the optimal path for greater use of renewable …...energy sources. this means that only 11 gw of...

CONTENTS

WHITE PAPER ON POWER SYSTEM OPTIMISATION

I. Market background . . . . . . . . . . 2

II. Determining the optimal path for Taiwan . . . . . . . . . . . . . . 4

III. The modelling results . . . . . . . . 5

IV. Recommendations and benefits . . . . . . . . . . . . . . . . . . . 9

V. Conclusion . . . . . . . . . . . . . . . . 11

White paper on power system optimisation | The optimal path for greater use of renewable energy in Taiwan | 2019

The optimal path for greater use of renewable energy in Taiwan

The global energy market landscape is in transition, largely due to the rapidly decreasing cost of renewables. Major players are moving towards more flexible and sustainable energy systems with a rapidly increasing share of renewable energy, declining inflexible baseload generation and a wider application of flexible power generation and energy storage technologies.

In Taiwan the government’s planned power generation mix for 2025 is 20% renewables, 30% coal and 50% natural gas, with all existing nuclear reactors retired before the end of 2025 as part of the island’s “nuclear free homeland” vision. The target is to install 27 GW of renewables, including 20 GW of solar PV and 6.7 GW of wind power by 2025.

In this study we used PLEXOS® energy simulation software to model the optimal investment path for meeting Taiwan’s goal of 20% renewable energy by 2025 while ensuring efficiency, reliability and a reduction in costs. The modelling demonstrates that Taiwan can cost-effectively increase the amount of renewables in the system well beyond 20%. Flexibility in the form of gas-powered engine power plants – which can be ramped up and down quickly to cope with fluctuating demand – is needed to cope with the intermittency of renewables. We will also show why investing in traditional thermal baseload today will restrict the country’s alternatives in the future, whereas a flexible system will keep the option open to achieve a high renewable power system in the future even faster.

LEARN MORE:https://www.wartsila.com/ energy


I. Market background

The Taiwanese Ministry of Economic Affairs (MOEA) and the integrated utility Taiwan Power Company (TPC) have planned new installations of coal and combined cycle gas turbines (CCGT) from 2018 to 2025. They will retire all nuclear and oil steam power plants by 2025.

NuclearOil

LNGCoalGenerator type

Note: The TPC thermal & nuclear units’ retirement and new installation plan between 2018 to 2025 are based onMOEA’s report “Review of the energy policy assessment in response to the referendum” on March 4, 2019.

NPP1#1 (636)

NPP1#2 (636)

NPP2 #1(985)

Datan CC #7-GT stop (600)

Datan CC#8 (1000)

Datan CC#7 (600)

Datan CC#7 (1000)

Datan CC#9 (1000)

Tongxiao CC#5 (386)

Tongxiao New CC#2 (893)



Tongxiao CC#4 (386)

Dalin#5 (500)

Dalin New#1 (800)

Dalin New#2 (800)

Linkou New#3 (800)

NPP2#2 (985)

Xinda#2 (500)

Xinda New CC#1 (1000)

Xinda New CC#2 (1000)

Xinda#3 (550)

Xinda#1 (500)

NPP3#1 (951)

NPP3#2 (951)

Xiehe#2 (500)

Xiehe#1 (500)

Xiehe#4 (500)

Xiehe#3 (500)

Taichung GT#2 (70)

Taichung GT#3 (70)

Taichung GT #1(70)

Taichung GT #4(70)

Taichung CC#1 (1000)

Taichung CC#2 (1000)

Xiehe New CC#1 (1000)

New Northern CC(500)

2018 2019 2020 2021 2022 2023 2024 2025

Retirement

Year

New installation

Power demand in Taiwan is expected to grow slowly at around 1-2% per year. The market is in the process of being liberalised to effectively end a 70–year monopoly on the sale of electricity and also to encourage green energy production. TPC will be restructured into two separate operations: one for power generation and the second for electricity transmission, distribution and sale. This means that other power suppliers will be able to sell electricity produced by renewable energy sources directly to consumers, in a change from the previous system in which private companies sold energy to TPC, which charged a transmission handling fee and then distributed it at the price it had set.

