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Technology and Prospects for Cross-regional Power Networks GEIDCO February 22nd, 2017 1. Background 2. Study Contents and Outcomes Status and prospects for interconnection Case studies of regional energy interconnection Regulatory and market frameworks for interconnection 2 Background T o comprehensively analyze the current development status and prospects for electricity interconnection under climate change scenario, and to discuss the contribution of cross-regional interconnection to improve the development of renewable energy and access remote energy resources, Global Energy Interconnection Development and Cooperation Organization (GEIDCO), partnering with International Energy Agency (IEA), State Grid Corporation of China (SGCC) and other organizations, has established a joint working group to carry out the study, aiming to promote the development of cross-border and inter-continental interconnection, and deliver policy recommendation. In November 2016, IEA released a flyer of the study outcomes and received positive response during the 22nd session of the Conference of the Parties to the UNFCCC (COP 22) . 3 Background This publication mainly focuses on development status and prospects of technology, case study, Regulatory and market frameworks for interconnection. The major topics are as follows: Based on IEA climate change scenarios, the current development status and technology innovation of cross-border and inter-regional electricity interconnection are studied. The future development trends and prospects are proposed. By studying the electricity interconnection cases in world's major regions, it is validated that there are comprehensive benefits from interconnection, which include balancing mismatches in supply, saving demand and peak capacity, improving the integration level of variable renewable energy, accessing remote energy resources and etc. The market frameworks, regulatory and business investment models for interconnection are systematically studied. The measures such as establishing international organizations, improving market regulatory framework, applying coordinated planning and etc., are proposed. Key issues in development and utilization of new interconnectors are thoroughly discussed as well. 4 1. Background 2. Study Contents and Outcomes Status and prospects for interconnection Case studies of regional energy interconnection Regulatory and market frameworks for interconnection 5 2.1 Status and prospects for interconnection Electricity Interconncetion Scenario Currently, the total length of global electricity grid is about 75 million km, with around 250GW of interconnectors and high voltage transmission links (330GW in 2020). The interconnection within China grows rapidly. By 2016, the accumulated power transmitted by China UHV lines is 615 billion kWh. • • • The global investment in power sector is around USD 700 billion in 2015,40% of which went to electricity networks With a greater emphasis on flexibility and interconnection, IEA predicts that the investment in transmission will increase by a third in 20 years The selection of interconnetion technology (AC or DC) depends on its target. The typical interconnection scenarios: Low-cost interconnection over large distances, Connecting asynchronous grids, Connecting remote energy resources and loads, and Accommodating variable renewable electricity Historic and projected investments in transmission and distribution, IEA 2015 scenario Source: IEA (2016, World Energy Investment; IEA (2016), World Energy Outlook (2016). Growth in high-voltage transmission capacity Source: BNEF (2016), Global HVDC Interconnector Database; IEA (2016), Energy Technology Perspectives 2016. 6 2.1 Status and prospects for interconnection Electricity Interconncetion Scenario Low-cost interconnection over large distances Current Status: Rapid promotion of UHV/HV-DC technology •The longest cross-border interconnection: NorNed link between Norway and the Netherlands, 600km/700MW •China: Haminan-Zhengzhou±800kV UHVDC, 2191km/8GW Prosptects:many interconnection projects are scheduled •Undersea North Sea Network (NSN) link between the Nordic zone and the United Kingdom, Jarud-Qingzhou UHVDC link 730km/1.4GW •China Jarud-Qingzhou±800kV UHVDC link, 1234km/10GW Connecting asynchronous grids Current Status: Nearly 13 GW of links connect asynchronous grids around the world (excluding interconnection within China) •Current highest operation voltage: China-Russia ±500kV DC back-to-back interconnection •China: Central and North China power grid is asynchronously connected through DC lines with total capacity of 31.7GW Prospects: strong demand for asynchronous interconnection •NordBalt link, connecting the Baltic with the Nordic China-Russia DC back to •links between the asynchronous grids of South America in Brazil, Uruguay, Argentina •Mongolia-China-South Korea-Japan interconnection project back link 7 2.1 Status and prospects for interconnection Electricity Interconncetion Scenario Connecting remote energy resources and loads Current Status: Increase voltage to deliver remote energy resources •The longest: Brazil Rio Madeira project brings hydro power from the Amazon basin to the densely populated Sao Paulo area, 2 800 km away •China: 6 UHVDC links, transmitting wind, PV, hydro power from west, north, southwest part of China to eastern