Keywords

Wind; wind integration; renewable energy; ancillary services; decarbonization; energy markets

20.1 Wind Integration: What it Means and Why We Need it

Wind turbines dedicated to producing electric power have been in service since the late 19th century. By the 1930s, wind turbines were providing local electric power needs to various rural communities and farms in the United States. However, it was only in the 1970s that electric utilities recognized wind as a potential resource for producing bulk power, at least in part driven by the oil embargo and resulting high price of oil, which at the time was still a significant fuel used for power generation. In the United States, the Public Utility Regulatory Policies Act (PURPA) enacted in November 1978 promoted energy conservation and renewable energy, and provided incentives to explore the potential of wind. Still, the overall capacity of wind resources in the power generation industry remained low. The worldwide capacity of wind generation installed by electric utilities in 1990 was less than 2 GW. Only in the late 1990s did wind generation start to grow more rapidly and the technology was soon recognized as the “alternative” energy source. By 2015 the global installed capacity of this alternative resource exceeded 432 GW and is growing faster than ever, as shown in Fig. 20.1 [1]. The worldwide wind energy investment in 2015 has surged to approximately $110 billion (USD), leading to nearly 64 GW of new wind capacity being installed in that year [2]. The United States was no exception to this trend, and today (as the end of 2015) it has nearly 74 GW (approximately 48 500 wind turbines) of installed onshore wind capacity. More than 66 GW of this cumulative wind capacity was installed between 2000 and 2015. Wind represents approximately 7% of total bulk power capacity of 1064 GW installed in the United States as of 2015 [3]. (In 2015, the 74 GW of wind installed in the United States produced approximately 191 GW h of power, or roughly 4.8% of the total power produced (3975 GW h) by utility-scale generation resources [3]. Globally, wind production accounted for approximately 3.7% of total electricity production [4]).

The investments in wind were driven by a number of factors, including policy incentives aimed at reducing pollution from fossil fuel-based power generation—with many focused on reducing greenhouse gas (GHG) emissions. Some countries also view reducing reliance on imported fossil fuel as part of achieving energy independence, which in turn is often part of a larger national security strategy, as a reason for promoting wind. The rapidly declining cost of wind generation has also contributed to this growth. Today, onshore wind in locations with good wind resources is often one of the resources with the lowest levelized cost of energy among all commonly operated generation technologies [5]. Where costs are competitive, some view wind resources as a way to save money or at least provide some low-cost diversification away from volatile fossil fuel-driven electricity prices.

As a result of all of these forces, many countries, spanning the range from small islands to large interconnected systems, have been integrating these indigenous and variable resources into their generation portfolio. There are over 170 countries with future targets for renewable energy resources, with wind typically representing a significant portion. For example, in Europe, Germany has a renewable penetration target of 80% by 2050, Denmark has a target of achieving 100% by 2035, and Scotland is aiming for 100% renewable energy by 2020 [6]. In the United States, California and New York both have mandates to generate 50% of electricity with renewable energy by 2030, and Hawaii 100% by 2045. Elsewhere, Alberta announced a clean energy target of 30% by 2030 and plans to install 5 GW of renewable resources [7]. Mexico, with its Energy Reform legislation enacted in December 2013, has set an ambitious annual target of 2 GW of wind capacity per year until 2023, Uruguay has a goal to generate as much as 38% of its power from wind by the end of 2017, the Indian government has committed to a target of 175 GW of renewables by 2022, including 100 GW of solar capacity and 60 GW of cumulative wind power capacity [8], and South Australia recently committed to a new target of zero net emissions by 2050 [9]. Discussions and negotiations at the United Nations Framework Convention on Climate Change have led over 190 countries to sign (and over 110 countries to ratify) the Paris Agreement that calls for reducing GHG emission globally. The agreement aiming at zero net emissions by 2050 indicates that the future generation portfolio is viewed globally to be largely comprised of non-GHG-emitting renewable resources, with wind and solar being the leading technologies (absent breakthroughs of other technologies) [10].

20.2 Current/Standard Measures for Wind Integration

Wind generation technology captures the freely available but varying amount of wind that cannot be controlled (though the electricity serving the system can be managed, largely through curtailment). The exponential growth of wind capacity in the late 1990s to the 2000s has made it necessary for many system operators to recognize the operational and planning challenges brought on by the intermittent nature of wind.

