European Wind energy association: analysis, issues and recommendations

EWEA full report:
http://www.europa.eu.int/comm/energy/res/sectors/doc/wind_energy/ewea_051215_grid_report.pdf

MAIN CONCLUSIONS
1. System operation: power and energy balancing
- A large geographical spread of wind power will reduce variability, increase predictability and decrease the occurrences of near zero or peak output. Power systems have .exible mechanisms to follow the varying load and plant outages that cannot always be accurately predicted.
- Accurate methods for short-term forecasting of wind power are widely available as there is a whole range of commercial tools and services in this area. On an annual basis, reducing the forecast horizon from day-ahead to a few hours ahead reduces the required balancing energy due to prediction errors by 50%.
2. Grid connection: grid codes and excessive technical requirements
- Grid codes often contain very costly, challenging and continuously changing requirements and are developed in a highly non-transparent manner by vertically-integrated power companies, who are in direct competition with wind farm operators.
- Costly technical requirements should only be applied if there is a true technical rationale for them and if their introduction is required for reliable and stable power system operation. These are not needed at low wind power penetration levels.
- Power systems dynamics are not a principal obstacle to increasing the penetration of wind power.
- R&D should continue to further improve the knowledge on dynamic interaction of system and wind power plants.
3. Grid upgrades and costs are not an isolated wind power issue
- Grid extensions and reinforcements will bene.t the whole power system and are a precondition for creating real competition in the emerging EU internal electricity market. Grids are natural monopolies and should be regulated as such.
- In the longer term, a European Super Grid is proposed to accommodate large amounts of offshore wind power and to utilize continental-wide smoothing effects of wind power to a maximal extent, as well as to improve the functioning of the emerging internal electricity market.
- Cross-border transmission of wind power is not a technical issue but a trade and market issue. Making slots available for renewable electricity would enable cross-border trade in wind power according to internal electricity market principles.
4. Fuel replacement and capacity credit of wind power bene.t security of supply
- Wind energy will replace energy produced by other power plants, which improves the energy adequacy of the power system.
- Wind power replaces conventional generating capacity. The capacity credit of onshore wind power throughout Europe varies between 20% and 35% of the installed wind power capacity. High wind power load factors in peak demand season and good wind power exchange through interconnection have a positive effect on the capacity credit.
- Adding wind power to the existing system is contributing favourably to the security of supply by virtue of technology diversi.cation and indigenous production.
5. The economic impacts of wind power integration are beneficial
- Additional balancing is very low and estimated at €1–3/MWh (of wind) for a wind power penetration of 10% of gross consumption and €2-4/MWh for higher penetration levels.
- The grid extension/reinforcement costs caused by additional wind generation are in the range of €0.1 to €4.7/MWh wind, the higher value corresponding to a wind penetration of 30% in the system (UK). When properly socialised in an unbundled market, these cost levels, as re.ected in the end user price are low – even up to high wind penetrations.
- System integration costs, under the most conservative assumptions, are only a fraction of the actual consumer price of electricity and are in the order of magnitude of €0 to €4/MWh (consumer level).
- These additional costs of more wind power would be outweighed by the bene.ts from the expected continuing decrease of wind power generation costs - a reduction of 20% for onshore and 40% offshore by 2020 as compared to 2003 levels.
- The economic bene.t of wind becomes even larger when the bene.ts of CO2 emissions reduction and other environmental bene.ts are taken into account.
- Wind power reduces portfolio generation costs. When added to a risky, fossil-dominated generating portfolio, wind as a .xed cost zero fuel technology reduces overall generating cost and risk.
- Balancing costs, grid extensions and reinforcements come with all electricity generating technologies, not only with wind power. It is impossible to .nd any study on these system costs of other technologies than wind power, hence proper cost comparisons are not possible. Other parties should study and publish the additional system costs for all other technologies than wind power.
- Most countries and institutions continue to ignore the risk element of volatile fuel prices when making cost comparisons between different electricity generating technologies. Rather than using the commonly applied levelised cost approaches, it is recommended to adopt cost calculating methods allowing a proper economic interpretation of (easily quanti.able) cost and risk of volatile oil, gas and coal prices.

