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Wind capacity cost curves for off-shore versus on-shore wind / negative prices and
curtailment of wind power
Klinge Jacobsen, Henrik
Publication date:
2015
Link back to DTU Orbit
Citation (APA):
Klinge Jacobsen, H. (2015). Wind capacity cost curves for off-shore versus on-shore wind / negative prices and
curtailment of wind power [Sound/Visual production (digital)]. ISEE Winter School 2015, Trondheim, Norway,
27/01/2015
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Wind capacity cost curves for off-shore
versus on-shore wind / negative prices and
curtailment of wind power
Henrik Klinge Jacobsen
Technical University of Denmark
Energy Systems Analysis
ISEE Winter School 2015 NTNU
January 28, 2015.
1/30/2015
DTU Management Engineering, Technical University of Denmark
Wind cost curves and their comparison?
AGENDA
Background – Cost curves and efficient deployment of renewable energy
sources
Wind cost curves for Denmark
■
■
■
■
Off-shore cost curve
Off-shore cost drivers
Onshore costs
Comparison and gap for adding transaction and acceptance costs
Wind cost curves in comparison to other countries
■ Norway
■ Netherlands
Price effects and diversification from mixing onshore and off-shore wind
■ Correlation of generation between wind categories?
■ Negative prices - yes
■ Curtailment of wind generation
DTU Management Engineering, Technical University of Denmark
Background: Cost curves
Objective: To identify the least cost renewables investment options to meet
national or EU targets for renewables in power generation
Used as input for optimisation models
Total lifetime generation costs including investment and operational costs
■ Levelized costs: average cost per generated unit (kWh)
■ Comparison between technologies including investment cost and with
different generation profiles (full load hours)
Issues with levelized cost curves
■ Do not distinguish between time of generation (generation at different
hours has very different value)
■ Difficult to compare technologies with very different lifetime
■ Cost curves are normally static - the real world is not
Based on database from European projects 2010-2013: Resolve and Res4Less
■ Covering all Member States and all renewable technology country specific
costs and potentials
DTU Management Engineering, Technical University of Denmark
Off shore cost in the range 10-20 €ct/kWh
DK Offshore wind costs
€ct/kWh
25
20
15
10
5
0
0
5000
10000
15000
20000
25000
GWh per year
DTU Management Engineering, Technical University of Denmark
30000
35000
40000
45000
Off shore basic cost drivers
■ Distance from shore: Cost of Cables etc.
■
■
■
■
■
■
0-20 km
20-50 km
50-100 km
100-200 km
Depth: Cost of Foundations etc. (wawes)
■
■
■
■
0-20 m
20-30 m
30-50 m
>50 m
Wind speed: (generation potential)
■ 9-10 m/s
■ 10-11 m/s
■ Seabed condition
■ Distance from service and support port
DTU Management Engineering, Technical University of Denmark
Onshore cost in the range 6-10 €ct/kWh for
9000 GWh per year
DK Onshore wind costs
€ct/kWh
18
16
14
12
10
8
Onshore wind
cheaper than
offshore
6
4
2
0
0
2000
4000
6000
GWh per year
DTU Management Engineering, Technical University of Denmark
8000
10000
12000
DK wind costs and potentials
€ct/kWh
25
Offshore
Onshore
20
15
10
Onshore potential
limited
Not sufficient for
100% wind
deployment
5
0
0
5000
10000
15000
20000
25000
GWh per year
DTU Management Engineering, Technical University of Denmark
30000
35000
40000
45000
Near-shore data do not suggest cheaper
cost potentials than further ashore potentials
DK wind costs and potentials
€ct/kWh
25
Offshore
Onshore
Nearshore (0-20km)
20
15
10
5
0
0
5000
10000
15000
20000
25000
GWh per year
DTU Management Engineering, Technical University of Denmark
30000
35000
40000
45000
Distance from shore and cost curves
€ct/kWh
DK off-shore potentials (distance categories)
16
14
12
10
8
6
4
Onshore
20-50 km
0-20 km
50-100 km
100-200 km
2
0
0
5000
10000
15000
20000
GWh per year
DTU Management Engineering, Technical University of Denmark
25000
30000
35000
40000
Off-shore versus onshore: Barriers and
acceptance issues limits onshore development
■ The cost advantage of onshore is clear but onshore development in DK has
been rather slow during the last 5-10 years
■
Preferences against onshore wind limits the sites actually available for
onshore wind development
■ Additional costs have to be added to facilitate further onshore development
■
■
■
■
Compensation payments (individual neighbours) can be brought to court
Green fund - Support for municipalities
Local minimum ownership (20%)
Developer risk of delay and spending on procedures/hearings increases basic
technology costs
■ Is the cost gap sufficiently large to account for these additional acceptance
cost?
