Renewable Energy Integration Opportunities & Challenges in Chile - system design & management

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Renewable Energy Integration Opportunities & Challenges in Chile - system design & management
system design &
management

Renewable Energy Integration
Opportunities & Challenges in Chile

             Jorge Moreno SDM 2011
             Donny Holaschutz SDM 2010
Renewable Energy Integration Opportunities & Challenges in Chile - system design & management
Agenda
• Trends in Wind & Solar Integration in Chile

• Emerging Dynamics in the Power System
   –   Changes in the Net Load
   –   Regionalization of Power System Dynamics
   –   New Modes of Operations of Existing Units
   –   Emerging Socio-Technical Constraints
   –   Real Time Deviations from the Day Ahead Plan
   –   Challenges to Operations of Reserves
   –   The Interactions between Carbon Policy & the Power Market

• Opportunities to Utilize Existing Flexibility & Encourage
  Investment in New Flexibility

                                                                   2
Renewable Energy Integration Opportunities & Challenges in Chile - system design & management
Agenda
• Trends in Wind & Solar Integration in Chile

• Emerging Dynamics in the Power System
   –   Changes in the Net Load
   –   Regionalization of Power System Dynamics
   –   New Modes of Operations of Existing Units
   –   Emerging Socio-Technical Constraints
   –   Real Time Deviations from the Day Ahead Plan
   –   Challenges to Operations of Reserves
   –   The Interactions between Carbon Policy & the Power Market

• Opportunities to Utilize Existing Flexibility & Encourage
  Investment in New Flexibility

                                                                   3
Renewable Energy Integration Opportunities & Challenges in Chile - system design & management
Chile has been a Leader in Integration of
Renewable Energy                                                                Country
                                                                                               % Percentage of Solar
                                                                                                & Wind Generated
                                                                                                      (2016)*
                                                                                Denmark                    44.6%
                   Solar Installed Capacity*
                                                                                Lithuania                  27.3%
     3.00
                                                                                   Spain                   22.8%
                                                                                 Portugal                  22.0%
     2.50                                                    Rest of South        Ireland                  20.2%
                                                              America &         Germany                    17.8%
                                                               Central
                                                                                  Greece                   17.1%
                                                               America
     2.00                                                                                                  14.2%
                                                                                    Italy
                                                                             United Kingdom                14.1%
                                                                                Romania                    13.2%
GW

     1.50
                                                                                 Belgium                   9.9%
                                                                                 Sweden                    9.9%
     1.00                                                                         Austria                  9.2%
                                                                              Netherlands                  8.3%
                                                                Chile           Australia                  7.9%
     0.50
                                                                                  Poland                   7.6%
                                                                                     US                    6.6%
     0.00                                                                         Turkey                   6.3%
            2011      2012   2013    2014      2015   2016                         Chile                   6.3%

                                                                                       *BP Statistical Review of World Energy

                                                                                                                                4
Renewable Energy Integration Opportunities & Challenges in Chile - system design & management
Chile has been a Leader in Integration of
Renewable Energy                                                                                  Country
                                                                                                                 % Percentage of Solar
                                                                                                                  & Wind Generated
                                                                                                                        (2016)*
                                                            2017
                                      14%                                                         Denmark                    44.6%
                                                                                                  Lithuania                  27.3%
                                                                                                     Spain                   22.8%
                                      12%
                                                                                                   Portugal                  22.0%
                                                                                                    Ireland                  20.2%
 % of Wind & Solar Energy Generated

                                      10%                                                                                    17.8%
                                                                                                  Germany
                                                                                                    Greece                   17.1%
                                      8%                                                              Italy                  14.2%
                                                                                               United Kingdom                14.1% Chile Exceded
                                                                                                  Romania                    13.2%      10%
                                      6%                                                                                              in 2017
                                                                                                   Belgium                    9.9%
                                                                                                   Sweden                    9.9%
                                      4%                                                                                     9.2%
                                                                                                    Austria
                                                                                                Netherlands                  8.3%
                                      2%                                                          Australia                  7.9%
                                                                                                    Poland                   7.6%
                                                                                                       US                    6.6%
                                      0%
                                            1   2   3   4   5   6   7   8   9   10   11   12        Turkey                   6.3%
                                                                Month                                                        6.3%
                                                                                                     Chile