At a fundamental level, the electric power system requires that production (generation) and consumption (demand) to be in balance at all times, even over extremely short time intervals (fractions of seconds, in practice). This creates two kinds of fundamental challenges. The first challenge is that production and consumption must be balanced under “normal” conditions, given the natural (and price-driven) fluctuations in consumption and to a lesser degree variation in production from conventional generation resources, such as seasonally fluctuating hydro generation. This challenge is potentially made harder by the variability of power production from wind resources due to fluctuations in weather conditions, and the limited ability to control the output from the wind resources, short of curtailment.

The second challenge is to maintain system security following a disturbance, such as the loss of a traditional generation resource or transmission element (such as a line or a transformer). Typically, wind resources do not directly increase this challenge—since most wind farms are smaller than the cause of such disturbances (typically a larger generation resources or transmission element), and the system is designed and operated to be able to cope with such disturbances. However, wind resources may replace other traditional generation resources that are capable of responding to a disturbance through their ability to provide synchronized inertia, various frequency response, and replacement reserves. (In many US systems, frequency response is provided by governor response (primary frequency response) and automatic generation control (secondary frequency response). Replacement reserves that relieve these fast responses so the system can prepare for the next disturbance are often considered as tertiary.) Technological advances have enabled wind to provide some frequency response, but generally in a limited manner when compared to dispatchable (i.e., resources where the output can be increased or decreased by the plant or system operators) generation resources. As a consequence, the increase of wind resources replacing dispatchable resources can lead to frequency response challenges, especially for small systems at high levels of wind penetration.

Balancing the system under normal conditions remains operationally challenging on several time frames, from days (how much wind should the system operator count on and how much additional resources should be prepared if wind is not strong enough?) to hours (greater ramping needs in the 1- to 3-hour time frame), to seconds (frequency control), and becomes increasingly so as wind displaces more dispatchable generation resources. More generally, imbalances of any kind lead to frequency deviations, which if significant could lead to service interruptions (blackouts and damage to electrical equipment in the most severe case, if adequate protections are not in place). Even relatively small frequency deviations can harm the sophisticated manufacturing processes of today. Historically, this balance was met by controlling the production (generation) from mostly dispatchable resources via Automatic Generation Control (AGC) or similar control mechanisms that adjust power plant outputs based on the size of measured changes in frequency or area-wide supply–demand balance (after accounting for intertie flows with neighboring systems). Learning through experience, system operators could predict the change in consumption with a high level of accuracy and commit and dispatch these controllable generation resources, which were mostly thermal and hydro generation, to match predicted and actual consumption in real time.

However, as more wind resources were added to power systems, the cumulative variability of wind power production in some systems began to exceed the variability and uncertainty caused by short-term fluctuations of consumption. With production—previously controllable for nearly all system resources—now varying due to external factors (weather), the balancing of production and consumption became more difficult under both normal operating conditions and following system disturbances. The rapid expansion of wind in the early 2000s therefore explains why integration studies of wind resources assessing the technical feasibility and the economic viability started to permeate the industry during this time period [11].

In the early days and at lower wind penetration levels, many integration studies were often technical feasibility studies focusing on maintaining the operational security, or the reliability, of the bulk power system. Reliability concerns include services that are critical to maintaining the operational security of the bulk power system during and after major disturbances (i.e., the second challenge discussed above). Primary issues include frequency response, system inertia, and frequency and voltage ride-through capabilities, all designed to ensure that following a disturbance, such as the sudden loss of a large generating unit, loss of a transmission line, rapid loss or restoration of renewable power due to sudden weather shifts, or a sudden and unexpected change in demand, power can be provided while maintaining frequency deviation within a narrow band [12]. (In the Eastern Interconnect (a 60 Hz system that approximately covers the eastern half of the United States and Canada), the system starts to respond when the frequency deviation exceeds ±36 milli-Hertz (59.964–60.036 Hz), excluding time error corrections.) Because all resources (for both production and consumption) on the electric system are synchronized at the same frequency, frequency deviations can lead to cascading failures. For example, the tripping (failure) of a generator resource due to a decline in frequency can lead to a further reduction in frequency, causing more generator trips, and so on. Today, many systems have built in various protection schemes, such as load shedding via under-frequency relays and generation tripping via over-frequency relays, to avoid such situations.

