new perspectives – revenue and cost optimized pumped ......future system demands require highly...

Global Unit Generation

New perspectives – revenue and cost optimized pumped storage concepts

Dr. Klaus Engels Louisville, KY – July 19, 2012

Future system demands require highly flexible PSP with


Future system demands require highly flexible PSP with optimized revenues and cost structures

Currently, pumped storage plants (PSPs) are the only mature large scale option to store energy and react flexible on system demand.

The remaining optimization lever is cost of a PSP – beside other positions the machine

Considering all revenue streams – wholesale market, ancillary services and portfolio effect – PSPs are profitable, even in tough market environment.

The remaining optimization lever is cost of a PSP beside other positions, the machine set is a main cost driver, which can be optimized.

To display the value contribution of a PSP – technically and economically - the optimal dispatch needs to be simulated with modern toolsdispatch needs to be simulated with modern tools.

As the plant flexibility becomes more important, the majority of the revenues come from the ancillary services (secondary reserve).

Thus, the optimal machine concept is highly flexible at minimal costs and has the right size in the market portfolio.

New Perspectives of PSPs July 19, 2012 E.ON Global Unit Generation2

E ON’s Waldeck 2+ project is an extension of the


E.ON s Waldeck 2+ project is an extension of the existing interconnected Waldeck Group

European hydro power portfolio

Potential increase of upper basin

The Waldeck Group in central Germany

Upper basin Waldeck 2 and 2+

Upper basin

of upper basin

Waldeck 2Waldeck 2+

300 MW

Waldeck 1

1

23

Waldeck 2480 MW Waldeck 1

135 MW

300 MW1

No. of operated hydro plants 212Efficient capacity 6.161 MWAnnual net generation 18,5 TWh

Lower basinWaldeck Group


Demand for flexibility will permanently increase within the


Demand for flexibility will permanently increase within the next years due to growing share of renewables feed-in

Annual residual load20102015

Energy production* [TWh]

Share of 11% 25%Decrease of residual load

[GW]

35%

20014060

renewables11% 25%residual load

Renewables

35%

2020

Relative frequency of load changes of annual residual load

[h/a]

490

2002020

490420 370Increase of

fluctuation

Conven-tional

20102015

20202020

[GW/h]

202020152010


*) Germany/ input for simulation without export, direct industry, railway or auxiliary consumption

Profitability of PSP is supported by high demand of


Profitability of PSP is supported by high demand of ancillary services – increasing revenue share accordingly

20092009to 2011

30%

60%

10%

Revenue

distribution

10%


Typical investment cost structure for new build projects


Typical investment cost structure for new build projects of hydropower plants incl. pumped storage plants

Pumped

General note: depending on the real project, individual cost structure may be different!

Run-of-river StoragePumped

Storage


To optimize the technical concept a comprehensive three-


To optimize the technical concept a comprehensive threestep evaluation approach has been applied

New Build Potential Extension Stage Machine Concept

2ÜbersichtS zena rien

Betrachtete Markt‐ und Ausbauszenarien

2

M1. Kr aft werkspar k 20 15

M2. Kr aft werkspar k 20 20 be i K ern energ ie ausst ieg

M3. Kr aft werkspar k 20 20 oh ne Ker nener gieausstieg

B etr achtet e Au sb auvarian ten

Markt szen arien

In Bas isvar ia nte A usbau hyd raulischer Kra ftwer ke üb riger Mar kttei lnehm er ent halt en

Ab t astu ng des Au sb aus hydr. K raft wer ke von E.ON in 10 Var iant en je Markt szenar io

Unt erschiedliche Ausbaustu fen fü r Tagespei ch er ( +/‐ 300 MW bis + /‐ 1500 MW) mit /o hne Ko mb in ation ei nes Jahr esspei ch ers (201 5: +386 /‐1 22MW 2 020: +4 56/‐ 189MW)

MWMW

Zubau

Leistung

Zubau Leistung

Ausbaustu fen 2015 (M1) Ausbaustufen 2020 (M2/M3)

Übersicht S zena rien

O hne Ja h res spe icher Mit Ja hre sspe ic he r Ohne J ah re sspeicher M it Ja hr ess pe icher

Eingangsdaten Marktsimulation ‐Kraftwerkspark

6

GW

Installierte Kraftwerksleistung Deutschland

Eingangsdaten ‐ Mark tsi mul ation

An st ieg der installier ten K raft wer kskapaz ität en in Deutschland dur ch Ausbau e rneu erbar er Ener gien (insbe son der e dur ch zu sät zliche Winden ergiean lagen On‐/Offsho re)

