Integration of Power-to-Gas Conversion into Dutch Electricity Ancillary Services Markets

ENERDAY 2018 – Technische Universität Dresden – April 27th, 2018 12th International Conference on Energy Economics and Technology Market and Sector Integration – National and European Perspective

VÍCTOR GARCÍA SUÁREZ

JOSÉ L. RUEDA TORRES

BART W. TUINEMA

ARCADIO PERILLA GUERRA

MART VAN DER MEIJDEN

THE POTENTIAL OF POWER-TO-GAS FOR THE NETHERLANDS

POWER-TO-GAS CONVERSION: PEM ELECTROLYSERS

DUTCH ANCILLARY SERVICES MARKETS

CASE STUDY: GRONINGEN-DRENTHE-OVERIJSEEL AREA (2030)

2 | 17

AGENDA

NORTH SEAOFFSHORE WIND FARMS

SOLAR FARMS

GREEN POWER FROM GERMANY

FROM 2019: COBRAcable FOR SURPLUS OF

DANISH WIND ENERGY

INDUSTRY

TRANSPORTATION

HOUSEHOLDS

H2

H2

H2

CH4

UNDERGROUND GAS STORAGE

FUEL CELLS

ELECTROLYSER

NATURAL GASELECTRICITY

Adapted from: http://tso2020.eu/ 3 | 17

USAGE OF NATURAL GAS IN EUROPE

• 1st in gas installed capacity (54%) • 1st in electricity produced with gas (45%)• 1st in gas consumption per capita (1180 m3)• World leading chemical industry cluster

• Generation mix dominated by nuclear power• Marginal use of gas for electricity production

• 2nd in gas installed capacity (35%)• 2nd in electricity produced with gas (42%)• 3rd in in total gas consumption (64,500 Mm3)

• 3rd in gas installed capacity (32%) • 3rd in electricity produced with gas (40%)• 2nd in total gas consumption (76,700 Mm3)

• 1st in total gas consumption (80,500 Mm3)• Generation mix based on coal and renewables

• Low usage of gas power plants (15%)• Last overall in total gas consumption

4 | 17- Top-6 EU Countries with Highest GDP in 2017 -

PEM = Polymer Electrolyte Membrane

POWER-TO-GAS CONVERSION: PEM ELECTROLYSERS

• Size of individual stack ≤ 3 MW• System efficiency of 75 – 85 %• Power setpoint change within 1 second• Startup and shutdown within minutes

SPECIFICATIONS

• TSO 2020 – 1 MW pilot station (NL)• Shell / ITM – 10 MW refinery (DE)• McPhy – 13 MW methanation (AT)• Gasunie – 20 MW station (NL)

ONGOING / PLANNED PROJECTS

CAPITAL COST (CAPEX)

• 1000 €/kW at 1 MW scale in 2018 • 500 €/kW at 10 MW scale by mid 2020s

POTENTIAL USES FOR POWER SYSTEMS

• Frequency regulation• Renewables curtailment reduction• Congestion management• Voltage control

• ≈ 80,000 hours for the stack• 20 – 30 years for the rest of the plant

LIFETIME

5 | 17- Reference data taken from different manufacturers - Electrolyzer sample image retrieved from Nel Hydrogen -

PREQUALIFICATION, MARKET MECHANISMS AND FUTURE FRAMEWORK OF:

» BALANCING MARKETS (FCR and aFRR)

» VOLTAGE CONTROL

» CONGESTION MANAGEMENT

ASSESSMENT OF THE TECHNICAL ADEQUACY OF PEM ELECTROLYSERS

BUSINESS MODEL OF ELECTROLYSERS AS ANCILLARY SERVICES PROVIDER

6 | 17

DUTCH ANCILLARY SERVICES MARKETS

[1] Online trading platform at regelleistung.net / 30% Dutch exclusive and 70% auctioned together with the following TSOs:

Generators

PARTICIPANTS:

