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5.1 Power system flexibility 5.2 Electrification of end-use
5.1 POWER SYSTEM FLEXIBILITY
Power system flexibility is the glue that connects a renewable power system with large shares of solar and wind with increasingly electrified end-use sectors. It enables reliable and affordable electricity supply thanks to smart technologies, new regulations and business models, digitalisation and new operational practices.
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This section looks at enabling innovations (5.1.1) and how they can be leveraged in a decarbonised power system by 2050 by operating in an optimal way through electricity and hydrogen supply (5.1.2). Section 5.1.3 recommends policies to be considered today to enable the next steps in the energy transition, towards the objectives of the Paris Agreement, as outlined in IRENA’s 1.5°C Scenario.
Three main innovation trends – digitalisation, decentralisation and electrification – are accelerating the transformation of the power sector, with VRE at its core: They are changing paradigms and unlocking power system flexibility for integrating larger shares of variable renewables.
Innovations are not only technological; they also include innovations in market designs, system operation and business models. Innovative solutions emerge from systemic innovation, the matching and leveraging of synergies between various innovations across multiple components of the power system. In Innovation Landscape for a Renewable-Powered Future, IRENA identified 30 innovations that facilitate the integration of large shares of variable renewables, following the systemic innovation approach (Figure 5.1).
One-size-fits-all solutions do not exist: The design of an optimal strategy for each power system and the implementation of different innovations depend on the country context and system-specific variables, such as the technical and economic aspects of a given power system. IRENA provides a toolbox of innovations that countries can use to create their own tailored solutions for flexible power systems (IRENA, n.d.).
FIGURE 5.1 IRENA’s innovation landscape for integrating variable renewable energy
ENABLING TECHNOLOGIES BUSINESS MODELS MARKET DESIGN SYSTEM OPERATION
1 Utility-scale batteries 2 Behind-the-meter batteries
3 Electric-vehicle smart charging 4 Renewable power-to-heat 5 Renewable power-to-hydrogen
6 Internet of things 7 Artificial intelligence and big data 8 Blockchain
9 Renewable mini-grids 10 Supergrids
11 Flexibility in conventional power plants 12 Aggregators 13 Peer-to-peer electricity trading 14 Energy-as-a-service
15 Communityownership models 16 Pay-as-you-go models 17 Increasing time granularity in electricity markets 18 Increasing space granularity in electricity markets 19 Innovative ancillary services 20 Re-designing capacity markets 21 Regional markets
22 Time-of-use tari s 23 Market integration of distributed energy resources 24 Net billing schemes 25 Future role of distribution system operators 26 Co-operation between transmission and distribution system operators
27 Advanced forecasting of variable renewable power generation 28 Innovative operation of pumped hydropower storage
29 Virtual power lines 30 Dynamic line rating
Source: (IRENA, 2019c).
One-size-fits-all solutions do not exist. IRENA provides a toolbox of innovations that countries can use to create their own tailored solutions for flexible power systems
5.1.2 Power system flexibility in 2050 under the 1.5°C Scenario
In order to carry out this analysis and assess the global flexibility needs, IRENA built the ETHER model (Box 5.1).45 This section describes the role of these options in the global power sector under IRENA’s 1.5°C Scenario.
Electricity storage
With its unique capabilities to absorb, store and then reinject electricity into the grid, electricity storage is seen as a main solution for addressing several technical and economic challenges of power systems. Electricity storage can provide a wide range of services that support solar and wind integration and address some of the new challenges that the variability and uncertainty of solar and wind introduce into the power system.
Based on the electricity storage capacity estimated in the 1.5°C Scenario, Figure 5.2 shows the average hourly charging and discharging patterns in four countries (two dominated by solar PV and two dominated by wind power). The figures – which are normalised by the peak power in each region, so that they can be compared – are illustrative of how the operation of storage in such a system would look in a 1.5°C Scenario in 2050. They are not meant to convey country-level insights.
BOX 5.1 IRENA’s Energy Transition Hydrogen and Electricity Reoptimisation (ETHER) model
The ETHER model is a new development in IRENA’s analytical capabilities. It is based on a commercial power system optimisation tool that can support the development of national and regional insights on flexibility as well as hydrogen.