Early wind machines used simple induction generators and were designed with the primary focus of capturing the free-flowing wind energy. These turbines provided no dynamic grid support in the event of a power system disturbance. This design led to wind generators having different response characteristics compared to conventional synchronous generators, and these alternative technologies were required to disconnect if frequency or voltage deviated from their nominal levels. Disconnecting a large quantity of wind resources could lead to the aforementioned cascading effects. In the United States, the Federal Energy Regulatory Commission (FERC), with considerable input from both the wind and the power systems industry, addressed this concern of cascading failure during certain system conditions by requiring all new wind turbines to ride through low-voltage events rather than disconnecting (Order 661A, 2005). (California and Hawaii are requiring ride-through capabilities from new distributed PV installations.) Today, disturbances, such as short-term small frequency or voltage deviations, rarely affect the operations of newer wind turbines, easing integration efforts. (A resource that lacks dynamic response capability does not help stabilize the power system when a disturbance occurs, and further displaces generation resources that could. This puts more stress on the remaining generator resources that do provide the grid support services. Therefore equipping wind turbines with such capability remedies are twofold.) At the same time, technology has improved such that newer wind turbines can provide some of the frequency, inertia, and voltage control that have traditionally been provided by other dispatchable generators. (While most dispatchable generator resources provided inertia, only generators with AGC capability (or its equivalent) provided voltage support and frequency control.) With many of these technological capabilities now in place, the main focus of wind integration has begun to shift from worrying about the technical feasibility of accommodating wind under normal operating conditions and following system disturbances toward understanding the economics of wind integration, i.e., how increasing amounts of wind (and other non-GHG-emitting resources with variable output) can be integrated at least cost. (Dynamic response capabilities of wind turbines have evolved significantly over the past decade. Typical modern wind turbines are coupled to the power system with advanced electronics that allow operators to control wind turbine output at a faster rate (milliseconds rather than seconds) and more accurately compared to conventional synchronous generator resources. Furthermore, wind turbines provide some inertia, which is also controllable through the advanced electronics (inertia response from conventional synchronous generator resources are typically uncontrolled).) (Since improving technical capabilities do not change either the underlying variability of wind production or the continued possibility that short-term deviations from expected wind output need to be managed.)

At very low penetration levels of wind, the cost of integrating wind, i.e., the cost for the system to react to expected and unexpected wind output changes in ways that maintain system balance within acceptable bounds to provide reliable electricity supply, tends to be very low because the fluctuation of wind is dwarfed by fluctuation of demand. That is, while the variability of wind imposes a real cost, in the sense of using up some of the ability of the system to absorb (unexpected) fluctuations, it is easily absorbed, at least on large systems or systems with significant flexible resources such as hydro, without material adjustments from standard procedures. Considerations of the attractiveness of wind as a generation resource in this easy-integration context therefore tend to ignore any potential additional costs to manage the variability of power production from wind resources.

However, with penetration increasing, it eventually becomes necessary to make costly operational and potentially investment changes to accommodate the larger aggregate fluctuations from wind resources to keep production and consumption in balance. Potential operational changes include re-dispatching the power system by using more expensive generators capable of quickly changing output in response to changes to power production from wind or deviations of wind output relative to forecast. Potential investment changes include adding more flexible generation resources (generally more expensive), and accounting for the wind capacity for generation capacity reserves. (Wind capacity is often discounted because wind resources are not always available. This requires the system to secure other resources for maintaining required/desired capacity reserve margins. Securing such resources under higher wind penetration levels could become costly because the net revenue from selling energy, which can offset the annual carrying charge, can be lower (because wind resources with lower marginal costs are dispatched before these resources).) Wind resource expansion decision now needs to include these adjustment costs.