load center Prosptects:Accessing remote energy resources Zhundong-Wannan UHVDC link •China Zhundong-Wannan ±1100kV UHVDC link, 3324km/12GW, will break records in transmission distance, operation voltage, and capacity Accommodating variable renewable electricity Current Status: Application of FACTS, Flexible DC and virtual synchronous machine •costs for IGBT have decreased by 2/3 over the past eight years •Denmark, Skagerrak 4, is particularly designed for flexibility to accommodate high shares of wind power in the country •World first true Bipolar DC link: China Xiamen ±320 kV flexible DC link Denmark Skagerrak 4 Prosptects:Continuous upgrading and implementation of key technologies 8 2.1 Status and prospects for interconnection Technology Innovation on Electricity Interconnection UHVAC power transmission Jindongnan-NanyangJingmen UHVAC project Characteristic: With longer transmission ditance and larger transmission capacity, UHVAC networks will provide voltage and reactive power support for multi-DC fed-in grid Current status: world's first commercial UHVAC line: China Jindongnan-NanyangJingmen 1000kV project, 640km/5GW, and followed with Huainan-Nanjing-Shanghai, Aferwards, Zhebei-Fuzhou, Huainan-Zhebei-Shanghai, Ximeng-Shandong UHVAC projects in operation Prospects: With more potentials on transmission distance and capacity, Half-wavelength AC transmission could be one of the solutions to future trans-continental synchronous interconnection. UHVDC technology Characteristic: Long transmission ditance, large transmission capacity, controllable power flow, capable of end-to-end transmitting power to load center, reduce or avoid over power flow Current status: The voltage level of IGBT-based DC link already reached ±1100kV/120GW, the potential transmission distance could be over 4000km Prospects: Researches on converter, valve, bushing, DC filter and other core devices with higher operation voltage, larger capacity and higher reliability. Research on ±800kV DC cable has been started China. ±1000 kV DC Converter Valve 9 2.1 Status and prospects for interconnection Technology Innovation on Electricity Interconnection Flexible DC Transmission Characteristic: Able to supply power to passive power grid, avoid commutation failure and easy to establish multi-terminal DC network Current status: Flexible DC technology is under demonstration level. In worldwide, there are already 20 projects in operation and 20 under construction. Europe has the most VSC-HVDC projects. Wind power integration and weak grids interconnection are the most applied scenarios. Prospects: Improve VSC-HVDC capacity and operation voltage. VSC-HVDC Converter Valve Multi-Terminal HVDC Zhoushan Multi-Terminal HVDC Geographical scheme Characteristic: Able to connect variable power sources to consumptions and solve the stability problem aroused by single large-scale HVDC link connected in AC grid. Current status: Italy-Corsica-Sardinia multi-terminal DC link is the world's first multiterminal HVDC project. Québec-New England multi-terminal DC link is also in operation. China Zhoushan project is the world's first five-terminal flexible DC project in operation. Prospects: Breakthrough on DC circuit breaker, modeling and simulation, networking, fast relay-protection, insulation design, and operation techniques. 10 2.1 Status and prospects for interconnection — Conclusion 1 The growing rate of electricity demand will be higher than energy demand in the future. To accommodate variable renewable energy, it is necessary to strengthen electricity interconnections, enlarge transmission capacity, and improve the flexibility of power grid. 2 The typical interconnection scenarios: Low-cost interconnection over large distances, Connecting asynchronous grids, Connecting remote energy resources and loads, Accommodating variable renewable electricity, and etc. 3 The future development trend of electricity interconnection technology will mainly focus on UHVAC/DC transmission, VSC-HVDC transmission, multiterminal HVDC transmission, and etc. 4 UHVAC/DC is the basis of ultra long distance and large capacity power transmission. Taking full advantage of different technologies, efficiently utilizing of energy sources in different time zones will greatly improve the building of interconnection network. 11 1. Background 2. Study Contents and Outcomes Status and prospects for interconnection Case studies of regional energy interconnection Regulatory and market frameworks for interconnection 12 2.2Case studies of regional energy interconnection CASE 1: Europe-North Africa Interconnection UCTE Europe-North Africa Interconnection • Largest interconnected grid in the world in terms of hosted power capacity, more than 1TW installed by 2015 The southern border •The synchronous grid of Continental Europe encompasses the 24 countries of the Continental Europe Regional Group of the ENTSO-E and neighboring countries (Albania, Ukraine, Morocco, Algeria and Tunisia) •Interconnection situation:the grids of Spain and Morocco were interconnected by a single 400 kV circuit in AC through a submarine cable line The northern border • exist planning The Nordic synchronous grid(formed by Denmark, Sweden, Norway and Finland) linked via several HVDC cables with the UCTE grid 13 2.2Case studies of regional energy interconnection CASE 1: Europe-North Africa Interconnection—The southern border Electricity trade North