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The magazine for the international power industry July-August 2013
SUB-SAHARA SET FORRENEWABLES BOOM
EUROPES CAPACITYBALANCING ACT
MAXIMISING PUMPPERFORMANCE
Nuclear usionLooking beyond fssion
TRIGEN: TECHNOLOGYFOR CHANGING TIMES
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3/56www.PowerEngineeringInt.com 1Power Engineering International July-August 2013
POWER ENGINEERING INTERNATIONAL
Contents
JULY-AUGUST 2013///VOLUME 21///ISSUE 7
2 Industry Highlights
4 News Analysis
8 News Update
44 Diary
46 Project & Technology Update
52 Ad Index
Features
12 Causing a frisson over fusion
With several projects well underway, harnessing nuclear
usion to generate power could be a lot closer to ruitionthan anticipated.
28 Realising a renewable energy dream
With technology prices dropping and internationalagencies backing low-carbon solutions, is sub-Saharan
Arica set or its long-awaited renewables boom?
34 Trigeneration: A technology for the times
As trigen technology wins devotees around the world, wehighlight its success stories and examine its most notable
ailure.
38 Pump up the volume
Advanced coatings can boost the perormance o apump beyond its as new and can maintain this standard
throughout its lie with minimal maintenance.
POWER-GEN Europe Best Paper Award Winners
Articles based on two o the six winning papers rom this years
POWER-GEN Europe Best Paper Awards are eatured.
16 A new market design for Europe?
New technology and market mechanisms can helpEuropes electricity system cope with the growing role o
renewables while ensuring adequacy o capacity.
22 FEM helps ease generator repair
Modelling o a stator casings destructive vibration allowedits modifcation on-site, a reft that was o short duration and
minimum complexity.
On the coverThe target chamber o the US National Ignition Facility. The holes in the
chamber provide access or the laser beams and viewing ports orthe diagnostic equipment. p.14
Credit: Lawrence Livermore National Laboratory
Free Product InfoYou can request product and service inormation rom this issue. Simply click on the link below that will provide you access to supplier companies websites,
product inormation and more http://pei.hotims.com
I you are considering suppliers or buying products you read about in PEi, please use this service. It gives us an idea o how products are being received to help us continuallyimprove our editorial oering and it also lets our advertisers know that you are a PEi reader and helps them to continue supporting the ree distribution o your magazine.
Trigen system in Sydney. Find out why the
Australian city has become the poster child
or trigeneration. p.34
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Industry Highlights
Renewables will surpass gas
and nuclear by 2016. That is the
somewhat surprising headline
fnding o the International Energy
Agencys report published late June.
According to the report, renewable power
generation will increase by an astonishing
40 per cent in the next fve years, making
up almost a quarter o the global power
mix by 2018.
According to the IEAs second Medium-
Term Renewable Energy Market Report, twomain actors are driving this positive outlook
or renewable power generation. The frst is that
investment and deployment are accelerating
in emerging markets and the second is the
growing need or energy diversifcation and
local pollution concerns.
Certainly evidence o the ormer is plentiul.
One recent example is the latest MENA
Renewables Status Report, which ound that
investment in the renewable energy sector
the Middle East and North Arica increased
by 40 per cent rom 2011 to 2012, despite aworldwide decline over the same period.
It is o no surprise that the IEA expects
the majority (two-thirds) o this emerging
market growth to come rom China. Despite
what appears to be a slowing (or it is a
rebalancing?) o its economy, China recently
announced an ambitious plan to essentially
quadruple its installed solar power capacity to
35 GW by 2015. Some arguably cynical reports
suggest that this initiative has been devised by
Beijing to help soak up the countrys sizeable
share o the global glut in solar technology
and thereby protect its domestic industry.
Arica also looks set to beneft rom
renewable energy. On his recent three-country
visit US President Barack Obama pledged
$16bn o American unding to double Aricans
access to electricity, with a strong ocus on
renewable energy development. In this issue,
we explore what is said to be a renewables
boom in sub-Saharan Arica, especially in
smaller-scale projects that are helping to
bring light to rural communities.
As youd expect the IEAs renewable
energy report is not all good news, with a slow-down in growth anticipated in more mature
markets, most notably Europe and the US. It
cautions that renewable energy development
is becoming more complex and aces
challenges in terms o governmental policy,
especially in a number o European countries.
I you are a power generator with a mixed
eet o both conventional and renewable
energy you will be all too amiliar with these
challenges.
You only have to look at some recent
headlines to get some idea o the challenges
acing those participating in the European
renewable sector. For example, Dong Energyrecently sold its Danish onshore wind power
business as part o a plan to ocus solely
on oshore wind. This may well be a smart
move by the Danish utility in light o the June
announcement that the European Union has
awarded a welcome 1m in unding towards
a detailed study or the ongoing initiative to
build an oshore grid between Scotland,
Northern Ireland and Ireland.
E.ON, Germanys largest utility by sales, has
withdrawn rom the Pelamis marine energy
project at the European Marine Energy Centrein Scotland. According to a spokesperson,
the decision was taken because o the slow
progress in wave technology development
and a shit in the utilitys ocus towards more
mature renewable technologies. Is this an
indication that novel renewable and low-
carbon technologies with huge potential but
little tested will lose out to more conventional
renewables in the continuing uncertainty over
renewable energy policy?
Furthermore, Germanys RWE has pulled
the plug on its Tilbury biomass-conversion
project in the UK, which it started in 2011 and
would have made it the largest biomass-
only power plant in the world. According to
RWE, it decided to halt work on the biomass
plant whilst options on project easibility are
assessed and reviewed. RWE may well be
thanking its lucky stars considering the recent
announcement by the British government.
It is proposing to cap subsidies or bespoke
biomass burning plants to 400 MW per plant
and end subsidies by 2027 or existing stations
combusting biomass. It does make one
wonder what Drax thinks o that, consideringits 700 million investment in converting three
o its six boilers to 100 per cent biomass.
Renewable powerwill increase by anastonishing 40 percent, making up
almost a quarter ofthe global power mixby 2018 and driven byemerging economiesDr. Heather JohnstoneChie Editorwww.PowerEngineeringInt.com
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News Analysis
Strike prices unveiled, a shale boom predicted,
regulator warnings and tabloid hysteria Kelvin Ross
examines 24 hours in the evolving UK energy market
ELECTRICITY TO BE RATIONED. That was the
headline on the front page of UK middle-
market tabloid newspaper the Daily Mail
earlier this month.
Britain could face a return to Seventies-
style power rationing to prevent blackouts the
paper told its readers.
The story appeared the morning after a
busy 24 hours for the UK energy industry, a day
dubbed Super Thursday. The governments
Department of Energy and Climate Change
(DECC) revealed some long-awaited details
of its Electricity Market reform package by
publishing draft strike prices for various forms
of renewable energy, the British Geological
Survey published a report on the potential
reserves of shale gas in Britain, and energyregulator Ofgem issued a warning over
electricity supply.
