Policy and Trade Mechanism of Distributed Generation on Smart grid Zhu, Shouzhen Wang, Xiaoyu Tsinghua University [email protected] CIRED 2011.

Policy and Trade Mechanism of Distributed Generation on

Smart grid

Zhu, Shouzhen Wang, Xiaoyu Zhu, Shouzhen Wang, Xiaoyu

Tsinghua University Tsinghua University

[email protected]@tsinghua.edu.cn

CIRED 2011

CIRED 2011

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Contents 1 Definition of Smart Grid

2 Characteristic of Smart Grid

3 The significance for interconnected with distributed generations to power system

4 Impact of Interconnecting Distributed Generation to Electric Network

5 The Pricing Policies and Trading Mechanism of Distributed Generation

6 Development

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Previous DefinitionA self-healing and interactive grid with high level of digitalization and automation.

Definition of “Smart Grid ” by CSEE

Current Version:A reliable and efficient grid which utilizes advanced information, communication and power technologies and equipments to systematically realize the intelligent monitoring, analysis and decision. The grid is self-healing and interactive. It has high automation level and supports renewable generation and flexible electricity consumption.

1 Defininition of Smart Grid

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The system should be strong enough to support large capacity power transmission and utilization, can support big wind farm for whole system smooth operation. the system must be more robust to support reliable operation with some content flexibility. There are still some discussions on that.

In order to satisfy the huge and fast increasing requirement of electricity demand in the whole country, the infrastructure construction of power industry in China is developed in a quite fast speed. Many new devices and technologies have been used for several decade years.

After UHVAC demonstration transmission line is put into trial operation, the large scale renewable energy generation projects, such as wind power fields about 10giga-watt level, are planned and commenced to be built. The development of the smart grid is driven by the optimal control and management of the large power system along with environment protection and energy efficiency improvement which concerns power industry deeply.

The capability of self-healing is considered mainly for distribution system. The technical guidelines for the smart substation and distribution are in the drawing procedure, and will be issued soon. The test and demonstration systems have already been arranged. The self-healing is one key issue for them.

Strong and Smart Grid

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Information

Intense integration and exchange of real-time information

Interaction

Interaction among power generation, power grids, and end

customers

Automation

automatic selection of control strategy

self-healing in case of damages and contingencies

2 Characteristics of Strong & Smart Grid

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Generation： Integration of renewable generation, large scale of wind/PV/storage, distributed generation(DG)

Transmission： Ultra high voltage (AC/DC), transmission planning, FACTS； intelligent equipments, long distance transmission , etc.

Substation： Substation automation, IED, condition-based maintenance, life-cycle management, etc.

Distribution： distribution planning, advanced distribution automation， DG/microgrid, energy storage, etc.

Operation and Control: EMS, electricity market, WAMS, advanced control center, etc.

Information/communication： Info.& comm. infrastructure, information modeling, cybertics, AMI, etc.

Supply/Consumption：marketing system, smart meter, demand response, etc.

2.1 Construction of Smart Grid

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Smart Distribution

To realize the functions such as the distribution network monitor and control, voltage / reactive power management, emergency management and self-healing control, security alarming after the distributed energy connection by the use of intelligent devices, intelligent terminals, intelligent master station system.

Distribution automationConnection of the distributed generationConnection of the storage system

Distribution

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Development Focus Build a secure and reliable distribution network with power flow optimization,

flexibility in reconstruction and accommodation of renewable energy; Unified control and compatible with centralized/decentralized storage devices

and distributed energy Overall construction of practical distribution automation system Promote application results and technical equipments of smart distribution

pilot projects Connection of the distributed generation Connection of the storage system

Key Projects Optimization of distribution structure and distribution automation Research on intelligent distribution dispatching technology and its promotion Pilot project for the construction of EV charging station Pilot projects for the construction of large-capacity storage

Distribution

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3. The significance of distributed generation interconnection

and the prime motors of DG system can be several kinds of energy switching facilities such as gas turbine, wind turbine, solar energy fuel cell ,photovoltaic cell, waste incineration boiler, and so on.