Loads

» Symmetric bid» Bid ≥ 1 MW» Bid ≤ Prequalified MW

BIDDING RULES:

Organized capacity market

» ± 110 MW [1]

» Weekly auction

MARKET TYPE: SETTLEMENT RULE:

Pay-as-bid

PRODUCT RESOLUTION:

Weekly

FREQUENCY CONTAINMENT RESERVE (FCR)

» Complete bid activation within 30 sec.» Provision for 30 min. for a ± 200 mHz deviation» Linear frequency-power characteristic

PREQUALIFICATION:

7 | 17

» Symmetric bids» Bid ≥ 1 MW» Bid ≤ 999 MW

BIDDING RULES:

Single-buyer bilateral market

» ± 350 MW» Mandatory daily bids

MARKET TYPE: SETTLEMENT RULE:

Pay-as-bid

PRODUCT RESOLUTION:

Monthly / Weekly

Marginal price

15-Minute (PTU)

Daily bid ladder

» Activation by merit order» Energy remuneration

» Voluntary capacity bids» Asymmetric bids allowed

AUTOMATIC FREQUENCY RESTORATION RESERVE (aFRR)

» Complete bid activation within 15 min.» Minimum ramping of 7% of the bid per min.» Control by Load Frequency Control (LFC)

PREQUALIFICATION:

Generators

PARTICIPANTS:

Loads

8 | 17

» Daily auction frequency

» Product resolution of 4 hours

» Marginal pricing settlement rule

» Introduction of asymmetric bids

FCR:

Involved TSOs:

» Full activation time of 5 or 7.5 minutes

» Gate closure times closest to real-time

» Increased imbalance netting through IGCC [1]

» Unified European market model

» Energy activation by a common merit order list

» Cross-border marginal pricing settlement rule

aFRR:

[1] International Grid Control Cooperation

BALANCING MARKETS: THE ROAD TO 2025

9 | 17

VOLTAGE CONTROL & CONGESTION MANAGEMENT

Generators

PARTICIPANTS:

Loads

Single-buyer bilateral market

» At TenneT’s request

CONGESTION MANAGEMENT: SETTLEMENT RULE:

Fixed fee

PRODUCT RESOLUTION:

No details

» The reinforcement of the grid is the preferred action plan in to avoid future congestions

» Mandatory provision for generators > 5 MW (Contracted service)

Generators

PARTICIPANTS:

Loads

FACTS

Single-buyer bilateral market

» Based on local needs» Yearly tender

REACTIVE POWER MARKET: SETTLEMENT RULE:

Pay-as-bid

PRODUCT RESOLUTION:

Yearly

» Activation in 15 min.

PREQUALIFICATION:

10 | 17

TECHNICAL ADEQUACY OF PEM ELECTROLYSERS

• 1 MW active power steps by LFC• Power setpoint change within 1 second

FREQUENCY RESTORATION RESERVE (aFRR)

• Curtailable industrial load• Interruptible load• Fast ramping in both directions

CONGESTION MANAGEMENT

FREQUENCY CONTAINMENT RESERVE (FCR)

VOLTAGE CONTROL

• Purely DC load• Reduction of active power demand• Use of converter at partial loading

Poutput [MW]

f [Hz]

PnomPref0

50.0

50.2

49.8

Pbid

Pbid

Inverse droop control:

• Power setpoint change within 1 second

11 | 17- Electrolyzer sample image retrieved from Nel Hydrogen -

» The sale of H2 (production with cheap electricity) and syngas is the main financial revenue source.

» The provision of ancillary services adds extra revenue to the power-to-gas business model.

» Most interest in short product horizons and capacity payments.

» In the new framework, prioritization of FCR and voluntary bidding for upward regulation aFRR.