It was this last report that prompted
the Daily Mails screamer headline and it
is the latest of many occasions in recent
months when energy has grabbed the front
page, sometimes with measured reporting,
sometimes not.
So what was in these reports and DECC
announcements and what did the power
industry make of them? Is it all doom and
(literally, as the Mail would have us believe)
gloom, or are there reasons to be upbeat
about the British power sector.
What Ofgem actually said was this: that
electricity supplies are set to tighten faster
than previously expected in the middle of this
decade. It stated that the risk to electricity
supplies is projected to increase from thecurrent near zero levels, although it added
and heres a rather vital caveat that it does
not consider disruption to supplies is imminent
or likely, providing the industry manages the
problem effectively.
Ofgem chief executive Andrew Wright said
the report highlights the need for reform to
encourage investment in generation.
He said Britains energy industry is facing
an unprecedented challenge to secure
supplies and added that it would be prudent
to consider giving National Grid additional
tools now to procure electricity.
Ofgem believes these tools would give
network operator National Grid the option to
buy extra demand-side response and reserve
generation to balance the electricity network.
Dr Monica Giulietti, Associate Professor of
Global Energy at Warwick Business School,
has studied UK energy prices for more than
a decade and says Ofgems warning is the
latest of several alerts.
There have been warnings the gasreserves are getting tight in the UK as its
storage capacity is a lot smaller than the rest
In the dark on thereality of blackouts
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News Analysis
o Europe, she says. Plus there is also an issue
with the decline in gas production rom the
North Sea. A change in demand will see the
energy companies rely on the spot market
and import gas, which is subject to variations
in price. With such low reserves the UK might
have to import more.
The Ogem report came a day beore the
government made key announcements on its
Electricity Market Reorm. It revealed the strike
prices or renewable energy that it proposes to
pay under its contracts or dierence schemeand also outlined details o its planned
capacity market.
Contracts or dierence orm a key plant
o the governments Electricity Market Reorm.
Varying in amount or each orm o power
generation, they guarantee to pay generators
a fxed sum or strike price or the electricity
they generate.
The government revealed fgures covering
each year rom 2014 to 2019. For projects with
a potential deployment capacity o more
than 1 GW, the government plans to pay155/MWh or oshore wind in 2014, alling to
135/MWh in 2019; Onshore wind will get 100
rom 2014, dropping to 95 in 2019, while large
solar PV will receive 125 in 2014 and get 110
in 2019. Hydro and biomass conversion will get
the same amount or the 2014-2019 period:
95 and 105 respectively.
On the capacity market, the government
confrmed that subject to EU state aid
approval the capacity market will be
launched next year, with participants such
as existing generators and investors in new
plant bidding in auctions to provide the total
amount o electricity that the UK is predicted
to need rom 2018-2019.
Successul bidders will receive a steady
payment in the year they agree to make
capacity available. In exchange, they will
be obliged to deliver electricity in periods o
system stress or ace fnancial penalties.
Energy Secretary Ed Davey must have elt
he was directly answering Ogems concerns
when he said: Developers and investors have
been crying out or more details sooner, and
that is what we are giving them today.The announcements were welcomed
albeit with some key caveats by many in the
energy industry. Andrew Horstead, head o
commodities research at energy and carbon
management specialists Utilyx, said: This is
the frst real assurance that weve seen rom
the government to make a real and lasting
commitment to improving the UKs energy
inrastructure. The measures outlined should
fnally provide investors with the clarity they
need to commit unds or energy projects.
But he added that this will take time to get
through the legislative process and said he
believed it was highly unlikely that we will seethe real benefts o these plans until the latter
stages o the decade at the earliest, which
has serious implications or the countrys short
term energy needs.
Maria McCaery, chie executive o trade
group RenewableUK, said the publication o
the drat strike prices was a welcome step
orward in setting out how the long term
market is going to work.
However, she added that more details
do need to be set out. The most important
ingredient remains investor confdenceand that will take time to land. The secret is
consistent long term support and investors
seeing that government is behind renewables
and low carbon generation or the long term.
Paul Massara, UK chie executive o RWE
one o Britains Big Six power utilities said
a signifcant level o detail is not yet fnalised.
This, along with the overall complexity o the
proposals and the need to gain EU state aid
approval, means uncertainty remains.
And Katja Hall, chie policy director at the
Conederation o British Industry, said DECCs
announcements were a big step orward and
should unlock the private investment we need
to keep the lights on and costs down.
Shale gas
In what proved to be a bumper day or UK
energy announcements, the government also
published details o a report rom the British
Geological Survey on the potential volume o
shale gas in the north o England.
The BGS estimated there is likely to be some
40 trillion cubic metres (1300 trillion cubic eet)
o shale gas in the ground in this area afgure ar exceeding all previous estimates.
However, it should be noted that the fgure
relates to technically recoverable volumes
and not to commercially recoverable gas.
Emma Wild, head o the upstream advisory
practice at consultancy KPMG, was ar rom
bowled over by the BGS report and the
governments shale gas package.
She said what had not been addressed
was the high cost o operating in the UK, the
availability o alternative sources o gas supply
or UK power and how these actors contribute
to shale gas commerciality.
Thereore the likelihood o large scale
developments remains uncertain.
However, Dan Byles, chairman o the All-
Party Parliamentary Group on Unconventional
Oil & Gas, was much more upbeat. He said
the fgures in the BGS report confrm the UKs
potential to become a major global player in
the shale gas market.
Even i only ten per cent o what BGS
believes is there was extracted, this would
support the UKs gas needs or our decades
and the report only covers one part o the
country. Now we need to know how much
o this valuable resource we can extractand what it will mean or UK consumers and
industry.
The UK faces a veryreal energy crunchover the next fewyears to 2020
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News
EUROPE
Germanyss EnBW to shut down our plantsand mothball RDK 4German utility EnBW is to close our power
plants two coal, one gas and one co-
generation which have a combined output
o 668 MW.
And it is also planning a short-term
shutdown o RDK 4 in Karlsruhe, which it says
is hardly being utilised and is consequently
also unable to cover its ull costs.
The our plants being closed permanentlyare an oil fred co-generation unit and a gas
fred plant in Marbach and two coal fred
plants in Walheim. They will shut at the earliest
legally possible date according to EnBW.
Both coal plants were commissioned in
the 1960s, while the Marbach gas plant was
commissioned in 1971 and the cogen plant
went operational in 1975.
The company said the decision to close
the plants was taken as a result o rapid
structural change in the energy sector.
EnBW said: As a result o the marked
additional construction o renewable energy
sources, numerous ossil plant are exposed to
great commercial and fnancial pressure, and
requently continue to be operated solely as
marginal power plants. This is resulting in a
drastic all in revenue.
The company said older coal plants and
especially gas power stations can no longer
cover their ull costs given todays electricity
market prices, and can consequently not be
operated on a commercially viable basis.
Around 100 sta will be aected by the
closures and EnBW is in talks with them over
their uture.