                                                                                                         *BP Statistical Review of World Energy

                                                                                                                                                   5
Renewable Energy Integration Opportunities & Challenges in Chile - system design & management
High Energy Prices & Opportunities to Sign
PPAs have Driven Integration
                                                                    Most New Projects
                                                    Block Scheme       Associated
                                                      Introduced   to Winning Bids are
                           14000                                                         160
                                                                      Wind or Solar

                           12000                                                         140

                                                                                               Average Offered Price ($USD/MWh)
                                                                                         120
 Energy Contracted (GWh)

                           10000

                                                                                         100
                           8000
                                                                                         80
                           6000
                                                                                         60

                           4000
                                                                                         40

                           2000                                                          20

                              0                                                          0

                                   Regulated Client Auctions

                                                                                                                                  6
Renewable Energy Integration Opportunities & Challenges in Chile - system design & management
Overview on the Chilean National Electricity
System: Current Regional Dynamics
      Primarily Thermal   Primarily Hydrothermal

                                                   7
Renewable Energy Integration Opportunities & Challenges in Chile - system design & management
Agenda
• Trends in Wind & Solar Integration in Chile

• Emerging Dynamics in the Power System
   –   Changes in the Net Load
   –   Regionalization of Power System Dynamics
   –   New Modes of Operations of Existing Units
   –   Emerging Socio-Technical Constraints
   –   Real Time Deviations from the Day Ahead Plan
   –   Challenges to Operations of Reserves
   –   The Interactions between Carbon Policy & the Power Market

• Opportunities to Utilize Existing Flexibility & Encourage
  Investment in New Flexibility

                                                                   8
Renewable Energy Integration Opportunities & Challenges in Chile - system design & management
Wind and Solar Integration is Changing the Net Load
                   12000                       Coal
                                               RoR Hydro
                                               Others                                                              March 28th, 2018
                                               Gas                          Approximation of Net Load
                                               Reservoir Hydro
                   10000
                                               Solar
                                               Wind

                   8000
 Generation (MW)

                   6000

                   4000

                   2000

                      0
                           1   2   3   4   5   6   7    8   9    10   11   12   13   14   15   16   17   18   19    20   21   22   23   24
                                                                           Hour

                                                                                                                                             9
Renewable Energy Integration Opportunities & Challenges in Chile - system design & management
One-Hour Net Load Ramps Requirements in the System

                                                     10
The One-Hour Net Load Ramp Requirement in the System
could double by 2021 and triple by 2026
             Max 1745 MW/hr           Max 2837 MW/hr
      2021   Min -1393 MW/hr   2026   Min -2463 MW/hr

                                                        2,750

                                                        0 MW

                                                        -2,750

                                                                 11
The Duck Curve does Not Always Apply to Chile
                                           Dry Scenario (2021)                                                        Wet Scenario (2021)
                      10000                                                                           10000
                            9000                                                                      9000
                            8000                                                                      8000
          Generation (MW)

                                                                                    Generation (MW)
                            7000                                                                      7000

 Winter                     6000                                                                      6000
                            5000                                                                      5000
  Day                       4000                                                                      4000
                            3000               Net Load                                               3000            Net Load
                            2000                                                                      2000
                                               Net Load minus Hydro Reservoir                         1000
                                                                                                                      Net Load minus Hydro Reservoir
                            1000
                                               Generation                                                             Generation
                              0                                                                          0
                                   1   3   5     7   9    11 13 15 17 19 21 23                                1   3   5   7   9   11 13 15 17 19 21 23
                                                                            Hours                                                                 Hours
                       10000                                                                          10000

                            9000                                                                       9000

                            8000                                                                       8000
          Generation (MW)

                                                                                                       7000

                                                                                    Generation (MW)
Summer                      7000
                                                                                                       6000
                            6000
  Day                       5000                                                                       5000

