POWER SYSTEM

FLEXIBILITY FOR THE

ENERGY TRANSITION
PART 1:
OVERVIEW FOR POLICY MAKERS

November 2018
www.irena.org
Copyright© IRENA 2018

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ISBN 978-92-9260-089-1

Citation: IRENA (2018), Power System Flexibility for the Energy Transition, Part 1: Overview for policy makers,
International Renewable Energy Agency, Abu Dhabi.

About IRENA
The International Renewable Energy Agency (IRENA) is an intergovernmental organisation
that supports countries in their transition to a sustainable energy future and serves as the
principal platform for international co-operation, a centre of excellence, and a repository of
policy, technology, resource and financial knowledge on renewable energy. IRENA promotes the
widespread adoption and sustainable use of all forms of renewable energy, including bioenergy,
geothermal, hydropower, ocean, solar and wind energy, in the pursuit of sustainable development,
energy access, energy security and low-carbon economic growth and prosperity.

Acknowledgements
This report benefited from the input of various experts, notably Debabrata Chattopadhyay
(World Bank), Todd Levin (Argonne National Laboratory), Debra Lew (General Electric), Michael
Milligan (consultant, ex-NREL), Simon Müller (IEA), Sakari Oksanen (consultant, ex-IRENA), Aidan
Tuohy (EPRI) and Manuel Welsch (IAEA). Dolf Gielen and Asami Miketa (IRENA) also provided
valuable input.

Contributing authors: Emanuele Taibi, Thomas Nikolakakis, Laura Gutierrez and Carlos Fernandez
(IRENA) with Juha Kiviluoma, Tomi J. Lindroos and Simo Rissanen (VTT).

The report is available for download: www.irena.org/publications.

For further information or to provide feedback: [email protected]

Disclaimer

This publication and the material herein are provided “as is”. All reasonable precautions have been taken by
IRENA to verify the reliability of the material in this publication. However, neither IRENA nor any of its officials,
agents, data or other third-party content providers provides a warranty of any kind, either expressed or implied,
and they accept no responsibility or liability for any consequence of use of the publication or material herein.

The information contained herein does not necessarily represent the views of the Members of IRENA. The mention
of specific companies or certain projects or products does not imply that they are endorsed or recommended
by IRENA in preference to others of a similar nature that are not mentioned. The designations employed and the
presentation of material herein do not imply the expression of any opinion on the part of IRENA concerning the
legal status of any region, country, territory, city or area or of its authorities, or concerning the delimitation of
frontiers or boundaries.
CONTENTS

ABBREVIATIONS ���������������������������������������������������������������������������������������������������������������������������������� 5

GLOSSARY����������������������������������������������������������������������������������������������������������������������������������������������6

EXECUTIVE SUMMARY������������������������������������������������������������������������������������������������������������������������� 8

1 FLEXIBILITY IN THE ENERGY TRANSITION��������������������������������������������������������������������������� 10

2 FLEXIBILITY IN POWER SYSTEMS��������������������������������������������������������������������������������������������15

3 SOURCES OF FLEXIBILITY ��������������������������������������������������������������������������������������������������������24

3.1 Technical flexibility���������������������������������������������������������������������������������������������������������������25

3.2 Operational flexibility����������������������������������������������������������������������������������������������������������� 31

4 FLEXIBILITY IN THE PLANNING PROCESS����������������������������������������������������������������������������35

5 CONCLUSIONS�������������������������������������������������������������������������������������������������������������������������������42

REFERENCES����������������������������������������������������������������������������������������������������������������������������������������43

3
FIGURES

Figure 1: Share of electricity in total final energy consumption,

REmap Case, 2015–2050 10

Figure 2: A 2-degree Celsius scenario for electricity generation,

REmap Case, 2015–2050 11

Figure 3: Power system flexibility enablers in the energy sector 12

Figure 4: Seasonal variability of hourly electricity demand in ERCOT 16

Figure 5: Legacy categorisation of various types of conventional electricity

generation units based on their generation characteristics 17

Figure 6: Impact of wind variability and uncertainty (forecast error) on net load 18

Figure 7: Flexibility issues in a system with high penetration of solar PV 21

Figure 8: Impacts of VRE at various time scales and relevant flexibility solutions 24

