(*) Joao Mello – CEO – A&C Consulting – jmello@andradecanellas.com.br

GENERATING VOLTAGE SUPPORT ASSESSMENT - Investment Decision & Regulatory Issues -

J. C. REBOUCAS F. FUGA J. C. MELLO (*) M. J. POVOA R. A. LIMA

A&C CONSULTING AES TIETE DUKE ENERGY BRASIL

Brazil Brazil Brazil

SUMMARY The Brazilian is a hydro-based power system and it has a set of long distance lines to interconnect the river basins; therefore the transmission system is heavily compensated. The reactive support equipments are included in Transmission packages to be auctioned or authorized by the regulator, as indicated in planning. To give more flexibility to ONS (Brazilian ISO) the implementation of new facilities for voltage generating support is allowed. For example to transform temporally thermal and hydro units in synchronous condensers, the investment is covered by all consumers, once it is afforded by regulator and supported by ONS. The operational costs are supported by a unitary tariff defined by regulator, paid as used and spread out among all consumers.

The provision of reactive power support for controlling voltage levels on power system aims to assure working standards, as defined by ONS in grid procedures. Seeking for minimum operating costs, different reactive power supply sources should be considered to sustain the desired voltage level. Given Brazil is a hydro-dominated generation system, in energy planning environment, hydro plants have been implementing overcapacity and to optimize energy production. Clearly, this overcapacity aims to maximize available energy for the system, the main objective function. Thus, in term of system electrical requirements, this framework creates opportunities. This paper shows the main aspects to be considered in the decision to convert existing generating units to synchronous condensers, concerning the following points: (i) Reactive power requirements from the supply/absorption balance when operating as synchronous compensator; (ii) Additional operation costs evaluation; (iii) investments to conversion of generating units to operate as synchronous condensers (SC); (iv) Ancillary Services Tariff values.

A real life “case study” project based in the assessment of conversion generating units in synchronous condenser of Agua Vermelha, located in a hydro basin nearby São Paulo the main Brazilian load center, is presented to explore important issues on the subject.

KEYWORDS Reactive power; Generating Voltage Support, Synchronous Condensers Operations, Investment Costs; Ancillary Services.

21, rue d’Artois, F-75008 PARIS C1-203 CIGRE 2008 http : //www.cigre.org

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1. INTRODUCTION – VOLTAGE SUPPORT, GENERATORS & PLANNING Maintenance of an adequate voltage profile over the system is a complex task, which has consequently associated costs. In past vertical structures slight attention has been given to identify genuine costs incurred in providing voltage support. Currently in unbundled & competitive power models voltage support costs are rewarded by multiple agents, through ancillary services; or network tariffs. A recurrently concern in planning arena is to avoid to impose overinvestment to new hydro IPP plants, given by concession grant, and even for thermal IPP, once these are naturally incorporated in energy only prices, mixing signals at the end.

The Brazilian power system is hydro-based (75% in capacity and 85% in 2006 yearly production) and plants are located in different basins spread around the country. The interconnection of basins and main load centers are made by a large transmission system with long distance lines. Brazil has in development economy with 4-5% yearly load increase and transmission planners are always facing the challenging “to expand just on time to fit power system requirements with minimum costs allocated to the real users”. Figure 1 presents a snapshot of the main grid of Brazilian power system, recognized and regulated as transmission assets, planned by EPE (central planner) and managed by ONS. As can be seen the expansion is coming, almost more 15 thousand km comparing 2006 and 2003.

The voltage support management in Brazilian power system is not a trivial task in operational and planning fields. The expansion of new sources of reactive power is a key issue. Thus, it is important to recognize that the production and consumption of reactive power has the following targets: (i) to increase the power transfer limit between transmission areas; (i) to control the voltage profile under normal operating conditions; and (iii) to control the voltage profile under transient conditions [1]. Minimum load power factors are defined by the regulator and the load compensation usually is not the main issue. Different dispatch profile subject to a long distance transmission system is the main issue. Figure 2 shows the Brazilian power system superimposed to the European and US Continental areas. It is important to notice that the dimension is similar, but the system load is not comparable. Total Brazilian load is similar to France, Italy, England, PJM and California individually. The least cost reactive management on this environment is a real challenge.

Figure 2 – Brazilian Power System comparing US Continental and Europe

Figure 1 – Brazilian Power System – Main Grid

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Equipments have specific role on voltage compensation, as well as, operating regimes. For example, while a synchronous compensator is used and must operate in a way that will provide a reserve of reactive power for controlling fast excursions of voltage during contingencies, switched shunt capacitors are used for controlling the voltage profile under permanent regimes, functions with vital importance. All functions incur investment costs as well as operational costs and, based on these costs, a commercial arrangement for voltage support was established. Some of the investments are planned and included directly on transmission expansion and by Brazilian regulation covered by network tariffs. This can be classified as explicit costs, which include the cost of capital, cost of installation, cost of administration and cost of scheduled maintenance, plus variable operating costs of the assets.