EnBW is also in talks with Germanys Federal
Network Agency over RDK 4 at Karlsruhe. The
company said the gas and steam plant is
hardly being used and it plans to shut down
the plant on a short-term and provisional basis
as a consequence.
The potential o a later recommissioning is
to be let open, added EnBW.
Conergy fles orinsolvencyConergy, once one o Europes largest solar
power companies, has fled or insolvency.
The German company has cited
inability to bring on board a new investor
as well as what it reerred to as an
unexpected delay in payment rom a big
project.
Philip Comberg, Conergy chie
executive, said in a statement: In the last 15months, we have presented two concrete
concepts on the investment by investors
to our lenders. We very much regret that
they repeatedly could not reach a reliable
agreement on a timely implementation o
the proposal.
He added: The management board will
now ully support the preliminary insolvency
administrator in order to hopeully secure all
jobs and to continue business operations
without any disruptions.
Conergy employs about 1,200 sta
globally 800 in Germany and about 400
in its international subsidiaries.
A global glut in supply combined with
plunging prices amid sti competition
rom Asia has brought down or seriously
debilitating some o the biggest names in
the sector in the past two years.
Spain closes second oldest nuclear plant
The Spanish government has closed down
the aging Santa Maria de Garona nuclear
power plant.
The plant is one o eight nuclear reactors in
Spain and is 42 years old the second oldest
in the country.
It was closed under an order issued by the
Industry and Energy Ministry but its operator
Nuclenor owned by Iberdrola and Endsea
said the closure was solely due to economic
reasons and not or technical or saety
concerns.
Spains Deputy Prime Minister Soraya SaenzSantamaria said Nuclenor has asked or the
plants operating license not to be renewed
but she added that the government has not
ruled out reactivating the plant at a later date.
The closure ends a prolonged period
o uncertainty over the uture o the plant.
Its licence renewal frst came up or review
in 2009 and the Nuclear Saety Council
recommended a 10-year extension be
granted.
However the then Socialist government
granted only a our-year licence extension to
this year. In January 2012 a new conservative
government removed the 2013 operational
limit with a view to allowing the plant to rununtil 2019, subject to Nuclenor renewing the
licence.
But Nuclenor delayed that application
until it had details o new government rules
and taxes, since it said it would have to spend480m on the plant to give it a 2019 shel lie, a
price it now seems was too high to pay.
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News
AFRICA
Continents biggestgas plant inaugurated
Aricas largest gas-fred power plant at
Sasolburg, outside Johannesburg, has been
ofcially inaugerated.
The Sasol plant is the largest power plant
running exclusively on gas engines on the
Arican continent, and the frst o its kind ever
in the Republic o South Arica.
The complete turnkey project packageat a demanding altitude o 1500 metres was
supplied by Wartsila on a ast-track basis with
perormance guarantees.
The Finnish company is also responsible or
the engineering, procurement, construction
and project management o the new power
plant, which is powered by 18 Wartsila 34SG
generating sets running on natural gas with
an operating capacity o 140 MW
The electricity produced by the plant will be
used on-site by Sasols chemical actory next
to the plant, with about hal o the production
being ed to the national grid.
Despite the high altitude o the Sasolburg
plant, the Wartsila gas engines are able
to operate with an extremely high level o
efciency.
The closed-loop cooling system used by
Wartsila also imposes a minimal demand or
water, which is an important actor in areas
such as this where water resources are limited.
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News
MIDDLE EAST
Middle East power sector at greatest risk of cyber attack
The energy sector in the Middle East is more
vulnerable to cyber attacks than anywhere
else in the world, according to DNV KEMA.
And the company has warned that a
cyber attack on crucial energy supplies and
transiting routes in this region would impact
the entire world.
DNV KEMA said that no regional cyber
security strategy has been implemented in the
Middle East, despite a rise in hacking attacks.
Until recently, most o these attacks
ocused on computers and websites, the so-
called ront doors to energy companies, but
DNV said that as viruses become increasingly
sophisticated, physical assets such as power
stations and power grids are also under threat.
Last year, Saudi Aramco and RasGas
reported cyber attacks while in Iran computers
at several nuclear power stations were
inected.
The Middle East is littered with gas and oil
installations and is planning to boost its energy
mix by introducing nuclear and renewable
energy power plants.Mohammed Ati, managing director o
DNV KEMA in the Middle East, said the regions
planned and existing cyber protection plans
are lagging behind the rest o the world. This is
a situation to really worry about, he added. A
cyber attack on crucial energy supplies and
transiting routes in this region would impact
the entire world.
He said awareness in the region o
cyber threats is insufcient in relation to the
technology developments and the level o
impact a cyber-attack could have on an
average Middle Eastern utility.
As cyber security threats are not restricted
to one single group, but can come rom
dierent corners such as governments,
activists and hackers, criminal and terrorist
organisations and even rom within, it is time
we all open our eyes and take appropriate
actions to protect our countries and guarantee
a sae and sustainable energy provision.
What is needed to remedy the situation,
said Ati, is national governments to develop
coherent cyber security strategies and plans,
supported by standards and regulations
across the major inrastructure sectors.
Sharing responsibility betweengovernments and companies in vital sectors
is a frst, necessary step in securing sae and
reliable cyber networks, he said.
DNV KEMA ound that inormation on
common cyber deense systems like SCADA,
Stuxnet and ISPs is increasingly becoming
publicly available both in and outside the
region. On top o this, industrial control systems
are all interconnected with corporate IT
networks and the internet, while at the same
time the interconnectivity o energy assets
such as power grids, is strongly increasing.
These developments, in combination with
insufcient awareness and the absence o a
cyber-deense plan, make the energy sector
in the Middle East vulnerable, more than
elsewhere, said Ati.
GDF Suez mulls Saudinuclear project
The chie executive o GDF Suez, Gerald
Mestrallet has revealed that the company is
considering involvement in a nuclear reactor
project in the Kingdom o Saudi Arabia.
The Saudi government is considering
building 17 GW o nuclear capacity by 2032.
Mr Mestrallet told Les Echos newspaper
that GDF is ready to cooperate, on the
condition that we are given the right amount
o room, and said that the company would
only ever be in a position to take on a nuclear
project by being a partner rather than sole
player.
We will never take an entire nuclear
project on our balance sheet, he said. We willalways be in partnerships, at least at the 50
per cent level.
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YELLOWSTONE POWER GENERATION PROJECT
INVITATION FOR EXPRESSIONS OF INTEREST FOR EPC CONTRACTOR FOR A 350MW
GAS-FIRED THERMAL POWER PLANT IN NIGERIA
Yellowstone Electric Power Limited (Yellowstone), an afliate o Quantum Power International Holdings Ltd (Quantum Power), wishes to invite interested
qualifed parties to express interest in providing engineering, procurement and construction (EPC services) necessary or the Turnkey implementation o
its 350 MW simple cycle gas fred power plant. The power plant shall be constructed near the town o Ajaokuta in Kogi State, Nigeria (the Yellowstone
Project).
