 and during 28 hours in 2008. On the other extreme, spot prices passed 100 r/MWh in 105 and 193 hours in the same period. According to Bach the numbers of such cases (0 r/MWh and 100 r/MWh) can be considered as the critical limits indicators for the quality of market services and the power system. How does Paul-Frederik Bach think the Danish TSO should deal with this challenge?

First, there is a need for a combination of improved international trading opportunities, and the provision of additional balancing capabilities will probably form the best development strategy, if the targets for wind power are to be realised.

Mr Bach puts this appeal to politicians: ‘since it is a political decision to install new wind power there must be a corresponding political attention to develop the required infrastructure. New infrastructure in due time is not straightforward, and requires planning. The costs of this new infrastructure will increase consumer prices’, – “perhaps significantly’ he concludes.

The central power plants in Denmark are currently important domestic providers of flexibility and balancing resources, especially to balance demand and supply in critical situations. Energy experts from the Danish EcoGrid survey have highlighted the following key challenges of the future Danish power system:

• The need for balancing resources will increase because the installed wind power capacity will reach 6000 MW, in a power system with a load in the range of 2100 MW to 6300 MW. At present wind power already covers the entire demand during many hours. In the future this will happen more frequently and increase the need for down regulation or absorption of the surplus of electricity.

• The balancing capacity must be provided by other sources because there will be less capacity available in the future in the thermal power plants currently providing these resources. Old thermal units will be phased out of the system and not necessarily replaced.

• It is unlikely that Denmark can rely on international markets to provide operating services and sufficient balancing capacity to the same extent as today in a power system with 50 % wind energy. However, the availability and cost of balancing resources from neighbouring countries are likely to differ significantly depending on the direction of future developments.

Next steps

The news from Danish researchers and energy experts is that penetration of 50 % wind in Denmark is possible, but that this will require profound changes in the Danish power system. Development shows that consumers are becoming more aware of the environmental impact of the energy and transport systems and seek greater ability to manage their own electricity use and contribute to system flexibility. New distributed energy resources such as solar, microgeneration and storage allow consumers to produce their own ‘green’ electricity as well as selling excess electricity.

Today, the grid is primarily a vehicle for moving electricity from generators to consumers. Tomorrow’s power system should include diverse and distributed energy resources as well as accommodating electric vehicles. This will require two-way flows of electricity and information as new technologies enable new forms of electricity production, delivery and use. New solutions, including a wider use of information communications technology and automation will be necessary, as well as a reinforced grid and improved trading opportunities. Without this, there is a risk of insufficient system security and reliability, as well as the inefficient utilisation of new wind power capacity.

According to the experts, a robust power system (organisation, distribution of responsibilities, information and IT solutions) must enable active involvement from large wind power farms and distributed energy resources, with electric vehicles to take a more active role in market balancing and supply of system services. The changes required in the current system architecture will depend on several factors,for example expected development

in international markets, development of competitive domestic balancing resources and customer demand for new energy management services and clean vehicle transport solutions.

Integration with the heat energy storage system

In the short term perspective further integration with the current Danish heat system (combined heat and power) has significant potential. Most of the Danish CHP plants are equipped with heat storage in order to make electricity generation less dependent on heat demand, so the prospects for indirect storage of electricity in off peak situations are good (eg in periods when wind power production is high). Surplus electricity in 2025 can be absorbed in the district heating systems for at least 12 hours. As a rough estimate between 20 and 30 GWh energy can be stored as useful heat.

The dynamic use of other heat production technologies in the district heating system (eg electric heaters, large heat pumps and heat boilers) is an important measure in rendering the energy system more flexible. Use of these measures makes it possible to utilise electricity production when prices are low or electricity production exceeds demand. At low electricity prices, an option is to stop CHP production and generate heat by utilising other technologies. There is a significant potential for installing heat pumps combined with buffer heat storage outside district heating areas. The investment cost of large heat pumps is high relative to electric heating but on the other hand, the operational costs are low and a high frequency occurrence of low electricity prices can make heat pumps profitable.

In situations where an immediate increase of electricity capacity is needed investment in new gas turbines and cooling towers can be attractive options. Microgeneration/CHP also provides a promising future solution.

Electric vehicles - the new electricity consumer

The accelerating transition towards cleaner transport using plug-in hybrid and battery electric vehicles will create a new type of flexible electricity consumers. Intelligent integration of electric vehicles can create new storage capabilities and become a significant factor in making possible the integration of more wind power in the system. But even though plug-in vehicles will play such an important part, it is the vehicle owners that will bear the major investment, not the system owners. Therefore the only additional cost to the electric power system associated will be building up new dedicated communication and control infrastructures. Estimates shows that 50 000 vehicles with plug-in functionality represent more than 100 MW of flexible demand.