While the specific methods and assumptions may vary, most wind integration studies estimate the cost of integrating wind by calculating the combined (net) variability of wind and demand (net-load variability) using time-synchronized data and evaluating how dispatchable resources will be used to match such variability to maintain system balance. Many studies point to improving ancillary service products (including reassessing their quantity) as one of the solutions to provide adequate response to the increasing magnitude and faster rate of output fluctuation from wind resources but also to fill in the gap that occurs when actual wind production deviates from forecast production. Some studies identify ways to increase the flexibility of existing resources through retrofitting these resources, or by adding new flexible resources of various types including storage. Studies for larger interconnected systems often highlight the benefit of better regional coordination for addressing net-load variability. Coordination within a region reduces net-load variability because it diversifies both load and wind profiles while allowing the system operator to seek the needed flexibility from a larger pool of resources. (Wind production profiles across different geographic locations are not perfectly correlated and the correlation declines with geographic distance. Hence, the combined variability of wind resources decreases by pooling wind generation in different locations, with benefits generally increasing the further apart wind resources are located, or the more diverse the geography around them. For instance, mountain ranges in Wyoming create significant lags and different directional patterns across wind farms located on different sides of those ranges. However, there are limits to the benefits of geographic diversification. For instance, while the overall wind production across ERCOT is somewhat smoother and more predictable than from any particular subregion, it is still a very volatile pattern and there are times (hours or longer) when essentially all of the wind production in the state goes off-line, or returns to high power, over short time frames. [13]. Sometimes the loss of power is not because the wind is not blowing, but because a widespread storm is making it blow too hard, above the operating limits of the plants. These can affect large areas, such as all of England [14].) A robust transmission system is often seen as key to such coordination. Some studies highlight the benefits of expanding the region itself, aiming for further increased diversification of wind and load profiles and access to a larger pool of resources with flexibility. Regional coordination backed by a robust transmission system may also have additional benefits, such as increasing energy market competition and improving network resiliency, so such decisions are typically made in conjunction with other objectives.

The least-cost wind integration solution varies by system. In smaller and more isolated systems, procuring additional flexibility, mostly through ancillary services in the form of operating reserves, tends to be a key solution. As a consequence, some jurisdictions have been trying to put the economic burden of providing this flexibility on wind developers—by requiring renewable resources to provide some “firming” of its power or to manage their ramp rates. In response, alternative resource developers team up with flexible resources including natural gas or hydro generation resources or bundle their assets with storage technologies. In larger and more interconnected systems, flexibility is less critical due to the diversification benefits brought by transmission and regional coordination. Growing penetration of wind resources has thus led a number of power systems operators to rethink their process for adding transmission as a cost-effective tool for wind integration. (Transmission often has significant other benefits beyond wind integration.)

In recent years, the additional need for flexibility to integrate wind has led to significant increases in the flexibility of various dispatchable generators. In Ontario, for example, nuclear units, previously deemed inflexible in the United States and Canada, are now cycled to accommodate these alternative resources. At the same time, wind technologies have improved and many newer wind turbines can themselves provide the various grid support services, and some systems allow renewable generators to directly contribute to maintaining reliability, for example by providing certain ancillary services. (There are other reliability contributions, such as counting (even if partially) the capacity of wind resources toward meeting resource adequacy goals.) Overall, options for securing the needed flexibility have increased, and consequently the cost of securing the needed flexibility needs has declined.

In addition, the design of electricity markets has evolved in ways that help integrate wind and other variable resources. In the United States and Europe, liberalized wholesale markets have generally moved toward shorter dispatch cycles, mostly dispatching resources on 5-minute intervals. Shorter dispatch cycles reduce the uncertainty and duration of the period (and therefore the overall quantity) for which ancillary services must be provided. For example, the Electric Reliability Council of Texas (ERCOT), with nearly 16 GW of wind installed (as of March 2016) [15], identified moving the dispatch resolution from 15 to 5 minutes in late 2010 as “one of the main reasons why ERCOT has been successful in integrating renewables with minimal increase in Ancillary Services capacity” [16]. While this was likely a good idea regardless of wind integration, it complemented the introduction of many renewables onto the ERCOT system.

