Energy Transition and need for flexibility.

There is no denying the fact that electricity is crucial for the world economy to thrive in this and the coming centuries. The demand for electricity increases not only because the human population increases, but also because the social-economic activities of humans are rapidly shifting from manual processes to automated processes, which are essentially driven by electricity. Therefore, electricity becomes inevitable for the sustainability of modern civilization because it has found its way to the root of many human establishments.

Power systems networks are traditionally structured and engineered to effectively accommodate the effects of uncertainty and variability of energy demand and availability of resources. 

To transform the present carbon-intensive electricity generation system to one driven largely by clean energy sources, the inclusion of variable renewable energy sources (vRES) is becoming predominant. However, the inclusion of large vRES in the power plant mix increases the uncertainty, variability and consequently flexibility requirements on the power system network. The inclusion of cost effective and environment friendly flexible generators that can cancel the effects of uncertainty and variability is essential on power system networks with high levels of vRES. 

The rapid inclusion of a large share of renewable energy into the grid is a major factor known to drive investigation into power system flexibility. vRES for electricity generation are cost effective and cheaper to acquire because of government subsidies and the absence of fuel costs. For these reasons and many more, inefficient thermal power plants that cannot compete with the vRES are being replaced by them. However, the outputs of vRES are not constant and therefore cause uncertainty. The fluctuation affects the power plant mix, power plant dispatch sequence as well as the frequency. As such, power system flexibility is inevitable. Fuel insecurity (Uncertainty of availability and fluctuation in the price) can also modify the generation mix. Other factors that drive research into flexibility of power systems include consumers’ attitude to the use of new technologies, and changes in both international and local policies and regulations as regards to conservation of the environment.

To sustain modern civilization, adequate access to reliable electricity is very important. This is because electricity has its roots established in almost every human sector. It is therefore a burden on utility companies worldwide to make sure that electricity demand is always met. This is because every mismatch between the demand and supply of electricity can jeopardize the operational reliability of the power system network. An unreliable supply of electricity has a ripple effect on the socio-economic activities of any society. Although reliable access to adequate electricity can have a positive effect on society, the method of generation is also very important. 

Drivers of power system flexibility

Flexibility describes the degree to which a power system can adjust the electricity demand or generation in reaction to both anticipated and unanticipated variability. Flexibility indicates the capacity of a power system network to reliably sustain supply during transient and large imbalances. 

The International Energy Association states that, “Power system flexibility is the ability of a power system to reliably and cost-effectively manage the variability and uncertainty of demand and supply across all relevant timescales”.

Sources of Flexibility

Conventionally, the issue of flexibility is not a major problem because vRES are very limited on the grid. As such, in the past, power system networks achieved flexibility using dispatchable power plants (e.g. gas turbines) which can be rapidly brought on and offline. In the wake of high penetration of vRES, flexibility is also attained through other means. Some of the other techniques of ensuring power system flexibilities include flexible demand (demand side management and demand response), reinforcement of distribution and transmission facilities, energy storage systems, electric vehicles, unit commitment, and generator output curtailment.

  • Demand side management and demand response

In demand side management (DSM) and demand response (DR) practices, consumer loads are strategically controlled (technically or through incentives) by utilities to respond to imbalances in power level on the grid. Connected loads can either be switched off, or its time of use shifted to off-peak periods when energy prices are lower. DR and DSM delay the addition of new facilities to avoid the need for the modification of generation levels. Implementation of DSM and DR practices will encourage and ensure that consumers take part in load control schemes which are based on price signals. DSM and DR are usually moderately inexpensive to achieve but entails following a set of strict rules and guidelines with respect to valid demand-side resources, response time, reliability and minimum magnitude. Some demand response activities include smart greed, time-of-use tariffs, direct load control by utility, interrupted load control, curtailed load, critical peak pricing, demand bidding, real time pricing, smart metering, etc.

  • Energy Storage

Energy storage technologies are used in storing energy generated during the periods of surplus and cheap electricity from vRES and then used when the need arises. Storage devices are usually used as peaking sources.When compared to demand response, demand side management and other sources of flexibility, the investment cost spent on deploying energy storage technologies is higher

  • Flexible Generation

Flexible generation is usually provided by power plants that can quickly be brought online when a power imbalance arises. One of the main features of these types of flexible source is quick ramp up and ramp down, fast start up and shut down and efficient operation at a lower minimum level throughout periods of high vRES output. It is essential that these power plants have minimal marginal cost for them to effectively compete as a source of flexibility.

Denmark and Ireland, for example, are front runners in wind energy integration, with wind power shares of 44 % (RTE, 2018) and 27 %, respectively, and maximum instantaneous penetration beyond150 % and 60 % of demand, respectively.