                            4000                                                                       4000

                            3000           Net Load                                                    3000           Net load
                            2000                                                                       2000
                                           Net Load minus Hydro Reservoir                                             Net Load minus Hydro Reservoir
                            1000                                                                       1000
                                           Generation                                                                 Generation
                               0                                                                          0
                                   1   3   5     7   9    11 13 15 17 19 21 23                                1   3   5   7   9   11 13 15 17 19 21 23
                                                                            Hours                                                                 Hours   12
In Chile the (Net Load – Hydro Curve) Looks More
like a Penguin from the Patagonia Swimming
                                                                     Wet Scenario (2021)
                                                 10000
                                                 9000
                                                 8000

                               Generation (MW)
                                                 7000
                                                 6000
                      Winter                     5000

                       Day                       4000
                                                 3000            Net Load
                                                 2000
                                                 1000
                                                                 Net Load minus Hydro Reservoir
                                                                 Generation
                                                    0
                                                         1   3   5    7   9   11 13 15 17 19 21 23
                                                                                              Hours
                                                 10000
                                                  9000
                                                  8000
                                                  7000

                               Generation (MW)
                                                  6000
                      Summer                      5000

                        Day                       4000
                                                  3000           Net load
                                                  2000
                                                                 Net Load minus Hydro Reservoir
                                                  1000
                                                                 Generation
                                                     0
                                                         1   3   5    7   9   11 13 15 17 19 21 23
                                                                                             Hours    13
Integration of Solar & Wind will Give Rise to
the “Middle Market”

The “Middle Market” has reached 2500 MW and could double o triple in the next ten years
                 Capacity Needs Are Changing with New Flexibility Needs

                                                                                      14
Agenda
• Trends in Wind & Solar Integration in Chile

• Emerging Dynamics in the Power System
   –   Changes in the Net Load
   –   Regionalization of Power System Dynamics
   –   New Modes of Operations of Existing Units
   –   Emerging Socio-Technical Constraints
   –   Real Time Deviations from the Day Ahead Plan
   –   Challenges to Operations of Reserves
   –   The Interactions between Carbon Policy & the Power Market

• Opportunities to Utilize Existing Flexibility & Encourage
  Investment in New Flexibility

                                                                   15
In the North – Wind and Solar Have been
  Integrated Rapidly
             Feb 27, 2016                   Feb 27, 2018
                                                                              NES-SING and
                                                                              NES-SIC North

Central Interconnected System (SIC) & Northern Interconnected System (SING)
were connected in November 2017 to create the National Energy System (NES)

                                                                                         16
Regional Net- Load Dynamics: In the North the
Duck Will Rapidly Get Chopped
                                                            Scenario (2021)
                                         3500
                                                                Net Load          Solar        Wind
             Demand - Generation (MW )   3000                                                                     NES-SING and
 Winter                                  2500                                                                     NES-SIC North
 Day                                     2000

                                         1500

                                         1000

                                          500

                                            0
                                                1   3   5   7      9    11    13     15    17    19    21    23

                                         3500
                                                                       Hour of Day
                                                                Net Load   Solar           Wind
          Demand - Generation (MW )

                                         3000

                                         2500
Summer
                                         2000
  Day
                                         1500

                                         1000

                                          500

                                            0
                                                1   3   5   7     9    11    13     15    17    19    21    23

                                                                       Hour of Day

                                                                                                                             17
High wind generation in zone 1 & 2
coincide with the drop in solar PV
production, as well as local peak
demand.

As the integration of wind and solar
generation increases in the north
deviations from the forecasted wind
generation in the north could increase
the stress on the system in real-time
operations.

