Archive for the ‘Renewables’ Category

Bloomberg – Project Helios

As noted on our web site, ECCO International, Inc., along with the National Bank of Greece and Guggenheim Partners, have been awarded the consultancy to provide financial and technical services to the Hellenic Republic for the project “HELIOS”.

The project “HELIOS” will develop, over the course of many years, 10,000 MW of photovoltaic (PV) energy in Greece for exports to Germany and other Northern European countries. This long-term and complex PV development has far reaching effects not only for Greece but for the entire EU.

Recently, ECCO president and CEO, Dr. Alex Papalexopoulos, Ph.D. was interviewed for a news article published by Bloomberg ( Contained in the article and the Q&A below are details related to the intricacies related to energy supply and energy markets and how the two function balancing both the financial and physical requirements.

Below are some intriguing questions and answers not fully covered in the article that are pertinent to today’s energy markets.

BLOOMBERG QUESTION: I understand why the “Virtual Transfer” or “Statistical Transfer” approach is beneficial; it avoids the troublesome issues connected with infrastructure requirements, especially in the short term, and it helps Northern EU member States reach their climate change and environmental targets. It also enables Greece to get raise revenues from the solar PV investments.

But, given that in Germany, supply issues will be crucial as you said from about 2014, is this virtual solution really helpful?

ECCO RESPONSE: The concept of the statistical transfer or “virtual sales” allows excess renewable energy (solar on our case) produced in one country to be virtually transferred to another country – in this case renewable energy statistics count towards the renewable target of the latter country. This practice is encoded in Article 6 of DIRECTIVE 2009/28/EC. So the EU directives support the Statistical Transfer. The objective is to allow member states with low or expensive renewable potential (receiving member states) to use renewable electricity produced in other countries with higher renewable potential and lower production costs (host or exporting member states) to comply with their national target.

BLOOMBERG QUESTION: In other words, are climate change goals enough to convince German rate payers to buy the power they’re not getting?

ECCO RESPONSE: This method of transfer is mainly designed to help countries which cannot meet their national target. Germany is ahead of any other EU country in meeting their national target. So Germany may not be an ideal candidate for this. However, there are countries like Italy which have said they cannot meet their national target by 2020. Such countries are ideal for such a mechanism. We are now evaluating the maximum amount of solar energy Greece can produce and consume as part of this method without creating market and system (physical) operational problems. It appears that this threshold is in the thousands of MWs. Again, this method is very appealing because it is very simple to implement.

BLOOMBERG QUESTION: As we discussed Germany will have energy supply problems as a result of the nuclear issue (The German government announced about a year ago plans to shut all of the nation’s nuclear power plants within the next 11 years, as a result of the Japanese disaster at Fukushima which caused an electoral backlash by voters opposed to reliance on nuclear energy. The plan calls for phasing out all of Germany’s 17 nuclear reactors — eight of which are offline — and drastically expanding the use of renewable resources. The decision was based on recommendations of an expert commission appointed after the Japanese disaster to study the nuclear industry that generates 23 percent of Germany’s electricity.) They have every interest to develop plans to cover the gap. For this specific goal the physical transfer of solar energy could help them.

Or, will the virtual solution just account for the first few hundreds of megawatts of the project HELIOS while the transmission infrastructure gets built/upgraded in order to accommodate a vast amount of physical sale transfers to Northern Europe?

ECCO RESPONSE: Yes, exactly. We want to deploy the statistical or virtual transfer first because it is the low hanging fruit. At the same time we’ll start implementing gradually the physical transfer option. Please note, with the existing infrastructure alone we can physically export about 1,600 MWs. (The interconnection via Italy has a Net Transfer Capability of about 500 MWs and the interconnections via the eastern and western Balkans have a Net Transfer Capability of about 1,100 MWs.)

BLOOMBERG QUESTION: The power that is virtually bought is still consumed locally in Greece, that’s correct?


BLOOMBERG QUESTION: Is this virtual/statistical approach used anywhere else in the world- or is this concept totally new, and developed by ECCO?

ECCO RESPONSE: This is a standard method applied in many countries. As I mentioned earlier is contained in Article 6 of DIRECTIVE 2009/28/EC.


New Trends in Reliability Assessment

As energy markets evolve in terms of rules, competition and diversity of supply so the framework of conducting studies for long-term reliability should also evolve.