Any party wishing to submit an Expression o Interest to provide EPC services or the Yellowstone Project (an Applicant) is hereby
encouraged to contact the Designated Representative listed below. Each Applicant will be supplied with detailed inormation regard-
ing the process or submission o an Expression o Interest, including the required supporting documentation. The deadline or receipt o
Expressions o Interest is September 2, 2013.
Based upon an evaluation o the Expressions o Interest received, Quantum Power and Yellowstone (in their sole discretion) will select those Applicants to be
invited to tender or EPC services or the Yellowstone Project. Successul Applicants will be issued a Request or Proposal (RP) and other bidding documents.
It is anticipated that the RP will be issued in September 2013.
Designated Representative:
Yellowstone Electric Power Ltd
76B Ebitu Ukiwe, Jabi
Abuja, Nigeria
Attention: Ms Sandy Eyal
Email: [email protected]
Please note that this is not an invitation to tender. Neither Quantum Power nor Yellowstone shall be responsible for the cost of any submission.
Any submission shall be at the cost of the Applicant. Yellowstone and Quantum Power reserve the right to accept or reject any submission.
For more information, enter 6 at pei.hotims.com
LATIN AMERICA
Noja Power wins $12m deal or Brazilian grid
Australian switchgear engineers Noja Power
has won a $12m deal to boost the saety and
reliability o Brazils electricity supply.
The contract was awarded by Latin
Americas largest utility Eletrobras and will see
Nojas Brazilian arm install and link its OSM15
and OSM38 automatic circuit reclosers to six
operation centres.
Eletrobras will monitor and control the units,
optimising network operational characteristicssuch as protection and load shedding.
The deal comes as the Brazilian government
is encouraging Eletrobras to modernise
its electricity generation, transmission and
distribution inrastructure.
The government has implemented a
modernisation programme called Project
Energy+ which aims to greater integrate
renewable energy resources such as
hydroelectric, solar and wind into the countrys
energy mix.
In addition, grid improvements under the
project will reduce power loss, eliminating the
need to add more centralised conventional
generating capacity to meet increased
demand. As such, Brazil is expected to
cumulatively spend $27.7bn on smart grid
investments by 2022.Brazil is a rapidly developing country and
the government is encouraging power utilities
to upgrade their electricity inrastructure
to meet the needs o the uture, said Bruno
Kimura, Nojas managing director in Brazil.
He said Nojas automatic circuit reclosers
will be a undamental component o Brazils
new smart grid.
ASIA
Target date or frstoating nuclear plantRosatoms Akademik Lomonosov oating
nuclear power plant, the worlds frst, could be
up and running as early as 2016.
The 70 MW plant is designed to serve large
industrial projects, port cities and oshore gas
and oil-extracting platorms and has attracted
interest in China, Indonesia and Malaysia.
The plant will be situated in the town o
Vilyuchinsk o the Kamchatka region in FarEast Russia.
Akademik Lomonosov is a non-sel-
propelled vessel, which is 140m long, 30m
wide and 10m high and built at Sevmash
submarine-building plant in Severodvinsk.
. It will be equipped with a power unit o two
35MW KLT-40C nuclear reactors, or 300 MW o
heat and two steam-driven turbine units.
www.PowerEngineeringInt.com 11Power Engineering International July-August 2013
News
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H
arnessing nuclear usion has
been a dream o technologists
almost rom the moment that
nuclear processes taking place
within the sun were recognised
early in the 20th century.
The frst, unsuccessul attempts at usion
took place in the 1930s and the quest was
taken up again in the late 1940s. Since then
there have been a string o successul and
increasingly large usion reactors built. Today
there are 20 in operation around the world.
Since 1958, co-operation has been an
important eature o usion research and has
centred on reactors that utilise magnetic
confnement to contain the superheated
plasma at the heart o the usion process.
The latest, largest and most expensiveo these is the International Thermonuclear
Experimental Reactor (ITER - Latin or the
way), which is under construction in the
south o France. ITER is expected to be the
frst such reactor to be capable o delivering
more energy rom a usion reaction than
is used to generate the reaction in the frst
place, a key requirement i usion is ever to
serve as a viable power source. I it keeps to
schedule it will reach ull-scale operation by
2030 or beore.
Recently, however, an alternative approach
to usion has started to make headlines. This
is based on a completely dierent concept
called inertial confnement and i it can be
perected, it promises a demonstration during
the 2020s and commercial usion plants by
2030, sooner than the magnetic confnement
path can deliver.
Rather than being international, the most
advanced inertial confnement development
is being carried out in the US, where it has
emerged, almost unannounced, rom the
deence establishment. Like the magnetic
confnement approach, inertial confnement
has yet to produce more energy rom usion
than is used to achieve a usion reaction.
However, the US programme is confdent that
it will achieve this milestone in the near uture.
The fusion problem
Fusion is attractive because it promises almost
limitless energy rom a simple process that islargely ree o atmospheric emissions or toxic
by-products. The principle reactions that take
place within the sun involve hydrogen atoms
using to produce heavier atoms.
The mass o the resulting heavier atoms
is not the exact sum o the two initial atoms,
some mass has been lost and great amounts
o energy gained. This is what Einsteins
ormula E = mc describes: the tiny bit o lost
mass (m), multiplied by the square o the
speed o l ight (c), results in a very large fgure
(E), which is the amount o energy created by
a usion reaction.
There are two important usion reactions
in the sun and the stars. The frst involves
Nuclear fusion update
Harnessing nuclearfusion as a means ofpower generation has fordecades been the Holy
Grail for atomic scientistsacross the world, butthere are several projectsunderway that coulddeliver results much soonerthan anticipated, writesPaul Breeze.
The most difcultproject on earth
12 Power Engineering International May 2013 www.PowerEngineeringInt.com
Causing a usion risson: the ITER site in the south o France
Credit: ITER
12 Power Engineering International July-August 2013 www.PowerEngineeringInt.com
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15/56www.PowerEngineeringInt.com 13Power Engineering International July-August 2013
usion o two hydrogen atoms to generate a
deuterium or heavy-hydrogen atom. In the
second, deuterium and hydrogen atoms use
to create a helium atom.However it is a third reaction between
deuterium and the even heavier hydrogen
isotope tritium that interests usion scientists
because it proceeds more easily than the
other two and under relatively more benign
conditions. A usion reaction between these
two hydrogen isotopes produces one helium
atom and one neutron and it is the latter that
carries most o the energy released during
the usion process. That energy must then be
captured and used to generate electricity.
The potential is massive. The energy rom
one tonne o deuterium is equivalent to
3 x 1010 tonnes o coal. Unortunately the
prize is not easily won. The reaction will only
take place in a plasma at massively high
temperatures and in the case o inertial
confnement, under conditions o enormous
pressure. Reaching the conditions necessary
or usion to take place and then controlling
and maintaining them have been the
primary challenge o usion research.