RECOMMENDATIONS
1. Improved system operation
- Imbalance payments and settlement on individual turbine level should always be avoided. It is the overall variability of output from all wind farms that is relevant to system operation.
- Long gate-closure times should be reduced for variable output technologies. There is no technical justi.cation for having wind power predict future production 48 hours in advance as demanded by some grid operators. The shorter the gate-closure time for wind power is, the lower the overall cost to consumers.
- More effective balancing and settlement procedures that do not discriminate against variable output technologies must be introduced.
- Distribution grids must be more actively managed.
- Curtailment of electricity production should be managed according to least-cost principles from a complete-system point of view. As wind power is free, constraining of wind power should be the last solution and restricted to a minimum.
- The balance market rules must be adjusted to improve accuracy of forecasts and enable temporal and spatial aggregation of wind power output forecasts.
- Imbalances payments should be settled according to monthly net imbalances as established in e.g. California and Spain.
2. Fair and adequate grid connection requirements
- Grid codes and other technical requirements should re.ect the true technical needs and be developed in cooperation between independent and unbiased TSOs, the wind energy sector and independent regulators.
- A European-wide grid code for wind power is not required.
3. Grid infrastructure investments
- A large geographical spread of wind power on a system should be encouraged through planning and payment mechanisms and the establishment of adequate interconnection. From a system and cost point of view, that will reduce variability, increase predictability and decrease or remove situations of near zero or peak output.
- The cost of grid extension should be socialised, as it is the case for all other electricity technologies. One reason to do it is that grids are natural monopolies.
- Grid connection charges should be fair and transparent and competition should be encouraged.
- In future developments of the European power systems, increased .exibility should be encouraged as a major design principle. Public private partnership and use of structural funds should play an important part.
- The benefits of distributed generation, e.g. reduced network losses and reduced need for grid reinforcements, must be recognised.
4. Proper credit to wind's contribution to system adequacy
- Proper, uniform standards for the determination of wind power's capacity credit must be developed. For small penetrations of wind power the capacity credit will be equal to the load factor in times of peak demand. For very high penetration levels, the capacity credit is reduced but never anywhere close to zero.
- European transmission system operators associations should – instead of referring to wind power as "non-usable power" recognise wind power's proper capacity credit.
5. Solving institutional inef.ciencies and improve power market competition
Solutions include:
1. Reduction of market dominance and abuse of dominant positions
2. Effective competition policies and authorities in the power sector
3. Full legal and ownership unbundling between transmission/distribution, production and trading activities
4. Improvement and expansion of cross-border interconnections between Member States
5. Establishment of undistorted third party access to the grids at fair tariffs and removal of discriminatory practices
6. Adequate grid codes that re.ect the nature of the technologies, developed in cooperation with the wind energy sector and regulators
- Electricity grids are natural monopolies and, hence, transmission and distribution must be effectively, i.e. legally and ownership-wise, separated from electricity production and electricity trading.
- The existing guidelines for trans-European energy networks (TEN-E Guidelines) can provide a good framework for upgrading the European grid infrastructure which has been characterised by underinvestment during the 1980s and 1990s.
- The nascent trans-national grids must be prepared to absorb offshore wind power, and the TEN-E can provide a vehicle to focus on this area.
- A European policy for offshore wind energy is needed. An Action Plan for offshore wind power that addresses offshore infrastructure would be an important step.
- A European super-grid should be developed to bring large amounts of offshore wind power to European consumers, similar to the way European gas pipelines have been constructed.
6. New and continued research and development efforts
Under the 7th EU Framework Programme for Research, more research is needed in the following areas:
1. Improved forecast methods
2. Methods for investigating dynamic interaction wind farms and power system
3. Transmission network studies on transnational level
4. Uniform methods for national system studies for balancing (reserve capacities and balancing costs)
5. Investigation of solutions to increase power system .exibility
6. Systematic output monitoring to validate theories on capacity credit