                                         18
Agenda
• Trends in Wind & Solar Integration in Chile

• Emerging Dynamics in the Power System
   –   Changes in the Net Load
   –   Regionalization of Power System Dynamics
   –   New Modes of Operations of Existing Units
   –   Emerging Socio-Technical Constraints
   –   Real Time Deviations from the Day Ahead Plan
   –   Challenges to Operations of Reserves
   –   The Interactions between Carbon Policy & the Power Market

• Opportunities to Utilize Existing Flexibility & Encourage
  Investment in New Flexibility

                                                                   19
Startups Increasing in Gas Units (2017) &
Operations Likely to Continue

                                                   Kelar on 11/16/2017

                         Actual

                                  Day Ahead Plan                 Actual

                                                                         20
In a 2026 Scenario with a Carbon Tax of 30 USD/ton, Coal
Plants Stay on Cycling to Minimum Load
                                                                                                     350
                                                    SING   SIC

                                                                                   Generation (MW)
                                                                                                     300
                                   100                                                               250
                                                                                                     200
Time at Minimum Output Level (%)

                                    90
                                                                                                     150
                                    80
                                                                                                     100
                                    70                                                                50
                                    60                                                                 0

                                    50                                                                                            Hours
                                    40
                                    30                                                               350

                                                                                   Generation (MW)
                                                                                                     300
                                    20                                                               250
                                    10                                                               200   Guacolda (SIC North)
                                                                                                     150
                                     0
                                         0   20     40         60       80   100                     100
                                                                                                      50
                                                  Capacity Factor (%)
                                                                                                       0

                                                                                                                                  Hours

      All units in the SING and the north of the SIC are kept either operating between their minimum stable
      level and maximum net capacity, or operating constantly at a minimum level to provide reserves.

                                                                                                                                     21
High Variable Cost Flexible Units have been
Used more than Planned (Oct 2016 - Sept 2017)

               .

                                                22
Agenda
• Trends in Wind & Solar Integration in Chile

• Emerging Dynamics in the Power System
   –   Changes in the Net Load
   –   Regionalization of Power System Dynamics
   –   New Modes of Operations of Existing Units
   –   Emerging Socio-Technical Constraints
   –   Real Time Deviations from the Day Ahead Plan
   –   Challenges to Operations of Reserves
   –   The Interactions between Carbon Policy & the Power Market

• Opportunities to Utilize Existing Flexibility & Encourage
  Investment in New Flexibility

                                                                   23
Coal Plants Affected by Effluent Temperature Limitations in
the North under Strong Niño Conditions in the Pacific Ocean
     UNIT         NOV 2016            DEC 2016   JAN 2017   FEB 2017

      NTO2 Unit                                             Day Ahead Plan

                             Actual

                                                                             24
Effluent Temperature Limitation of Coal Power Plants Coincides
with the Drop of Solar PV Generation and Spinning Reserves
                                  Days with Water
                                   Temperature
                                    Limitations                             °C

                                                    At 19:11 on Feb 20th 2018 the CTM 1
                                                    Unit Reports:

                                                    •   Limitation Due to High
                                                        Temperatures at the Discharge

                                                    •   States that Generation Capacity
                               Day Ahead Plan
                                                        will be Limited to 110 MW
           Actual

                                                                                          25
Defined Local Emissions Limits Can Affect
Power Market Operations
          Emissions Limits for Existing Units
                    Fuel              Particulate Matter         Sulfur Dioxide           Nitrous Oxide
                                        (MP) mg/Nm3              (SO2) mg/Nm3             (NOx) mg/Nm3
                    Coal                      50                      400                      500
                   Liquid                     30                       30                      200
                    Gas                      N/A                      N/A                       50
          MP & SO2 can exceed the limit 5% of the hours due to (startup, shutdown, and trips)
          NOx must meet limit during 70% of the hours operating, including startup periods.

                    NOx Emissions Measurement of a Gas Unit (CCGT)

         150
         140                                                                                    In 2016 gas units exceeded:
                                                                 Hora Encendido
                                                                  Startup Hours
         130
                                                                  Continuous
                                                                 En Regimen Operations
         120                                                                                    •   NOx limits for existing units 54%
         110                                                                                        of the time during startup
         100                                   Challenges Meeting the Current Standard
          90                                   At Partial Load & During Startup
mg/Nm3

