hydropower value study past, present, and future€¦ · ramping resources to avoid load shedding...

Hydropower Value Study –

Past, Present, and Future

1

ABHISHEK SOMANI Energy and Environment Directorate, Electricity Infrastructure

Northwest Hydroelectric Association – Annual Conference, 2019

Portland, OR

February 28, 2019 2

Presentation Outline

Changes in Value Drivers for Hydropower

Changes on the Horizon Policy

Technology

Regulatory

Impacts on Power Markets and System Operations

DOE’s Hydropower Research Vision

Key Results from Hydropower Value Study

Changes on the Horizon:

More & More Variable Energy

Hydropower generators, due to their fast response, can provide ramping resources to avoid load shedding and variable energy curtailment and may be called upon to correct imperfect net-load forecast errors during intra-day and real-time operations to counteract variability and uncertainty.

State Goal Year

HI 100% 2045

CA 100% 2045

VT 75% 2032

NY 50% 2030

ME 40% 2022

CO 30% 2020

CT 27% 2020

NV 25% 2025

IL 25% 2026

OH 25% 2024

DE 25% 2026

Source: CAISO 2013

Summary of renewable portfolio standards (RPS) goals for several high-target states

February 28, 2019 4


CAISO Net Load and Renewables Supply

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Renewables Supply – October 2, 2018

Solar Wind Geothermal Biomass

Biogas Small hydro Batteries

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Load vs Net Load – October 2, 2018

Hour ahead forecast Demand (5 min. avg.) Net demand

Max Load served by Renewables

% o

f To

tal L

oad

CAISO estimates that by 2024 there will be

times during certain days when 100% energy

will come from variable energy resources

Systems will require increasing amounts of

operational flexibility

Systems with an excess of must-run

resources will experience negative pricing,

forced curtailment, or export.

Energy production shifting from conventional

resources to Variable Energy Resources

Source: CAISO

February 28, 2019 5

Flattening Supply and Low Prices dues to

Increasing Renewables – PJM Example

Load growth has stayed

relatively flat over the years

Supply curve has shifted

right causing decrease in

energy prices

Increasing renewable

penetration – mostly

wind

Source: PJM State of the Market Report

February 28, 2019 6


Technology – Energy Storage

CAISO – predominantly

reliability oriented

requiring at least 4

hours of energy

capacity to fulfill CPUC

requirements

ERCOT and PJM

installations are geared

for frequency regulation

and hence, tend to be

power-oriented

Source: US EIA Form EIA-860M

Source: US EIA Form EIA-860

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Current Power Market Trends

Low energy prices, because of high penetration of zero-production

cost renewables, and low natural gas prices. There are low prices in

day-ahead and real-time markets, and hence, even with the inherent

volatility is causing some of that shift along with growing comfort of

participants to rely on markets to meet their needs.

Flat demand even in a growing economy. Electricity demand is flat.

Greater demand-side efficiency reduces overall loads but may make

them “peakier.” Investment strategies and planning paradigms need to

shift to ensure adequate levels of flexibility exist.

Decreasing ancillary services needs and prices. This is a trend seen

in all ISOs with the exception of CAISO, and is due to increased

sophistication in renewables forecasting methods and integration as well

as a growing comfort of system operators with given reserve margins.

February 28, 2019 8

Current Power Market Trends:

All-in Prices Across Markets

Prices have stayed the same over the years across markets

https://www.potomaceconomics.com/wp-content/uploads/2018/05/2017-State-of-the-Market-Report.pdf

February 28, 2019 9

Regulation Reserve Requirements –

ERCOT Example

Regulation Up

Regulation Down

Regulation

requirement in

ERCOT market has

decreased due to

improvements in

forecasting, and

other operating

procedures

Trends in other

markets are mixed:

CAISO increased

its requirement

from 400 to 800

MW in early 2016

Source: http://sites.utexas.edu/energyinstitute/files/2016/12/UTAustin_FCe_Ancillary-Services_2016.pdf

February 28, 2019 10

Reliability Impacts:

NERC CPS1 Score – ERCOT Example

Reliability, as measured by NERC CPS1 score has increased over time

Source: http://sites.utexas.edu/energyinstitute/files/2016/12/UTAustin_FCe_Ancillary-Services_2016.pdf


Changing Paradigm of Renewable

Operations and Contract Structures

Flexible operations of VERs being proposed

Hawaiian Electric Co. signed contracts for

dispatchable renewables

Question: What are the implications for

hydropower fleet and operations?