Ker nene rgieausstieg in M2 ( 2020) wir d du rch neu e Kohle‐ und Gaskraf twer ke komp ens iert

An st ieg der installier ten Leis tu ng in

Gaskr aft werken zw. 20 08 u. 20 20Zusätz licher Zubau von PSKW in Deutschland dere

Erzeugun

gskapa

zität Einfluss zusätzlicher Turbinenleistung in Abhängigkeit

unterschiedlich hoher Einspeisung regenerativer EnergienExempla rische Betrachtung e iner Spitzenla ststunde

Merit order bei geri nger WEA‐Einspeisung Merit order bei hoher WEA‐Ei nspeisung

10Bewertung ‐ Marktsimulation

Results of RWTH Aachen simulations – Turbine and pump schedules of PT with asynchronous generator (300 MW)

‐300

‐200

‐100

0

100

200

300

Scheduled Energy Reserve Energy negative Reserve Energy positive

Reserve Capacity positive Reserve Capacity negative

Power Outpu

t

MW

Time‐300

‐200

‐100

0

100

200

300

Scheduled Energy Reserve Energy negative Reserve Energy Positive

Reserve Capacity positive Reserve Capacity negative

Power Outpu

t

MW

Time

Turbine Pump

During hours of pumping no positive spot and reserve energy ( reversible pumpturbine)

Due to its controllability pump can take part in the negative reserve market with 90 MW

Results of RWTH Aachen simulations –Analysis of WA 2+ contribution margins in 2009

Weitere Rahmenbedingungen:Net znu tzungsent gelte f ür b est ehen de Wasser kraf twer ke berü cks icht igt ( D: 0, 60 €/MWh ( pump en) / A: 2 ,17€/MWh ( pum pen), 2,065 €/MWh (tu rbin ieren )

Zusätz licher Zubau von PSKW in Deutschland der übr igen Markt teiln ehmer ber ücks ich tigt

2015: Blaubeu ren, SWU 45 MW Pump‐/Turbinen leis tung

2020: A tdorf , EnBW 1000 MW Pump‐/Turbinenleis tung

Installiert

ins talliert e therm. Er zeu gu ngs leist ung

spez.Erzeugungs‐kosten

Na ch fra g e (i n kl . au sg e ba u teT u rbine n le istung

Na ch fra g e

(o hn e au sg e bau te Tu rb in en lei s tun g )

installiert e therm . Er zeu gun gs leist ung

spez.Er zeugungs ‐

kost en

Na ch fra ge (i nk l . a u sg eba u teTu rb inen le is tung

N ac h frag e(o h n e au sg eb aut e T u rb in e n le i stu n g )

Kos tre duk tion du rc h

Tu rb inen le is tung

Ko ste n reduk tion du rch T ur bine nle i stung

Zusätzliche Turbinenleistung führt zu Kosten‐ und somit MarktpreisreduktionVerschiebung der Merit Order nach rechts bei hoher WEA‐Einspeisung führt zu geringerer Kostenredukti on der zusätzlichen Turbinenleistung durch fla chere Steigung im re levanten BereichAufgrund des stark nichtlinea ren Verlaufs der Merit Order sind generell ke ine proportiona len Zusammenhänge in den Ergebnissen zu erwarten

Z us . Wind ‐e in s pe i sung

25

Turbine takes to a high degree part in reserve market, esp. pos. and neg. PRR (only 3 MW due to rel. low flexibility) and neg. SRR

Remainder of 210 MW operated at the spot marketIf called for positive PRR energy, HPP needs to be supported by portfolio slightly overestimated contribution margin

Contribution Margin of Waldeck 2+

0

10

20

30

40

50

250 280 300 320 350

Capacity (MW)

Contribu

tion

margin (m

€/a)

PT asynchronous Ternary engine set PT synchronous

Contribution Margin of Waldeck 3

20

25

30

35

40

45

50

0 100 200 300 400 500 600

Capacity (MW)

Contribution margin (m

€/a)

PT asynchron Ternary engine s et PT synchron

PT asynchron and ternary engine set with same level of achievable contribution margin (from 320 MW onwards PT asynchron even with slight advantage)

PT synchron with significantly lower level

Decreasing slope of curve with increasing capacity saturation effect

How much additional pumped- What is the market optimal How much flexibility is

32

PT synchron with significantly lower level

storage capacity fits into the German market?

capacity and upper basin size? required in today’s market? Which machine type should be applied?