3.1 Define of distributed generation (DG)

In general, is an environmentally-friendly, energy saving

power station installed at the loads. The capacity of DG

can be from several kW to dozens MW,

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(1) Economics

(2) Environmental protection

(3) Reliability

(4) New direction of using new energy sources

(5) Important content for power system development manner

(6) Solution supply insufficiency in area of city center

3.2 As the important supplement of

large electric power system

返

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Beijing south Station

Tianjin Station

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3.3 DG interconnection Problem & development

policy

safety

trade

Technology

rule

DG DG interconnection

1、Macroscopica

l policies

2、 Study the impacts of

DG connection on power

system

3、 Established Technology

and management of

DG interconnection

4 、 Study Economic

trade mode and

electric rate

policies between

DG and electric grid

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3.4 Economic Technology and management of incentive policies

《北京市节能减排综合性工作方案》 2007

北京《加快发展循环经济建设资源节约型环境友好型城市行动计划》 2009.4

《上海市节能减排工作实施方案》 2007

《上海市燃气管理条例》 1999

《上海市节约能源条例》 1998

《广州市新能源和可再生能源发展规划》（征求意见稿） 2008.9

《深圳市推动节约能源工作实施方案》 2003.6

《吉林省节约能源条例》 2003.9

《河北省新能源开发利用管理条例》 1997.5

《太原市清洁能源规划》 2002

《安徽省节约能源条例》 2006.7

《浙江省人民政府办公厅关于加快光伏等新能源推广应用与产业发展的意见》 2009.5.7

台湾《永续能源政策纲领》 2008.9返

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4、 Impact of Interconnecting Distributed Generation to Electric Network

4.1 Impact of DG on stable voltage of distribution network

4.2 Impacts of DGs on power quality

4.3 Impacts of DG on power system in abnormal operating situation

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Advantageous impacts on grid

Improve power supply reliability of grid, especially the reliability of power supply for important user;

Save cost of electric grid establish;

Improve energy use efficiency and develop new-style energy source.

Reduce environment pollution

Peak shaving and reduce loss

Dynamic voltage support

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Disadvantageous impacts on grid

Add to short circuit capacity of electric grid

Add to difficulty of line voltage regulation

Affect relaying protection

Effect power quality

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The studies of this report are focused on

Study the impact of DG on stable voltage of distribution network, and discuss the reasonable locality and injecting capacity of DG units;

study the power quality of distribution network with DG units, such as flicker, harmonics, unbalanced voltage and DC current injection and so on;

Study the impact of DG in the abnormal situation, the contribution of DG to level of short circuit capacity and protection arrangement, and local stability of power system.

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4.1 Impact of DG on stable voltage of distribution network

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Feeder voltage and voltage change before and after DG connecting

0 2 4 6 8 10 12 14 16 18 20

0. 95

0. 96

0. 97

0. 98

0. 99

1. 00

1. 01

1. 02

1. 03

1. 04

1. 05

0. 0

0. 5

1. 0

1. 5

2. 0

2. 5

3. 0

(%)

负荷节点电压变化率

(p.u.)

负荷节点电压

负荷节点编号

节点电压变化率指标 DG未接入 ，表达式计算 DG接入 ，表达式计算 DG未接入 ，潮流程序计算 DG接入 ，潮流程序计算

In the distribution network with DG, where rate of change is bigger is the top-priority locality of reactive-load compensation and voltage support.

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DG locality change simulation

5 10 15 200.96

0.97

0.98

0.99

1.00

1.01

1.02

19

14

13

12

(p.u.)

负荷节点电压

负荷节点

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5 10 15 200.95

0.96

0.97

0.98

0.99

1.00

1.01

1.02

(p.u.)

负荷节点电压

负荷节点

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22

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Figure voltage contribution change with DG locality change

• Voltage distribution will have biggish differentia if DG units with the same output interconnected with different locality combination.

Figure :voltage contribution with DGs

concentrated at the sole node

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General rule

DG plays obvious active role in voltage support;

If DG mounted position is selected at the position from which to the end total load equals to half of DG capacity, voltage of DG connecting point will be more stable ；In order to avoid situation that voltage of DG injecting point is higher than voltage of sending eng, it is necessary to restrict DG injecting capacity not beyond up limit;

Interconnecting DG with large capacity to network will add to difficulty of substation voltage regulation. ；In normal situation, DG should generate more active power and less reactive power, and keep operating at high power actor.

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4.3 Impacts of DG on power system in abnormal operating situation

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Increase short circuit capacity and impact protection setting

Impact of DG on fault current

DG

a

10KV开闭站

DG并网增加短路电流容量

1

2b

(1) Short circuit level of fault point is so large that short circuit current of feeder 1 in

figure 3-17 exceeds capability of short circuit and broken circuit that switch gear

(cable ,short-circuiter and so on) in the feeder;

(2) Generally, there is only overcurrent protection in 10kV feeder, without directivity.

Therefore, when short circuit current of DG is too large, it will lead to protection b in

figure misoperation and breaker 2 opening, which results in unnecessary supply

interruption.

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Increase short circuit capacity and impact protection setting

Connecting DGs with inverter interface to power grid will not add to short circuit level of system; but connecting DGs with rotation interface will supply short-circuit current to increase fault current at short circuit point.