                                                                                                In 2016 coal units exceeded:
          80
          70
          60                                                                                    •   PM & SO2 limits for existing units
          50                                                                                        23% of the time during startup
          40
          30                                                                                    •   NOx for existing units 12% of the
          20                                                                                        time during startup
          10
           0
               0     50       100       150       200      250       300          350    400
                                              Generation (MW)
                                                                                                     *Ministry of Energy 2017
                                                                                                                                        26
Limitations can Affect Power Market Operations

                                    *Ministry of Energy 2017
                                                               27
Limitations can Affect Power Market Operations

       Problems with SO2 mitigations                                    CTTAR Coal Unit – July 11th, 2017
       equipment start at 7:44 am      At 11:25 am it reports that unit will
                                       shut down for high emissions and
                                       problems with SO2 mitigations                     Day Ahead Plan
                                       equipment

                             Actual

                                                                                  *Ministry of Energy 2017
                                                                                                             28
Agenda
• Trends in Wind & Solar Integration in Chile

• Emerging Dynamics in the Power System
   –   Changes in the Net Load
   –   Regionalization of Power System Dynamics
   –   New Modes of Operations of Existing Units
   –   Emerging Socio-Technical Constraints
   –   Real Time Deviations from the Day Ahead Plan
   –   Challenges to Operations of Reserves
   –   The Interactions between Carbon Policy & the Power Market

• Opportunities to Utilize Existing Flexibility & Encourage
  Investment in New Flexibility

                                                                   29
Dynamics of 3-13-2018 in the North part of
the SEN
                                   Marginal Costs Reached
                                   148 $USD/MWh at 10pm

                     Planned

            Actual

                     Hour of Day          Hour of Day       Hour of Day

                                                                          30
Dynamics of 3-13-2018 in the North part of
the SEN
          Wind and solar generation          Coal generation rapidly deviating
          398 MW less than expected at 3pm   reaches 414 MW less than expected at
                                             7pm

                       Planned

              Actual

                       Hour of Day           Hour of Day           Hour of Day

                                                                                    31
Dynamics of 3-13-2018 in the North part of
the SEN    Solar Generation SING

          Solar Generation
             SIC North

          1 Hour Ramp Manageable Generation SING

          1 Hour Ramp Manageable Generation SIC North

            Actual

                                                        32
Dynamics of 3-13-2018 in the North part of
                                 Marginal Costs
the SEN                         148 $USD/MWh
                                at 10pm in SING
               Day Ahead Plan
                                        CTM1 Coal Plant Reports Cooling
                                        Limitation at 9:16pm

                         Actual

         Sierra Gorda Wind Farm

          Day Ahead Plan
                                                                     Actual

       Valle de los Vientos Wind Farm

                                                                      Actual

               Day Ahead Plan

                                                                               33
Variations between the Planned Marginal Costs
(Day Ahead) and the Real in the SING
                              Marginal Cost SING (Crucero Busbar)                                          Marginal Cost SING (Crucero Busbar)
                            Pre-Interconnection (Jan 2017 – Nov 2017)                                     Post-Interconnection (Nov 2017-Mar 2018)

                                                                                                                              CMg Real     CMg Prog
                                                  CMg Real     CMg Prog                             250
                           250

                                                                                                    200

                                                                          Marginal Cost (USD/MWh)
                           200
 Marginal Cost (USD/MWh)

                                                                                                    150
                           150

                                                                                                                  Overestimated
                                                                                                    100
                           100                                                                                    Marginal Cost

                                         Underestimated
                                          Marginal Cost                                              50
                           50

                             0                                                                        0
                                                                                                             1

                                                                                                          1054
                                                                                                          1171
                                                                                                          1288
                                                                                                          1405
                                                                                                          1522
                                                                                                          1639
                                                                                                          1756
                                                                                                          1873
                                                                                                          1990
                                                                                                          2107
                                                                                                          2224
                                                                                                          2341
                                                                                                          2458
                                                                                                          2575
                                                                                                          2692
                                                                                                          2809
                                                                                                          2926
                                                                                                          3043
                                                                                                           118
                                                                                                           235
                                                                                                           352
                                                                                                           469
                                                                                                           586
                                                                                                           703
                                                                                                           820
                                                                                                           937
                                    1