As part of the plan to reach 20% renewable energy sources by 2025, a total of 5.5 GW of offshore wind power has been auctioned. There is also a plan to add 1 GW per year of new offshore wind capacity from 2026 to 2030.

The above table was published on the TPC website (as on March 4, 2019)

White paper on power system optimisation | The optimal path for greater use of renewable energy in Taiwan | 2019 3

INSTALLED CAPACITY

Generation mix 2018, TWh

The current installed capacity of TPC, IPPs and renewables under feed-in tariffs is about 45 GW, with coal and gas accounting for the majority of the installed base, and renewables accounting for about 17% of installed capacity and 6% in the generation mix.

Installed capacity in the system, 2018

Source: TPC

Source: TPC

5.3%

10.1% 22.5%

10.4%

25.5%

7.0%

5.8%

4.7%

4.5%1.6%

1.4% 1.3%

Solar

Wind

Hydro

38.7%

38.6%

11.4%

4.9%

2.8%

2.0%1.5%

Co-gen

Oil

Gas

Nuclear

Pumped hydro

Coal

Co-gen

Oil

Gas

IPP-gas

Nuclear

Diesel (islands)

Pumped hydro

Coal

IPP-coal

Installed capacity 2018 in the system

Generation mix 2018

Total233.3

TWh

Total45.0

GW

Renewables

5.3%

10.1% 22.5%

10.4%

25.5%

7.0%

5.8%

4.7%

4.5%1.6%

1.4% 1.3%

Solar

Wind

Hydro

38.7%

38.6%

11.4%

4.9%

2.8%

2.0%1.5%

Co-gen

Oil

Gas

Nuclear

Pumped hydro

Coal

Co-gen

Oil

Gas

IPP-gas

Nuclear

Diesel (islands)

Pumped hydro

Coal

IPP-coal

Installed capacity 2018 in the system

Generation mix 2018

Total233.3

TWh

Total45.0

GW

Renewables


Scenario 1 (base case) – without flexible generationNew coal plants, CCGTs and renewable energy capacity are added to achieve the target of 20% renewable energy sources, 30% coal and 50% gas.

Scenario 2 – with flexible generationNew coal plants, CCGTs, renewable energy and flexible generation in the form of gas-powered engine power plants and battery storage are added to achieve the target of 20% renewable energy sources, 30% coal and 50% gas.

Scenario 3 – high renewableMOEA target constraints are removed and PLEXOS optimises the generation mix based on the best available choices and outcomes.

The sources for this study are TPC’s 2017 long-term expansion plan, TPC’s 2016 power generation data and the MOEA power generation mix target.

This study was made as a long-term generation expansion model in PLEXOS. The planning horizon is 2020-2030 and the resolution time of the model is two hours.

Wärtsilä's analysis, carried out using PLEXOS, focused on the importance of flexible power generation to complement renewables, as the total amount of renewables may be curtailed by inflexible capacity. The goal was also to see if total operational costs and emissions can be reduced while still ensuring high reliability. The PLEXOS modelling is based on the operational cost and capital expenditure of different technologies. Renewable feed-in tariffs and market prices are not considered in this exercise. The system load profile in 2025 was projected based on the actual load profile of 2016.

II. Determining the optimal path for Taiwan

ABOUT PLEXOS® ENERGY SIMULATION SOFTWARE PLEXOS by Energy Exemplar is a proven energy simulation software used by the world’s leading system operators, regulators and planners as well as utilities, traders, consultants and manufacturers. Wärtsilä uses PLEXOS globally for power system modelling, both in long-term capacity development optimisation and short-term dispatch optimisation. PLEXOS is built to find the most cost-optimal solution for each scenario based on the applied constraints.

