Wind Across Markets and Routes-to-MarketNoel Cunniffe, Head of Policy

02 October 2019CIGRE Training Day on Electricity Markets

IWEA represents 90% of Wind in Ireland

• Members across existing assets, development & supply chain for onshore & offshore:

• Wind farm developers

• Asset owners

• Supply Chain:

• Turbine manufacturers

• Construction companies

• Supply companies

• Accountants

• Insurance

• Consultancy

• Legal firms

• Banks

State-of-Play and Cost of Wind?

• Wind provides 29% of Irish electricity (2018) and expected to be 35% by 2020

• But how much did all of this cost?

• Everyone can see the costs of wind on their bill – PSO Levy

• But what about the benefits?

• How much did this actually cost?

• First ever ‘back-cast/historical’ CBA and results are better than expected

• Wind energy in Ireland cost the consumer:

• <€1/person/year (66 cent) between 2000-2020 or

• A total of €63 million (assuming Ireland hits its 2020 renewable electricity target)

Savings Total - €3.2bn• €2.3bn wholesale energy cost savings

• €0.2bn CRM savings

• €0.7bn avoided EU non-compliance with 2020 target savings

Costs Total - €3.3bn• €1.9bn renewable support costs

(IE one of lowest PSOs in EU)

• €0.4bn DS3 costs

• €0.5bn network upgrade costs

• €0.5bn constraint costs

Wind for a Euro

Savings Total - €3.2bn• €2.3bn wholesale energy cost savings

• €0.2bn CRM savings

• €0.7bn avoided EU non-compliance with 2020 target savings

Costs Total - €3.3bn• €1.9bn renewable support costs

(IE one of lowest PSOs in EU)

• €0.4bn DS3 costs

• €0.5bn network upgrade costs

• €0.5bn constraint costs

Wind for a Euro

• Wind energy reduces the price on the electricity market

• By 5-20% depending on the specific year

• More wind typically means more savings, so the biggest savings are occurring now i.e. as wind is growing each year

Impact of wind on wholesale prices

Other cumulative benefits of Wind

33 million tonnes of CO2 saved

(equivalent to 3 years of CO2 from electricity)

€2.7 billion of fossil fuels avoided

(137 TWh = 3 years of fossil fuel from electricity)

Mainly Gas (€2.5bn) but also Coal (€0.2bn)

• 39 wind units contracted for DS3 System Services in 2018

• Advances in technology lead to FFR being provided through Emulated Inertia

• Wind can also provide Negative Reserve to protect the system against interconnector export trips or the loss of large energy users

• System Services revenue is a small portion of wind revenue but seen as a potential growth area

• DS3 has helped get more renewables on the grid – what I-SEM improvements could do the same?

Wind entering the world of DS3 System Services

FFR POR SOR TOR1 SSRP

39 MW 51 MW 43MW 33MW 1,024 MVar

• Review of interconnector activity during curtailment events indicates that generally exports increased over 5-year period

• Noted that SO countertrading had ceased at the start of I-SEM but increased recently

• Still potential for greater exporting on existing interconnectors during curtailment events

• Uncertainty on future export capacity of Moyle interconnector

RES Curtailment Events & Interconnector Operation

2014 2015 2016 2017 2018 Q1 2019 Q2 2019 2014 to Q2 2019

Curtailment Events(nr.) 137 119 87 103 112 48 19 625

EWIC Avg Net (MW) 190 -1 -64 -271 -191 -357 -202 -87

EWIC Avg Net (%) 36% 0% -12% -51% -36% -67% -38% -16%

Moyle Avg Net (MW) 99 -46 -127 -186 -50 -71 -107 -65

Moyle Avg Net (%) 40% -18% -42% -62% -17% -24% -21% -23%

EWIC Absolute Avg (Day) (MW) 376 213 14 -18 30 -41 7 110

EWIC Absolute Avg (Night) (MW) 78 -24 -15 -171 -146 -52 -125 -59

Moyle Absolute Avg (Day) (MW) 154 61 -11 41 138 122 88 79

Moyle Absolute Avg (Night) (MW) 50 -92 -59 -76 23 107 10 -23

Notes:

Positive figures represents imports, negative figures represent exports

EWIC Out of Service: 2014 = 43 days, 2015 = 14 days, 2016 = 109 days, 2017 = 53 days, 2018 = 49 days, 2019 = 12 days

Moyle Out of Service: 2014 = 65 days, 2015 = 2 days, 2016 = 46 days, 2019 = 9 days

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Source: MullanGrid analysis for IWEA Dispatch Down Working Group

Interconnector Operation in I-SEM

• Assessing 1st – 30th August shows interconnector scheduled to flow in the opposite direction to price signal 45% of the time

Interconnector Operation in I-SEM – How to improve?

• There are a number of potential policy fixes to improve this alignment and reduce curtailment

1. EirGrid carries out increased SO to SO trades to minimise renewable curtailment

2. Integrate SEM closer with the GB market – 3 possible methods:

a. Move IDA2 market closer to real-time – allows use of more accurate weather forecasts and result in a more efficient market schedule

b. Couple IDA3 with GB using the Euphemia algorithm – IDA3 currently not coupled with GB meaning that the periods of the trading day from 5pm to 10:55pm are last coupled at 8am, 9-14 hours beforehand - coupling allows for improved forecasting and more efficient market operation

c. Introduce XBID as soon as possible – XBID is the European Commission’s target model for facilitating cross border trading in the intra-day markets - it will help renewable penetration as it facilitates the movement of the interconnectors scheduled flow up to 1 hour before real-time

• Removing barriers to renewables across all sectors will reduce future consumer costs to 2030

Future Routes-to-Market for Renewables

RESS Auction

Corporate PPA

Merchant

2020 – 2030 Routes to Market

Previously on RESS…

• The new RESS will help deliver Ireland’s contribution to the EU-wide binding renewable energy target of 32% RES out to 2030

• Seeks to deliver:

• Ireland’s renewable electricity ambitions out to 2030

• Increased community ownership and partnership

• Increased renewable technology diversity

• All within a cost competitive framework

• The RESS High Level Design paper was published in June 2018

• Set out for RESS to achieve 55% RES-E by 2030 & first auction in 2019

RESS interactions with I-SEM

• Auction design is a 2-way Contract for Difference

• Recently announced RESS 1 will bePay-as-Bid

• Reference price likely to be Day-Ahead market price

• Upcoming IWEA publication with Pöyry demonstrating large net-saving to electricity consumer of moving to 70% RES-E through RESS due to wholesale price reductions

0

5

10

15

20

25

30

35

40

45

50

2020 Target - 40% RES-E 55% RES-E 2030 Target - 70% RES-E

TW

h

Existing Renewables (REFIT) New Renewables (RESS HLD) RESS Gap Non-RES

70% RES-E - Increased RESS Volumes or Corporate PPAs?

15% RES-E Gap

Increased RESS

Or

Corporate PPAs?

Approximately

equivalent to

2.5 GW of wind

generation

What about Corporate PPAs?

Climate Action Plan 2019 target of 15% CPPAsLarge increase in Global CPPA Volumes

Watch this space!

• Varied Working Groups:

• B4.66 - Implications for Harmonics and Filtering of the Installation and Filtering of the Installation of HVDC Converter Stations in Close Proximity

• C1.39 – Optimal power system Planning under growing uncertainty

• Authored papers for CIGRE Sessions in 2016 and 2018

CIGRE is a great place to learn more about all of these topics!

Everything Markets –join it!

Special Reporter for C2 - System Operation & Control during Paris 2018 Session