Due to hydro resources, the planning procedures in Brazil are also intensely dominated by energetic targets, which means future hydro and thermal plant energy balances. Thus plant capacities are defined to these goals. This is a special issue for hydro plants, which by Brazilian law is a federal concession grant, defined by auction, earlier specified. Moreover in hydro plants are usual to overcapacity the units to allow the best usage of hydrological stream flows. Given this environment the investor is able to calculate energy only prices to trade in the market. Clearly, the definition of unit requirements includes a rational system reactive support as a by-product.

Conversely in operational timeframe there are a lot of uncertainties in this framework and ONS needs flexibilities. The regulator recognizes this requirement and includes extra costs of generators to provide voltage support in ancillary service cost coverage. The explicit costs for new investments should be recognized by ONS and approved by ANEEL. The extra operational costs are identified by ONS and paid monthly based on in real-time measurements. The ancillary service costs are paid by all consumers [5].

Hydro generators in Brazil often can operate as SC, typical on light load periods, thus opportunity cost of energy only price of generator is not considered, due to demand is covered by other units. In Brazil, all generators connected to the SIN (National Interconnected System), that generate real power, are obliged to generate reactive power without expenses to any end user. Exceptions are made to the generators requested to operate as SC, for which services are compensated by the TSA (Ancillary Services Tariff), paid by the end users through ESS (System Service Charges), addressing the additional operating and maintenance costs. Those generators requested to operate as SC needs to sign up a CPSA (Ancillary Services Supply Contract) with ONS. The past planning practices were to include this SC capacity in the whole cost in the vertical model, so for existing assets only operational costs are recognized. For those existing units with no SC facilities, or even recent planned not considering them, Brazilian regulation allows the implementation of ONS requirements. Detailed operational flexibility evaluation is a duty of ONS. The power system requirements for reactive in Brazil in the operational field can be summarized as follows: (i) there are wide regional variations in the need for reactive power on the transmission network, mainly due to dispatch profile; (ii) there is a substantial daily variation in the requirements, arising both from the nature of the system demand (weather impact such as air conditioning) and the way in which system voltages are controlled; (iii) considerable flexibility is required in the sources of reactive power, enabling both production and absorption at different times of the day and in varying quantities; and (iv) problems of voltage control are intensified by long transmission distances for different operational situations.

2. GENERATOR OPERATING AS A SYNCHRONOUS COMPENSATOR Existing generators frequently run as SC and, under this condition, they consume real power (internal losses & pumping) from the system. This operation usually takes place during light load conditions, when there is an excess of reactive power that must be absorbed as a way of controlling the voltage profile. In addition, under these conditions, a synchronous compensator permits more reliable operation, since it increases inertia in the system. This is very important if the system suffers a failure; furthermore, the generator is able to respond adequately to rapid voltage oscillations.

Hydro units to become a SC need power supplying to engines that are responsible for eliminating water from the interior of the turbine and for covering losses of the generating unit running. Typically,

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turbines in Brazil operate submersed, so that a generator operating as a synchronous compensator requires the elimination of water in the turbine casing. Thus, a pumping system is required with a compressor that works continuously while the generator is operating as a synchronous compensator, thereby permitting the turbine to run freely, called “exhausting facility” (EF). SC operations are submitted to losses in gen units classified as: rotational; armature winding and step-up transformer; field winding and exciter system.

In the South region of Brazil is usual to find hydro generating units operating as SC, once they were prepared to do as them. In thermal plants, the operation as a SC is unusual, and it is necessary to have a clutch system that allows turning the unit from generator mode to synchronous mode and vice-versa. In South, there are expensive fuel oil units allowed to operate as a SC, which requires 20 hours of preparation, after 72 hours of cooling from its outage. To return the unit to the generator mode, 24 hours are required [1]. Currently there are other applications in SIN.

Operation of three units of the Salto Osorio plant are shown (SC operation) in Figure 3 in values minute by minute. However, while the reactive power profiles are different among the three units (internal decision), the real

power absorbed is practically constant around 3.3 MW. The same profile is applied to others plants with ES, so the real power absorbed for loss compensation and running the compressed air system is considered constant.

