Low-storage and high-distribution arbitrage under peak and valley on-grid tariffs

Low-storage and high-distribution arbitrage under peak and valley on-grid tariffs

  1. Electricity price policies for wind power in different countries

At present, the electricity price policies for wind power in various countries in the world can be divided into three categories: 1. Fixed electricity price policy; 2. Electricity price subsidy policy, especially the electricity price subsidy policy with upper and lower price limits, referred to as price limit policy; 3. Green energy license policy. The electricity price policies of major European countries for wind power are shown in Table 1.

Table 1 - Electricity price policies for wind power in major European countries
Table 1 – Electricity price policies for wind power in major European countries

As can be seen from Table 1, among the major European countries, Germany and France have chosen the fixed electricity price policy; Denmark and the Netherlands have adopted the electricity price subsidy policy; Spain has provided wind power companies with two options: fixed electricity price and electricity price subsidy, and adopted one of the two policies. Electricity price setting is used to guide wind power companies. Because of the electricity price set by the latter, the revenue expectation of the latter is greater than that of the former. At present, more than 90% of wind power companies have chosen the latter; only the UK has adopted the green energy license policy.

China currently implements a benchmark on-grid tariff policy for wind power. According to the “Notice on Improving the On-grid Electricity Price Policy for Wind Power Generation” issued by the National Development and Reform Commission in July 2009, the country is divided into 4 types of wind energy resource areas, and the corresponding wind power benchmark electricity price levels are 0.51 yuan/(kw. Yuan/(kw.h), 0.58 Yuan/(kw.h) and 0.61 Yuan/(kw.h), at the same time, it is stipulated that the wind power cost sharing system will continue to be implemented, and the on-grid electricity price of wind power will be higher than the benchmark on-grid electricity price of local coal-fired units. , which will be resolved through the sharing of renewable energy electricity price surcharges levied across the country. The analysis shows that China’s current electricity price policy for wind power is consistent with the fixed electricity price policy of European countries. The risk of price fluctuations; on the other hand, wind power does not need to undertake the obligation to balance auxiliary services, and the balance problems caused by the fluctuation and intermittency of its output are all borne by the grid company, and the cost is ultimately shared by users.

  1. Risk analysis under different electricity price mechanisms

The risk allocation methods under the three electricity price policies are compared, as follows:
1) From the perspective of the long-term market, the fixed electricity price policy is most beneficial to wind power companies, completely eliminating the risk of price fluctuations that wind power companies need to face. But this part of the risk has not disappeared, and will eventually be borne by the system operator or user. The electricity price subsidy policy is an improvement to the fixed electricity price policy. It takes a step forward in risk sharing and requires wind power companies to bear the risk of price fluctuations like other electricity market participants. The price subsidy policy of upper and lower price limits limits the risks faced by wind power companies to one
within a certain range. Compared with the first two methods, the green energy license policy is a brand new idea. Through the green energy license, various power sources are distinguished from the perspective of environmental impact. Subsidize renewable energy units, promote the development of renewable energy power sources, and promote the transformation of the energy structure of the entire society. However, judging from the existing rules, this method is not as capable of protecting the interests of wind power companies as the first two methods.

2) From the perspective of balancing auxiliary services, the three electricity price policies have similarities in balancing auxiliary services. In addition to the current fixed electricity price policies in Germany and France, various other electricity price policies require wind power companies to undertake certain balancing obligations and implement special balancing ancillary service fee charging methods, including charging only for the part exceeding the power fluctuation threshold The above measures can provide economic incentives for wind power companies to reduce the unbalanced amount.

  1. Risk analysis of wind power price in China

From the perspective of risk, there are four main problems in the connection of wind power under China’s current power structure:
1) There is no effective risk sharing mechanism. The current benchmark on-grid tariff policy and the management method of “full guaranteed purchase” of wind power make the risk of wind power fluctuation completely borne by the power grid company. Due to the failure to establish an effective risk sharing mechanism, it is impossible to fundamentally mobilize the enthusiasm of power grid enterprises.

2) Lack of incentives to reduce risk from a technical perspective. Since wind farms do not need to bear the risk of power fluctuations of units at all, it is impossible to motivate wind farms to reduce the risk of wind power access to the system from a technical point of view.

3) Lack of motivation provided by balanced resources. There are many power plants with regulating capability in the market, which play an integral role in the balance of active and reactive power in the system. Because there is no good incentive mechanism, they are mostly free to participate in the system balance, and their subjective initiative is poor.

4) Lack of price signals to guide wind power behavior. The fixed benchmark on-grid electricity price not only ensures the return on investment of the wind farm, but also isolates the wind farm from the market signal. The wind farm cannot respond to the market price signal, and it is easy to increase the peak-to-valley difference, which makes the anti-peak adjustment effect obvious.

  1. Solutions to China’s wind power price risk

Aiming at the four problems summarized above, the following possible solutions are proposed:
(1) Establish a reasonable risk sharing mechanism
China’s current electricity price policy for wind farms is a fixed benchmark on-grid electricity price, which plays an important role in promoting wind power investment, as evidenced by the rapid growth of China’s wind power installed capacity in recent years. Through the research on the development of foreign wind power industry, we can see that many foreign countries have adopted similar methods in the early stage of wind power development. However, this measure makes the risk of wind power fluctuation completely borne by the power grid company.

