29 March 2012:
IEA Flexibility Index - An Incomplete Yardstick
IEA: Sufficient balancing resources for 60% wind energy in Denmark

The International Energy Agency, IEA, recently issued a report on Danish energy policy [1]. The assessment is generally positive, but the following passage might cause reflection: "The IEA own analysis suggests that penetration of variable renewable energy in Danish gross electricity demand could increase to more than 60% and still be balanced by existing flexible resources."

The statement is slightly worrying because comprehensive alterations will be needed in Denmark in order to integrate that much variable renewable energy (VRE) efficiently. It would be a pity if this task should be underestimated and consequently downgraded.

The statement is based on an IEA report on the calculation of a flexibility index [2]. The report is the outcome of IEA's Grid Integration of Variable Renewables project (GIVAR). The purpose of the project was to develop a simplified method for the assessment of the amount of flexible resources for the balancing of VRE in a certain area.

Eight cases have been analyzed including both the entire Nordic area (NordPool) and Denmark. Denmark is the top scorer with a PVP (present VRE Penetration Potential of gross electricity demand) of 63%. In the bottom the Japanese PVP is 19%. Unfortunately the cases do not include Germany or France.

The report stresses that the Danish flexibility is a consequence of the modest size of the country and the large interconnector capacity. For the other areas the flexibility mainly depends on the regulating capacity of the power plants within the area.

A main conclusion of the report is that the flexibility in all case studies is better than is commonly supposed. Therefore there is room for a larger share of VRE.

The attempt to develop an operational flexibility index is commendable. It is obvious that a great effort has been done in the development of the method and in analysing the cases. The report is well written and excellently illustrated. The results are characterized as conservative due to three mitigating circumstances which have not been considered in the model:
1. Complementarity of fluctuating demand with VRE output.
2. Smoothing of VRE output due to geographical dispersion.
3. Curtailment of VRE output.

However, the model has some shortcomings which cannot be offset by the mitigating circumstances. Some of the limitations are recognized in the report. An evaluation of the Danish results indicates some additional problems.

Economy and environment disregarded
The IEA report is considering four main groups of resources for balancing the VRE output:
- Dispatchable power plants
- Energy storage
- Interconnections
- Demandside management.

All these measures are given the same weight regardless of economy and environmental properties. This limitation is clearly acknowledged in the report. The next phase of the project is expected to shed light on the relative cost of the measures.

The technical ability of a system to absorb a lot of wind power should not be the main target. It is essential that the valleys of the wind power profile can be filled up with cheap and clean power. Balancing with old thermal power plants and OCGT cannot be a lasting solution. Moreover wind power overflow should not be wasted but given the best possible utilisation.

Therefore the optimistic conclusions could be premature. There is good reason for anticipating phase 2 of the project with interest.

Interconnectors are dubious resources
Investments in stronger main grids are among the IEA reports explicit directions. There is no reason for questioning that point. But it should be stressed that the grid is only a means of transport. Together with an efficient electricity market the interconnectors can improve the interaction between supply and demand. The grid can move balancing services, but it cannot generate them.

The Danish case is illustrative. In the IEA calculations the interconnectors have contributed 5,440 MW to the resources (table 35). The composition of this figure is uncertain. In 2011 the maximum simultaneous import capacity of the 5 interconnections was 4,530 MW and the maximum export capacity was 5,525 MW. The average values for 2011 were 3,756 MW and 3,877 MW.

Denmark is a transit area. Therefore Danish market participants cannot occupy the full capacity of all interconnectors.

Norway has the best balancing facilities in the vicinity of Denmark. The maximum simultaneous import capacity of the Danish interconnections with Norway and Sweden in 2011 was 2,980 MW and the maximum export capacity was 3,440 MW. The average values were 2,483 MW and 2,572 MW.

Even these figures are too high because they must be shared with market participants in other countries, primarily in Germany. In 2011 Germany had six times as much wind power capacity as Denmark.

Due to the large wind power capacity Germany and Denmark are purchasing balancing capacity. A study from 2009 [3] revealed a surprisingly high synchronism between wind power in Germany and Denmark. Consequently there is also a strong correlation between electricity spot prices in Germany and Denmark. Germany and Denmark behave in practice like one market area purchasing balancing services in Norway.

Based on this reality it would be more reasonable to consider Germany and Denmark to be one area with a common stock of interconnections with Norway and Sweden. The Danish flexibility cannot be better than the German. Therefore realistic figures for Denmark must be much lower than shown in the IEA report (tables 32 to 37).

When interconnectors are evaluated as balancing resources it is important to know if there is available balancing capacity at the other end of the link. Otherwise the interconnector cannot contribute to solving the balancing problem.

An incomplete method
The Danish case demonstrates that IEA's FAST method (Flexibility Assessment Method) is unsuited for a realistic assessment of the potential for balancing VRE for a small area which is integrated in larger market systems.

The primary grid and the interconnections are important but they are not balancing resources by themselves. The resources may be found beyond the links. The available balancing capacity will vary depending on time and international market conditions and cannot be characterized by one figure.

The balancing resources for a certain geographical area should be divided into internal and external resources and they should be ranked according to economy and environmental properties.

Due to the international competition for external resources a proper analysis of the balancing of VRE should include both countries supplying balancing services and countries competing for purchasing the services. This task could be quite comprehensive.

The sensible intention was to develop a simplified method for the assessment of the flexibility of a power system with VRE. This aim has not yet been achieved.

1 - Energy Policies of IEA Countries - 2011 Review - Denmark
2 - Harnessing Variable Renewables - A Guide to the Balancing Challenge - IEA 2011
3 - Paul-Frederik Bach: Wind Power and Spot Prices, German and Danish Experience 2006-2009, Renewable Energy Foundation. London, 2009

Opdateret d. 13.5.2012