Energy conversion/Description: Difference between revisions

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{{ComponentDescriptionTemplate
{{ComponentDescriptionTemplate
|Reference=Hoogwijk, 2004; Van Vuuren, 2007; Hendriks et al., 2004b; Van Ruijven et al., 2007;
|Reference=Hoogwijk, 2004; Van Vuuren, 2007; Hendriks et al., 2004b; Van Ruijven et al., 2007; Ueckerdt et al., 2016; Gernaat et al., 2014; Koberle et al., 2015; De Boer and Van Vuuren, under review;  
|Description=[[TIMER model|TIMER]] includes two main energy conversion modules: Electric power generation and hydrogen generation. Below, electric power generation is described in detail. In addition, the key characteristics of the hydrogen generation model, which follows a similar structure, are presented.
|Description=[[TIMER model|TIMER]] includes two main energy conversion modules: Electric power generation and hydrogen generation. Below, electric power generation is described in detail. In addition, the key characteristics of the hydrogen generation model, which follows a similar structure, are presented.


===Electric power generation===
===Electric power generation===
As shown in the flowchart, two key elements of the electric power generation are the investment strategy and the operational strategy in the sector. A challenge in simulating electricity production in an aggregated model is that in reality electricity production depends on a range of complex factors, related to costs, reliance, and the time required to switch on technologies. Modelling these factors requires a high level of detail and thus {{AbbrTemplate|IAM}}s) such as [[TIMER model|TIMER]] concentrate on introducing a set of simplified, meta relationships ([[Hoogwijk, 2004]]; [[Van Vuuren, 2007]]).
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In TIMER, electricity can be generated by 28 technologies. These include the VRE sources solar photovoltaics (PV), concentrated solar power (CSP), and onshore and offshore wind power. Other technology types are natural gas-, coal-, biomass- and oil-fired power plants. These power plants come in multiple variations: conventional, combined cycle, carbon capture and storage (CCS) and combined heat and power (CHP). The electricity sector in TIMER also describes the use of nuclear, other renewables (mainly geothermal power) and hydroelectric power. ([[De Boer and Van Vuuren, under review]])
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As shown in the flowchart, two key elements of the electric power generation are the investment strategy and the operational strategy in the sector. A challenge in simulating electricity production in an aggregated model is that in reality electricity production depends on a range of complex factors, related to costs, reliance, and the time required to switch on technologies. Modelling these factors requires a high level of detail and thus IAMs, such as TIMER, concentrate on introducing a set of simplified, meta relationships ([[Hoogwijk, 2004]]; [[Van Vuuren, 2007]]; [[De Boer and Van Vuuren, under review]]).
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====Total demand for new capacity====
====Total demand for new capacity====
The electricity capacity required to meet the demand per region is based on a forecast of the maximum electricity demand plus a reserve margin of about 10% (including the capacity credit assigned to different forms of electricity generation). Maximum demand is calculated on the basis of an assumed monthly shape of the load duration curve ({{AbbrTemplate|LDC}}) and the gross electricity demand. The latter comprises the net electricity demand from the end-use sectors plus electricity trade and transmission losses (LDC accounts for characteristics such as cooling and lighting demand). The demand for new generation capacity is the difference between the required and existing capacity. Power plants are assumed to be replaced at the end of their lifetime, which varies from 30 to 50 years, depending on the technology and is currently fixed in the model.
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The electricity generation capacity required to meet the demand per region is based on a forecast of the maximum annual electricity demand plus a reserve margin. The reserve margin consists of a general reserve margin of 10-20% plus a compensation for imperfect capacity credits (the ability of capacity to supply peak demand) of existing capacity. The maximum annual demand is calculated on the basis of an assumed shape of the load duration curve (LDC) and the gross electricity demand. The latter comprises the net electricity demand from the end-use sectors plus electricity trade and transmission losses. An LDC shows the distribution of load over a certain timespan in a downward form. The peak load is plotted to the left of the LDC and the lowest load is plotted to the right. The shape of the LDC is based on work by Ueckerdt et al. ([[Ueckerdt et al., 2016|2016]]), who derived regional normalized residual LDCs (RLDC) for different solar and wind shares, including the application of optimized electricity storage.  
 
The final demand for new generation capacity is equal to the difference between the required and existing capacity. Power plants are assumed to be replaced at the end of their lifetime, which varies from 25 to 80 years, depending on the technology.
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====Decisions to invest in specific options ====
====Decisions to invest in specific options ====
In the model, the decision to invest in generation technologies is based on the price of electricity (in {{AbbrTemplate|USD}}/{{AbbrTemplate|kWhe}}) produced per technology, using a multinomial logit equation that assigns larger market shares to the lower cost options. The specific cost of each option is broken down into several categories: investment or capital cost (USD/kWe); fuel cost (USD/GJ); operational and maintenance costs (O&M); and other costs (see further). The exception is hydropower capacity, which is exogenously prescribed, because large hydropower plants often have additional functions such as water supply and flood control. In the equations, some constraints are added to account for limitations in supply, for example restrictions on biomass availability. The investment for each option is given as the total investment in new generation capacity and the share of each individual technology determined on the basis of price and preference.
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In the model, the decision to invest in generation technologies is based on the levelized cost of electricity (LCOE; in USD/kWhe) produced per technology, using a multinomial logit equation that assigns larger market shares to the lower cost options.