IEEE recently hosted a two-day meeting of the Loss Of Load Expectation (LOLE) Best Practices Working Group to discuss industry trends in the study of long-term reliability. The meeting featured each reliability region in North America and provided a forum for discussing new trends in assessment practices.

Historically, long-term reliability studies have been conducted on large control area or multi-control area (regional) basis. These studies typically accounted only for supply, load growth, weather and in some cases where critical, hydro-conditions. As we enter the 21st-century, energy supply has migrated, in most regions, to a competitive marketplace.

In addition to the element of competition, the supply of energy itself is changing from fossil-fuel based to more reliance on intermittent resources as well as demand response products. As such modeling of these resources has become more complex. In addition to the changes in supply, the industry is also recognizing that increased granularity in-terms of modeling of the network is also critical.

The role of network modeling in reliability studies has become paramount. Why? Because reliability is always Job-1 and competitive markets tend to extract maximum value from existing network resources. As network resources become more constrained the study of the impact of supply on the network over the long-term becomes more critical.

This is where ECCO International comes into the picture. ECCO has long been an industry leader in the areas of energy market design and network modeling for competitive markets. Our models account for the complexities of the market while accounting for network “realities.” As such, ECCO has incorporated in its long-term market simulation software, ProMaxLT™, which is deployed for reliability studies a detailed transmission model.

ProMaxLT™ uses exactly the same transmission models as used by an ISO/RTO for clearing its nodal market to model the effect of transmission constraints on the network. ECCO proposes that this model can be used to calibrate and assess the accuracy of the zonal constraints and proxy transmission constraints being proposed for any LOLE study. ECCO has been using this formulation for nodal market simulation, price forecasting and reliability studies for over 7-years very successfully. Our unique experience as energy market designers in implementing energy markets around the world over the last 15-years has given us a competitive advantage in building a software platform that exactly mimics the Day-Ahead market clearing engines of ISOs/RTOs. This configuration is critically important for LMP market analysis and price forecasting purposes. For short-term operational studies, the full AC model is used by ProMaxLT™ with no approximations or simplifications. A power flow solution is solved for each trading interval to provide a network model to compute sensitivities of the flows on heavily loaded lines to changes in generation output for use in the LP/MIP formulation and to compute the loss sensitivity factors for use in calculating the loss component of the LMP (if the AC power flow based models are used for the market clearing).

For such nodal market simulation and price forecasting studies, ProMaxLT™ can perform a full hourly Day-Ahead MIP-based Unit Commitment using forecast load profiles, bidding profiles, renewable schedules, forecast maintenance schedules, etc. ProMaxLT™ has the capability to use forecast economic bids for energy and ancillary services, or alternatively can perform a classic LP-based economic dispatch using unit heat rates and forecast fuel prices. In both cases a full or reduced AC or DC network model can be deployed. The power flow model can be iterated with the MIP engine exactly the same way with the market clearing methodology various ISOs/RTOs deploy to clear the spot market. This approach models startup costs and inter-temporal constraints. Note that constant proxy costs can be used for all generation resources for the purposes of typical reliability studies. However, if a financial tradeoff between reliability and associated costs is to be evaluated, then a realistic representation of all costs associated with generators is required.

However the selection of MIP-based capability with explicit transmission modeling is not recommended for LOLE studies using Monte Carlo simulations. In case explicit transmission constraints are required by a region to be included in such studies, we recommend to use a full unreduced DC network model, which explicitly includes contingency constraints. A fast iterative solution between LP dispatch and DC power flow is then performed to enforce the security constraints in solution using the well known shift factors or Power Transfer Distribution Factors (PTDFs).

Energy Storage – Why is it needed?