Magnetic confnement
When matter is heated to temperatures that
approach anywhere near those o the sun,
the material becomes a plasma in which the
individual atoms disintegrate into a sea o
atomic nuclei and electrons that are bound
by electromagnetic interactions.
It was recognised early on in usion
research that such a material state could not
be contained using conventional materials
and the idea o magnetic containment was
born. This proved much more difcult to realise
that had been expected and it was Russian
scientists that eventually solved the problemwith a toroidal magnetic confnement which
they called a tokamak. Although exploration
o other approaches continued, this become
the de acto design or a usion reactor.
The two largest usion reactors in operation
today are the Joint European Torus (JET) at
Culham in the UK and the Tokamak Fusion
Test Reactor (TFTR) at Princeton in the US. Both
started experimenting with deuterium-tritium
(DT) uel during the 1990s, and in 1997 JET set
the current record or the largest amount o
power generated by a usion reactor 16 MW.
The reactor consumed more than
16 MW to achieve this record although the
ratio o power in to power out (the gain o
the reactor), at 0.7, was close to the break-
even target. However, JET could only sustain a
plasma burst or 5 seconds beore its ancillaryservices started overheating.
Both JET and TFTR are experimental, pilot-
scale usion reactors and achieving break-
even is a matter o scale. It requires a big
reactor to achieve a gain o much more than
one and get signifcant power generation.
That will be the job o the next usion reactor
based on the tokamak design, ITER.
However the work at the smaller reactors is
ar rom over. JET is being upgraded to extend
its operating range to carry out more pre-ITER
experiments, particularly on plasma stability.
The plasma in the tokamak ows along
lines o magnetic orce. The temperature at
the centre o the JET plasma reached 170 x
106 C. Inside the hottest regions the plasma
is bubbling like a boiling liquid and this
creates eddies that make it both unstable
and inefcient. Controlling and reducing the
turbulence inside the plasma is one o the
keys to an efcient usion reactor and work
at JET rom 2015 to the end o the decade
should help advance the understanding o
plasma turbulence.
There are also design problems that
have yet to be solved beore ITER can start
to operate, such as the material used or the
lining o the reactor chamber. In JET, these
are carbon tiles, but the carbon absorbs
tritium so an alternative must be ound. The
avoured replacement is beryllium tungsten
and this will be tested at JET. Further work
on the operating modes or the reactor will
also help ITER. In essence, JET is the model
or ITER.
ITER has had a long gestation. It was
conceived in 1988 under the auspices o the
International Atomic Energy Authority and
initially involved the EU, Japan, Russia and theUS. An engineering design was completed in
2001, the Cadarache site selected in 2005
and the ITER agreement was signed in 2007
by the now seven members, ollowing the
addition o China, India and South Korea.
The project will have a plasma volume o
800m3, ten times larger than JET and it will have
a thermal power output o 500 MW, which is
30 times larger than JET has achieved. It is
hoped that at this size, the reactor should
be able to achieve a gain actor o ten, so
50 MWth will drive an output o 500 MWth.
However, ITER is not a commercial
demonstration project. It has been designed
to prove that it can generate 500 MW o
usion power or 400 seconds. A commercial
plant will need to be able to operate round
the clock or weeks i not months on end.
I it was being designed today, then
perhaps ITER would have been more
ambitious, but most o the basic parameters
were set during the 1990s when the costs and
risks involved in trying to build a plant that
would generate electricity seemed huge.
So the plant will be virtually commercial size
but will not have steam or turbine generators.
More signifcantly, it will not have a ull-sized
system or capturing the energy generated
by the usion reactions in the plasma. There
will be test modules within the reactor shroud
but the ull energy capture system will have to
wait or the frst demonstration plant.
So ITER is another experimental reactor, but
even so it is probably the most challenging
project being built on the earth today, at least
Some 633 of these massive stainless steel forgings will benecessary for the construction of the ITER vacuum vessel sectors
Credit: ITER
Nuclear usion update
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16/5614 Power Engineering International July-August 2013 www.PowerEngineeringInt.com
Nuclear usion update
in the opinion o Michel Claessens, head o
communication and external relations or the
Ofce o the Director-General at ITER.
With seven members and a total o 34
countries that will jointly build the project,
many o the components will not be built
by one abricator but by manuacturers
in dierent countries. Scheduling the
construction and maintaining the level o
quality control or a project o this complexity
will be a Herculean task. But i all this can be
mastered then in theory the frst experiments
will take place at ITER in 2020.
Inertial confnementWhile the research into usion based on
magnetic confnement edged orward there
was, behind the acades o deence research
establishments in the US and elsewhere a
completely dierent approach to the usion
being pioneered. However the deence-
related nature o much o this work has meant
that until very recently little was known about
what is called inertial confnement.
While a reactor such as ITER will contain
a plasma that maintains conditions or
usion continuously within its heart, inertialconfnement instead uses a series o small,
discrete usion reactions, each producing a
burst o energy. This has been likened to a
piston engine in which energy is generated
is a series o small impulses rather than in a
continuous stream.
The concept is relatively simple i
developing it into a commercial power station
design is not. A small capsule containing a
ew hundred micrograms o a DT mixture is
subjected to a massive pulse rom a system
o multiple lasers ocused onto its surace. The
laser energy striking the surace o the capsule
causes the outer surace to explode in a pulse
o x-rays and this creates an equal and opposite
shock wave which travels into the capsule,
heating and compressing the DT mixture to the
point where the usion reaction takes place at
its centre.
Once the usion reaction starts it radiates
outwards through the whole capsule,
travelling aster than the material itsel can
expand so that the whole charge o uel is
consumed and energy released. The inertia
consequent on the mass o the atoms o the
DT mixture prevents them rom expanding as
ast as the usion ront advances, hence the
name inertial confnement.
It is possible to imagine this being
achieved in a single shot experiment but toturn the concept into a power station, the
process must be repeated endlessly. For a
practical plant there would be about 15 o
these usion explosions each second. Yet this
is exactly what a major programme in the US
is proposing. What is more, the US government
has built a plant, called the National Ignition
Facility (NIF) that has the capability to prove
the practicability o the process.
The new road to usion
NIF is an expensive and ambitious projectthat has come about partly as a result o the
Comprehensive Test Ban Treaty designed to
eliminate nuclear weapons testing.
The acility will provide experimental data
to support this treaty which is why it has been
able to attract $5 billion o US government
unding. However, NIF will also have two
other purposes as a tool or undamental
scientifc research and to prove the viability
o power generation rom usion based on
inertial containment.
The heart o NIF is its laser system. The
acility has 192 lasers which are capable
o delivering as much as 5 MJ o energy in
20-nanosecond pulses. So ar it has operated
at 1.8 MJ, equivalent to a power delivery o
500 TW. The lasers initially generate inra-red
light but this is converted, frst to visible light
and then to ultra-violet beore it strikes thetarget. That target is a tiny capsule called a
hohlraum which is about 2 mm in diameter
and contains 150 mg o the DT mixture. It is
this tiny charge that is subjected to around
500 TW o power.
The importance o NIF rom a power
generation perspective is that the laser power
is o the scale necessary to build a 1000 MW
power station. It can thereore simulate at ull
scale the capacity or inertial containment to
deliver energy or electricity generation.