■
■
Probably yes for some part of the onshore potential
We investigate this in the Wind2050 Danish research project
DTU Management Engineering, Technical University of Denmark
Distance from shore and public preferences
■ Distance from shore: Cost of Cables etc and depht (foundation costs)
traded for public acceptance
■
■
■
■
■
0-20 km
20-50 km
50-100 km
100-200 km
Preferences for placing further ashore - miss-match off distance categories
in present dataset for Wind2050 project
■
■
■
■
10 km
15 km
>20 km
above that no significant difference/effect
DTU Management Engineering, Technical University of Denmark
Wind cost curve for Norway and the benefit
of developing here compared to DK
€ct/kWh
Norway onshore wind costs
20
18
16
14
12
10
8
6
4
2
0
0
5000
10000
GWh per year
DTU Management Engineering, Technical University of Denmark
15000
20000
Offshore wind costs 2020
25
Offshore wind costs DK 2020?
Netherlands
20
Costs [€ct/kWh]
15
Denmark
Potential
gain from
cooperation
10
5
0
22 June
2012
0
10000
Third
Progress
Meeting,
20000
30000
40000
Stakeholder
Workshop,
Bruxelles
DTU Management Engineering, Technical UniversityAmsterdam
ofCumulative
Denmark
December
15, [GWh]
2011
Potential
50000
14
60000
14
70000
Denmark have a politically agreed target for
reaching a fossil fuel free energy consumption in the
year 2050
Wind energy is relatively cheap and will be a main
contributor to this development
Target for 2020 is 50% of total electricity
For 2014 achieved around 40%
DTU Management Engineering, Technical University of Denmark
Power market price effects of renewables?
DTU Management Engineering, Technical University of Denmark
Adding renewable capacity and the short
term price effect
■ Average wholesale power price is reduced
■ Price is reduced the most when demand is high (peak load) and the least
when demand is low
■ The effect is the same as when adding other low variable cost generation.
Base load technologies with low marginal cost would also shift the supply
curve to the right.
■ The relative effect for consumer price is not as great, since the network costs
and all the taxes are added to the wholesale price
DTU Management Engineering, Technical University of Denmark
Load duration curve Denmark West JanuarySeptember 2013
MW
3500
Load (demand)
3000
2500
2000
1500
1000
500
1
293
585
877
1169
1461
1753
2045
2337
2629
2921
3213
3505
3797
4089
4381
4673
4965
5257
5549
5841
6133
0
DTU Management Engineering, Technical University of Denmark
hours
Subtracting the wind generation
Denmark West January-September 2013
MW
3500
Load (demand)
Residual load
3000
2500
2000
1500
1000
500
hours
-500
1
293
585
877
1169
1461
1753
2045
2337
2629
2921
3213
3505
3797
4089
4381
4673
4965
5257
5549
5841
6133
0
-1000
DTU Management Engineering, Technical University of Denmark
Electricity price and renewable generator
revenues
■ Renewable generators receive support
■ feed-in tariffs
■ premiums
■ green certificates
■ investment grants or tax credits
So why does prices matter for renewables?
■ First
■ premiums create some market dependence
■ green certificates imply high market price dependence
■ feed-in given as fixed term (15 years) support and afterwards 100%
market!