African countries are experiencing a growing electricity demand. Almost all of the Morocco’s imported electricity comes from Spain. Mid-term opportunities Strengthen interconnections between Spain and Morocco. Plans to connect Tunisia and Italy by submarine cable, 200 km/600 MW. An agreement has been signed to conduct a feasibility study for the electric interconnection project between Morocco and Portugal, with a capacity of 1 GW. Benefits Low-cost renewable energy in Africa replace the thermal power in both Europe and Africa, to reduce carbon emissions. Promote closer cooperation and break barriers between countries, and establish mutually dependent and beneficial organization. Promote harmonious development and utilization of energy. Challenges and opportunities Clear regulations, agreements and grid codes are necessary to enable different power systems to operate together efficiently. Promote interconnection between Europe and North Africa. Promote large scale development of clean energy in North Africa countries. 14 2.2Case studies of regional energy interconnection CASE 1: Europe-North Africa Interconnection—The northern border Electricity trade In 2015, Norway exports almost 10% of total energy production and Sweden exports 15%. Mid-term opportunities The Nordic Carbon-Neutral Scenario sees the VRE share of generation in Northern Europe grow from 7% in 2013 to 30% in 2050. Build a unique offshore electricity grid in the southern part of the Baltic Sea. Benefits Keep strengthen the link between Nordic synchronous grid with the UCTE grid, make full use of large hydropower. By unidirectional electricity trade, enhance the power system flexibility, and promote development and utilization of renewable energy By offshore energy grid in southern Baltic Sea, linking offshore wind farms to Continental Europe. Challenges and opportunities Sharing of costs and benefits, stable operation of large power grid, benefitting from synergies in the generation portfolio increased interconnection capacity may unlock wind potential in Nordic countries beyond domestic demand in response to higher electricity prices on the continent Cost allocation and development of domestic power grid upgrade may enhance noneconomic obstacle 15 2.2Case studies of regional energy interconnection CASE 2: Linking the Americas through SIEPAC SIEPAC – the Central American Interconnection System Six countries : Panama, Costa Rica, Honduras, Nicaragua, El Salvador and Guatemala International operation: The establishment of an international transmission line company(EPR) under the Framework Agreement of the Electrical Integration of Central American. Shareholders include Central American countries and extraregional countries like Spain. SIEPAC’s transmission line route Interconnection situation • 1800 km of single circuit 230 kV transmission lines, which provides 300 MW of transfer • Integration : allowed for the deployment of the telecommunication infrastructure needed for the integration of Central American, México and Colombia systems through the installation of an optical ground wire (OPGW) conductor with 36 fibre-optic cables 16 2.2Case studies of regional energy interconnection CASE 2: Linking the Americas through SIEPAC Energy transactions in MER, 2013-15 Benefits Has the potential to enhance the local underdeveloped hydro resources and to improve the efficiency in the operations of the thermal power plants in the region. Promote electricity trading and enhance the energy safety in the region. Challenges and opportunities • Electricity trade The electricity sector and market structure of the six countries involved varies significantly, from models based on fully competitive wholesale markets to vertically integrated utilities acting as single buyers • • Enable the use of SIEPAC’s future second circuit as required to improve transmission capacity reducing national flows in the first circuit to improve reliability and safety of the regional transmission network. Execute the Colombia–Panama transmission interconnection project, which is crucial for the consolidation of the regional integration. Jointly make the plan for the regional power development 17 2.2Case studies of regional energy interconnection CASE 3: East Asia Interconnection • East Asia, locates in the east part of Asia, west bank of the Pacific Ocean, includes China, Mongolia, Russia(Far East and Siberia Area), North Korea, South Korea, Japan and the Association of Southeast Asian Nations (ASEAN) Northeast Asia •Interconnection status:The current cross-border interconnection projects include Russia-Mongolia, Russia-China, China-Mongolia. The overall capacity is relatively small Southeast Asia • • Three subregions for interconnections in Southeast Asia are divided Interconnection stauts: It is envisioned that the total capacity will reach 23 200 MW (Hermawanto, 2016). 