IRENA ran an hourly economic dispatch problem for different years. It selected the year with the highest VRE penetration (2050) for the detailed analysis presented in this section.
The main flexibility measures considered in the model for avoiding loss of load and minimising VRE curtailment and total system cost are battery storage systems, demand response, smart charging of EVs and power-to-hydrogen. Instead of using approximated – and often misleading – metrics such as the integration cost for solar and wind in a system dominated by these resources, the approach focuses on minimising the combination of annualised investment costs and operational costs (including fuel), for generation as well as flexibility options.
45 This modelling framework will be regularly updated with national and regional insights based on the ongoing and future regional energy transition outlooks from IRENA. Country engagement and the increasing geographic granularity of regions down to the country level will help validate the results and incorporate globally relevant regional insights in future editions of the World Energy Transitions Outlook.
FIGURE 5.2 Projected patterns of electricity storage in four countries in 2050
Electricity storage charge Electricity storage discharge % of peak power 100%
India
80%
Italy 60%
United Kingdom
Canada
20151050 Hour of the day 20151050 Hour of the day 40%
20%
0
In solar PV–dominated countries, such as Indonesia and Italy, electricity storage charges mostly during the day, to then discharge when solar PV ramps down or is not available. Sufficient storage capacity must be deployed to facilitate the integration of solar PV. A significant share of that storage could be deployed behind the meter of PV systems, both for utility-scale and rooftop PV, to make sure that low-cost electricity from PV is made available not only during the central hours of the day but also when the sun is not shining.
In wind-dominated countries, such as Canada and the United Kingdom, storage charge is spread throughout the day, depending on whether there is a VRE surplus, which can happen at any time of day or night, unlike solar. Storage in systems with large shares of wind should be connected to the power system directly, as opposed to behind the meter, to maximise its value for the system by reacting rapidly to real-time price signals. Storage discharge into the grid takes place when there is high demand and low renewable generation. By operating in this way, electricity storage not only reduces the system price, it also avoids investing in unnecessary and expensive peaking plants. Electricity storage is therefore a crucial factor in the world’s transition to decarbonised energy systems based on renewable sources.
Electricity markets often fail to sufficiently remunerate storage for the value provided to the system. It is critical to adjust the regulatory framework to enable cost-effective storage deployment. IRENA’s Electricity Storage Valuation Framework proposes a five-phase method to assess the value of storage and create a viable regulatory framework to enable the deployment of cost-effective electricity storage (IRENA, 2020g).
Policy makers and regulators may want to consider the following actions:
1. Promote the deployment of storage deployment together with solar PV once PV produces the majority of electricity generation during the central hours of the day, in order to spread PV generation to other times of the day.
2. Promote the deployment of standalone storage systems, in order to provide system services like reserves, congestion relief and balancing.
3. Develop a regulatory framework that is conducive to the gradual and increasing deployment of storage, based on the value of storage for the system at different stages of the energy transition.
Smart charging of electric vehicles
IRENA’s 1.5°C Scenario estimates that about 4.7 billion battery EVs need to be deployed in the next 30 years (for commercial and passenger vehicles as well as two- and three-wheelers), implying an increase in total final electricity consumption for road transport of over 10 000 terawatt hours (TWh)/ year in 2050. Thanks to higher efficiency, this amount of electricity will more than offset gasoline and diesel consumption for the same energy service provided while enabling decarbonisation of road transport through electrification with renewables. Most of these EVs will charge using electricity from the grid. It will therefore be critical to be able to control the time and speed of charging to avoid adequacy or flexibility issues for the power system. Smart charging strategies are key to increasing VRE integration, reducing peak load and grid congestion, and preventing flexibility issues (see section 5.2).
Figure 5.3 shows when smart charging of EVs takes place on average during the course of a day. The level of charging is normalised using the peak charging power in each region and averaged over 365 days, to highlight the daily charging pattern. These results are illustrative only, showcasing the optimal charging patterns for EVs in systems with large shares of PV in a 1.5°C Scenario by 2050. They are not the results of country-level studies.