====Operational strategy====
An important variable used in determining the LCOE is the amount of electricity generated. Often, the LCOEs of technologies are compared at maximum full load hours. However, only a limited share of the installed capacity will actually generate electricity at full load. This effect is captured in a heuristic: 20 different load bands have been introduced to link the investment decision to expected dispatch. The different load bands are distributed among the LDC, resulting in a load factor for each load band. The inclusion of different load factors for each load band means that less capital-intensive technologies are attractive to use for lower load factor load bands. These are likely to be gas-fired peaker plants. For load bands with higher load factors, the electricity submodule chooses technologies with lower operational costs. These are likely to be base load plants, such as coal-fired or nuclear power plants. A system with more VRE sources will result in lower load factors and therefore in a higher demand for peak or mid load technologies.
Use of power plants is based on operational costs, with low-cost technologies assumed to be used most often. This implies that capital-intensive plants with low operational costs, such as renewable and nuclear energy, operate as many hours as possible. To some degree, this is also true for other plants with low operational costs, such as coal.  
The operational decision is presented in the following three steps:
#Renewable sources PV and wind are assigned, followed by hydropower, because these options have the lowest operational costs;
#The peak load capacity (period of high electricity demand) is assigned on the basis of the operational costs of each available plant and the ability of these plants to provide peak load capacity;
#Base load (period of medium to low energy demand) is assigned on the basis of the remaining capacity (after steps 1 and 2), operational costs and the ability of options to provide the base load capacity.


====Fossil-fuel and bio-energy power plants====
The standard costs of each option can be broken down into several categories: investment or capital cost; fuel cost; fixed and variable operational and maintenance costs; construction costs; and carbon capture and storage costs.
A total of 20 types of power plants generating electricity using fossil fuels and bioenergy are included. These power plants represent different combinations of conventional technology, such as gasification and combined cycle ({{AbbrTemplate|CC}}) technology; combined heat and power ({{AbbrTemplate|CHP}}); and carbon capture and storage ({{AbbrTemplate|CCS}})([[Hendriks et al., 2004b]]). The specific capital costs and thermal efficiencies of these types of plants are determined by exogenous assumptions that describe the technological progress of typical components of these plants:
* The capital costs of VRE and nuclear power develop as a result of endogenous learning mechanisms explained [[Energy supply and demand/Technical learning|here]]. The capital cost development of other technologies is exogenously determined
* Fuel cost result from the supply modules described [[Energy supply|here]]
* Fixed and variable operation and maintenance costs are exogenously prescribed
* Construction costs result from interest paid during construction. Construction times vary among the technologies
* More information on carbon capture and storage cost can be found [[Carbon capture and storage|here]]
Also, additional costs are distinguished: backup costs; curtailment costs; VRE load factor decline; storage costs; and transmission and distribution costs.
* Backup costs have been added to represent the additional costs required in order to meet the capacity and energy production requirements of a load band. Backup costs are higher for technologies with low capacity credits. Backup costs include all standard cost components for the chosen backup technology
* Curtailment costs are only relevant for VRE technologies and CHP. Curtailments occur when the supply exceeds the demand. The degree to which curtailment occurs depends on VRE share, storage use and the regional correlation between electricity demand and VRE or CHP supply. Curtailment influences the LCOE by reducing the potential amount of electricity that could be generated
* Load factor reduction results from the utilisation of VRE sites with less favourable environmental conditions, such as lower wind speeds or less solar irradiation. This results in a lower potential load influencing the LCOE by reducing the potential electricity generation. The development of load factor reduction is captured in cost supply curves. For more information on the TIMER cost supply curves see: Hoogwijk ([[Hoogwijk, 2004|2004]]), Gernaat et al., ([[Gernaat et al., 2014|2014]]) and Koberle et al., ([[Koberle et al., 2015|2015]]).
* Storage use has been optimised in the RLDC data set. For more information on storage use, see Ueckerdt et al. (n.d.)
* Transmission and distribution costs are simulated by adding a fixed relationship between the amount of capacity and the required amount of transmission and distribution capital. VRE cost supply curves contain additional transmission costs resulting from distance between VRE potential and demand centres


* For conventional power plants, the coal-fired plant is defined in terms of overall efficiency and investment cost. The characteristics of all other conventional plants (using oil, natural gas or bioenergy) are described in the investment differences for desulphurisation, fuel handling and efficiency.
The exceptions are hydropower, other renewables and CHP. Hydropower and other renewables are exogenously prescribed, because of a lack of available data or because technologies like large hydropower plants often have additional functions such as water supply and flood control. The demand for CHP capacity is heat demand driven.