In addition to shorter dispatch cycles, several regional US markets including the Mid-Continent Independent System Operator (MISO) and Southwest Power Pool require variable resources to directly participate in the wholesale energy market as dispatchable resources. That is, a wind unit can bid into the energy market up to the cap based on its forecasted output and will be penalized (like any other dispatchable resource) if it cannot follow its dispatch signal. (Power systems operations differ significantly region by region. Most US markets centrally dispatch at least larger generating units by sending commands to individual generating units to increase, hold, or decrease output levels. In European markets, generators tend to self-dispatch, i.e., they react to market prices rather than direct dispatch signals. However, penalties can still arise through short-term imbalances caused by deviations of output from wind generation relative to anticipated and contracted electricity amounts.) MISO assumes that approximately 95% of wind energy’s potential can be captured through economic dispatch. The traditional unit commitment cycle, typically performed day-ahead, has also been evolving. Many US markets, including PJM, have introduced intraday commitment to reduce the uncertainty associated with deviations of net load from forecast. Others, including the New York Independent System Operator, include wind resources in its commitment logic.

Some systems have tried to expand their regional footprint to maximize the geographical diversity benefits of renewable resources. Denmark, known as one of the world’s leading wind countries, interconnects both with Germany and the Scandinavian countries. The larger footprint has helped integrate wind resources developed in and around Denmark. Other systems, such as the Germany market and Xcel Energy Colorado, have reduced the total variability of wind resources by aggregating all wind and/or solar output into one portfolio for output forecasting purposes, effectively reducing the real-time net-load variability and forecast deviations. For the same reason Spain also forecasts total wind output at the market level, rather than at the individual plant level.

Improvements in wind forecasting techniques have further reduced the forecast uncertainty. Technological advances in weather forecasting, together with better data on historical performance of renewable resources, allow significantly improved forecasting accuracy of wind generation. Forecasts today are much more accurate than they were 10 years ago and often include ramping forecasts to allow system operators to prepare for extreme events. In many cases the improvements in forecasting technique lead to operational changes. (There are other ways to take advantage of the improved forecasts. For example, better wind forecasts can be applied to improve load forecasts, especially in today’s world where smarter infrastructure are being deployed at the customer site.) For example, Xcel Energy Colorado improved the wind forecast accuracy by 35% relative to previous forecast methods, informing both day-ahead and real-time operations. Since the introduction of the improved methodology, Mean Absolute Error (MAE) in wind forecasting has decreased from 18.01% in 2009 to 11.04% by 2013 (a 38.7% reduction) [17]. Xcel Energy now coordinates the unit commitment, dispatch, and fuel purchase schedules for its traditional generation resources with wind forecasts and estimates that its US$6×10⁶ ($6 million (USD)) investment in improving wind forecast over 6 years has saved over US$60×10⁶ ($60 million (USD)) over the same period [18]. The California Independent System Operator and MISO have enhanced their ancillary service products and now include flexible ramping products designed for dealing with net-load ramping needs that are much steeper than historical load variation.

Overall, the worldwide experience with wind generation over the past two decades has led to a greater understanding of the characteristics of this renewable resource and the remedies needed for integrating it reliably and economically through the use of existing, and sometimes new, resources. Fig. 20.2 shows the estimated integration cost from a number of studies performed for US systems. Two observations can be made based on these studies. First, the estimated cost of integrating wind varies significantly across studies, ranging from less than $2 (MW h)⁻¹ to more than $10 (MW h)⁻¹. While many factors including changes in fuel and capital costs likely contribute to the wide range, the range of estimated integration costs is generally wider at higher penetration levels. The second observation is that, on average, estimates of integration costs are not increasing over time even though penetration levels have been increasing. For example, PacifiCorp has conducted four studies, in 2005, 2007, 2010, and 2012. The integration cost estimate of $4.5 (MW h)⁻¹ at a penetration level of about 10% in 2005 increased to $5 (MW h)⁻¹ at an 18% penetration level in 2007 and to nearly $10 (MW h)⁻¹ at a 15%–18% penetration level in 2010, but then decreased to only approximately $2.5 (MW h)⁻¹ at a penetration level slightly above 20% in 2012 [19]. While the integration costs will vary over time due to changing underlying assumptions for natural gas prices (and therefore shows a higher cost in 2010), it is also likely that progress is being made in understanding the characteristics of this alternative resource. Operators are improving the methodologies for estimating integration costs and are being helped by an expanded set of operational (and technology) options available for renewables integration.

Nonetheless, the mainstream integration approach has generally stayed inside the traditional framework of adjusting the production (generation) from dispatchable resources to meet the net load (i.e., demand net of wind and other noncontrollable generation resources).

