Trading off renewable energy modulation and grid investments

To meet Flemish renewable energy targets in a cost-efficient way, current grid access policies for RES and high-efficiency cogeneration should be revised according to a new 3E study.

3E completed a study for the Flemish Regulator of the Electricity & Gas market (VREG) on the implementation of alternative grid access rules for solar, wind and CHP. Today the regulation already foresees the possibility of connecting these installation with a flexible grid access in congestion-prone grids. However, the current regulation’s lack of reimbursement schemes and limits for the modulated energy yields certain insecurities for the investors. Additionally, it may cause high grid investment costs for society especially for a high penetration of renewables in the distribution grids.

3E was assigned by VREG to investigate potential improvements by means of a benchmark study with other European countries. Further to that, 3E performed a techno-economic simulation to identify the most cost-effective policy framework and policy parameters. Three policy frameworks were compared:

Policy A – Present framework: temporary, but unlimited flexible access in case of congestion problems (incl. no financial compensation) until the (obligatory) grid reinforcement is completed
Policy B – Alternative framework that limits the possible financial loss until (obligatory) grid reinforcement is completed
Policy C – Alternative framework without grid reinforcement obligation that gives grid operators the freedom to make a trade-off between grid reinforcement or financially compensated modulation.

Additional policy parameters were introduced to ensure the maximum cost per additional unit of RES/CHP-energy injected to the grid is capped.

All possible combinations of policy parameters were evaluated on a simulated set of grids, growth scenarios for RES & high-efficiency cogeneration and renewable project developments. The figure below shows the results for the pareto-optimal policy parameters for a high growth scenario of solar wind and CHP. The total cost for grid integration (x-axis) increases as the injected energy from new renewable projects increases (y-axis). Both alternatives (policy option B & C) were found to significantly and robustly reduce the grid integration costs for society compared to the current practice (option A ).

(Click to enlarge)

The full report (in Dutch) is available on the VREG website.