Plant nameplate capacity: 300 MW Power output curtailed during these operating hours to maintain headroom for inertia and primary frequency response

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Power Market Changes

New market products to meet

increasing flexibility requirements:

Ramping/flexible capacity

Product expansion, increasingly

granular products

Intra-hour scheduling, dispatch, and

settlement

Western market convergence

CAISO administered Energy Imbalance

Market (EIM) footprint growing

More and more balancing authorities

participating in the EIM

Discussions ongoing regarding

consolidation of western BAs under a

single ISO/RTO


Greenhouse Gas Compliance in the

Energy Imbalance Market – 2017

Almost 65% of the compliance obligations were assigned to hydro

GHG emissions prices were less than CEC established compliance costs

for an efficient gas resource



Market Design Changes in other parts

PJM considering a change to the existing price formation process by

allowing inflexible units to set market prices

Pros: Avoids out-of-market settlements;

Cons: Unintended consequences not well known, presently

ERCOT considered redefining ancillary services products but the

initiative failed after a lengthy stakeholder process

Some of the ideas are in the process of being implemented, such as fast

frequency response reserves

CAISO presently engaged in design and analysis of a day-ahead

ramping reserve product

CAISO has added a new category of requirements to the Resource

Adequacy (RA) program called Flexible Resource Adequacy



Ramping Resource Adequacy in CAISO

Category 1 –

Base Ramping Category 2 –

Peak Ramping Category 3 –

SuperPeak Ramping

Economic Bid – Must offer Obligation

5:00AM – 10:00PM 5 hour block 5 hour block

12 PM to 5 PM for May – September 3 PM- 8 PM for January- April and October-December

Energy Requirement Minimum 6hrs at Effective

Flexible Capacity (EFC) Minimum 3hrs at Effective

Flexible Capacity (EFC) Minimum 3hrs at Effective

Flexible Capacity (EFC)

Daily Availability 7 days a week 7 days a week Non-Holiday Weekdays

Maximum quantity of capacity allowed

Set monthly based on largest secondary net load

ramp

Set based on the difference between 100% of the

requirement and category 1

Maximum of 5% per month of the total requirement per

month

Daily start-up capability

Minimum of 2 starts per day or the # of starts allowed by

operational limits as determined by min up and

down time

At least 1 start per day At least 1 start per day

Other limitations No limitations that translate

to less than the daily requirements

No limitations that translate to less than the daily

requirements

Must be capable of responding to at least 5 dispatches per month

Examples of types of resources

Conventional gas fired resources, wind, hydro,

storage with long discharge capabilities

Use-limited conventional gas fired generation, solar,

conventional gas fired peaking resources

Short discharge battery resource providing

regulation and demand response resources

DOE-WPTO Hydropower Value

Research


Hydropower Value Study

Study funded by Department of Energy’s (DOE’s)

Water Power Technologies Office (WPTO)

Project Team:

Argonne National Laboratory (Argonne)

Idaho National Laboratory (INL)

National Renewable Energy Laboratory (NREL)

Oak Ridge National Laboratory (ORNL)

Pacific Northwest National Laboratory (PNNL) – Project Lead

Timeline

Start date: March 2018

End date: March 2019

Project Overview

Motivating questions:

How is hydropower currently contributing to grid services?

What services/capabilities will be needed by the grid in the future?

Can hydropower provide the services based on technical capability and cost?

