Saving money and the
environment with
Smart Power Generation
CONTENT
Introduction
Case 1: California
Case 2: Great Britain
Case 3: India
IEA statements of ICEs
The value of flexibility
Future market design
4
6
8
10
12
14
15
INTRODUCTION
W
i nd and solar power are crucial to cut CO2 emissions and
secure a flow of electricity to our homes and businesses.
But the output of wind and solar energy changes with the
weather. This becomes a problem when the capacity of
wind and solar is large. Current systems cannot absorb the variations.
Another challenge is coping with the daily peaks of electricity demand.
4
For these new challenges, more flexibility is needed in power systems.
The most important source of flexibility is flexible generation. It means
fast-starting, efficient power capacity that can offer back-up for any
variations in the supply of renewable energy and the demand of electricity.
This booklet showcases recent research by Wärtsilä. It demonstrates
what Wärtsilä’s Smart Power Generation (SPG) power plants, based
on internal combustion engines (ICEs) can do to optimise power systems around the world. According to the results, flexible capacity can
cause significant savings and reductions in CO2 emissions.
Modern combustion engine power plants use reciprocating internal
combustion engines that burn natural gas. Unlike conventional gas turbines, the combustion takes place in cylinders, much like a car engine.
However, the similarity with automotive applications ends there as
engines for power plant applications have state-of-the-art control systems and are optimised and developed unlike anything found in the
transportation industry.
“Flexible generation is a costeffective, mature and readily
available option to balance
renewable energy variability and
uncertainty.” 1
What is flexibility?
Flexibility in power generation can be defined as the ability to change the level of electricity output in response to an
instruction or another signal. All forms of electricity production or consumption are flexible over certain timeframes. For
example a combined cycle gas turbine (CCGT) can flex from producing no electricity at standstill to full output over the
course of a couple of hours. Similarly some industrial processes take hours to days to entirely shut down to bring their
electricity consumption to zero.
Response time is the critical differentiator for valuing flexible forms of electricity when balancing intermittent renewables.
Flexible forms of electricity must be able to ramp their output at the same rate that wind and solar output fluctuates, so that
a balance can be maintained. Systems need to respond across different timeframes, from seconds to minutes to hours.
During the last few years, Wärtsilä has undertaken several studies related to power system optimisation of large-scale
power systems. These studies include e.g. California (KEMA 2013; Wärtsilä & Energy Exemplar 2014a & 2014b), Great
Britain (Wärtsilä & Redpoint Energy [Baringa Partners] 2013), India (Wärtsilä 2014), South Korea (Leino; Rautkivi; Heikkinen
& Hultholm, 2012) and Australia (Wärtsilä & Roam Consulting 2014)2.
Despite the very different generation fleets in the above cases, the economic findings are well in line with each other. In
this document, three of these studies will be introduced and the case-specific value of Smart Power Generation will be
presented.
These global studies have also led to new insights on how electricity markets should be designed in order to ensure affordable electricity.
1
International Energy Agency (IEA), 2014. The Power of Transformation – Wind, Sun and the Economics of Flexible Power Systems
2
www.smartpowergeneration.com
5
CASE 1: CALIFORNIA, 2020/2022
C
alifornia has a legislated renewable portfolio
standard (RPS) requiring 33% of the electricity
load to be served by renewable energy, primarily wind and solar, by the year 2020. Every 2
years the CA public utility commission publishes details of
all new capacity expected to be installed 10 years forward.
For the years 2020 and 2022 the amounts published were
5–6 GW, or approximately 7% of the installed capacity.
6
Three studies were performed [1], [2], [3] which explored
outcomes if the new capacity were Wärtsilä Smart Power
Generation (SPG) instead of the planned build out of primarily open cycle gas turbines (OCGTs) and combined
cycle gas turbines (CCGTs). Results showed California could save hundreds of
millions of dollars annually, reduce CO2 emissions by
1–2%, and improve reliability if they installed SPG instead
of OCGTs/CCGTs. This is all due to the fact that SPG
power plants are extremely flexible, can absorb fluctuations in the net load, and free the most efficient assets in
the fleet (CCGTs) to do what they are designed to do – run
at full load with a minimal number of starts and stops. In
short, the flexibility of SPG power plants unlocks the
full potential of other assets in the fleet.
The rapid start times, superior efficiency and flexibility of
gas-fired combustion engines are shown to increase the
entire fleet efficiency within the California Independent
System Operator (CAISO) system. This is done by reducing cycling and starts/stops on existing combined cycles
and optimising provision of ancillary services.