SCENARIOS CONSIDERED


III. The modelling results

In scenario 1, when the system has a large share of conventional thermal baseload, it is not able to adjust to the fluctuating generation of the renewable energy sources, thereby inhibiting the adoption of renewable energy sources. This means that only 11 GW of new solar power can be added to the system by 2025. The modelling results are as follows:

— Coal plants are added until 2022, with only gas plants added thereafter* — No new solar power plants are added from 2025-2030 because of a lack of flexible power generation — A minimum reserve margin capacity of 15% is needed, including 30% solar and 20% wind as firm

capacity

* The base case scenario is based on the 2017 plan published on the TPC website

SCENARIO 1 (BASE CASE) – WITHOUT FLEXIBLE GENERATION

System without flexible generation

0

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Scenario 1 (base case) – without flexible generation

Scenario 2 – with flexible generation

Scenario 3 – High renewables

Solar Wind BiomassROR hydro Pumped storage

Oil Open cycle gas turbineOpen cycle gas turbine new buildCombined cycle gas turbine Combined cycle gas turbine new build

NuclearFlexibility (ICE)

ST Coal ST Coal new build Energy batteryPower battery Peak load

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* Internal combustion engine

*


In scenario 2, the target of 20 GW solar can be achieved by adding flexible generation in the form of gas-powered engine power plants and battery energy storage to the grid. The modelling results are as follows:

— No new coal plants are added — 1.5 GW CCGT and 7.5 GW internal combustion engine (ICE) power plants are added by 2025,

increasing to 5.1 GW CCGT and 8.3 GW ICE power plants by 2030 — 4.3 GW wind is added by 2025, with more wind installations from 2026 to 2030

SCENARIO 2 – WITH FLEXIBLE GENERATION

System with flexible generation

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In scenario 3, the optimal mix is not constrained by the target of 20% renewable energy, 30% coal and 50% gas. There are no constraints such as installation space or grid connections in the model. The modelling results are as follows:

— No new coal plants or CCGTs are built – only new ICE power plants, battery storage and renewable energy are added

— 24 GW of solar energy is added by 2025, rising to a total of 30 GW by 2030, while 22.3 GW of wind power is also added by 2030

• Batteries are economical after 2027, with 2.1 GW of batteries added between 2027 and 2030

SCENARIO 3 – THE HIGH RENEWABLE OPTION

System with high renewables

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DISPATCH GRAPHS FOR 2025

Dispatch - 13_base_Gas50%RE20% - year 2030

Dispatch - 20_base_Gas50%RE20%_ICE+Batt in - year 2030

Solar Wind BiomassROR hydro Pumped storageOil Open cycle gas turbine

Open cycle gas turbine NBCombined cycle gas turbineCombined cycle gas turbine new buildFlexibility (ICE)

ST Coal ST Coal NB Demand

0

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Scenario 3 – the high renewable option


IV. Recommendations and benefits

In order to meet the government’s target of 20 GW of solar energy production, flexible capacity in the form of gas-powered engine power plants is needed. However, the 20 GW target for solar energy production is not the most cost-optimal way forward. The share of renewable energy generation can increase from 23% to 36% by 2025, and 48% by 2030, in the high renewable scenario. In this scenario, PLEXOS proposes to only build renewables and flexible ICE power plants, rather than relying on new coal plants and CCGTs.

Recommended generation mix by 2025 and 2030

System level costs

RE targets 2025 2030

Battery Solar BiomassWindGasHydro Coal

0

250000

200000

150000

100000

50000

300000

Scenario 1:Without flexible

generation

Scenario 2:With flexiblegeneration

Scenario 3:High

renewables


generation


Scenario 3:High

renewables

GW

h

2025 generation

20%

20% 23

%

30%

48%

36%

2030 generation

The benefits of adding flexible capacity while keeping the 20/30/50 target are cumulative savings of 6.5 billion USD in total system cost* from 2020-2030. If the fixed targets for generation are removed, cumulative savings from 2020-2030 are 12.5 billion USD in total system costs. This corresponds to a 12% system level saving.

*Total system cost = operational expenditures (OPEX) + fixed operation & maintenance (FOM) + capital expenditures (CAPEX)

System level costs

10000

12000

14000

16000

18000

2020 20222021 2023 2025 2027 20292024 2026 2028 2030

Scenario 1: Without flexible generation

Scenario 2: With flexible generation

Scenario 3: High renewables

Milli

on U

SD

System level costs

10000

12000

14000

16000

18000

2020 20222021 2023 2025 2027 20292024 2026 2028 2030

Scenario 1: Without flexible generation

Scenario 2: With flexible generation

Scenario 3: High renewables

Milli

on U

SD


In addition to the cost savings, there will be a reduction in fuel consumption and CO2 emissions by 2030. In the high renewable scenario, this amounts to a 33% fuel import savings and a CO2 emission reduction of 17%.