Project intent:

Foundational work to understand present hydropower operations trends, future expected changes, and hydropower capabilities analysis

Project design:

Will involve extensive data collection and analysis on market participation trends, operational practices, and technological capabilities

Will not involve design of new market rules, hydro operations models/tools

Expected outcomes:

Comprehensive understanding of hydropower’s evolving value proposition

Understanding of high-impact future research needs – research roadmap

Analysis of Hydropower

Operations in the US


TOM VESELKA – ARGONNE NATIONAL LABORATORY NATHALIE VOISIN – PACIFIC NORTHWEST NATIONAL LABORATORY RUI SHAN – OAK RIDGE NATIONAL LABORATORY

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WECC: Hydropower Production Is Dispatchable Following

Loads More Effectively than other Renewable Resources

Combined Loads & Generation for the CISO & BPAT BAs

Shifting operations from load following to maximizing value based on market prices would change hydropower economics

CAISO: Hourly averaged correlations

between solar and small hydro

By Power Output By Percent of Generating Mix

Small hydro’s increase in generation during both the morning and afternoon peak periods when solar PV increases, on a daily basis.

Small hydro’s proportional increase especially during the morning peak, but also across all the hours of the day when solar PV increases.

Analysis by: Rui Shan


ISO-NE: Ancillary Services Participation

Capacity payments represent majority of non-energy revenue

Spinning Reserve and Black Start provide more revenue than Regulation, Supplemental

Reserve and Voltage Support

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Energy Others

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Capacity Payment Blackstart Regulation Spinnning

Supplemental Voltage support Uplift

Generation: PSH plants generate most of the times during high price periods, as expected

MISO: Patterns of Pumped Storage Hydro

Generation and Pumping

Pumping: PSH plants operate in pumping most of the times during low price periods, as expected


Chelan PUD – Impact of Water Availability

on Hydropower Operations

Water availability, and resultant water management issues impact operations

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Significant hydropower services, which

may or may not be effectively monetized

Rotating mass / Inertia

This property has been historically abundant in the system

Inertia can be synthetically produced, but failure to have enough will cause

system frequency (60 hZ) to deviate

Primary Frequency Response. Hydropower is considered a fast and

accurate responding market participant. But the speed of signal matters:

California ISO notes that hydropower’s provision of primary frequency response (less

than a minute) is “predictable,” but its performance is relatively sluggish and inaccurate

due to older hydropower plants using mechanical controls as a proxy for power signals

Flexibility. Hydropower can contribute many services. Resources are

compensated on a competitive basis for each service that they provide,

but not for their ability to provide multiple services depending on the

need.

Inertial and Governor Response: Resource-level Responses

Hydro resources are typically programmed to provide governor response, along with the autonomous inertial response

Inertial and Governor Response: System Response

System recovers because of both inertial and governor response System blackout because

of lack of governor response

Basis for CAISO’s Transferred Frequency Response Obligation Construct



Market-based Mitigation Measures

Planned mitigation measures are shown in blue, while already existing mitigation

measures are shown in black; Source: ERCOT

Future Grid States:

Implications to Hydropower

Operations and Value

MICHAEL INGRAM – NATIONAL RENEWABLE ENERGY LABORATORY

30

Hydropower Value Drivers in Future Grid

Flexibility

• “Duck” Curve

Reliability

• Black Start

• Reactive Power Support

Ancillary Service

• Operating Reserves

Economics

• Operational Costs

• Value

Stability

• Frequency Response

• Transient Stability

Power Systems Metrics

Report the inferred value of hydropower based on the impacts and requirements identified in literature review and the NREL Interconnections Seam Study.

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Examples: Model vs. Actual

Glen Canyon Dam and Blue Mesa

Gaps and Challenges in Hydroelectric

Representation in Power System Models

Precipitation, Runoff, and Unregulated Flow Variability

Pool (Elevation) Variability

Temperature and Water Quality Variability

Individual Organism Response & Growth

Population Response & Growth

Community Response

Landscape & Riverscape Adj.