Flexibility combined with the superior reliability of
multi-shaft engine plants is shown to reduce the
number of hours of ancillary service shortfalls by
70%, and the amount (MW) of ancillary service
shortfalls by more than 50%.
44,000
LEGISLATION
42,000
40,000
33%
Renewable energy
38,000
SOLAR AND WIND
36,000
34,000
32,000
30,000
Gas turbines
+5.5 – 7 GW
Did you know?
28,000
26,000
24,000
GAS
22,000
Improvement
through SPG
20,000
0:00
$1,039,000,000
2:00
4:00
6:00
8:00
10:00
12:00
14:00
16:00
18:00
20:00
22:00
0:00
By choosing the right electricity modeling
system, electricity consumers can save up to
3%-units.
A typical day in California 2020 (Source: CAISO)
= 13%
cost savings
1,450,000ton
SPG +5.5 – 7 GW
H2O
H2O
reduced CO2
emissions
97,000,000
litres water saved
Net load: The total electricity demand minus renewable generation. This remaining share of the demand has to be partly met with power generation that can be dispatched, i.e. generating units
that can be ramped and started and stopped as needed.
Ancillary services: Capacity which the system operator uses to maintain the required balance between generation and electricity load. Also known as balancing services. Divided to as contingency and operational reserves. Contingency reserves (spinning and non-spinning) handle system eventualities, such as a trip of the largest generator. Operational reserves (load following and
regulation) are used to balance fluctuations in net load.
Sources: [1] DNV (KEMA) 2013. How to Manage Future Grid Dynamics: Quantifying Smart Power Generation Benefits
[2] Energy Exemplar 2014. Incorporating Flexibility in Utility Resource Planning
[3] Energy Exemplar 2014. Power System Optimization by Increased Flexibility
All of these studies can be found at www.smartpowergeneration.com
7
CASE 2: GREAT BRITAIN, 2020/2030
Traditional electricity reserves
400 MW
E
l ectricity market in Great Britain is witnessing
a sharp increase in the volumes of intermittent
renewable generating capacity. The demand for
flexible forms of generation to manage this intermittency is expected to grow. In particular, part-loading of
conventional generation can unnecessarily drive up the
cost of providing flexibility, adding to consumers’ electricity bills.
8
It has been demonstrated that Smart Power Generation
(SPG) can achieve significant savings over traditional
forms of flexibile generation, particularly as the penetration of renewable generation technologies increases in the
future.
200 MW
of
reserve
capacity
TARGET
>30%
Electrical efficiency 50%
Renewable energy
200 MW
Gas turbines
+4.8 GW
Improvement
through SPG
The Great Britain electricity market was modelled in for the
years 2020 and 2030. In the scenarios 4.8 GW of new build
combined cycle gas turbine (CCGT) generating capacity
was replaced with the same amount of SPG. The outcome
of the study showed significant savings in the costs of creating flexibility by using SPG compared to CCGT.
SPG +4.8
GW
ANNUAL
COST
SAVINGS
el. eff
55 %
Electrical efficiency 55%
el. eff
el. eff
48%
el. eff
52%
el. eff
55%
200 MW
of
reserve
capacity
400 MW CCGT
running at
part-load
200 MW CCGT
spinning to
supply energy
400 MW CCGT
running at
full load
200 MW SPG
stand -by
£545,000,000
What is part-loading?
£1,540,000,000
Part-loading is the practice of turning down generating units that would otherwise be running at full load,
so that they can be turned up again to provide flexible energy if needed. Similarly, generating units that
are stopped can be turned on to produce low levels of output as a form of standby. It is a way of creating
reserves of flexible energy. A generating unit that is turned down to part-load will produce less energy.
So in practice, as one generating unit is turned down to part-load, another unit will need to be turned up
simultaneously to maintain the overall balance of energy.
= 5% in 2020
= 14% in 2030
Source: Redpoint Energy: Flexible energy for efficient and cost effective integration of renewables in power systems
New SPG electricity reserves
9
C
oal has traditionally been the main source of electricity production in India. Going by the recommendations of the 12th and 13th 5-year plans, this
dependence is likely to continue well into the future.
An average addition of 14,000 MW of coal plants has been
planned every year.
10
100%
5.00
Coal increase +14 GW / year
0.63
0.77
0.70
4.00
3.00
16
12
Gas price US$/MMBTU
8
Improvement
through
optimised
coal-SPG
hybrid setup
Focusing heavily on coal plant baseload leads to inefficiency
and inflexibility. Power demand is increasingly following a cyclical pattern, characterised by sharp peaks during certain hours
and low patches during off-peak hours and night. If the capacity
of baseload plants exceeds a certain threshold in the system,
these plants will run at sub-optimal loads during off-peak hours.