NIF started operating in 2009 and has
carried out a series o ignition experiments
since then. Ignition, in this context, is the point
at which the capsule o DT produces more
energy that the laser pumps into it.
During the frst experiments, the results
were around 50 to 60 times short o the
target required by ignition.Over the past
three years it has crept closer to the target,
which is now only a actor o two or three
away. Once ignition is reached, the usion
reaction becomes sel-sustaining because it
generates the energy necessary to maintain
the temperature and pressure required. Sowhile they cannot say when ignition will be
achieved, the scientists as NIF are confdent
that they will achieve it.
I ignition can be demonstrated, then
a power plant based on this principle is
possible. Work to defne what this power
station will look like has already started and
orms the basis o the Laser Inertial Fusion
Energy (LIFE) project. The design or the
LIFE plant has been developed through a
collaboration between technologists, electric
utilities, power plant vendors, regulators andenvironmental groups. Its aim is to build a
demonstration power plant within ten years
o ignition being achieved at NIF using
components that can be abricated today
by technology companies.
NIF will continue to be the benchmark or
testing LIFE concepts but the belie is that i
ignition can be achieved, then a LIFE plant
can be built. The demo plant would initially
be designed to produce 400 MW o electrical
power but with the ability to be scaled up to
1000 MW. Based on current estimates, this
plant could be operating in the early part
o the next decade, with commercial plants
available by 2030.
An artists concept o a LIFE power plant with the exterior cut away to show the usion chamberCredit: Lawrence Livermore National Laboratory
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Nuclear fusion update
Visit www.PowerEngineeringInt.comor more inormationi
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I LIFE could achieve this target, then it
would be a remarkable milestone. Beore
that, however, there are some major hurdles
to cross. These include integrating all the
components o a LIFE plant rom the laser to
the uel delivery system to the heat extraction
and power generation. Operating the cycling,
piston engine type o ignition has yet to be
demonstrated at power plant scale. And
there is one technological hurdle that aces
both LIFE and the frst ull-scale usion power
plant based on magnetic containment the
design o the blanket system.
The blanket system is the layer that
surrounds the plasma chamber in the
case o a tokamak reactor and the ignition
chamber in a LIFE-style power plant. It has to
serve two unctions: the frst is to slow downthe very high energy neutrons that emerge
rom the usion reaction, absorbing their
energy and converting it into heat that can
be used to generate electricity. The second
is to manuacture tritium. Fusion reactors are
expected to breed their own uel and this will
take place inside the blanket.
Precisely what the blanket will look like
remains a matter or speculation but whatever
orm it takes, it will contain lithium because
this will be the source o tritium. When a lithium
atom is exposed to neutrons such as those
generated by usion o deuterium and tritium
it reacts to orm an atom o tritium and an
atom o helium.
This tritium must then be harvested rom the
blanket ready to provide uel or urther usion.
Liquid lithium could itsel orm the coolant
inside the reactor, cycling through a heat
exchanger to generate steam. Alternatively
some other coolant such as helium might
be used and the lithium contained within
a ceramic rather than in liquid orm. Molten
salts containing lithium might also be used.
The futureSo what does the uture hold or usion?
Optimistically, a usion plant based on inertial
confnement might deliver a commercial
plant by 2030, although based on experience
with other complex projects, the timeline is
likely to be a little longer than this.
Meanwhile, ITER hopes to demonstrate
commercial plant scale usion by around that
time too. I ITER progresses as expected then
work on the frst demonstration plant, reerred
to as DEMO in the usion industry, will be well
under way by then.
It is oten said that a commercial usion
plant is always 30 years away. While there is
clearly still a long way to go and nobody has
yet demonstrated that usion can produce
electricity rather than simply consuming it,
that threshold does seem palpably closer
today than at any time in the past.
The potential is
massive. The energyfrom one tonneof deuterium isequivalent to over3000 tonnes of coal.Unfortunately the prizeis not easily won
For more information, enter 7 at pei.hotims.com
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18/5616 Power Engineering International July-August 2013 www.PowerEngineeringInt.com
New market design
Along with renewables
growing role in Europe
comes unprecedented
change in the regions
energy sector. System
operators are already
calling or fexibility rom thermal units to cope
with the variability o increasing wind and solar
production, and green energys low operating
costs and subsidies are causing turbulence
in electricity markets. Capacity rom thermal
units will clearly be necessary in the uture to
provide balance, but will markets be able to
deliver it?
Capacity mechanism designs presented
to date will not solve this problem. Market
mechanisms to attract capacity are still
unclear. Wrtsil has devised a market model
or the uture that will incentivise fexibility and
ensure adequacy o capacity. It is based on
two case studies that have shown the value
o fexibility in two large power systems: the UK
and the US state o Caliornia.Since renewables production generally
has eed-in priority, remaining capacity has
to adjust its output to balance total electricity
production and demand. System operators
need to have capacity available that can
respond quickly to changes in electricity
demand and output rom renewables, which
can be rapid.
The impact o the deployment o
renewables on electricity markets is severe.
Such sources generate electricity at low
marginal costs and thereore push thermal
capacity higher up in the merit order
or completely outside it. This means the
operating hours o thermal capacity all
and it generates less revenue. Subsidies or
renewables also depress electricity prices,
which makes the easibility o thermal plants
even more challenging. Thermal capacity is
still needed in a high-renewables system or
balance, but its protability is jeopardised.
Several EU Member States have stated
that plant closures and a lack o investment
in new capacity may prevent the market
rom bringing orward sucient capacity
under current market arrangements. Allowing
electricity prices to reach high levels at peak
times would be necessary to allow plants
running at low load actors to recover xed
costs. However, it is not simply capacity that is
required in a high-renewables system.
Without appropriate price signals, there
is an equally important concern around
missing fexibility. Systems require a
suciently fexible mix o capacity as well as
the right types o capacity.
The importance o fexibilityTransmission system operators (TSOs) and
other market players recognise the increasing
need or fexibility but the value o fexibility has
not been quantied or identied in market
arrangements. Wrtsil has conducted
several studies around this topic.
The rst step in the process is to dene the
uture power system architecture, which will
be based on objectives such as emissions,
reliability and costs, which policy makers set.
To determine how to achieve these objectives
requires the creation o several capacity
scenarios with dierent mixes o technologies.
The output o step one is an architecture that
can meet uture objectives.
The architecture provides input to the
second step o the process, i.e. the modelling
o power system operations, or despatch.
Despatch sotware PLEXOS was used in recent
studies o the UK and Caliornian systems.
Inputs or the model are the expected
capacity mix (including the capabilities
o these technologies), weather and load
data, system requirements (such as required
system reserves) and market operation, or
example how reserves are procured and at
what price. The tool optimises the generating
costs o a system in a chosen interval in line
with the trading blocks o the system, or
example every 30 minutes.