3. REAL LIFE EVALUATION

3.1. Diagnosis

This evaluation presents technical requirements and economical foundations to implement an EF in an existing hydro asset, as recommended by ONS [4]. The hydro plant is Agua Vermelha (AV), which belongs to AES Tiete and operates facing an old-fashioned 440 kV heavily compensated transmission system, close to the main Brazilian load centers, including Sao Paulo. Figure 4 illustrates the AV site in the middle of high-voltage lines, hydro basins and load centers. Clearly this means flexibility in voltage control. The hydro plant has 6 Francis turbines with 232.7 MW each resulting 1396.2 MW total. The plant is connected to

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Figure 3 – Salto Osorio Hydro Plant 1-hour SC Operation

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BaririBaririBaririBaririBaririBauruBauruBauruBauruBauru

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Agua Agua VermelhaVermelhaSao Gotardo 2Sao Gotardo 2Sao Gotardo 2Sao Gotardo 2Sao Gotardo 2

MainMain LoadLoad CentersCenters

Figure 4 – SIN and Agua Vermelha (AV) Site

Transmission500 kV440 kV345 kV

Transmission500 kV440 kV345 kV

Transmission500 kV440 kV345 kV

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440 kV and a connection with 500 kV systems in neighborhood is made by a transformer at the same site. The AV capability curve is shown in Figure 5.

Power flow studies have been developed to evaluate system requirements of the total reactive amount needed and all existing reactive resources were considered. It was also considered the system evolution with planned equipments and investments. For this evaluation 5 years ahead simulations are enough. The indicative planning of SIN, provided by ONS and EPE, was applied [6].

For the regulator and ONS once the project -implementation of EF - becomes technical feasible and system profitable the explicit cost will be covered by ESS. In turn for the asset owner the objective-function of the evaluation is to get some incomes of the new service, or at least to avoid financial losses. Thus, the project economics took into account expected revenues for AV hydro plant as an ancillary service provider. This revenue is obtained the settlement of reactive energy (MVAr.h) applied to Ancillary Service Tariff (TSA).

The reactive amount absorbed by AV was assessed for a set of different seasonal system loads and AV dispatch scenarios, all for light load, as can be seen in Table 1. The AV units are request to absorb large reactive power in light load due the weak compensation on 440 kV systems (fixed line and switching reactors). The flexibility for voltage control in neighborhood is poor. The historical behavior of AV generating units was checked to identify typical operational ranges of active and reactive dispatches, for internal strategies, if and when the ES project would be installed. A detailed modeling of reactive limits based on AV capability curve (see Figure 5) was applied and 2 possible operational ranges were considered: lower between 125 and 165 MW and higher between 175 and 233 MW. Figure 6 presents a summary

of AV SC evaluation for seasonal scenarios. As can be seen the system requires 1 AV unit as SC in 2G + 1SC label. In other situations turning-off AV units, the steady-state limits can be reached.

Once the global strategy is defined, hence max requirement of 1 unit operating as SC, a detailed load-flow simulation was performed. For the winter 06 evaluation the 2 AV units assume 349 MW and -410 MVAr and the SC absorbs

THEORETICAL STABILITY LIMIT

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Figure 5 – AV Capability Curve

Table 1 – Seasonal Scenarios

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more 110 MVAr considering a special control. There are margins for more reactive power dispatch, if required. The summer 07 evaluation is bind in terms of AV reactive power and voltage profile in the simulation of Figure 6 profile. Thus a 1 SC unit was added and AV reactive margin is enhanced and the voltage profile better matched system needs. Once system requirement launch 1 SC goal in AV, another evaluation was to check the capacity of another generator in the neighborhood to be better as an ancillary service provider. A detailed impact of reactive surcharge in hydro plants in neighborhood was done for different situation, including a set of contingencies in 440 kV shunt reactors. In investigated scenarios other generators are constrained in terms of reactive power and/or their influence in voltage control is not enough. In summary the operation as 1 SC in AV is the recommendation for the evaluated scenarios.

3.2. SC Operation Perspectives

The historical analysis of AV in low load levels (including light) as shown in Figure 7 demonstrates that during almost 60% of this period the dispatch of whole is found on 375 to 750 MW range and absorbing power reactive in a range of -100 to -350 MVAr. Given the AV hydro plant is in the middle of the main cascade of hydro in Brazilian power system is reasonable to assume a quite similar dispatch behavior of AV in the future.

Based on historical data is possible to check in Figure 7 two operational ranges nearby future SC operations: (i) 320 to 375 MW and absorbing 250 to 350 MVAr with a probability of occurrence around 2.4%, and; (ii) 375 to 500 MW absorbing 350 to 400 MVAr with a probability of occurrence around 0.5%. Thus, the first probability assessment of SC operations in AV is close to 3% of low load level period. This

period is in average 10 hour per day and 30% of this is in light load level.