To reduce and avoid disadvantageous impact of DG parallel to grid

1) limit parallel capacity of DG;

2) augment impedance of DG isolating transformer;

3) set directional power protection at the outlet of DG.

Before connecting DG to grid, we must check generating equipment impedance to the full, and calculate short-circuit current addition due to DG parallel to grid, to determine interconnection capacity of DG. And for parallel DG with large capacity, it is necessary to set directional power protection.

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Impacts on local stability

Frequency response of 500kV corresponding to different DG penetration

voltage response of 500kV corresponding to different DG penetration

It is obvious that the case with DG and much higher system loads shows better dynamic response than the base case. The deviations of maximum voltage and frequency are less, and the oscillations show very slightly better damping.

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5、 The Pricing Policies and Trading Mechanism of Distributed Generation

5.1 Renewable Energy Based Distributed Generation (DG)

5.2 Cost-sharing Mechanisms of Renewable DG

5.3 Combined Cooling Heating and Power (CCHP)

5.4 The Model of Basic Price

5.5 Pricing Police and Trade of CCHP

5.6 Summary

5.1 The Pricing Policies and Trading Mechanism of Renewable-Energy-Based

Distributed Generation (1) Mandatory policies

Renewable Portfolio Standard (RPS)

The green certificate market—renewable energy green certificate trading system

(2) Economic incentive policiesFeed-in Laws

（ 3 ）Market development policies

Tendering Policies

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China Renewable Energy Law

Applied in Jan. 1, 2006.No. 14 Renewable electrical will be sun purchaseed by

electrical company.

After Emended Applied in April 1,2010

No. 14 Renewable electrical will be indemnificatory sun purchaseed by electrical company.

Renewable Portfolio Standard (RPS)

RPS includes the following rules:

①the amount or proportion of renewable energy electricity

②the deadline and duration of achieving given amount or proportion

③the recognized amount or proportion of renewable energy electricity by generation, distribution, and transmission

④the sorts of renewable energy and generation techniques

⑤Certificates, Tracking and accounting method

⑥the encouragement to the suppliers who achieve RPS and Enforcement penalties who not

⑦the cost limit of generation and trade of renewable energy

RPS can effectively spur renewable development and encourage competition among renewable energy producers.

The green certificate market—renewable energy green certificate trading system

charge

Green card

Renewable electricity producers

Administrator and report forms

Quota obliged customers

registration Quota monitor

Quota obliged electricity customers

Green card

Green card Green card

charge

Transaction info.

data Data

Green card transction

market

Figure Green card and its procedures

5.2 Cost-sharing Mechanisms of Renewable DG

Economic incentive policies

all sorts of incentive policies

cash subsidies, preferential pricing policies,

reductions of tax revenue, loans at low interest rates or loans with interest allowance.

Feed-in Laws:A feed-in law is a price-based policy that specifies the price to be paid for renewable energy.

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China Renewable Energy Law

Applied in Jan. 1, 2006.

Price management and cost-sharing No. 19 The tariff of renewable generation is decided by the government according to type, development level, and area of renewable generation。 The tariff should be publicized.

No. 21 The expenses for the utilities to buy renewable generation can be included into the generation cost and reimbursed from the retail sales of electricity.

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5.2 Cost-sharing Mechanisms of Renewable DG

Establishing Renewable Fund Analysis of the sales price of electricity

The sales price of electricity including 4 parts: purchasing cost, transmission-distribution loss, transmission-

distribution tariff, and government fund.

Design of cost-sharing Renewable Energy Fund =

Cost-sharing level If shared in the whole

country, the level of cost-sharing is only 0.95 RMB/MWh.

TotalREREAVERE QEQPP ])[(

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Green power marketing The principles for design

Decision of tariff to voluntarily purchasingGE=RE-CE-EC

fees of decontamination for coal electricity

EC=0.6× (sum of quantities of equivalent of top 3 main pollution)=0.010￥ /kWh, so GE=0.244￥ /kWh.

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Trading mechanism based on green power marketing

Electric Power Company as the main marketing unit

Green certificate market

Suggestions on price policy of distributed renewable energy generation

The total amount of renewable energy production and consumption should be regulated.;The nation supports to establish green electric power system ;The nation encourages and supports interconnection and generation of the multiform renewable energy ;The State adopts a categorized electricity price for the power purchase price of the renewable energy electricity .

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5.3 Combined Cooling Heating and

Power (CCHP) Background

CCHP is a small or micro integrated energy supply system installed around the user.

Compensatory expenses for the reserve capacity When CCHP needs spare sustainable capability from the grid while operating, it should compensate power utilities for the reserve capacity.