The third step denes the value o fexibility
by comparing the results o dierent scenarios.
Power system modelling provides the system
operating costs and CO2
emissions as an
output or each scenario.
Dierent generating technologies have
dierent ways o providing fexible electricity.
Some can start up rom zero output and rampup within seconds. Others may take hours,
but can quickly fex their output up to meet
the system needs once they are generating
above a stable level. This is typical o large
units such as large combined-cycle gas
turbine (CCGT) or coal-red plants. Typically
these slower technologies provide a systems
fexibility requirement today.
Part-loading may have been eective
in the past but today it is not likely to be
the most ecient method o providing the
greater fexibility needed in the uture.
Part-loading generates extra costs
because o increased carbon costs,
reduced uel eciency, the greater number
How can the regions electricity system cope with the growing role o renewableswhile ensuring fexibility and adequacy o capacity? Matti Rautkivi andMelle Kruisdijk say innovative technology and new market mechanisms can help.
Europesbalancing act
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New market design
o generators needed on the system, and
the costs o curtailing wind generation to
maintain system security.
Given these costs, i conventional sourceso fexibility are used in a system with a
high level o renewables, the ull benets o
decarbonisation may not be achieved and
consumers will pay higher prices.
Smart power generation (SPG) describes
power plants such as modern gas-red
types that are fexible and avoid the costs
associated with part loading. SPG can
provide savings or three reasons.
The rst is speed. From zero output, SPG
can respond almost instantaneously to
fuctuations in supply and demand, so they
do not need to be part-loaded.
The second is sustainability o output.
Unlike other ast-start technologies, SPG can
start up quickly and hold output without
needing to be relieved quickly aterwards.
Finally, SPG is ecient. Such plants incur
minimal costs or being on standby as reserve
but can deliver much needed electricity as
quickly as conventional fexible technologies
and even more quickly in some cases.
Valuing fexibility UK
August 2012 saw the UKs Department o
Energy and Climate Change (DECC) publish
an analysis that estimates how fexibility roma range o sources can generate signicant
savings to UK consumers, particularly in a
scenario o high wind penetration. These
sources include demand-side response
(DSR), increased interconnection, storage and
thermal generation.
Redpoint Energy and Imperial College
London ollowed the report with urther
analysis o the potential value o fexibility
through detailed modelling o the UK power
market and balancing costs. The ocus has
been on supply-side fexibility provided by
SPG. The results, however, are more generally
applicable to all sources o fexibility, whether
DSR, storage or interconnection.
The modelled scenarios are based on
projections by the DECC and National
Grid, the UK TSO, or demand and capacity
mix development by 2020 and 2030. Two
capacity mixes came under investigation in
the scenarios o high wind and base wind,
with and without SPG, or the years 2020 and
2030, as Figure 1 shows. In a No SPG capacity
mix, ecient gas generation capacity comes
rom a mixture o combined-cycle gas turbine
(CCGT) and some open-cycle gas turbine(OCGT) generation. In an SPG capacity mix,
4.8 GW o SPG replaces the same amount o
the most uel ecient CCGT capacity. SPG
has a slightly lower net electrical eciency
but superior fexibility compared with CCGT.
What is the impact o SPG on the provision
o system fexibility? Depending on the
case, SPG is the least cost option to provide
fexibility 3540 per cent o the time. With SPG
providing system fexibility in an optimal way,
more room is available or ecient CCGTs
and coal-red generation to run at ull load,
providing cheap electricity to consumers.
The analysis showed that, depending on
the wind scenario, fexible gas generation
could save the UK consumer between
380 million and 550 million ($566 million
and $820 million) per year by 2020 through
reduced balancing costs. By 2030, savings
range rom 580 million to 1.5 billion, as the
volume o wind in the system is expected to
increase urther.
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New market design
A comparison with the UK system-wide
generation costs is useul to give some
scale to the potential savings in balancing
costs. With an increasing amount o low-cost
renewables generating electricity at almost
zero marginal cost, the total generation
costs will all when the output o renewable
generation increases. However, the need or
balancing actions will increase accordingly,and these costs will have a signifcant role by
2030.
The savings potential o SPG is as high as
5 per cent in 2020, increasing to an impressive
19 per cent o total generating costs in 2030.
Valuing fexibility Caliornia
Caliornia aims to increase generation rom
renewables to 33 per cent by 2020. However,
this development has started a debate about
what exible assets will be required to secure
the reliable operation o the power system.Caliornias system will ace another issue
in the near uture when new environmental
regulation may orce the retirement o plants
with once-through cooling that total 12 GW in
capacity. The states system operator CAISO
concludes that 5.5 GW made up o equal
amounts o new CCGT and OCGT is required
by 2020 to secure reliability.
DNV KEMA Energy & Sustainability has
analysed the Caliornian system or 2020 by
using dynamic system modelling. The base
case or the power system modelling was the
Caliornian system or 2020 with a renewables
penetration o 33 per cent, made up o wind
and solar but excluding hydro, and 5.5
GW o new gas turbine plants, made up o
equal amounts o new CCGT and OCGT.
The alternative modelling scenario had the
same basic assumptions but 5.5 GW o SPG
replaced that amount o gas turbines.
By introducing 5.5 GW o SPG instead
o 5.5 GW o gas turbines in the system,
Caliornias consumers save around
$900 million per year, representing 11 percent savings in system-level generating costs.
Figure 2 shows the cost breakdown o the
total system operating costs or the modelled
scenarios.
The studies conducted by DNV KEMA,
Redpoint Energy and London Imperial
College make evident that the inclusion o
SPG in a generation portolio reduces total
system operating costs in systems with a high
penetration o renewables. This is because
SPG provides exibility at low cost.
In addition, by adding SPG to the capacitymix o a power system, other thermal plants
no longer need to run in part load and can
produced electricity at a higher efciency,
which reduces overall generation costs.
A system without SPG can provide
exibility by running plants at part load, but
such actions signifcantly increase costs to
consumers, as the studies show. The value
o exibility in the examined 60 GW UK and
Caliornia peak load systems with high
renewables penetration is greater than
500 million ($642 million) per year.
Translating this to a system the size o
Europes, the value o exibility is estimated
to be greater than 5 billion per year, even
by 2020. Consequently exibility should be
one o the key parameters in the design o a
uture power system and energy market.
A new market vision
In February 2013, the European Commission
asked or stakeholders inputs on potential
ways to secure capacity adequacy and
system reliability in a uture system with high
amounts o renewables. In a high-renewables
power system, exibility is no longer an
invisible and low-cost side product o power
generation but a key actor in power system
design and optimisation.
Although the studies o the UK and
Caliornian systems clearly indicate the
beneft o exibility in the capacity mix,
current market arrangements do not
reect the value o exibility or incentivise
investments in exibility. They also hide the
cost o inexibility within consumer bills and
consequently prevent investments in new
exible capacity. At the same time, energy-
only market setups are struggling to keep
capacity at adequately healthy levels.
