Policy and Trade Mechanism of Distributed Generation on Smart grid

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Policy and Trade Mechanism of Distributed
Generation on Smart grid
CIRED 2011
CIRED 2011

• Zhu, Shouzhen Wang, Xiaoyu
• Tsinghua University
• zsz_at_tsinghua.edu.cn

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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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1 Defininition of Smart Grid
Definition of Smart Grid by CSEE

• Previous Definition
• A self-healing and interactive grid with high
  level of digitalization and automation.

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.
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Strong and Smart Grid

• 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.

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2 Characteristics of Strong Smart Grid
Information Intense integration and exchange of
real-time information
Automation automatic selection of control
strategy self-healing in case of damages and
contingencies
Interaction Interaction among power generation,
power grids, and end customers
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2.1 Construction of Smart Grid
GenerationIntegration of renewable generation,
large scale of wind/PV/storage, distributed
generation(DG)
TransmissionUltra high voltage (AC/DC),
transmission planning, FACTSintelligent
equipments, long distance transmission ,
etc. SubstationSubstation automation, IED,
condition-based maintenance, life-cycle
management, etc. Distributiondistribution
planning, advanced distribution
automation,DG/microgrid, energy storage,
etc. Operation and Control EMS, electricity
market, WAMS, advanced control center,
etc. Information/communicationInfo. comm.
infrastructure, information modeling, cybertics,
AMI, etc.
Supply/Consumptionmarketing system, smart meter,
demand response, etc.
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Smart Distribution
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 automation
• Connection of the distributed generation
• Connection of the storage system

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Distribution

• 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

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3. The significance of distributed generation
interconnection
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,
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.
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3.2 As the important supplement of large electric
power system
(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
?
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Beijing south Station
Tianjin Station
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3.3 DG interconnection Problem development
DG interconnection
2?Study the impacts of DG connection on power
system
trade
Technology rule
1?Macroscopical policies
safety
policy
3?Established Technology and management of DG
interconnection
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3.4 Economic Technology and management of
incentive policies

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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
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
Figure voltage contribution change with DG
locality change
Figure voltage contribution with DGs
concentrated at the sole node

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

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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

• (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
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.
Frequency response of 500kV corresponding to
different DG penetration
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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

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

• (1) Mandatory policies
• Renewable Portfolio Standard (RPS)
• The green certificate marketrenewable energy
  green certificate trading system
• (2) Economic incentive policies
• Feed-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.

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Renewable Portfolio Standard (RPS)
RPS can effectively spur renewable development
and encourage competition among renewable energy
producers.

• RPS includes the following rules
• ?the amount or proportion of renewable energy
  electricity
• ?the deadline and duration of achieving given
  amount or proportion
• ?the recognized amount or proportion of renewable
  energy electricity by generation, distribution,
  and transmission
• ?the sorts of renewable energy and generation
  techniques
• ?Certificates, Tracking and accounting method
• ?the encouragement to the suppliers who achieve
  RPS and Enforcement penalties who not
• ?the cost limit of generation and trade of
  renewable energy

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The green certificate marketrenewable energy
green certificate trading system
Figure Green card and its procedures
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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 LawsA 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.

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• Green power marketing
• The principles for design
• Decision of tariff to voluntarily purchasing
• GERE-CE-EC
• fees of decontamination for coal electricity
• EC0.6 (sum of quantities of equivalent of top
  3 main pollution)0.010?/kWh, so GE0.244?/kWh.

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• Trading mechanism based on green power marketing
• Electric Power Company as the main marketing
  unit
• Green certificate market

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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

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• Proportion of marginal capacity cost
• Basic price (Marginal generation
  capacity cost Marginal transmission
  distribution capacity cost)30

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5.5 Pricing Police and Trade of CCHP

• Determination of compensatory expenses
• Compensatory expenses (RMB/month) Basic
  price (RMB /kWmonth) reserve capacity (kW)
• Marginal generation capacity cost

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• Marginal transmission distribution capacity
• Basic price

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• Collect governmental fund from CCHP
• The 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

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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
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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/KVAmonth(Beijing) , 20.00
  RMB/KVAmonth(Anhui)

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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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6 Development

• 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 system
• Distributed 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.

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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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CCHPa newest energy integrated optimizing
scheme

• 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 laboratory in Tsinghua University
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Thanks!