Machine types differ in their flexibility to participate in


Machine types differ in their flexibility to participate in the reserve markets and in their investment cost

Three technical alternatives are available:

Two main flexibility parameters of given machine types were simulated:

Investments required:

1Pumped turbine

with synchronous generator

ng m

ode

ine

€/kW

Limited flexibility (no controllability of pump, high min. load of turbine)

1 1

Pumped turbine with asynchronous

generator y in

pum

pin

oad

of tu

rb

xpen

ditu

re €

Medium flexibility (variation of power output of pump

ibl di i

2 2

generator

Ternary hi on

trol

labi

lity

Min

imum

l

Cap

ital E

x

Maximum flexibility (hydraulic short

possible, medium min. load of turbine)

3 3machine

set

Co (hydraulic short

circuit can be applied, low min. load of turbine)


An asynchronous pump-turbine is proposed as optimal


An asynchronous pump turbine is proposed as optimal machine concept – dependent on the individual situation

h l l99%100%

80%

Simulated contribution margins:

132%

Capital expenditure assumptions *:

reserve

wholesale80% 100%95%

ternary machine

t

pumped-turbine

h

pumped-turbine

h

pumped-turbine asynchron

ternary machine set

pumped-turbine synchronsetasynchronsynchron

Asynchron pumped-turbine and ternary machine

asynchronsynchron

Cost-benefit-analysis with consideration of Asynchron pumped turbine and ternary machine set reach same level of contribution margin, whereas synchron pumped-turbine remains 20% behind.

capital expenditure reveals pumped-turbine with asynchronous generator to be the most beneficial solution.


* Source: Lahmeyer International, only M&E part (approx. 20% of total budget)

Backup


Backup


Contact details and CV

University Degree in Electrical Engineering,

Contact details and CVCurriculum VitaeContact

Dr. Klaus EngelsRWTH Aachen University, Germany

University Degree in Economics,FernUni Hagen, Germany

1997 – 2002 Academic assistant and PHD studies at

gVP Asset Risk and GovernanceT +49 871 694-4010F +49 871 694-4008M +49 170 8562698klaus engels@eon com

RWTH Aachen University

2002 – 2004 Asset Manager Transmission GridRWE Energy AG, Dortmund

2005 – 2008 Project Manager

[email protected]

E.ON Generation FleetE.ON Wasserkraft GmbHLuitpoldstraße 27 j g

Roland Berger Strategy Consultants,Dusseldorf/Munich

2008 – 2010 Head of Business DevelopmentE.ON Wasserkraft, Landshut

84034 Landshut

since 2010 Vice President Asset Risk and Governance Hydro, E.ON Fleet Management Generation

Recently invited to Advisory Working Group for the study y y g y“Modeling and Analysis of Value of Advanced Pumped Storage Hydropower in the U.S.” of DoE


The energy-economic modeling of pumped-storage


The energy economic modeling of pumped storage plants must address both wholesale and reserve markets

0

Markets for scheduled energy2

Inflow QinHydraulic generation Two‐stage method as mixed whole‐number quadratic problem for

Methodology 5

Evaluation methodWholesale & reserve market Thermal & hydraulic systems

Spot- and Future marketPurchase and Sale of electrical energySpot market: hourly productsFuture market: variable productdefinitionsModelling by price-demand-function,aggregated for total market

Reserve Markets (I)

Emax,sale Emax,pur

Purchase

Sale

prohibitive price

Traded energy

price

1

Reserve Markets (II)

storage

Run-of-river plant

Turbine

Turbine

Turbine

Pump

Qin

Qin

Qin

Qin

Turbine

Qin

Time variable natural inflowsMinimum and maximal discharge ofpumps, turbines, penstocks etc.Starting und end volume for each reservoirRevisions and forced commitmentsProvision of scheduled energy and reserve capacityLoad dependent efficiency…

inflow

Upper basint = 1 t = 2 t = n

Start volume Endvolume

power generation and trading planningObjectiveDetermination of the maximum contribution margin of a generation pool consisting of thermal and hydro power plants under consideration of spot and reserve markets

spot market LP:parameters, e.g.:

k i

Decomposition

Input data: generation, trading, load, reserve, control data

Lagrange Relaxation Co‐ordination of energy and reserve balance

reserve market QP:parameters, e.g.:

i & i

hydro units (SLP):parameters, e.g.:

i

thermal units (DP):parameters, e.g.:

i / i

1st stage

3

Reserve provision by hydraulic power plantsReserve procurement by transmission grid operator

For power plant operators: only sale of reserve capacityVarious product definitionsMinimum offer volumesActivation time

Criteria for award of offer/contract:Only merit-order of capacity priceModelling of capacity-price-demand-functionCriteria for calling of reserve energy:merit-order of energy priceModelling of reserve energy calling byenergy price dependent callingprobability (time row)