With the continuous expansion of the proportion of wind power access, the irrationality of this risk allocation method will gradually become prominent. An improved point of view is that the system should not unconditionally accept wind power fluctuations, there should be a range, the part within the range is free, and the part beyond it will be charged. Compared with Germany’s electricity price policy for renewable energy, Spain has made improvements. It is also a fixed electricity price policy. Spain also stipulates that the system provides power balance free of charge.
The range is 20% for wind power and solar power, and 5% for other new energy sources. Anything beyond this range is charged to renewable energy generators, currently 7.8 euros/kw.h.

According to the specific situation in China, the following improvement measures are available;
1) The part of the fluctuation beyond the range (such as 25%) is still handled by the dispatching department, but the wind power supplier needs to pay for it.

2) For the part where the fluctuation exceeds the range (eg 25%), the wind farm is required to balance itself. At this time, the wind farm can sign a contract with other power plants (power plants with short-term power adjustment capability), and other power plants can reserve a certain amount of spinning reserve for them. Once a power shortage occurs, the wind farm can call this part of the reserved spinning reserve. .

(2) Reducing the risk of wind power access to the system from a technical point of view The fluctuation and intermittency of wind turbine output will inevitably bring risks to the system operation, which are reflected in the problem of frequency regulation, peak regulation, and reactive power compensation. It also includes the security and stability of the power grid.

In addition to starting from the system itself, wind power companies should also be encouraged to reduce the risk of wind power access from a technical perspective. It mainly includes 3 aspects:
1) Improve the accuracy of wind power prediction. The output volatility is an inherent property of wind turbines, but the predictable volatility can control the risk of system operation.

2) Strengthen the control of wind turbine output. At present, the control methods of conventional units (thermal power and hydropower) are relatively mature, but the control of active and reactive output of wind turbines is still very weak, which increases the risk of wind power connection to the system.

3) Add an energy storage device to stabilize the output fluctuation of the wind turbine. In recent years, with the development of materials science, battery technology and power electronics technology, many efficient energy storage devices have emerged, such as flywheel energy storage, all-vanadium flow and sodium-sulfur energy storage, superconducting energy storage and supercapacitor energy storage Wait. Efficient energy storage devices can not only reduce the impact of wind power fluctuations on the power grid when wind speed disturbance occurs in daily operation, but also improve the stability of the system under fault conditions. In order to incentivize reducing the risk of wind power connection from a technical point of view, two approaches can be adopted: one is to write the factors that have a greater impact on the security of the power grid into the grid connection rules, and to regulate the behavior of power generators; And the wind turbines participating in the system stability control are given certain economic subsidies.

(3) Establish an auxiliary service market to ensure the supply of balanced resources The establishment of an auxiliary service market can motivate power plants with adjustment capabilities to actively participate in the system balance, and reflect the value of balanced resources with different performances (divided by response time) from the price. This move can not only mobilize the enthusiasm of power plants, but also the ancillary service market with good liquidity will also reduce the cost of balancing services and ensure the maximization of social benefits.

(4) Implement peak-to-valley benchmark on-grid tariffs for wind power
Considering that the peak-valley characteristics of wind farm output are often opposite to the peak-valley characteristics of load, and its anti-peak shaving effect is obvious, a bee-valley benchmark on-grid tariff for wind power can be implemented, and market price signals are used to guide wind farms to participate in peak shaving. For example, when the load is at a valley, the wind farm output may be at a peak. If the electricity price in the wholesale market is low at this time, the wind farm can fully respond to the market price signal, reduce its own output, and reasonably “abandon the wind” to weaken the effect of anti-peak regulation.

  1. Analysis of low-storage and high-generation arbitrage under peak and valley on-grid electricity prices

At present, China learns from the policies and measures adopted in the early stage of wind power development in western developed countries, and implements a benchmark on-grid tariff policy for wind power, which is a safeguard policy when the scale of wind power development is small in the early stage. However, the anti-peak shaving characteristics of wind power will lead to the shutdown of thermal power units or reduce the output operation when the load is low, and the coal consumption rate will greatly increase, which will greatly reduce the operating economy of the system. At the same time, wind power is regarded as garbage power by power grid companies, and large-scale access to the grid will affect the safe operation of the power grid, so it is often restricted.

Under the fixed on-grid tariff mechanism, the use of energy storage systems in wind farms to store electricity during load troughs (usually wind power peaks) and discharge during load peaks (usually wind power troughs) will not generate economic benefits for wind power companies and cannot motivate them. Take technical means to improve the quality of wind power. With the battery energy storage technology becoming more mature and the cost gradually decreasing, if a reasonable peak-to-valley electricity price can be implemented for wind power, on the one hand, the price signal can be used to guide the wind farm to participate in peak regulation, reduce the peak regulation pressure on the power supply side and the power grid, and optimize the On the other hand, it can reduce the impact of wind power on the power grid, ensure the safe operation of the power grid, and improve the enthusiasm of the power grid to accept wind power. Therefore, this section assumes that the peak-valley electricity price on the sales side is used as a reference to set the wind power price, and analyzes the incentive effect of the peak-valley difference of the on-grid electricity price on the construction of energy storage. Then the arbitrage of the energy storage system in the i-th period through low storage and high issuance is (2):

In the formula, Pi+, Pi– are the discharge power and charging power of the energy storage device in the i-th period (when discharging, the charging power is 0; when charging, the discharging power is 0);
Pc, i- the output limit of the wind farm is allowed to be accepted under the grid penetration power limit in the i-th period. When the wind power is large and the system capacity is low, the wind farm needs to limit the output of the wind turbine, but if the energy storage system is used If it is adjusted, it is possible to increase the on-grid electricity of the wind farm without limiting the output of the wind turbine or reducing the limit; ei-the on-grid electricity price in the i-th period; Δt= 1/12h is the length of the divided period.

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