■ Secondly
■ Most utilities portfolios include intermittent generation and conventional
■
generation
Theirs and competitors investment in intermittent generation will
influence the price patterns of power markets and their total revenues
DTU Management Engineering, Technical University of Denmark
Wind generator revenue and the value of the
power generated from wind
Table 1 Wind generators market based revenues in the Western Denmark price area
2006
2007
2008
Area Price
€/MWh (direct
average of
hours)
44.19
32.40
56.42
Wind
average
price
€/MWh
40.54
28.66
51.20
Difference
€/MWh
Wind price
relative to
market
Wind
generation
(GWh)
Potential
loss mill. €
3.64
3.74
5.22
92%
88%
91%
4614
5562
5190
16.8
20.8
27.1
On average the wind generation has a 10%
lower value than the average market
willingness to pay
DTU Management Engineering, Technical University of Denmark
Strong interconnections and additions
facilitate use of pumped storage in reservoirs
DK peak load:
6500 MW
1040 MW+
700
740 MW
1900 MW
1500 MW
950 MW
DTU Management Engineering, Technical University of Denmark
600 MW
01/03/2013
02/03/2013
03/03/2013
04/03/2013
05/03/2013
06/03/2013
07/03/2013
08/03/2013
09/03/2013
10/03/2013
11/03/2013
12/03/2013
13/03/2013
14/03/2013
15/03/2013
16/03/2013
17/03/2013
18/03/2013
19/03/2013
20/03/2013
21/03/2013
22/03/2013
23/03/2013
24/03/2013
25/03/2013
26/03/2013
27/03/2013
28/03/2013
29/03/2013
30/03/2013
31/03/2013
Diversify renewable sources and location has
benefits
MW
3500
On-shore and off-shore wind March 2013
On-shore
3000
Off-shore
2500
2000
1500
1000
500
0
DTU Management Engineering, Technical University of Denmark
Negative prices and curtailment of wind?
DTU Management Engineering, Technical University of Denmark
Negative prices for electricity
■ Does not sound logical
■ The marginal value of using more electricity is negative?
■ Does not fit with normal assumptions
■ There are good explanations for negative prices in power markets
■ Important to allow the negative price signals passed to all generators for
efficient allocation of production
DTU Management Engineering, Technical University of Denmark
€/MWh
220
Price duration Denmark West
170
2009
120
70
20
-30
-80
-130
DTU Management Engineering, Technical University of Denmark
€/MWh
20
Price duration Denmark West last 200 hours
15
10
5
0
-5
-10
-15
-20
DTU Management Engineering, Technical University of Denmark
2009
Curtailment of generation as an option?
DTU Management Engineering, Technical University of Denmark
Price
Price duration curve
for day ahead hourly
prices
Low variable cost
conventional generators
Zero marginal cost
generators : wind
generation without
subsidy
P = marginal cost
voluntary curtailment
hours
Wind generators
P = -feed in
premium
with feed-in premium
support
Wind generators
P = -feed in
tariff
DTU Management Engineering, Technical University of Denmark
with fixed feed-in
support
Hours
DTU Management Engineering, Technical University of Denmark
Negative prices: Explanation and solution
■ Stop and start costs for conventional generators (minimum up and down
times)
■ Renewable generators are subsidised (feed-in tariff or production based tax
credits)
■ Renewable generation stay online as long as the negative price is less than
the support
■ Solution:
■ use dynamic tariffs (tax) element of consumer price reduced when zero
■
■
wholesale price
instruct renewables to shut down – involuntarily curtailment
reduce/remove the support when power prices are zero or below – voluntary
curtailment
■ Result: Much less zero and negative prices after a bit of learning
DTU Management Engineering, Technical University of Denmark
Thank you for your attention!
Henrik Klinge Jacobsen
[email protected]
Department of Management Engineering
Technical University of Denmark – DTU
Systems Analysis Division
Building 110, P.O. Box 49
DK-4000 Roskilde, Denmark
www.dtu.dk
DTU Management Engineering, Technical University of Denmark