Increasing the share of renewables in energy portfolios is key to reducing global CO2 emissions. Variable renewables, such as wind, wave, tidal, solar and run-of-river hydro, share a characteristic that distinguishes them from conventional sources of energy: their output varies according to the availability of the resource. This variability represents an additional challenge in terms of their integration in power systems.

However, if a power system is sufficiently flexible, the significance of variability is reduced. A flexible electricity system is one that can respond reliably and rapidly to large fluctuations in supply and demand. Some flexibility already features in electricity systems: in the generation portfolio, in markets, in transmission and distribution, and in the shape of electricity demand.

The IEA was tasked by the G8 to investigate options to facilitate the grid integration of renewable energy, for the G8 Hokkaido Toyako Summit, in July 2008. This paper focuses specifically on measures to increase the flexibility of power systems – their ability to operate reliably with significant shares of variable renewable electricity.

Before additional capacity investments are made, the use of existing system flexibility should be optimised. Empowering Variable Renewables: Options for Flexible Electricity Systems identifies a number of the options for maximising the use of the existing resource, through innovative design and operation of electricity markets and grids.

Electricity systems throughout the world are entering a new investment cycle. In the light of pressing climate change concerns, this is an important opportunity to modernise the way they work and, consequently, to facilitate an increasing role for variable renewable electricity.

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Table of Contents
Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
2 Variable renewable electricity technologies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Factors with a smoothing effect on variability . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
Forecasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
3 Power system flexibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Assessing flexibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
4 Operational measures to increase flexibility . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Aggregating power systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Trading closer to real time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Demand side management and response . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
5 Transmission and distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Optimal use of transmission capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Intelligent network operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
New transmission technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
6 Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29

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About This Paper

The IEA was tasked by the 2005 Gleneagles G8 Summit to draw together findings in the field of grid integration of renewable electricity, and to prepare recommendations for the G8 Hokkaido Toyako Summit, in July 2008. This paper focuses specifically on measures to increase the flexibility of power systems – their ability to operate reliably with significant shares of variable renewable electricity (var-RE). The term “power system” is here used to denote the whole chain of electricity production, transmission, trading, distribution and consumption.

Measures involving capital investments to increase the flexibility resource of a power system, including additional flexible generation capacity, energy storage, and inter-area interconnection capacity, are looked at in some detail in a previous publication of the IEA (2005a). This paper focuses on a portfolio of measures available with today’s technology to optimise access to and the use of this resource, through modification of the operation and design of electricity markets and transmission, thus enabling higher var-RE share.

Chapter Two discusses variability, and how a system-wide approach to the integration of var-RE power plants can have a smoothing effect on their output, before touching on the issues of forecasting and predictability. Chapter Three outlines a methodology to assess power system flexibility. Chapter Four highlights measures to increase flexibility, which relate to the operation of physical power markets, while Chapter Five covers the optimisation of transmission and distribution networks – the grid. Finally, Chapter Six provides conclusions.

INTERNATIONAL ENERGY AGENCY

The International Energy Agency (IEA) is an autonomous body which was established in November 1974 within the framework of the Organisation for Economic Co-operation and Development (OECD) to implement an inter national energy programme.

It carries out a comprehensive programme of energy co-operation among twenty-seven of the OECD thirty member countries. The basic aims of the IEA are:

• To maintain and improve systems for coping with oil supply disruptions.
• To promote rational energy policies in a global context through co-operative relations with non-member countries, industry and inter national organisations.
• To operate a permanent information system on the international oil market.
• To improve the world’s energy supply and demand structure by developing alternative energy sources and increasing the effi ciency of energy use.
• To promote international collaboration on energy technology.
• To assist in the integration of environmental and energy policies.

The IEA member countries are: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Republic of Korea, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom and United States. Poland is expected to become a member in 2008. The European Commission also participates in the work of the IEA.

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

The OECD is a unique forum where the governments of thirty democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies.

The OECD member countries are: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Republic of Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom and United States. The European Commission takes part in the work of the OECD.

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