11131517192123

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

Pri

ce [

€/M

W/h

]

Week

FCR marginal priceFCR average pay-as-bid priceFCR minimum pay-as-bid price

Source: regelleistung.netFCR price in the Dutch auction in 2017 Energy price duration curve for upward regulation aFRR in 2017

Source:

0

200

400

600

800

1000

0 3000 6000 9000 12000 15000 18000

Pri

ce [

€/M

Wh

]Number of PTUs with Imbalance

12 | 17

BUSINESS MODEL AS ANCILLARY SERVICES PROVIDER

ISSUES TO BE INVESTIGATED:

» PRELIMINARY ASSESMENT ON VOLTAGE CONTROL AND LIKELIHOOD OF CONGESTIONS

» TECHNICAL IMPACT OF THE PARTICIPATION OF ELECTROLYSERS IN FCR

» COMBINED OPERATION OF RENEWABLES AND POWER-TO-GAS

GRID TOPOLOGY ACCORDING TO TENNET’S DEVELOPMENT PLAN FOR 2030

HIGH CROSS-BORDER POWER IMPORT AND LOW CONVENTIONAL GENERATION

13 | 17

CASE STUDY: GRONINGEN-DRENTHE-OVERIJSEEL AREA

VIERVERLATEN

to GERMANY

to ZWOLLE

EEMSHAVEN

NorNed COBRAcable

380 kV 220 kV 110 kV

MEEDEN

WEIWERD

14 | 17

49.80

49.82

49.84

49.86

49.88

49.90

49.92

49.94

10 12 14 16 18 20 22 24 26 28 30

Nad

ir F

req

ue

ncy

[H

z]

Total FCR Capacity [MW]

Only P2G

10 MW CCGT + P2G

Only CCGT

Frequency nadir for different allocations of FCR capacity

49.88

49.90

49.92

49.94

49.96

49.98

50.00

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Freq

uen

cy [

Hz]

Time [s]

30 MW P2G20 MW P2G + 10 MW CCGT15 MW CCGT + 15 MW P2G20 MW CCGT + 10 MW P2G30 MW CCGT

Frequency response for different allocations of FCR capacity

EVENT: Loss of generation due to disconnection of wind turbines or sudden decrease of COBRAcable power import

15 | 17

FCR PROVISION: EFFECTS ON FREQUENCY RESPONSE

0

100

200

300

400

500

600

0:00 2:00 4:00 6:00 8:00 10:00 12:00 14:00 16:00 18:00 20:00 22:00 0:00

Po

wer

[M

W]

Time [hrs]

Wind PowerP2G ConsumptionP2G CapacityGrid Injection

Example of the coordinated operation between the wind park and the large-scale power-to-gas facility

16 | 17

INTERACTION WITH WIND ENERGY GENERATION

Maximum consumption during cheap electricity hours No grid injection for

low wind power output

Shutdown during the most expensive electricity hours

Operation at partial load output

TECHNICALLY, ELECTROLYSERS COULD PARTICIPATE IN FREQUENCY BALANCING MARKETS, VOLTAGE CONTROL AND CONGESTION MANAGEMENT

ECONOMICALLY, FCR IS THE MOST ATTRACTIVE SERVICE DUE TO THE CAPACITY PAYMENTS AND SHORT PRODUCT RESOLUTION (FROM 2021)

THE FAST DYNAMICS OF ELECTROLYSERS IMPROVE THE FREQUENCY RESPONSE OF THE POWER SYSTEM

LARGE-SCALE POWER-TO-GAS CAN BECOME ONE OF THE POTENTIAL SOLUTIONS TO MITIGATE RENEWABLE ENERGY VARIABILITY

17 | 17

CONCLUSIONS

Integration of Power-to-Gas Conversion into Dutch Electricity Ancillary Services Markets

ENERDAY 2018 – Technische Universität Dresden – April 27th, 2018 12th International Conference on Energy Economics and Technology Market and Sector Integration – National and European Perspective

VÍCTOR GARCÍA SUÁREZ

JOSÉ L. RUEDA TORRES

BART W. TUINEMA

ARCADIO PERILLA GUERRA

MART VAN DER MEIJDEN