18 2.2Case studies of regional energy interconnection CASE 3: East Asia Interconnection—Northeast Asia Electricity trade No unified electricity trading market exist in Northeast Asia now The current cross-border electricity trade concentrates between Russia and Mongolia, Russia and China, Mongolia and China Mid-term opportunities Governments in Northeast Asia are increasingly aware of the necessity to strengthen energy interoperability and its economic and financial dialogue Relevant organizations and TSO are working on expansion of cross-border electricity trade between Northeast Asia Benefits Promote the development of renewable energy, increase energy system flexibility, expand cross-border electricity trading, create new jobs, and reduce carbon dioxide emissions which will bring significant environmental benefits Challenges and opportunities Establish intergovernmental committees to support energy infrastructure construction Establish regional energy multilateral cooperation mechanism, legislation for cross-border electricity trade and improvement of the relevant laws and regulations Financing capacity needs to be strengthened 19 2.2Case studies of regional energy interconnection CASE 3: East Asia Interconnection—Southeast Asia Electricity trade Power trade among ASEAN countries is conducted only under bilateral arrangements; multilateral trading agreements do not yet exist but are planned. There are two particularly notable models for bilateral electricity trade in Southeast Asia. The first is the Thailand–Lao PDR model, Another notable bilateral electricity trade model is the Singapore–Malaysia rolling zero net-energy exchange. Mid-term opportunities A group of ASEAN countries agreed to pilot a multilateral electricity trade initiative to transmit 100 MW of electricity via existing interconnections from Lao PDR through Thailand and Malaysia to Singapore Benefits Effectively protect the Southeast Asian economic and social development of low-cost clean power supply, increase employment, stimulating economic development, also provide the fundamental solution to sustainable development. Challenges and opportunities Concerns that increased regional power system integration may undermine national sovereignty or require reforms that conflict with national interests can impede progress on cross-border interconnections. 20 2.2Case studies of regional energy interconnection ——Conclusions The cases above present a part of the interconnection projects in most continents. Due to the differences of climate and energy resources, cross-regional interconnection of power networks will bring huge benefits. 1 2 Meanwhile, transporting the low-cost electric power of large-scale renewable energy base to the load center, can reduce its power cost. Cross-border power grids can promote the renewable energy resources development and enhance the regional economic cooperation. 21 1. Background 2. Study Contents and Outcomes Status and prospects for interconnection Case studies of regional energy interconnection Regulatory and market frameworks for interconnection 22 2.3Regulatory and market frameworks for interconnection Key Factors of Cross-regional Interconnection Common 1. Coordinate relevant institutions 2. Meet policy and regulatory requirements (both technical and environmental) 3. Attract stakeholder buy-in, and appropriately allocate costs. Differences 1. Additional layer of crossborder collaboration 2. Complex of selecting locatino Key Measures 1. MoUs among all relevant agencies 2. Establish a permanent, supranational body that is given clear levels and limits of responsibility Market Framework for Interconnection models for cross-border trading of electricity unidirectional trades based on cost differences or IPP imports bidirectional or multinational power trades between national utilities multi-buyer, multiseller market 23 2.3Regulatory and market frameworks for interconnection Key Factors of Market Framework Depending on Cost allocation • • • Recommended methodology for cost allocation is the “beneficiary pays” principle Clearly define boundaries for cost allocation Agree to a common methodology for identifying and quantifying beneficiaries in large interconnection project Merchant investments • Merchant investors' revenue source: charging a fee for access or selling exclusive access to the line • different market frameworks, apply appropriate cost allocation and metchant investment models Experiences on applying merchant model remain limited Key Factors of Regulatory Framework Determine Allocate network capacity to transfer market capacity participants Unify regulatory framework Unify regulatory framework , data sharing, crosscountry dispatching and market regulation design, and utilize interconnector properly 24 2.3Regulatory and market frameworks for interconnection——Conclusions 1 Market frameworks for cross-regional interconnection matter for two aspects. First, the most important things about development of new interconnectors are cost allocation and investment. Second, the key issues about the operation are determining transmission capacity and allocating capacity to market participants. 2 In early stage of power grid planning, to make the coordination easier, a multinational organization has to be established. 3 Cost allocation of investment in power grid is the first issue to be addressed in international power market. 4 Wide area integrated electricity market could improve the operation stability and economic efficiency of power system, and reduce the potential operation risk of high penetration of renewable energy. 25 Epilogue Cross-regional interconnection in the ascendant, is the trend of power grids and the basis of building global energy interconnection. It is also a complex system project requiring joint efforts. We hope more entities could join us to build global energy interconnection, and realize a green harmonious global village. 26 Thank You!