                                 1153
                                 1441
                                 1729
                                 2017
                                 2305
                                 2593
                                 2881
                                 3169
                                 3457
                                 3745
                                 4033
                                 4321
                                 4609
                                 4897
                                 5185
                                 5473
                                 5761
                                 6049
                                 6337
                                 6625
                                 6913
                                 7201
                                 7489
                                  289
                                  577
                                  865

                                                                                                                                                      34
Dynamics of 3-26-2018 in
          Planned                    the North part of the SEN

                                        Marginal Costs
                                        Overestimated
Actual

                                                    Imports from the SIC
                                                    provided flexibility &
                                                   lowered marginal cost
                                                  between 7pm & Midnight

                                                     Programed SING to SIC
                                                   but flowed from SIC to SING

         Hour of Day

                                     Programmed
                                     Real

                       Hour of Day
                                                                                 35
Dynamics of 9-23-2017 SIC (Pre-Interconnection)

        Less Renewables than Expected

        Reservoir Hydro & Gas provided Flexibility

                                                     36
Dynamics of 9-23-2017 SIC (Before
Interconnection)

       Less Renewables than Expected

      Reservoir Hydro & Gas provided Flexibility

                                                   37
Agenda
• Trends in Wind & Solar Integration in Chile

• Emerging Dynamics in the Power System
   –   Changes in the Net Load
   –   Regionalization of Power System Dynamics
   –   New Modes of Operations of Existing Units
   –   Emerging Socio-Technical Constraints
   –   Real Time Deviations from the Day Ahead Plan
   –   Challenges to Operations of Reserves
   –   The Interactions between Carbon Policy & the Power Market

• Opportunities to Utilize Existing Flexibility & Encourage
  Investment in New Flexibility

                                                                   38
Overview of Planned Reserves for Frequency Regulation:
PFC (Contingency) + PFC (Up Regulation) + SFC (Up)
Case December 2017 (average day)
                                                                                 Recently, the interconnection
        1800
                                                                                 (NES-SIC & NES-SING)
        1600                          NES-SING                                   allowed the reduction of
        1400
                                                                                 reserve requirements for PFC
        1200
                                                                                 in the system.
        1000
   MW

         800
         600
                                                                                   Different reserve providers
         400
                                                                                   in the SIC-Center and SIC-
         200
                                                                                   South.
           0
               1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
                                           Hour                                    Competitive advantage of
                                BESS     Gas      Coal                             generators that provide
        1800                                                                       reserves in different
        1600                          NES-SIC                                      regions of the NES-SIC.
        1400
        1200
        1000
   MW

         800
         600
                                                                                PFC: Primary Frequency Control
         400
                                                                                SCF: Secondary Frequency Control
         200
           0
               1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
                                           Hour
                                Gas     Hydro     Coal
                                                                                                                 39
Planned Reserves SIC North & SING 3/03/2018

           PFC Contingency
                                              Battery Angamos

                (MW)
                                             Battery Cochrane

Primary     PFC Up Regulation
                 (MW)
Reserves
            PFC Down Regulation
                  (MW)

                                                                                40
Planned Reserves SIC North & SING 3/03/2018

                      PFC Contingency
                                                                            Battery Angamos

                           (MW)
                                                                           Battery Cochrane

Primary                PFC Up Regulation
                            (MW)
Reserves
                       PFC Down Regulation
                             (MW)
            SFC Up Regulation

                                             Coal Over Supply
                 (MW)

                                               Of Reserves
                                              During the Day
Secondary
 Reserves
              SFC Down Regulation
                    (MW)

                                                                                                              41
Planned Reserves SIC North & SING 3/03/2018

                      PFC Contingency
                                                                            Battery Angamos

                           (MW)
                                                                           Battery Cochrane

Primary                PFC Up Regulation
                            (MW)
Reserves

                                                                      When there is renewable curtailment &
                       PFC Down Regulation

                                                                       transmission constraints price signal
                             (MW)

                                                                                  drops to zero.
            SFC Up Regulation

                                             Coal Over Supply
                 (MW)