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5.4 The Model of Basic Price

Long term Marginal Cost methodology for pricing

Marginal capacity cost Marginal generation capacity cost

Marginal transmission & distribution capacity cost yearly payback investment

( )

(1 )R m

cgs

I C K OM

R R

1

1

/(1 )( )

/(1 )

mn

nn

t R m mn

nn

I iA K C O

P i

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Proportion of marginal capacity cost

Basic price = (Marginal generation capacity cost + Marginal transmission & distribution capacity cost)×30%

dCIC 10 kVkVkVkV dCIC 1101103535

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5.5 Pricing Police and Trade of CCHP

Determination of compensatory expenses

Compensatory expenses (RMB/month) = Basic price (RMB /kW·month) × reserve capacity (kW)

Marginal generation capacity cost

aRMBM cg kW/2.995

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Marginal transmission & distribution capacity

Basic price

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Collect governmental fund from CCHPThe quantum of public utility add-ons (three-gorge fund, rural grid loan fund) is: 4 cents per kWh, for lighting and commerce.

The related fees of interconnection

Trade mechanism of CCHP

Relation between the price of natural gas with cost of cost of CCHP system

Figure The fluctuation of natural gas price affect CCHP generation cost

Figure Effect of natural gas to annual economic benefits

0500

1000150020002500Annual

revenue(mi l . RMB)

1. 8 1. 7 1. 6 1. 5 1. 4

Natural gas pri ce(RMB/ m3)

Effect of natural gas to annualeconomic benefits

Policy Suggestions for the Development of (CCHP)

Set up the interconnection rules Promoting CCHP consultant industry, and

encouraging ESCO and public utility to take part in the investment, construction and management of CCHP

The related fees of interconnection The state levies governmental fund to Distributed

Generation; The quantum of public utility add-ons (sanxia fund, rural grid loan fund) is: 4

cents per kWh, for lighting and commerce. Charge compensatory expenses of the gird-

interconnected Distributed Generation; the compensated expenses standard of spare sustainable capability refers to

Basic price: 30.00 RMB/KVA•month(Beijing) , 20.00 RMB/KVA•month(Anhui)

Table Trade model of distributed CCHP of Shanghai

Serial number Trade model remark

Shanghai Pudong Airport

The power supply side undertakes the cost of combining to the grid and increasing the capability; take charge of standby capability cost in public grid:

27 RMB/kW/month

In commission (interconnection), general no anti-inject

Shanghai Minghang Hospital

The power supply side undertakes the cost of combining to the grid and increasing the capability; the power company charge cost for equipment of public grid leave unused; discharge the inject cost; In many ways financing: Shanghai power company, China National Petroleum Corporation, Gas Corporation of Shanghai and some design companies

Operate and interconnect, no anti-inject

Shanghai Shuya Liangzi Healthy Recreational Center

The power supply side undertakes the cost of combining to the grid and increasing the capability

In commission (no interconnect)

Shanghai Bao Steel (self-supply generation plant)

The power supply side undertakes the cost of combining to the grid and increasing the capability; Shanghai power company charge Bao steel 0.13 RMB per unit for serving; the tax of station or region is handed in by Bao steel.

In commission

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5.6 Summary -1

For renewable energy, the paper brings forward two reasonable methods of cost-sharing to allocate the cost differential between renewable energy and conventional energy. Cost-sharing level of Renewable Energy Fund is estimated based on the analysis of electricity sales price and sharing principles. Volunteering Purchasing Mechanism of green power marketing is established. All above methods give some suggestions of associate measures to Renewable Law.

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5.6 Summary -2

For CCHP, the paper brings the proposal of compensatory expenses to the reserve capacity of power system while interconnection.

The basic price tariff and expenses standard of different voltage levels is calculated by using Long Term Marginal Cost methodology.

It also brings forward the suggestions of governmental fund and related fees.

A trading mechanism for CCHP interconnection is given in the final.

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Distributed Generation is a new direction in the development of energy resources in future. Interconnection with the grid is a key step in its progress. Recognition Impact of DG to power systemDistributed Generation must have relevant technology qualifications of interconnection. It should accord with the capacity and voltage level of interconnection, suffice power quality and the conditions of connection and disconnection.

6 Development

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MicroGrid

There are two design modes for Distributed Generations. One is that a generator or some supply electric power to a special user, and they are isolated from the power grids in electric and become a small system,call MicroGrid.

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Distributed CCHP can effectively control or cut down the supply demands in heating and cooling, vacate much load capacity and optimize the load structure 。

CCHP——a newest energy integrated optimizing scheme

CCHP laboratory in Tsinghua University

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