Activating small users of distributed energy

The challenge is to activate not only a few energy intensive industry end-use customers, but also many small electricity end-users employing ‘demand response’. There is a substantial need for new market services to activate distributed small resources, which also include local suppliers of electricity (for example wind power, photovoltaic and micro generation).

The potential for increasing flexibility through demand response is significant, up to 1.3 GW. The control system must also prepare in the long term for future vehicle-to-grid applications, meaning vehicles that can export useful amounts of power from their batteries to the grid.

Measuring electricity by smart meters will also allow the setting of prices that vary with time-of-use. This can for example allow small electricity consumers to benefit from in-home energy displays, home energy management system, etc.

Currently the Nordic regulating power market is in practice limited to suppliers that can supply plans, and guarantee to be able to feed the balancing service. Further, the participants must bid a minimum of 10 MW into the power regulating market. Many potential suppliers (wind power and microgeneration) are in practice therefore prevented from taking an active part. In a well-designed real-time market, any producer (and consumer) who is able to adjust production or consumption should participate and be paid the prevailing prices. Subsidies for small generation could be changed and exposed to market prices, and thereby reduce the barriers to supplying balancing capacity.

Flexible wind turbines

Modern wind turbines are expected to be much more flexible in the way that they can be operated and to be capable of providing system services. The key to this development is modern IT and communication tools that enable, for instance, wind farms that are connected to the transmission system to contribute ancillary service functionality similar to that provided by conventional power plants.

Several options exist for grid connection of modern wind turbines using proven technology, which can increase the flexibility (and value) of wind power in the supply system. There is no single technology, but rather a number of competing options for individual wind turbines and for wind power plants/farms that incorporate auxiliary equipment and flexible AC/DC interconnectors.

Developing an intelligent power system

Energinet.dk has to be prepared for the great changes suggested by energy experts, and the first steps towards one of those, further integration with the heating market, have already been taken. Today CHP units larger than 5 MW must sell electricity at market prices, which means that hundreds of local CHPs have since 2005 been participating in the Nordic market for regulation power. In Denmark there are more than 750 local CHP units smaller than 25 MW, most of them firing natural gas.

Kim Behnke recognises two key benefits from further integration with the district heating system, namely that the electricity output from wind power can be utilised as 100 % renewable energy for heating purposes and thus contribute to replacing fossil fuel, and that a reduction of the wind generated electricity surplus will come about when wind power is utilised in combination with CHP production.

These solutions require full market participation with free and transparent pricing. This will require (further) co-operation and information flow in order to co-ordinate the operation of the different energy systems. And – very important – regulation must be adjusted or a new tax systems should be developed that support development towards an intelligent energy system, one which enables a high share of renewable energy production in accordance with the Danish 50 % renewable target.

Among new major initiatives, Energinet.dk will test how electrical vehicles-storage technology can act as a means of smoothing the power fluctuations from wind power. This will be done through the Danish demonstration project EDISON (Electric Vehicles in a Distributed and Integrated market using Sustainable Energy and Open Network). The EDISON partners include Denmark's largest energy company DONG Energy, as well as IBM, the regional energy company Oestkraft, the Technical University of Denmark, Siemens, Eurisco and the Danish Energy Association. Market introduction and investment plans in Denmark are expected to result in upwards of 10% of the country's vehicles being all-electric or hybrid electric during the coming years.

Currently Energinet.dk together with pan-European partners is preparing a full-scale demonstration project of an intelligent energy system with high penetration of (variable) renewable energy sources and active end-user participation (EcoGrid Europe). The demonstration is expected to take place on the Danish island Bornholm. The aim and ambition is to merge the best Danish and international knowledge in the area of Smart Grids, says Kim Behnke, and he suggests that the Danish wind power challenge is very similar to the challenge many member states will face in the steps they take towards the European 20-20-20 goal.

Kim Behnke is an advocate of smart grid solutions that build upon practical experience from large-scale demonstration projects. Based on this, stakeholders in the energy market including Energinet.dk can better suggest the necessary future solutions. ‘One of our main tasks and responsibilities’ says Kim Behnke, ‘is the managing of national energy R&D programmes and participate in demonstration projects. It is important to ensure that our activities are in track with the future power system requirements and to focus on the right R&D projects.’