This did not happen overnight. The power systems of both countries have been going through a transformation process from which we can extract valuable lessons:

  1. It makes much more economic sense to plan for flexibility rather than exploring suboptimal investments after flexibility issues arise in a power system.

  2. Substantial amounts of VRE can be integrated by unlocking existing flexibility rather than investing in new costly assets.

  3. Project development time, in particular permitting and construction times, must be accounted for in the selection of solutions.

  4. Planning for flexibility is based on sophisticated tools and methods that evolve over time to account for developments in the areas of policy, economy, and technology/science.

  • Operational flexibility

Operational flexibility refers to how the assets in the power system are operated. It is dependent, in addition to the constraints of each technology’s capabilities, on the regulatory and market environment that surrounds the physical system and drives system operations.

Like grids, market and regulatory frameworks can act as an inhibitor to existing flexibility. An example of a market acting as an inhibitor is the case of large countries that, from an operational perspective, are broken down into provinces operating in isolation, with limited to no exchange of energy based on centralized merit order dispatch or a market to regulate such exchange. In some cases, intra-border electricity exchanges between such provinces are limited due to a lack of efficient coordination, and as a result a portion of the system’s supply-side and grid-related flexibility is locked.

Central dispatching and the creation of a market to schedule electricity exchanges based on price signals are good measures to address such flexibility issues. Maintaining different, cost-reflective wholesale electricity prices for different areas within a country (zonal pricing) or for the different nodes in the transmission network (nodal pricing) also helps to reflect possible transmission congestion issues and to take them into account when building the merit order, avoiding predictable redispatch and associated costs.

In the long term the system must ensure that enough operational flexibility is built so that it can operate properly with a significant level of VRE. To make this possible, regulators might need to incentivize the investment by using, for example, capacity markets in which flexibility is incentivized, or by increasing the space and time granularity of wholesale markets, providing better long-term price signals to invest in flexible resources.

In the long to medium term the system has to balance the seasonal and inter-annual energy variability, which traditionally is achieved with hydro scheduling under uncertainty in systems with significant shares of hydropower.

In the medium to short term the commitment, and the economic dispatch, of generation units should be planned before real-time generation. In this time scale the design of day-ahead and intra-day markets will be relevant to enable the full flexibility potential of the system. Measures such as increasing time and space granularity (e. g., lower settlement period or shift from zonal to nodal prices) or setting the market’s gate closure closer to real time are measures that increase market flexibility.

Finally, in the short to very short term, ancillary services markets are required to procure grid services, including to compensate for sudden imbalances between supply and demand. Here regulators need to define operating reserves in a way that flexible resources are incentivized to participate. The most innovative service – being used already by some systems, such as in the United Kingdom – is the fast frequency response (FFR) that can be supplied by batteries and VRE if the proper power electronics are in place. The challenge for the system would be to define how much inertia can be replaced by FFR.

  • Flexibility in the Planning process

As VRE shares increase, sooner or later bridging flexibility gaps might become key for integrating additional VRE capacity. At very high shares of VRE, and after traditional flexibility sources have been fully exploited, VRE surpluses will emerge. At this point electrification becomes important to further decarbonize the energy sector through VRE (e. g., EVs and power-to-heat), and hydrogen’s role may become key to bridge seasonal imbalances between supply and demand.

Planning early for flexibility is critical to avoid the need for costly urgent solutions once flexibility issues arise. A small and inflexible system, for example, might experience flexibility shortages at very low VRE shares, while a larger and more flexible system might experience this at a much later stage.

Although the size and level of modernization of a power system are key flexibility attributes, the choice of future potential mitigation measures also can be affected by the prospects of future demand growth. For example, many large, modern systems suffer from overcapacity that was built to support past demand growth that has now stalled due to industrialization reaching maturity and an emphasis on energy efficiency. Investment in new assets in an environment like this is more costly as system assets compete for revenue within a more challenging environment.

In a mature power system, on the other hand, many of the thermal power plants are likely to have already been depreciated, while newly built ones in power systems with growing demand might still have significant way to go before reaching break-even. IRENA addressed this topic in a dedicated working paper as part of the REmap analysis. Planning for flexibility is easier within a greenfield environment, as flexibility can be embedded in market design and grid codes for new assets, rather than having to invest in costly retrofits in both thermal and renewable power plants.

Planning for flexibility is a complex multi-step process that needs to account for a variety of factors that together form a complex mathematical problem that can only be solved using appropriate tools. The process typically starts with assessment of current needs and extends into the future Depending on the present status, integration measures might be necessary in the future or may already be a matter of urgency, which greatly changes the list of available options and associated costs. Assessment of current flexibility is key as it creates the foundations for a least-cost, long-term pathway for a flexible power system that is ready to incorporate significant shares of VRE.