                                               Of Reserves
                                              During the Day
Secondary
 Reserves
              SFC Down Regulation
                    (MW)

                                                                                                               42
Planned Reserves SIC North & SING 3/03/2018

                      PFC Contingency
                                                                           Battery Angamos

                           (MW)
                                                                          Battery Cochrane

Primary                PFC Up Regulation
                            (MW)
Reserves
                       PFC Down Regulation
                             (MW)
            SFC Up Regulation

                                             Reserves Supply
                                               Tightens up
                 (MW)

                                             After Sun Hours
Secondary
 Reserves
              SFC Down Regulation
                    (MW)

                                                                                                             43
Planned Reserves SIC North & SING 3/03/2018

                      PFC Contingency
                                                                                 Battery Angamos

                           (MW)
                                                                                Battery Cochrane

Primary                PFC Up Regulation
                            (MW)
Reserves
                       PFC Down Regulation
                             (MW)
            SFC Up Regulation
                 (MW)

Secondary
 Reserves
              SFC Down Regulation

                                                Opportunity for
                    (MW)

                                             Renewables to Provide
                                             SFC Down Regulation

                                                                                                                   44
Use of More Gas and Diesel than Planned in Day
Ahead Coincide with Tightening of Reserve Supply

                                      October 2016 – September 2017 (SING)
                                      25
 Cumulative Hourly Deviations (GWh)

                                      20                Gas           Diesel

                                      15

                                      10

                                       5

                                       0

                                       -5   1   2   3   4     5   6    7   8   9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

                                      -10

                                                                                                                        Hours

                                                                                                                                45
Increases in Wind Capacity Drives New
Ramping and Reserve Requirements

• Projected Variability will Drive Definitions of Reserves
   – Scenario for 20-min variability
   – Wind generation developed across Chile

                                              Wind Data: AWS Truepower
                                                                         46
If no new flexible
generation projects are
added, increasing spinning
reserve requirements
increases:

1. VRE Curtailment,

2. CO2 Emissions, and

3. Operational Costs

for Medium Hydrological
Conditions

                             47
Agenda
• Trends in Wind & Solar Integration in Chile

• Emerging Dynamics in the Power System
   –   Changes in the Net Load
   –   Regionalization of Power System Dynamics
   –   New Modes of Operations of Existing Units
   –   Emerging Socio-Technical Constraints
   –   Real Time Deviations from the Day Ahead Plan
   –   Challenges to Operations of Reserves
   –   The Interactions between Carbon Policy & the Power Market

• Opportunities to Utilize Existing Flexibility & Encourage
  Investment in New Flexibility

                                                                   48
Effects of Carbon Policy on the Middle Market
       2017                                 Dry Scenario (2026)

              8760                                    8760        8760

                     New RoR Projects Get Developed
                                                                  49
Increasing the Carbon Price Does Not Have
the Same Effects on the SIC and the SING
                                       (Dry Scenarios)
                    SEN SING                                                 SEN SIC

   Flexibility of reservoir hydro & reservoir hydro’s ability to provide reserves allows CO2 price signal
   to be more effective in SIC

                                                                                                            50
Agenda
• Trends in Wind & Solar Integration in Chile

• Emerging Dynamics in the Power System
   –   Changes in the Net Load
   –   Regionalization of Power System Dynamics
   –   New Modes of Operations of Existing Units
   –   Emerging Socio-Technical Constraints
   –   Real Time Deviations from the Day Ahead Plan
   –   Challenges to Operations of Reserves
   –   The Interactions between Carbon Policy & the Power Market

• Opportunities to Utilize Existing Flexibility & Encourage
  Investment in New Flexibility

                                                                   51
Integration of Solar & Wind will Give Rise to
the “Middle Market”
 Capacity requirements are
  changing with emerging
      flexibility needs

 Today, flexibility isn’t being
    fully remunerated.

    How will Chile keep
integrating more renewable
   energy efficiently and
         effectively?