Turbine, Gate, and Flow Dynamics

Power System Dynamics

Water Demand & Competing Use Variability

Automated Controls

Real-Time Scheduling

Short-Term Planning

Long-Term Planning

Hydrologic Variability

Ecological Variability

Equipment & Use Variability

Decision-Making Processes

Comparison of Hydropower Operations Timescales and Power System Time Scales (courtesy of ORNL)

Hydropower in power system operations

Hydropower represented as a monthly potential at the balancing authority scale

• Spatial, temporal, unit and computational complexity creates seams issues between water management and grid models

• Hydropower representation presently does not depict the complexity, diversity, and changed operational paradigm of the fleet


Key Takeaways

Power grids and markets are evolving, and conventional value streams

may no longer be the most valuable

Some evidence of changes in operations – Helms (PG&E)

More system-wide work is needed to asses flexibility characteristics

Further economic analysis is needed to assess the cost vs. benefit of

operating resources more flexibly

System stability and reliability needs with increased renewables will

impact hydropower operations – more analysis needs to be performed

HVS Project Core Tasks

Landscape analysis

More granular exploration of how hydropower is used, and how it is valued

Contribution to reliability services presently not monetized:

Inertia and primary frequency response

Future value drivers

Possible evolution of the power system, and

Implications on demands that could be placed on hydropower resources

Capabilities and Constraints

Technical and water management drivers of flexibility

What does it cost to be flexible?


Key Takeaways

System Reliability: More than

100% increase in uplift service

by hydro in ISO-NE from 2015

to 2016; indicates fast-start

capability hydro units

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Energy Others

Hydropower in ISO-NE

Flexibility is resource specific, and depends on

water availability and environmental requirements

Power grids and markets are evolving, and conventional value streams may no longer be the most valuable

Flexible Operations:

Some evidence of changes in

dispatch of small hydro (CAISO)

due increasing PV penetration

Hydro resources presently provide

10% of CAISO-wide Flexible

Resources Adequacy requirement

36

Challenges Facing Hydropower Valuation

Valuation methodologies and mechanisms. As presently defined,

market products and services will not adequately justify investments in

capital intensive projects and technologies. Value drivers such as

resilience, reliability, and flexibility are not explicitly priced. For example,

with flexibility, a resource may be compensated for a specified service,

but not its ability to perform any one of several services at a given

moment.

Complex interface between markets and operational parameters,

including water constraints. System-driven optimization (like PJM) of

hydropower may not present the entire suite of value streams to the

resource.

37


Regulatory Shift

FERC decisions adjusted market requirements to accommodate

energy storage.

Order 841 (February 2018), FERC issued Order No. 841 requiring system

operators to remove barriers to the participation of electric storage resources

in the capacity, energy, and ancillary services markets. Each ISO/RTO must

revise its tariff to include market rules that recognize the physical and

operational characteristics of electric storage resources.

Order 842 (February 2018),



Technology – Electric Cars

Grid Impacts:

Significant increase in energy consumption

Change in load shapes, not presently known

Potential significant increase in instantaneous power requirement

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Reservoir Water Storage Reduces Variability and

Significantly Adds to Hydropower’s Value

Generation (MWh)

Gen is highest during peak load month

Monthly inflow variability is much greater than outflow variability

The ability to reduce variability and shift water releases/generation to high value months is a function of storage capacity



Technology – Energy Storage

State mandates:

California – 1325 MW (AB 2514, 2013) + 500 MW (AB 2868, 2017)

Massachusetts – 200 MWh by 2020

New York – 1.5 GW by 2025

State incentives:

Nevada – Allows energy storage systems to be included in RPS

Maryland – 30% ITC on residential and commercial systems

Some states require IOUs to include energy storage in IRPs

PG&E’s 500MW/2270 MWh storage procurement:

Three projects from third-party owners, totaling 385.5 MW, 1,540 MWh, and

One 182.5 MW, 730 MWh project the utility would own

hydropower value study past, present, and future€¦ · ramping resources to avoid load shedding...

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