This leads to a significant drop in their efficiency. Many of the
coal plants are already operating at a lower-than-normative
annual plant-load factor. A major reason for this is the reduced
conosumption of power during off-peak hours and night.
Coal-gas hybrid
Flexible gas ICE power plants will be
important in meeting the objective of
reliable, 24/7 power supply for India.
11,900 Rs crores (*
> 5%
reduced CO2 emissions
500,000,000,000
litres water saved
of coal increase replaced with SPG
Contingency reserves
provided
by peaking plants
Contingency
reserves
Contingency reserves
0
*)1,500,000,000€
11
Peaking energy provided
by peaking plants
13,000,000ton
20%
20
Stand alone coal
cost savings
It has been shown that pruning down the Indian baseload coal
plants to about 80% of the planned capacity and that replacing 20% of the planned coal capacity with flexible peaking
plants will generate annual cost savings of over 5%. The
benefits of these optimised or hybrid systems are clearly visible and quantifiable. The savings are significant also with high
liquified natural gas (LNG) prices.
Source: Peaking & Reserve Capacity in India: Using flexible, gas-based power plants
for affordable, reliable and sustainable power
0.57
System load
CASE 3: India, 2014–2019
6.00
4
8
12
16
Time (hours of day)
Contingency
reserves
20
24
IEA STATEMENTS OF ICEs
Rising flexibility needs make internal combustion engines (ICEs) increasingly
attractive for power [...], stacked in so-called “bank” or “cascade” plants (20
MW to 200 MW) or operated with a combined steam cycle (> 250 MW).
12
At 48% full-load efficiency, ICEs outperform OCGTs ( < 42%) but fall short of
CCGTs ( < 61%), while having better flexibility and part-load efficiencies.
Internal combustion engine (ICE) plants [...] offer higher efficiencies [...] than
a large CCGT operating at part load.
ICE DRIVERS (IEA):
HIGH PART-LOAD EFFICIENCY
MODULARITY
RAPID START-UP
MULTI-FUEL CAPABILITY
LOWER CAPITAL COSTS THAN OCGT
SHORT CONSTRUCTION TIME
OCGT: Open cycle gas turbine
CCGT: Combined cycle gas turbine
Source: Energy Technology Perspective: Harnessing Electricity’s Potential, IES 2014
Source: Energy Technology Perspective: Harnessing Electricity’s Potential, IES 2014
13
THE VALUE OF FLEXIBILITY
Recent studies clearly show that adding flexible generation reduces total system costs in high renewable energy power systems.
In high renewable energy power systems, flexibility is no longer an invisible and low-cost side product of power generation, but a key
factor in the power system design and optimisation.
14
While continuously ensuring capacity adequacy, adding flexibility to a system significantly reduces generation costs and CO2 emissions.
The value of flexibility cannot be materialised by modifying existing inelastic generating assets or by demand response – new flexible
power generation is needed.
Future electricity markets need to recognise the value of flexibility to boost investments in
flexible power generation – this requires a new approach to electricity market design.
FUTURE MARKET DESIGN
To develop a reliable, affordable and sustainable power system, three key actions can be identified:
1
Understand that the energy market environment has dramatically changed due to increasing amounts of variable renewable generation
–this new environment requires increased services (flexibility).
2
Recognize the value of flexibility and make it visible for market players through marginal pay-as-cleared balancing energy and cost
reflective imbalance prices and by developing short-term energy markets.
3
Create a transparent market place for flexibility enabling efficient procurement of system services and provide clear market
signals for investing in flexibility.
Adding incentives for flexibility to the electricity markets should remain high in the
EU agenda ­— Flexible capacity can provide savings of several billion euros annually
to European consumers.
15
Simple solutions for complex problems
Portfolio optimization is the key to
sustainable, affordable and reliable power
systems. This has never been more
relevant than it is for utility systems tasked
with meeting ambitious renewable energy
targets.
Inclusion of internal combustion engine
(ICE) power plants in the suite of new
build options can yield future fleets that
are more flexible and reliable, require
less capacity to meet utility needs, while
delivering both ratepayer savings and
greenhouse gas reductions. The modularity and flexibility of ICEs is
what Smart Power Generation is all about:
cost competitive, flexible, efficient and
clean capacity, ultimately designed to
unlock the full potential of a sustainable,
affordable and reliable Smart Power
System.
www.smartpowergeneration.com