FIGURE 5.3 Projected patterns of daily smart charging of electric vehicles in eight countries in 2050
Daily electric vehicle charging per region (% of peak charging)
Australia
China
Indonesia
India
Italy
United States of America
South Africa
United Kingdom
0 5 10 Hour of the day 15 20 100
80
60
40
20
0
In most countries, a large share of renewable energy is solar PV. Therefore, smart EV charging is concentrated during the central hours of the day, coinciding with peak solar PV generation, when electricity prices are lowest. The “smartness” of the charging is thus leading to the lowest charging costs for consumers and the greatest flexibility for the power system. In countries with large shares of wind power, such as the United Kingdom, EVs often charge at night, as wind penetration is more evenly distributed during the day, having a seasonal rather than a daily pattern. Day charging is also significant, however, to capture low-cost electricity during days when solar PV represents a significant share of power generation.
Policy makers and regulators may want to consider the following actions:
1. Promote the deployment of an extensive network of smart chargers in public parking spaces.
2. Promote the installation of smart chargers in office buildings.
3. Incentivise smart charging by implementing time-of-use tariffs, which can trigger charging when electricity prices are lower, typically during high PV generation hours but potentially also at home during the night in systems in which wind power represents a large surge of renewable energy.
Demand response
Demand-side flexibility is the portion of demand in the system (including through electrified heat, transport and hydrogen production) that can be reduced, increased or shifted within a specific duration. Demand-side flexibility must be harnessed to ensure the smooth integration of large shares of VRE into power systems (IRENA, 2019k).
In the ETHER model, EVs and electrolysers are modelled separately. The demand response in this section therefore refers to the remaining demand-side flexibility that comes mainly from heating and cooling, industrial processes and smart appliances that can be used to reduce demand at critical periods. Based on the literature, it was assumed that in each hour of the year, up to 4% of electricity demand (excluding transport and hydrogen demand) is flexible and can be reduced at a cost.
In 2050, in the ETHER model, electricity demand is reduced by 135 TWh through demand response as part of the optimal mix of flexibility options. Demand response exhibits a seasonal pattern, with a tighter supply-demand balance in winter months, as well as an hourly pattern in regions relying heavily on PV generation. In the latter case, demand response comes into play in periods of low PV generation and in the hours when PV is ramping up or ramping down, thus helping the system cope with the rapid increase and decrease of PV generation by smoothing the net load curve and preventing potential flexibility issues, such as steep ramping, during those critical hours.
Seasonality of green hydrogen production
Hydrogen is an energy carrier, like electricity. Green hydrogen can be produced when electricity is abundant and cheap. It can be stored at scale at lower cost than electricity and traded internationally, even over very long distances (see section 5.3). For these reasons, many countries and institutions are expressing growing interest in it.
Global hydrogen demand is expected to increase by a factor of almost seven between 2020 and 2050, to reach 74 exajoules (EJ) in IRENA’s 1.5°C Scenario. It will become an important component of final energy consumption.
Green hydrogen is produced via electrolysers that convert renewable electricity and water into hydrogen and oxygen. This hydrogen can be then stored during long periods, to use in periods of lower availability of renewable resources or to temporally (and spatially) decouple demand from supply.
Some countries can produce cost-effective green hydrogen all year long at a nearly constant rate without seasonal fluctuations, as renewable electricity is abundantly available throughout the year. They include countries that are expected to become potential large-scale producers of green hydrogen, supplying domestic demand and exporting to countries with lower renewable resource quality and potential, as shown in section 5.4. Countries with a significant share of hydropower – which can be dispatched to ensure a constant supply of renewable electricity during the year, generating when PV and wind generate less power, keeping electricity prices stable over the year – can maximise the capacity factor of electrolysers, reducing the capacity needed compared with regions in which the main renewable resource is seasonal. For instance, in climate zones where PV resources are abundant overall but limited in winter, hydrogen production would be concentrated during the summer. In these cases, it makes sense to run electrolysers at lower capacity factors, to produce hydrogen when electricity prices are lower during the year, although doing so would require greater overall electrolyser capacity than in countries with higher capacity factors.
Operation of systems with large shares of solar and wind
In IRENA’s 1.5°C Scenario, all sources of flexibility work together to deliver a decarbonised, reliable and cost-effective power system. Using the ETHER model, the dispatch of all technologies is co-optimised at once. It shows how the optimal operation of the power system, as well as green hydrogen production and international trade, could look like in a net zero world.
