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Technology Collaboration Programme by IEA

Valuing Flexibility in Power Plants

Technical Report

1 December 2017

Capture

Niall Mac Dowell, Clara Heuberger, Iain Staffell, Nilay Shah

Citation: IEAGHG, "Valuing Flexibility in Power Plants", 2017-09, December 2017.

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Publication Overview

The study was designed to investigate the value of flexible CCS-equipped power plants to the UK’s electricity system. The value used, the System Value (or SV), is a metric that quantifies the benefit, i.e. the reduction in total system cost, of adding a unit of a particular technology to the electricity grid. To operate effectively, an electricity grid must not only have adequate generating capacity to meet demand but also have reliable reserve generation capacity (e.g. as back-up for outages) and sufficient system inertia (for frequency control). While supply-side (e.g. energy storage) or demand-side (e.g. energy efficiency) mechanisms may offer alternatives to grid expansion, adding new capacity remains a central requirement for any grid, e.g. as power plants are retired and/or demand increases. Since not all technologies provide the same services to the grid, the value of adding a unit of a particular technology will be a function, at any given time, not just of the incremental increase in power demand that it may satisfy but also of the characteristics of the technologies already connected.

Publication Summary

  • The objectives of the FlexEVAL study were to investigate the need for flexibility and the value of flexible CCS power plants in the UK electricity system. It addressed the role of flexible CCS on long-term carbon intensity, recognising that policy mechanisms would likely be required to encourage the uptake of flexible CCS in the future electricity grid.
  • While the cost of CCS has been the focus of many studies, its value – the focus of the current study – has not been explored nearly as often. Investigating the value of a technology to the electricity system takes in much more than simply its cost; it includes the contribution of a technology to system adequacy (cf. total installed generating capacity), system reliability (cf. reserve capacity) and system operability (cf. inertia or spinning reserve).
  • The study demonstrated that flexible CCS power plants can provide additional value to the electricity system of the future. Flexible CCS power plants complement intermittent renewable capacity and provide system-wide benefits critical to reducing the cost of the electricity system.
  • The cost-optimal low-carbon electricity system of the future is likely to contain substantial intermittent renewable capacity. To integrate progressively higher shares of intermittent power generation, thermal power plants must have sufficient cycling capability.
  • Flexible CCS technologies provide additional value in being able to accommodate higher levels of intermittent renewable capacity, reducing total system costs (TSCs) further through increased electricity dispatch from intermittent renewables with low operational cost.
  • Its ability to provide low-carbon electricity consistently identifies CCS as an essential component for a global, low-carbon energy system to be achieved at least cost and the ability for flexible CCS to provide dispatchable, low-carbon electricity makes it even more attractive. However, while this may be valid from a global, system-wide perspective, the current high capital and operating costs of CCS inhibit its progress at the local level.
  • The value of electricity availability is an important backdrop to the study. While the cost of electricity is easy to calculate, e.g. £42.1/MWh[1] for the UK in 2014, the value to society and to the economy of having access to a reliable, secure electricity supply is more difficult to quantify. To address this a concept termed the value of lost load (VoLL) has been used as a measure of the damage caused to customers by power disruption. While estimates vary considerably, the VoLL is typically at least two orders of magnitude higher than the cost of electricity.
  • Using a metric termed the “System Value”, the study quantified the value of flexible CCS power plants to the UK’s future electricity system. In an energy sector where increasing demand and a tightening of carbon dioxide emission targets require significant changes to an energy system’s structure and operation, possible impacts of future developments on the System Value were reviewed. Key technical and market-relevant characteristics of CCS power plants were identified and flexibility concepts that enhance their ability to adjust power output discussed.
  • In reducing TSCs, flexible CCS technologies reduce demand from interconnectors compared to non-flexible CCS options and are thus able to lower dependency on electricity imports.
  • The economic level of deployment is only marginally affected by the flexibility of the power plants.

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