Energy Storage – why?
California is in the process of sending “energy storage” legislation to the governor for signature. What exactly is “energy storage”, why do we need it? Discussing whether or not efficient energy storage can be legislated is a topic for another day.
Storage for the 21st Century.
ECCO International has been closely following the issues surrounding energy storage. We have led the development of inclusion of pumped storage hydro resources in ISO’s optimization algorithms. ECCO stands in the forefront of helping the energy industry utilize current and future energy storage technologies moving forward.
What is energy storage and why do we need it?
During the early days of nuclear power development there was envisioned a time when there would be many nuclear plants. Nuclear, as they had been constructed in the US, were reasonably inflexible in-terms of moderating their energy output with demand. What the industry saw then was a need to “store” energy during low usage periods when costs would be very low for use during peak usage periods when costs would be much higher. This plan would help manage the inflexibility of the nuclear “fleet. As a result pumped storage hydro facilities were constructed.
Briefly, pumped storage facilities have two reservoirs, an upper and lower. During light load periods the pumped storage facilities would “pump the water up to the upper reservoir, consuming the cheaper electricity. Then during peak conditions they would “run” the water back down into the lower reservoir when costs were high.
Now with the need to find alternative energy sources the focus is now on energy sources such as wind and solar. While these energy resources have many positive characteristics, they are subject to “natural” variations in climatic and “time-based” conditions. They are commonly called intermittent resources. For example, when the sun doesn’t shine and the wind doesn’t blow the output from these facilities is low to zero. The problem is how we manage these variations along with our need for a reliable and stable energy supply.
The current answer is that we try to manage these variations using conventional means. For example, bringing on high cost combustion turbines when there are shortfalls or committing more conventional resources, “just in case” to prevent service disruptions. Both of these options are costly to consumers and not optimal, thus the need to move toward technological development of new energy storage capabilities is crucial and imminent. The better answer is to add more storage capacity to the system to capture the excess output of intermittent resources for use when these systems are not producing at their peak capacity.
Moving forward…
ECCO International has been studying this issue and is now helping our clients consider new and innovative ways to optimize the existing storage technology along with newer or improved technologies such as compressed air and “battery” storage. Additionally, we focus on the demand side of the equation by developing and implementing optimal methodologies for incorporating Demand Response Resources into the wholesale markets in order to offer a complete and optimal solution to this problem.

Renewable “Intermittent” Sources and the Grid

We all know the wind doesn’t always blow and the sun doesn’t always shine at any given location as forecasted. Over the last year, there’s been increasing dialogue about the challenges of bringing renewable energy sources, such as solar photovoltaics (PV) and wind energy onto the utility grid.  These source of energy have variable and uncertain “intermittent” characteristics and that creates problem for ensuring the grid is stable and reliable. A new generation of tools like ramp forecasting tools and short-term event predictor would permit operators to anticipate major events in California is in the forefront of advancing these long-term goals, which includes bringing 20 percent renewable energy sources onto the California utility grid by 2010 and 33 percent by 2020. Add to the complexity that 80 percent of the area’s renewable energy resources are in the southern half of California. There is no doubt these goals are important and highly desired over the next few years.

To achieve that 33 percent goal, the California ISO’s preliminary studies have revealed that California will need more than 800 miles of new 500-kV transmission capacity, “planned, approved, sited and constructed by 2020.”

ECCO International is working on market integration issues with clients in various regional markets. Some of these challenges are cropping up with the newly proposed ancillary services and products being designed for scheduling purposes. Another important part of this challenge is to examine the economics of a variety of potentially competing technologies including demand response, transmission, flexible generation, and improved operational practices. 

There’s no shortage of challenges ahead in terms of integrating these sources into the grid, especially when the sources of renewable energy reach more than 20 percent of the overall energy mix of the grid.  For starters, there are no utility scale storage systems (batteries) to store electricity when the production of energy exceeds the demand. Cal ISO does have project plans for 200 MW of storage capacity will be operational in its footprint by 2012, with as much as 1,000 MW by 2020.  There are also important policy questions that figure into the longer-term renewable energy trend to bring these sources onto the grid.  Often, the question comes down to two key issues: reliability and cost. What cost and what level of reliability are California residents, commercial and industry energy consumers ready and willing to participate? What are the market incentives that need to be in place to make the changes happen?

Let’s also not forget that some renewable energy sources also have some inherent operating characteristics unique to them, which can adversely impact the overall reliability of the utility grid. What happens, for example, when the wind forces are less than originally forecasted for the day or there are more clouds in the sky, thus impacting the overall generation of solar power? How does that impact the market participants and stakeholders?  We are only at the beginning of this shift to renewable energy sources. But in order to achieve these ambitious objectives, there has to be alignment of policies and regulations with all market participants, including business and consumers.