  Over time, how will Chile
  efficiently and effectively
      replace its existing
 thermoelectric assets with
newer more flexible assets?
                                  Hours
                                                52
New Modes of Operation Increase Costs for Existing Units
Creates Opportunities for New Technologies

                                                                                                  Total Variable
                                                                     Time
                                                                                                   O&M (VOM)
  Type of Unit                  Case Summary                       Operating    Starts    Trips
                                                                                                      Cost*
                                                                     (hrs)
                                                                                                   (USD/MWh)

                 Case 1 – Plant Operating at Full Load with an
                 Average Time per Cycle of 1875 hrs
                                                                     7500       Limited    4           2.5
   280 MW –
   Coal Unit
                 Case 2 – Daily Cycling between technical
                 minimum and full load.
                                                                     7116       Limited    4           2.6

                 Case 1 - Mostly Full load operating 6000 hrs.       6000       Limited    4           3.2

  400 MW -       Case 2 - 150 real starts per year from start to               150 Warm
  CCGT Unit      load following.
                                                                     4000                  8           6.1
                                                                                 Starts

                 Case 3 - 300 real starts per year from start to               300 Warm
                 load following.
                                                                     4000                  8           8.8
                                                                                 Starts

                                                                                                                   53
The Policy Levers to Incentivize Investment into New
Flexibility Options for the System are Intertwined
                Energy           CO2
  Long Term     Market          Policy
  Contracts
                  Environmental
Capacity           Regulation        Demand                     Demand
 Market                               Side
           Ancillary
                                      Policy
           Services      TX & Dist
            Market       Planning

    Focusing on just improving the parts of the policy independently will not guarantee
    improving the performance of the whole

    The performance of the electricity system will depend on how the policy levers fit
    together not what they achieve separately

                                                                                          54
Key Areas to Observe to Find
                            Opportunities for Flexibility:

                            1.   Performance of existing thermoelectric
  The improvement of             facilities

the performance of the      2.   Variability & deviations from the planned
 Electricity System will
                            3.   Deviations between actual & expected
    not be driven by             economic performance of the system
  pondering about the
                            4.   New constraints which emerge as the system
future, but rather really        operates
 understanding what is
                            5.   The behavior of the “Middle Market” & its
happening today to find          interaction with Environmental restrictions &
    opportunities to             CO2 Policy

improve the system for      6.   Interactions between energy and operating
     the long term.              reserve services

                            7.   Performance parameters which will be more
                                 relevant to address new challenges such as
                                 satisfying the net-load or improving regional
                                 needs
                                                                                 55
Upcoming Related Presentations & Paper
    6th International Congress on         Presentation of New Methodology to Asses Environmental
    Water Management in Mining
    2nd International Congress on
                                          Impact Industrial Facilities in Chilean Environmental Impact
    Water in Industrial Processes         Assessment System
    May 9-11, 2018 │ Santiago, Chile                                                      Jorge Moreno, Partner at inodú
                                                                                       Donny Holaschutz, Partner at inodu

                                       Teaching Masterclass on Opportunities for Storage in Mexico
                                                                                       Donny Holaschutz, Partner at inodu

                                       NEW MARKET INTERACTIONS IN THE CHILEAN ELECTRICITY
                                           SYSTEM WITH HIGH INTEGRATION OF VARIABLE
                                                      RENEWABLE ENERGY
                                                                                  Benjamin Maluenda, Lead Analyst at inodú
                                                                                             Jorge Moreno, Partner at inodú
                                                                                         Donny Holaschutz, Partner at inodú
                                                        Esteban Gil, Professor at Universidad Técnica Federico Santa María

                                        Presentation for Opportunities for Renewable Energy in Mining
                                                                                             Jorge Moreno, Partner at inodu

                                       Challenges Complying with Emissions Limits in Chile Caused by
                                       New Modes of Operations and High Levels of Renewable
                                       Energy Integration
                                                                                          Jorge Moreno, Partner at inodú
                                                                                       Donny Holaschutz, Partner at inodu
                                                                                                                            56
system design &
management

Renewable Energy Integration
Opportunities & Challenges in Chile

             Jorge Moreno SDM 2011
             Donny Holaschutz SDM 2010
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