OPTIMIZING ELECTRICITY MARKET DESIGN FOR HIGH PENETRATION OF

VARIABLE RENEWABLE ENERGY SOURCES IN ISOLATED POWER SYSTEMS

Gautam Jindal, Energy Studies Institute, National University of Singapore, Phone: (65) 6516 6743, email: esigj@nus.edu.sg
Liu Xiying, Energy Studies Institute, National University of Singapore, Phone: (65) 6516 6752, email: esilx@nus.edu.sg
Anthony D Owen, Energy Studies Institute, National University of Singapore, Phone: (65) 6516 2000, email: esiadow@nus.edu.sg
Overview
As countries look towards adopting higher amount of renewable electricity generation in order to achieve their
climate change, energy security and economic targets, they are faced with the challenge of integrating large
amounts of intermittent and variable generation in their power systems. In order to maintain power system
stability, they must procure additional frequency control services. However, these services are generally limited in
their availability by the technical capabilities of the conventional generation fleet and these also impose an
additional economic burden. The problem becomes even more acute for isolated power systems due to the
relatively small size of the power system and lack of interconnections for transferring power to or from neighours.
Thus, even a small percentage of variable renewable generation can require significant additional frequency
control services.

Furthermore, a liberalized electricity market can further restrict the ability of the system to adapt to the variability
from renewable energy sources, as conventional generators require advance information on demand to determine
their pricing strategy. Re-dispatch by the system operators in real time can thus, erode the generators’ confidence
on the market.

Thus, it is useful to determine the design aspects that make the electricity market of an isolated power system,
best suited for integrating high percentages of renewable energy sources at the minimum possible cost. The paper
aims to highlight the best practices from three types of power systems:

1. Large interconnected power system with liberalized electricity market (e.g. Germany)

2. Large isolated power system with liberalized electricity market (e.g. Australia NEM)

3. Small isolated power system with vertically integrated utility (e.g. Hawaii)

Using Singapore as a case of an isolated power system with a well functioning liberalized market, the paper will
aim to analyse the requirement and cost of additional frequency control services of integrating a large amount of
solar PV with its current market design. Additionally, the paper will aim to quantify the cost reductions from
implementing best practices derived from the three case studies.

Methods
Statistical analysis of the variability of System Demand and PV output, in multiple scenarios, where each scenario
represents a different design of an electricity market

Results
First, it was found that with the current electricity market design, Singapore would require very large amounts of
additional frequency control services. Currently, the existing generation fleet in Singapore does not have the
capability to provide the required amount of additional frequency services.

Second, one of the major factors for the large amounts of additional frequency control services required is because
Singapore is a relatively small isolated power system. It does not enjoy the smoothening effect of PV output
caused by spatial diversity, and the possibility of using energy imbalance transfers with neighouring power
systems

Third, if the additional cost of frequency control services is imposed on PV generators based on a causer pays
principle, PV projects would become financially unviable
Finally, a number of modifications to the design of the market can result in substantial reduction of the additional
frequency control services requirement and the resultant cost. These include shortening of dispatch intervals,
reduced gate closure timings, incentivising storage to provide frequency control services, among others.

Conclusions
Electricity markets, especially those that are located in small isolated power systems need to incorporate best
deisgn practices, in order to minimize the cost of balancing the variable output from renewable energy sources.

References

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Rebours, Y., Kirschen, D., Trotignon, M., & Rossignol, S. (2007). A Survey of Frequency and Voltage Control
Ancillary Services Part I: Technical Features. IEEE Trans. Power Syst., 22(1), 350-357.
http://dx.doi.org/10.1109/tpwrs.2006.888963

Riesz, J., Gilmore, J., & MacGill, I. (2015). Frequency Control Ancillary Service Market Design: Insights from
the Australian National Electricity Market. The Electricity Journal, 28(3), 86-99.
http://dx.doi.org/10.1016/j.tej.2015.03.006

Eber, K., & Corbus, D. (2013). Hawaii Solar Integration Study: Executive Summary. National Renewable Energy
Laboratory (NREL/TP-5500-57215). Retrieved from http://www.nrel.gov/docs/fy13osti/57215.pdf