Bilaterale reserve contracts (e.g. hourly reserve)

Capacity price +prA· offered energy price

Capacity price

RCmax,sale

Sale

Price

Reservedcapacity

prc: calling probability

RCmin.offer

Middle basin

Turbine

Turbine

Pump

Lower basin

Start volume Endvolume

Continuity equation: Vt = Vt-1 + Qt, inflow – Qt, outflow

Modelling of interconnected hydraulic groupsHydraulic Network-Flow

Hydro‐thermal power dispatch (close‐ended solution)QP

results evaluation: dispatch, contribution margin

‐market prices‐market volumes

‐ capacity & energy prices‐max salable capacities ‐ hourly request of energy

‐max capacity‐ efficiencies‐ storage volumes‐ grid tariffs

‐min/max capacity‐ efficiencies‐min/ up‐ and down‐times‐ cost components

2nd stage

Upper basin

turbine pump

topology

. . .

. . .

QTu,EE QPu,EE

V1start V1end

hydraulic model

max. generation limit,e.g. elec.energy: 80 MW,reserve: 100 MW

QTu,RE QPu,RE

reserve energy availability, e.g.100 MW · 4 h = 400 MWh

reserve: consideration of requested

Pumped-storage plant participation in scheduled energy and positive minutereserve market

ate a e ese e co t acts (e g ou y ese e)Purchase and offerPossibly longterm contractsDesign not standardizedModelling as fixed amount of reserve capacity

Lower basintime

V2start V2end

QTu,FE + QTu,RL ≤ QTu,max

Vmin ≥ c ⋅ PRL ⋅ tmin

reserve: consideration of requested reserve energy, e.g. with calling probability prA = 0,2:0,2 · 100 MW · 1 h = 20 MWhelec.energy:80 MW · 1 h = 80 MWh

QTu,RA= prA ⋅ QTu,RL

An integrated algorithmoptimizes the power plant scheduling on wholesale and reserve market

Particularities for scheduled energy and reserve markets (prices, sellable reserve capacities, calling signals…)

Hydraulic constraints and technical restrictions in the considered system (incl. thermal plants portfolio approach)

Results: optimized dispatch of portfolio and contribution marginof PSP (incl. portfolio effect)


g ) pp )

Additional restrictions needed to be defined in


Additional restrictions needed to be defined in simulation model to reflect machine type characteristics

spot market

nuclear gas

spot marketspot

market

nuclear gas

reserve market

nuclear

hard coal

gas

hydro storage

reserve marketreserve market

nuclear

hard coal

gas

hydro storage

Step 1:

Portfolio-simulation without restrictions in order to

Step 2:

Machine type simulation on stand-alone basis for

With re-definition of optimization problem complexity increased

d l restrictions in order to conclude how much reserve capacity is provided by Waldeck Group if part of the portfolio.

stand-alone basis for Waldeck-Group with portfolio-simulated reserve capacity provision as input and 2009 actual prices

tremendously

Simulation approach needed to be split into two steps to limit calculation times p

Waldeck 2+ extracted from group results


Analysis of run-of-day schedules showed that machine


Analysis of run-of-day schedules showed that machine type specifics were captured well in simulation

300

t

100%

Exemplary 24-h-schedules

No full load operation in wholesale

Take-aways

‐150

0

150

Power Outpu

t

50%

0%

‐50%

No full load operation in wholesale market, irrespective of machine type

Large amount of capacity sold to reserve market300

t

100%

‐300

Reserve Energy negative Scheduled Energy Reserve Energy PositiveReserve Capacity positive Reserve Capacity negative

Time‐100%

Increasing flexibility of machine types fosters reserve market participation

Hardly any standstill times to be able to participate in PCR market which is very

‐150

0

150

Power Output

50%

0%

‐50%

participate in PCR market, which is very lucrative in Germany

Simulated energy output schedule looks different from a traditional PSP schedule of today0

150

300

er Output

100%

50%

0%

‐300

Scheduled Energy Reserve Energy negative Reserve Energy positiveReserve Capacity positive Reserve Capacity negative

Time‐100%

schedule of today

‐300

‐150

0

1 4 7 10 13 16 19 22

Asynchronous Generator Three‐machinery set Synchronous Generator

Powe

Hours

0%

‐50%

‐100%

PT asynchron PT synchronTernary machine setTime


Asynchronous Generator Three‐machinery set Synchronous GeneratorPT asynchron PT synchronTernary machine set

new perspectives – revenue and cost optimized pumped ......future system demands require highly...

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