Fuel (coal & LNG) import cost and CO2 emission intensity in 2030

THE BENEFITS

17% REDUCTION IN CO2 INTENSITY

USD 12.5 BILLION SAVINGS IN TOTAL

SYSTEM COST

FUEL IMPORT SAVINGS OF 33%

0

500

400

300

200

100

g/KWh

Fuel (Coal & LNG) Import cost in 2030


generation

2017 Scenario 2:With flexiblegeneration

Scenario 3:High

renewables

0

15000

12000

9000

6000

3000

Milli

on U

SD

13151

10735 10231

7194

Fuel (Coal & LNG) Import cost in 2030 + CO2


generation

2017 Scenario 2:With flexiblegeneration

Scenario 3:High

renewables

0

15000

12000

9000

6000

3000

Milli

on U

SD

13151

10735

474.2

10231

412.8

7194

391.9

Fuel import cost CO2 emission intensity


V. Conclusion

This study explored alternatives to Taiwan’s 2017 power system expansion plans. Using rigorous analysis and complex system modelling software, this paper reveals how Taiwan can plan the most flexible, economical and environmentally friendly power system possible.

If there is no flexible power generation added to the grid (the base case), baseload capacity will hinder renewables deployment as the total amount of solar energy that can be added to the grid is limited to 15 GW.

If flexible power generation in the form of gas-powered engine power plants and battery storage is added, the target of 20 GW of solar power can be achieved. This approach also reduces thermal power operational costs when compared to using CCGTs, and no new coal plants are needed.

In the high renewable scenario, Taiwan can further improve its renewable energy generation from 20% to 36% by 2025 and 48% by 2030, with wind and solar power becoming a primary source of electricity.

Installed capacity 2025

Scenario 1 – without flexible generation (MW)

Scenario 2 – with flexible generation (MW)

Scenario 3 – the high renewable option (MW)

Solar 14920 18501 23755

Wind 7197 4374 12262

Combined cycle gas turbine 20334 16961 15500

Open cycle gas turbine 1220 550 550

Flexibility (ICE) 0 7558 7158

Pumped Storage 2602 2602 2602

ROR Hydro 2089 2089 2089

Biomass 83 83 83

ST Coal 17068 12852 12852

Nuclear 0 0 0

ST Oil 0 0 0

Installed capacity 2025

Open cycle gas turbine

Solar

ROR hydro

Wind Combined cycle gas turbine

Flexibility (ICE) Pumped storage

Biomass ST coal

0

70000

60000

50000

40000

30000

20000

10000

80000


generation


Scenario 3:High

renewables

MW

10.2

019

/ Te

nfou

r

wartsila.com/energy

© 2019 Wärtsilä Corporation – All rights reserved.

No part of this publication may be reproduced or copied in any form or by any means (electronic, mechanical, graphic, photocopying, recording, taping or other information retrieval systems) without the prior written permission of the copyright holder. Neither Wärtsilä Finland Oy, nor any other Wärtsilä Group Company, makes any representation or warranty (express or implied) in this publication and neither Wärtsilä Finland Oy, nor any other Wärtsilä Group Company, assumes any responsibility for the correctness, errors or omissions of information contained herein. Information in this publication is subject to change without notice.

No liability, whether direct, indirect, special, incidental or consequential, is assumed with respect to the information contained herein. This publication is intended for information purposes only.

About Wärtsilä Energy BusinessWärtsilä Energy Business is leading the transition towards a 100% renewable energy future. As an energy system integrator, we understand, design, build and serve optimal power systems for future generations. Wärtsilä’s solutions provide the needed flexibility to integrate renewables and secure power system reliability. Our offering comprises engine-based flexible power plants – including liquid gas systems – hybrid solar power plants, energy management systems and storage and integration solutions. We support our customers over the lifecycle of their installations with services that enable increased efficiency and guaranteed performance. Wärtsilä has 70 GW of installed power plant capacity in 177 countries around the world.

the optimal path for greater use of renewable …...energy sources. this means that only 11 gw of...

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