Wrtsil has studied several electricity
market models with the aim o developing
one that will incentivise exibility and ensure
capacity adequacy or a system with a highcontribution rom renewables. The market
model should secure capacity adequacy,
incentivise the right type o capacity and
lead to the least cost to consumer. Figure 3
shows the overall market model design that
will deliver this. It is based on two markets
existing next to each other.
The energy market, consisting o the
wholesale electricity markets (day-ahead,
intra-day and balancing markets), and a
fexibility market, establish a competitive
environment. A competitive capacity marketwould be introduced only i needed, to
secure capacity adequacy.
A competitive energy market orms the
basis o the market model. The objectives
o energy markets are to provide low-cost
electricity and low CO2
emissions in all
situations via competitive short-term markets.
Cost-reecting imbalance prices will
increase the imbalance exposure o all
market participants (where all participants
are responsible or balancing), which
incentivises balance at gate closure. Supply
and demand or energy closer to gate closure
is thereore expected to increase because
each market player, in order to reduce the risk
Figure 1: Capacity mixes or power system modelling in the UK, with base and high wind scenarios
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New market design
o out-o-balance penalties, will make eorts
to be in a balanced position at gate closure,
either through changed positions within its
own portolio o options such as changing
the outputs o its own power plants or DSR, or
through trading.
This development enhances the liquidity
in intra-day markets and provides additional
income or fexible assets through balancing
and intra-day markets because these units
will be in a position to supply energy shortly
beore gate closure. However, it would be
hard or even impossible or providers o
fexibility to capture the total value o fexibility
through energy prices alone. Thereore, in
addition to the energy market, we propose
the introduction o a market or fexibility.
A competitive fexibility market would be
a day-ahead option market or fexibility to
increase or decrease energy the ollowing
day. The fexibility market would replace the
existing procurement strategies o TSOs and
would make the procurement o system
services more transparent to market players.
TSOs would go to the fexibility market to
procure the fexibility, or reserves, requiredto satisy the needs o the system or the
ollowing day, when the volumes are not
locked away under long-term contracts.
The fexibility market would also be open
or market participants to procure fexibility
to hedge against intra-day prices and
imbalance exposure.
There are many key eatures to the fexibility
market. When it comes to buying fexibility, the
TSO would always procure it according to the
needs o the system. However, procurement
by market participants could reduce the
amount procured by the TSO.
Market participants determine their own
volume requirements depending on their
willingness to hedge against price risk, and
the TSO acts as a backstop in the day-ahead
auctions to ensure that the system has the
fexibility needed. The TSO procurement
strategy provides stable volumes and liquidity
in the fexibility market and makes known the
total volume o the fexibility requirement.
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Figure 2: Value o fexibility in Caliornia in 2020
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New market design
Another eature is that multiple products,
such as 5-minute or 30-minute ramping, are
defned by the TSO. This ensures the needs o
the system are met. All products require an
option to deliver an increase or decrease in
the physical energy in any uture settlement
period.
Also, the day-ahead timerame aligns with
the energy market or allows co-optimisation
with it and provides a daily reerence price
or dierent exibility products. A secondary
within-day market or participants and the
TSO allows them to trade their options as
more inormation emerges. Clear day-ahead
reerence prices can allow long-term fnancial
contracts to be struck between exibility
providers and market players or the TSO.
The option holder (i.e. market participant
or the TSO) may exercise the option by
calling or energy to be delivered prior to
gate closure. Sel-provided exibility must
provide inormation to the TSO within-day on
whether it wi ll be exercised. Ater gate closureany unused options would be exercisable by
the TSO in the balancing market.
Another key eature is cash ows. Flexibility
cleared through the day-ahead auctions,
other than sel-provided reserve, is paid the
market clearing availability ee per megawatt
or the contract period. A utilisation ee per
MWh is paid on exercise. Unused exibility
must be oered into the balancing market
at the fxed utilisation ee or despatch and
payment by the TSO.
Ensuring cost recovery is also important.
The option holder pays the availability ee
to the exibility providers. The availability ees
incurred by the TSO can be recovered via an
inormation imbalance charge levied on out-
o-balance market participants.
Finally there is the monitoring eature. The
TSO would certiy the physical capability o
capacity providers who seek to oer into the
day-ahead auctions. Any options exercised
would be notifed to the TSO in the same way
as physical energy.
A central capacity market would be
established i the energy and exibility
markets are not delivering investments or
are not able to keep existing plants in the
system. The purpose o the capacity market
is to ensure capacity adequacy by providing
so-called administrative capacity payment,
which compensates the missing money
rom market operations.
While uture energy and exibility markets
are volatile by their nature, investors may
require stable cash ows to be able to fnance
new projects. A capacity market could
enhance the bankability o new projects.
The capacity market, like any capacitymechanism, should concentrate on securing
capacity adequacy rather than speciying
what type o capacity is needed. It should
treat all orms o capacity on an equal basis.
Thus, a well unctioning energy market
together with a exibility market would reward
capabilities, while a capacity market provides
the all-in price required by investors to make
investments.
Change in market design needed
An increasing penetration o variable
renewable generation into a power system
changes its operations and impacts market
undamentals. But while system operators
are calling or exibility rom the generation
side, the thermal eet takes a big hit as
its operating hours are reduced while the
average electricity price is lower. The result isincreasingly uncertain market-based revenues
or thermal plants.
There are potential market-based
approaches to incentivise investments in
exibility. These approaches do not require
administrative cash ows but call or a
reallocation o system costs rom the TSO to
the market, making the cost o exibility visible
or market players. To develop a reliable,
aordable and sustainable power system
necessitates several actions.
Firstly, there must be an understanding
that more renewable generation has caused
dramatic changes in the energy market
environment. Secondly, there must also be
recognition o the value o exibility, which
must be made visible or market players
through cost-reective imbalance prices and
by developing short-term energy markets.
Thirdly there must be a transparent market
explicitly or exibility. This will enable efcient
procurement o system services and provide
clear market signals or investors in exibility.
Finally, new players must be able to enter
the market and new projects must be made
bankable by introducing a capacity market
i the energy and exibility markets are not
delivering investments.
To avoid the risk o locking in the wrong
type o capacity, it is important to take the frst
three actions beore considering the ourth.
Many market players are calling or a
market-based approach regarding the EU
electricity market structure. We hope we have
shown that it is possible to design a market
that provides investment signals or the right
type o capacity and ensures capacityadequacy at the same time.
Matti Rautkivi is general manager,
Business Development, Power Plants, and
Melle Kruisdijk is director, Market Development
Europe, and Business Development, Power
Plants at Wrtsil. For more inormation, visit
www.wartsila.com
This article is based on a Best Paper Awards
winner at POWER-GEN Europe 2013.
Visit www.PowerEngineeringInt.comor more inormationi
Figure 3: A new market design or a power system with high renewable energy integration
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