Considering AV operates as SC during all light load level, the max limit of operation would be 3 hour per day with an amount of 250 MVAr. The past expected behavior based on historical performance was considered as 3% of low load level (110 hours per year) with an average amount of 110 MVAr. The SC operation perspectives is for 1 unit following the

operational limits as shown in Figure 8 for 2 units running as generators and the other as SC.

3.3. Real Life Evaluation – Economics

Operating cost of units functioning as generators are not meaningfully different than for same units functioning as SC. The operating staff is practically the same in both cases. Even though the maintenance costs of the compressors could arguably be considered as a SC additional expenses. To estimate the annual operating costs as SC, the operations costs can be divided proportionally to the unit’s operating time, for either operating conditions (normal or as SC).

Hence the real operational cost should consider this SC O&M. All should be covered by revenues coming from reactive energy settlement, considering TSA regulated by ANEEL. The additional energy costs for the compressor used to eliminate water inside the turbine and for energy used to compensate the generator energy losses should be paid. However, by Brazilian market rules this energy to runs SC is covered by system postage stamp signal together with network losses. Existing

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Figure 7 –AV Dispatch in Low Load Level - Historical Allocation per Operational Range (MW,MVAr)

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generator units have been evaluating the investment to implement ES facility, whenever is recommended by ONS and approved by ANEEL, is a cost-based coverage regulation. This TSA is defined and yearly updated by ANEEL as established in Resolution ANEEL 195 (19 December 2005) for value around 2 US$/MVAr.h (ref. January 2006).

NPV were found applying a discounted cash flow technique in real terms. Discount rate applied was 13.5% per year for a 10 year horizon (ref. July 2006). The economics were evaluated for the max limit and past expected behavior scenarios of SC operation on AV. The annual revenues for AV from ancillary services are 25 MUS$ and 540 MUS$ for past expected behavior and max limit scenarios respectively. Considering revenues and filtered cash costs of SC operation the NPV are summarized in Table 2. As can be seen the NPV results demonstrate that the decision to implement the project of EF is at least neutral, obtained in past expected behavior scenario analysis. It is important to notice that in a near future the transmission system nearby AV will be the terminal receiver for a large transmission lines coming from Amazon basin to meet Southeast load demand. This terminal is expected to be around 6 GW, which certainly will change the dispatch behavior of AV, not really real power profile, but in terms of reactive requirements in the neighborhood. The trend in NPV is to be going to the max limit situation. The investor decision is under internal approval.

4. CONCLUSIONS & RECOMMENDATIONS The generating voltage support assessment should be carefully analyzed in hydro-base power systems like Brazil. The decision of plant capacity is dominated by future energy balance evaluation. Thus, the reactive power limit of each unit is a by-product of this decision-making process in a certain degree of rationality. Once further generating reactive support should be required and identified in planning, its additional explicit and operational costs should be covered by ancillary services. The provision of ancillary services in Brazil is not a competitive environment and, in turn, it is heavily regulated based on tariff control, mainly due to the correlation with hydro concession duties. Going to operational field the uncertainties surrounding reactive power is large and extra flexibilities can be requisite to the hydro generators, such operations as synchronous condensers in low load level periods or during other system requirements. Regulations in Brazil allow the ISO to require more flexibility like that and the investment in “exhausting facility” to eliminate the water in the turbine casing is covered by all consumers in a cost-based procedure. The economics of implementation of SC facility on an existing asset, named Agua Vermelha, was provided. The results have shown at least a neutral situation for the asset owner, maybe moving to a profitable standard. The driver on ancillary service regulation for generating units is flexibility with rationality. Once this balance is working, the planner and system operator have an important strategic variable, under their responsibility, for system performance enhancements.

BIBLIOGRAPHY [1] E.L.Silva, “Annex 1 - Project RE-SEB - Ancillary Services: Voltage Support”, 1998 [2] E. L. Silva, J. J. Hedgecock, J. C. O. Mello, e J. C. F. Luz, “Practical Cost-Based

Approach for the Voltage Ancillary Service”, IEEE Transactions on power systems, vol. 16, no. 4, November 2001.

[3] E. L. Silva, “Reactive Power Supply as an Ancillary Service”, XV SNPTE, Brazilian National Seminar on Production & Transmission, 1999 (in Portuguese).

[4] ONS, “PAR 2006-2008, Volume II – Evaluation of Basic Grid Performance”, 2005 (in Portuguese).

[5] ONS, “Grid Procedures – Management of Ancillary Services”, 2003 (in Portuguese). [6] ONS, “PAR 2006-2008, Volume I – Proposal of Expansion & Reinforcements in Basic

Grid”, 2005 (in Portuguese).

Table 2 – NPV results (ref. Jan./2006)

SC operation scenario NPV (1000 US$)past expected behavior 128

max limit 2944