* For Combined Cycle (CC) power plants, the characteristics of a natural gas fired plant are set as the standard. Other CC plants (fuelled by oil, bioenergy and coal after gasification) are defined by indicating additional capital costs for gasification, efficiency losses due to gasification, and operation and maintenance (O&M) costs for fuel handling.  
Finally, in the equations, some constraints are added to account for limitations in supply, for example restrictions on biomass availability. For a more detailed description on electricity sector investments in TIMER, see De Boer & van Vuuren (n.d.).
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* Power plants with carbon-capture-and-storage systems (CCS) are assumed to be CC plants, but with fuel-specific lower efficiency and higher investment and O&M costs (related to capture and storage).
====Operational strategy====
 
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* The characteristics of combined-heat-and-power plants (CHP) are similar to those of other plants, but with an assumed small increase in capital costs, in combination with a lower efficiency for electric conversion and an added factor for heat efficiency.
The demand for electricity is met by the installed capacity of power plants. The available capacity is used according to the merit order of the different types of plants; technologies with the lowest variable costs are dispatched first, followed by other technologies based on an ascending order of variable costs. This results in a cost-optimal dispatch of technologies. The dispatch of VRE is described by the RLDC dataset. CHP dispatch is distributed based on monthly heating degree days. Within each month, the CHP load stays constant.
 
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The cost of one unit electricity generated is equal to the sum of the capital cost, operational and maintenance costs (O&M), fuel cost, and CO<sub>2</sub> storage cost.
 
See the additional info on [[Grid and infrastructure]] and  [[Carbon capture and storage]].
 
====Solar and wind power====
 
The costs of solar and wind power in the model are determined by learning and depletion dynamics. For renewable energy, costs relate to capital, {{abbrTemplate|O&M}} and system integration. The capital costs mostly relate to learning and depletion processes. Learning is represented by in learning curves (see [[Energy supply and demand/Technical learning|Page on Technical learning]]); depletion is by long-term in cost–supply curves.
 
The additional system integration costs relate to curtailed electricity (if production exceeds demand and the overcapacity cannot be used within the system), backup capacity; and additional required spinning reserve. The last items are needed to avoid loss of power if the supply of wind or solar power drops suddenly, enabling a power scale up in a relatively short time, in power stations operating below maximum capacity ([[Hoogwijk, 2004]]).
 
To determine curtailed electricity, the model compares 10 points on the load-demand curve at the overlap between demand and supply. For both wind and solar power, a typical load supply curve is assumed (see [[Hoogwijk, 2004]]). If supply exceeds demand, the overcapacity in electricity is assumed to be discarded, resulting in higher production costs.
 
Because wind and solar power supply is intermittent (variable and thus not reliable), the model assumes that backup capacity needs to be installed. It is assumed that no backup is required for first 5% penetration of the intermittent capacity. However, for higher levels of penetration, the effective capacity (degree to which operators can rely on plants producing at a specific time) of intermittent resources is assumed to decrease. This is referred to as the capacity factor. This decrease leads to the need for backup power by low-cost options, such as gas turbines, the cost of which is allocated to the intermittent source.
 
The required spinning reserve of the power system is the capacity that can be used to respond to a rapid increase in demand. This is assumed to be 3.5% of the installed capacity of a conventional power plant. If wind and solar power further penetrate the market, the model assumes an additional, required spinning reserve of 15% of the intermittent capacity (after subtraction of the 3.5% existing capacity). The related costs are allocated to the intermittent source.
 
====Nuclear power====
The costs of nuclear power also include capital, O&M and nuclear fuel costs. Similar to the renewable energy options, technology improvement in nuclear power is described via a learning curve (costs decrease with cumulative installed capacity). Fuel costs increase as a function of depletion. Fuel costs are determined on the basis of the estimated extraction costs for uranium and thorium resources, see [[Energy supply]]. A small trade model for these fission fuels is included..


===Hydrogen generation===
===Hydrogen generation===

Revision as of 15:24, 6 November 2016

Link to framework components overview

Parts of Energy conversion/Description

  1. Introduction page
  2. Model description
  3. Policy issues
  4. Data, uncertainty and limitations
  5. Overview of references
    6. Additional info
  6. Carbon capture and storage
  7. Grid and infrastructure
  8. Technical learning
Component is implemented in:
Aggregated component:Components:
Related IMAGE components
Projects/Applications
Models/Databases
Key publications
References
TIMER model, electricity module
Flowchart Energy conversion. See also the Input/Output Table on the introduction page.

Model description of Energy conversion

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