Key Issues for Optimal Renewable Integration & How to Address Them
Written by:Team Energy Exemplar
Achieving net zero emissions by 2050 will require a complete transformation of the global energy system. In the IEA's pathway to net-zero, almost 90% of global electricity generation comes from renewable sources, with solar PV and wind together accounting for nearly 70%. Renewable energy development, and will continue to be, key to achieving net zero targets worldwide.
However, when optimally integrating utility scale renewables into the power grid, various issues can impact a project's reliability, feasibility, and profitability. These issues are, in many cases, rather intrinsic. For example, project feasibility is impacted by the project's ability to serve load reliably. Further, the feasibility of the project will have an impact on profitability. The following elements are essential to consider if you want to have an optimal renewable integration strategy:
- Project Sitting & Sizing – This decision directly impacts the reliability of the project in the marketplace, the feasibility of the project, and the profitability.
- Capacity Reserve Margins – Impacts reliability of the grid at the portfolio and market level in addition to project feasibility, depending on what the capacity reserve margins will look like before and after the project.
- Firmness Contribution – The more firm a project can be, the better impact it will have on reliability and, thus, profitability. This is because the project may be able to qualify for more commodities and more products to sell into the market.
- Primary Energy Resource Availability – This refers to the ability to understand weather uncertainty in relation to your project. For example, if it's a solar project, you’ll need to consider the elements that could potentially impact the availability of the primary fuel source, in this case, solar. You’ll need to understand how that availability might change in different scenarios and under varying conditions. Fuel availability will have an impact on reliability, feasibility, and profitability. Because of this, hybrid projects are becoming more common because they allow you to hedge against the particular risk of primary energy source availability.
- Grid Connectivity – Grid connectivity is the ability to get the project connected to the grid, which has a direct impact in terms of reliability and feasibility. Depending on the type of project, if it contributes to reliability, then it will likely be prioritized in terms of the interconnection queue. That will then have a direct impact on the feasibility of the project as it will come online sooner, generating revenue.
- Transmission Flow Availability – Understanding transmission flow availability and managing your project around transmission system constraints is critical. From a financial perspective, a comprehensive understanding of the project's basis risk directly impacts risk management. It's vital to assess the project's basis risk within the parameters of transmission compliance. The ability to serve load at specific hubs and nodes directly impacts price forecasting, thus impacting project feasibility and, ultimately, project profitability.
- Risk Analysis & Hedging – This directly impacts feasibility and profitability. It includes looking at the different types of risk, financial operations, etc.
- Regulatory Compliance – Regulatory compliance most directly relates to feasibility, depending on what regulatory elements you must meet or incentives your project may qualify for. For example, if a project helps a utility reach some Renewables Portfolio Standard (RPS) targets, it will have a higher or lower feasibility component.
- Revenue Streams – This is directly related to where the project will sit, its size, what kind of contribution it may have, and the project type. Whether it's a hybrid or non-hybrid project will impact reliability, feasibility, and profitability because the firmness of the project will determine how many products you can sell into the market and therefore guarantees the project will go live, having higher levels of profitability.
- Commercial Operations – Basically, the ability to optimize PPA contracts. The ability to have a good risk measure, quantity, and price of a project in a particular PPA directly impacts its profitability.
- Revenue Projections – The ability to properly model these revenue predictions given different types of uncertainty scenarios and market scenarios will impact feasibility and profitability.
How to address the key issues of Optimal Renewable Integration
To start, you’ll need to identify the required modeling capabilities to address the critical issues of optimal renewable integration. The following elements are essential to developing a profitable renewable integration strategy:
- Multi-Horizon Capability – Examine different time horizons, and you need to be able to look at everything at once. You need to be able to optimize against long-term investments, mid-term risk management, and short-term operations simultaneously. Understanding the individual processes for each is essential for success.
- Multi-Objective Optimization – Traditionally, modeling and optimization in the energy industry have been about minimizing costs. However, reliability is equally important, and other objective functions, such as environmental constraints, must be considered.
- Multi-Commodity Co-Optimization requires the ability to model different elements. These elements include energy capacity, ramping, synchronization, commodities, and the assets associated with the project. All of these must be optimized for successful outcomes. It is important to determine the type of product you want to sell and the price for each. This will help you identify the right market for your products.
- Co-optimization capabilities, including:
- Alternating Current (AC) Power Flows vs. Direct Current Optimal Power Flows (DC-OPF)
- Chronological optimization – especially if you're considering batteries or hybrid projects
- Stochastic optimization – to model uncertainty
- User-defined granularity
- Security Constrained Unit Commitment (SCUC) and Security Constrained Economic Dispatch (SCED) optimization
- Mixed-Integer Linear Programming (MILP) optimization
- Additional features and functionalities to be able to simulate the market, including:
- Digital twin modeling
- User-defined constraints
- Nodal market modeling
- Market-wide simulation
- Bidding simulation
- Day-Ahead Real-Time (DA-RT) interleaved modeling
- Ability to model risk or uncertainty by:
- Correlating variables
- Performing Monte-Carlo based modeling
- Scenario-based simulations
- Sensitivity analysis
- The capability for:
- API Integration - necessary for models to be able to integrate with other tools.
- User-Based Roles
- Workflow Configuration & Automation
All the identified modeling capabilities require departments to work together efficiently, PLEXOS provides the enterprise platform that streamlines your operations to make investment decisions faster and with greater confidence.
Watch our on-demand webinar, Optimal Strategies for Renewable Integration, to learn more about best practices for planning and operations modeling processes related to renewable and hybrid energy projects.