20.3 The Future of Wind Integration

The currently prevailing framework for wind integration is centered on the notion that increasing levels of wind generation and the associated output fluctuations are largely counterbalanced with the flexibility from traditional dispatchable resources. There are, however, at least three distinct developments that will likely limit the effectiveness for this framework at some point in the future.

First, wind is no longer the dominant alternative resource technology in many regions. Rather, the cost of other renewable technologies, particularly solar photovoltaic (PV) generation, has become much more competitive and has been entering the market at a rapid pace. PV technology has several advantages over wind. First, its generation profile tends to better match the general load profile—it generates more power during the daytime when it is needed, compared to wind resources in many parts of the world typically producing more in the early mornings when power is not needed as much. This profile difference now leads many to view solar PV as a complementary technology to wind. Also, the scalability and modularity of the technology enables fast and widespread deployment. Wind and solar currently dominate the global growth of renewable electricity production. In 2015, the combined share of investments between these two technologies comprised 90% of global renewable energy (excluding large hydro resources) investment of nearly US$286×10⁹ ($286 billion (USD))—with solar at US$160×10⁹ ($160 billion (USD)) and wind at nearly US$110×10⁹ ($110 billion (USD)) [21]. Given its longer investment history and higher average capacity factor, wind still represents a larger portion of total installed capacity and production. (In 2015, annual energy production from wind exceeded 840 TWh, about 3% of global electricity production. By comparison, solar PV generated about 250 TWh, or about 1% of the global electricity production [21].)

Second, a combination of the improving economics of wind and solar and climate change related policy will likely require most existing fossil-fuel-based resources to be replaced with nonemitting resources over the next few decades. Therefore, most of the current fossil-fuel-based resources will likely eventually no longer be as available to help “integrate” renewable resources with variable output. At that point, various types of renewable resources, eventually storage, and almost certainly enhanced real-time demand management will likely become increasingly important for integrating each other. (It is also possible that gas turbine or steam turbine technology-based resources currently fueled by fossil fuel to continue providing the integration services (balancing the system dominated by variable resources such as wind and solar), by replacing the fossil fuel with renewable fuels such as biomass, biogas, and biofuels.) This will create both new challenges and opportunities. The loss of inertia, which is currently largely provided by fossil-fuel-based resources, likely represents a new challenge not addressed in many past integration studies. (As Fig. 20.2 shows, many of the earlier integration studies focused on renewable penetration levels that were typically lower than 40%–50%. With the awareness of global warming, several systems are exploring options to achieve significantly higher penetration levels to reduce GHG emissions. Such future systems are often expected to be primarily characterized by variable generation resources, such as wind and solar PV, which provide limited if any inertia. Therefore inertia has begun to be a focus of interest, especially on smaller systems.) Given the low tolerance for frequency fluctuations of the system, maintaining inertia, which acts to stabilize the system, can become critical, especially for smaller systems. Should the total quantity of inertia become lower than the system needs, it has to be made up either with new inertia provided from remaining non-fossil-fuel resources and possibly from demand resources. (These options include increasing loads with rotating mass (such as motor loads) and converting existing generators (with rotating mass) into synchronous condensers. Studies have identified other means to reduce the needs of inertia, including providing synthetic inertia from inverter-based generation or adjusting primary frequency response quantities from resources that respond faster than traditional resources (e.g., governors).)

The loss of traditional fossil-fuel-based resources providing flexibility and inertia may be accelerated due to the impact of higher penetration levels of renewable resources with near-zero marginal costs have on market prices. In systems with wholesale energy markets and significant shares of renewable generation, market clearing prices have, on average, declined, and in some cases quite substantially. At the same time, the occurrence of negative market clearing prices has increased. Negative prices can occur when larger, less flexible units want to stay online in order to avoid high start-up and shut-down costs or when resources are willing to bid into the market at negative prices to assure being dispatched and thus receive output-based incentives, such as the US production tax credit for renewable resources, renewable energy credits (RECs), feed-in tariffs (FITs), or fixed price power purchase agreements. These price patterns impact the long-term economic viability of fossil-fuel-based resources that system operators currently rely on to provide the operational flexibility for integrating alternative resources such as wind. In systems dominated by fossil-fuel-based resources, planners and policy makers will therefore need to understand the conflicting pressures of the current framework—increasing renewable resources to replace fossil fuel requires securing the economic viability of fossil-fuel-based resources for providing ancillary services, at least until alternative technology options emerge at sufficient scale to be able to provide non-fossil-fuel-based alternatives.