To ensure that demand and supply are balanced at every hour of the year, technologies as well as operational practices compete to provide least-cost flexibility. One of the sources of flexibility is curtailment, the reduction of the active power injected into the grid by variable resources, such as solar and wind. Curtailment is part of a cost-optimal mix of flexibility options. It should be seen as an indication of a healthy, reliable power system rather than an undesirable feature to be eliminated. Because curtailment has an opportunity cost, however, it has to be kept at low levels. Renewable curtailment refers to the share of renewable energy (typically VRE) potential that, because of the imbalance between demand and supply, has to be wasted because it cannot be stored or used to instantaneously cover part of demand. Excessive renewable curtailment can indicate a flexibility issue, as curtailment can often be reduced by introducing greater flexibility. Too much curtailment can undermine the financial viability of renewable generators, especially if it is not spread evenly across generators. In solar PV–dominated systems, for example, when solar generation ramps up, other generators need to ramp down. If they cannot, energy storage, smart-charging EVs or flexible demand must be available to absorb PV generation when it would otherwise exceed demand. If none of these flexibility options is in place, some curtailment is necessary. It should be kept to a minimum.
Generation (GW) 2500
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Demand Import Nuclear Natural Gas Biomass Biomass CCS Hydro Demand response Battery discharge Wind Solar PV Exports Electrolyser VIG Battery charge
Even with very high solar PV penetration, the system can operate normally with no loss of load or renewable curtailment, thanks mainly to the combination of electricity storage, the production of green hydrogen via electrolysis, the smart charging of EVs and demand response. No single source of flexibility alone could provide the same level of flexibility required in this scenario. In this example, EVs charge during daylight hours, using smart charging infrastructure (dark blue). Electricity storage also charges during the day, discharging at night. Some hydrogen is also produced via electrolysis, mostly during the day but also at night during the winter, when wind penetration is higher. The figures in Figure 5.4 are illustrative of how all sources of flexibility can work together to ensure reliable and cost-effective operation of the power system. They are not based on a country-level study.
Generation (GW) 150
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Demand Import Nuclear Natural Gas Biomass Biomass CCS Hydro Demand response Battery discharge Wind Solar PV Exports Electrolyser VIG Battery charge
Note: Figure shows dispatch on a single day. It shows no battery charging because the battery was charged the previous day.
Figure 5.5 shows how a wind-dominated country like the United Kingdom would operate. Exports, hydrogen production and EV smart charging are key to integrating both solar PV and wind generation. In a solar PV–dominated country, EV charging takes place mostly during the day. Winddominated countries must be able to charge the EV fleet at night, when wind penetration is higher. Smart charging at home therefore becomes important, to leverage wind generation during hours of low electricity demand in order to optimise the charging of EVs while people are sleeping.
Figure 5.5 shows how electricity storage can play a key role in system flexibility, by discharging when solar PV is ramping down. If no storage is present, a thermal flexible unit needs to be started up, increasing the system’s price and carbon dioxide emissions.
To optimise the balance among different flexibility options, policy makers and regulators may want to consider the following actions:
1. Create a level playing field for different flexibility options for providing the necessary services to the system.
2. Leverage the flexibility of renewable generation resources, particularly hydropower. With its ability to balance daily variability and seasonality of solar and wind, hydropower is the ideal candidate for providing generation-side flexibility in a decarbonised power system. Market design and regulatory frameworks must compensate all resources, including hydropower, for the services they provide to the power system.
3. Plan smart charging of EVs based on the power generation mix. In systems dominated by solar
PV, the deployment of public charging infrastructure will be essential to allow EVs to be charged during the day at low cost and to integrating PV into the transport sector. In wind-dominated systems, smart chargers accompanied by cost-reflective tariffs will be required for home and roadside charging at night.
4. Develop the cross-border electricity market, particularly during prolonged periods of low solar and low wind generation. When renewable resources are low at a particular time on one part of a continent, other parts may have plenty of wind, sun or hydropower reservoirs. As a less efficient alternative, green hydrogen can be stored from one season to another or imported, to provide strategic reserves of green molecules that could be used in power generation if necessary.
Policy makers and system operators can help make flexible resources available to power systems around the world and unlock their full flexibility potential. The following sections describe the actions they need to take in the near future.