Finally, led by the progress of solar PV, there is a significant trend toward locating generation sources much closer to the customer than has been observed traditionally. In many cases, resources are moving “behind the meter” and thus become less visible and less controllable for system operators, creating additional challenges with respect to balancing supply fluctuations. Solar PV is the most obvious generation technology to be located behind the meter because it is scalable: a small solar PV panel can generate just as much electricity per unit of surface are than a larger one. (This does not mean that solar PV does not benefit from economies of scale in construction, or that there are not other sources of efficiency gains. In fact, utility-scale solar PV projects can and tend to be substantially cheaper per unit of power output and per unit of avoided emissions than small residential systems. They tend to produce more output per panel since larger systems can be oriented more optimally toward the sun—they do not have to follow the slope of the roof and can also be tracking the sun. They also involve lower installation costs with lower inversion and control costs since they can be sized for a larger group of PV assets, rather than for individual roofs.) By contrast, small and medium-sized wind turbines are not as advanced as the more developed large-scale wind turbines and lack the high capacity factors enjoyed by their utility-scale siblings. Nonetheless, distributed wind has recently been gaining momentum as well. (Distributed wind operates at capacity factors that are generally higher than PV systems and also have the benefits of producing some power around the clock. Furthermore, daily wind production profiles tend to fit the residential demand profile better than solar PV because the peak residential demand in many parts of the world often occurs after sunset. And distributed wind projects can be put in service much faster, typically within 2–9 months, compared to 2–4 years for land-based utility-scale wind farms and 8–12 years for offshore wind farms. Finally, wind does provide system generation inertia (needed for stability), and although limited, this could become critical for protecting some small-scale systems from disturbances. Therefore, while not as prominent as solar PV systems, distributed wind has started to gain momentum.)

Most distributed solar PV and wind systems serve the host load directly (behind the meter) and are not visible to the system operator. Yet the operational and planning issues caused by their variable output are the same as for the larger utility-scale resources. Today, many system operators are becoming aware of the growth in distributed resources and are trying to incorporate the associated uncertainty in their operations. One of the challenges is that imbalances on the distribution network cannot be remedied in the traditional way of controlling the output of dispatchable generators as done on the bulk transmission system—since most distribution systems do not have resources that are controlled by a system operator. Distribution level integration of wind and solar resources therefore likely represents new and important challenges that require further coordination of the operations of all resources, regardless of their interconnection point and controllability by the system operator (i.e., whether they are interconnected to the bulk transmission system and controlled by the system operator or interconnected to the distribution system, oftentimes behind-the-meter, and not controlled by the system operator).

In addition to these three developments related to wind and solar PV, the emergence of new storage technologies represents a significant change in the industry. (Many of these new storage technologies are portable and scalable, so that they do not require much space and can be installed quickly (within months, compared to years for new generation resources), even at remote locations, and they be designed to provide various services, including ancillary services and dynamic grid support.) Variable renewable resources are recognized as a force that creates opportunities for storage in many systems. The marginal cost difference between renewable and traditional fossil-fuel-based resources, the need for flexibility in operation, and in the early days the lack of voltage regulation capability or protection against low-voltage events by wind resources, has created such opportunities. These new storage technologies can respond to emerging opportunities in existing energy and ancillary service markets but are also a potential component of a changing framework of integrating the renewable resources.

The combined effect of these developments around wind and solar PV and storage is change to the current practice of system planning, particularly in smaller systems including island grids. For example, many of the smaller and isolated markets that have traditionally relied on fuel oil-based generation resources have experienced very high and volatile power prices over the past decade. These systems have been seeing renewable resources as their remedy for a lower, more stable power price (and to some extent energy security). However, the limited demand, the lack of geographical diversity, and limited flexibility from existing resources have made it technically challenging for these systems to integrate higher amounts of renewable resources.

Several systems, including in particular island systems, have tried to increase load flexibility as renewable penetration levels increase. This can be done in the first instance by creating more centrally coordinated load management and associated opportunities for customers to be compensated for providing various system services. A more dramatic potential change pushing further along those lines would involve the electrification of other industries in a way that provides flexibility. Electrifying the transportation section and using electrical vehicles as a source of flexibility (such as by timing charging) is one example. Electrification of heating (and/or cooling, although most cooling today is already electrified) likely provides opportunities for using thermal storage (of water) to provide additional flexibility to integrate renewables while at the same time displacing fossil fuel consumption for heating. Allowing demand response to play a bigger role in managing system variability (and emergency situations) has been a theme in larger interconnected systems as well. (Other approaches under development in larger interconnected systems include dynamically managing the transfer capacity of transmission lines.) The proliferation of smarter infrastructure, much of it deployed at the customer site (smart meters, smart thermostats, smart appliances, all enabled by smarter software), enables participation of increasing amounts of demand in activities that help mitigate the variability of renewable generation. The incentives to provide demand response likely also rely significantly on improved price signals to end users, e.g., in the form of time-varying retail tariff structures and means to compensate end users for providing ancillary services.

Also, in a system primarily characterized by variable generation resources, such as wind and solar, transmission planning will likely need to take into account not only short-term reliability concerns, but increasingly how to allow access to promising areas for renewable energy development, i.e., areas where the wind blows and/or the sun shines a lot, and how to transport energy from renewable rich areas to load centers. The development of new transmission lines in Texas, the so-called Competitive Renewable Energy Zone (CREZ) lines and the current construction of high-voltage transmission lines in Germany to connect on- and offshore wind resources in the North to demand centers in the South are two examples of a trend that will likely need to accelerate.

All of these approaches represent a framework that differs significantly from the traditional framework for renewable integration. Rather than addressing the challenges associated with incrementally growing wind (and other variable generation) capacity, it takes into account the broader ultimate objectives of renewable integration, such as to ultimately enable deep economy-wide GHG reductions. This more holistic approach therefore likely needs to involve other sectors, such as buildings (space and water heating) and transportation, which traditionally were not part of planning and operating the electric system. For instance, New York City’s 80×50 initiative is one such integrated effort across sectors—buildings, energy, and transportation—to understand potential strategies for New York City to achieve an 80% reduction in GHG emissions by 2050 (thus 80×50). A number of other cities around the world, including Berlin, Copenhagen, and Vancouver, have committed to essentially 100% renewable energy use and at least 80% GHG reductions by mid-century [22]. In these examples, the phrase “alternative” energy source no longer applies because the entire system is designed around renewable resources, with wind often being the largest component.

20.4 Conclusions

Overall, the increasing shares of wind, solar PV, and other renewable resources, more and more of which are connected to the electricity grid by advanced power electronics, are part and parcel of the (r)evolution of power systems across the world. This evolution also includes increased levels of flexibility embedded elsewhere in the system, including controllable loads, electricity, and thermal storage technologies (with a growing share behind the meter) and transmission system interconnections and control procedures. The more distributed nature of wind, solar PV, and other forms of generation along with more active consumer participation are all contributing to a dramatic shift in the nature and characteristics of the electricity grid.

To plan a system that can accommodate large amounts of renewables at least cost, it will be important to consider a more holistic approach than traditional incremental approaches. Since many of the complementary approaches, including demand-side responses, storage, and various means of using renewable energy generators themselves to balance the system, are nascent and rapidly evolving, it is impossible to plan the “optimal” system today. It is therefore important to enable the development of complementary technologies, and to incorporate them into plans and markets as they mature. Also, given that in many parts of the world traditional fossil generation still represents the largest share of total production, a transition is needed that minimizes disruption along the way, both physically and financially. In many countries there are material institutional hurdles to implementing this holistic approach, which would consider (wholesale) renewables, retail technologies, and revised transmission planning as a complementary bundle of choices to be made jointly. In particular, responsibility for these choices tends to be dispersed across entities with different information sets and different interests. Nonetheless, as the system continues to evolve toward higher levels of variable renewable resources, the accompanying industry framework must provide the appropriate signals to incentivize sufficient flexibility in both the operational and investment time horizons. Not only is a sufficient level of capacity required to meet future demand, but the nature of this capacity is fundamentally different from what was needed in the past, due to the emphasis on and the need for flexibility.