Figure 9: Technical options to increase system flexibility 25

Figure 10: Different time scales in which flexibility has to be analysed 33

Figure 11: Summary of operating reserves 33

Figure 12: Methodology for flexibility planning 36

Figure 13: The IRENA FlexTool in the planning process 41

TABLES

Table 1: Comparison of technical characteristics between coal-fired and

gas-fired power generation technologies 26

BOXES

Box 1. Unlocking power system flexibility in China 32

Box 2. The Irish case 34

Box 3. Brief introduction to the IRENA FlexTool 41

4 P OW ER S YS T EM FL EX I BI LI TY F O R TH E ENERGY TRANSI TI ON
ABBREVIATIONS

CAES compressed air energy storage

CHP combined heat and power
CO2 carbon dioxide
CSP concentrated solar power
DC direct current
DS3 Delivering a Secure, Sustainable Electricity System
ENTSO-E European Network of Transmission System Operators
ERCOT Electric Reliability Council of Texas
EV electric vehicle
FACTS flexible alternating current transmission system
FCR frequency containment reserve
FFR fast frequency response
FRR frequency restoration reserve
GW gigawatt
IAEA International Atomic Energy Agency
IEA International Energy Agency
IRENA International Renewable Energy Agency
MW megawatt
NREL National Renewable Energy Laboratory (United States)
PJ petajoule
PV photovoltaic
REmap Renewable Energy Roadmap
SNSP system non-synchronous penetration
SONI System Operator for Northern Ireland
TSO transmission system operator
TWh terawatt-hour
VRE variable renewable energy
V2G vehicle-to-grid

PART 1: OVE RVIE W FOR P OLICY M A KE R S 5

GLOSSARY

Ancillary services Services necessary for the operation of an electric power system
provided by the system operator and/or by power system users.
System ancillary services may include the participation in frequency
regulation, reactive power regulation, active power reservation, etc.
(Source: Electropedia)

Capacity expansion The process of identifying future investments in assets in the power
planning sector, typically with a long planning horizon, 20–40 years or more.
Frequently published as electricity sector masterplans. Common
purposes include the least-cost evolution of the electricity generation
mix, assessing economic and policy implications and their sensitivity
to future uncertainties, and exploring alternative policy scenarios.
Cycling Changing the output of a power plant by starting up, shutting down,
(re: thermal generators) ramping up or ramping down.
Demand-side flexibility A power system’s ability to adjust electricity demand rapidly as
requested to match electricity supply.
Dispatch simulation A mathematical process applied to simulate the dispatch of
generators in a given power system over a period of a few hours up
to one year. Transmission system operators (TSOs) may use such
simulations for operational planning of dispatch (e. g., a day or a
week ahead), and power generators may use them for fuel budgeting
and maintenance planning (e. g., years ahead). Policy and regulatory
bodies also use them to inform policy and regulatory decisions made
during the planning process.
Electrification The process of shifting from an energy source other than electricity
to electricity. An example of electrification is shifting from biomass to
electricity for cooking food.
Electric vehicle A vehicle that uses one or more electric motors or traction motors
for propulsion rather than a conventional internal combustion engine.
Frequency The rotational frequency of synchronous generators within a power
(re: a power system) system that has to be maintained in a narrow interval around the
nominal value to ensure reliable operations.
Heat pump A device that transfers heat energy from a source of heat to a heat
sink. Heat pumps move thermal energy in the opposite direction of
spontaneous heat transfer, by absorbing heat from a cold source and
releasing it to a warmer sink.

6 P OW ER S YS T EM FL EX I BI LI TY F O R TH E ENERGY TRANSI TI ON
Geospatial planning An integral part of the transmission planning conducted by TSOs,
regulators or the TSO-responsible unit within a utility. It refers to
planning practices that define a long-term vision for developing
transmission lines, primarily on economic grounds considering
the trade-off between the potential benefit of locating renewable
generation in areas with higher-quality resources, and the cost of
transmission investment.
Inertia A property of large synchronous generators, which contain large
(inertial response) rotating masses, and which acts to overcome the immediate
imbalance between power supply and demand for electric power
systems, typically the electrical grid. (Source: Wikipedia)
Interruptible load An electrical load that comes from customers with interruptible
service that can be disconnected when the system requires a rapid
reduction in demand.
Power-to-heat The process of using surplus electric power from variable renewable
energy (VRE) to produce heat that can be used as an energy carrier
or a service, mainly in the industrial and residential sectors. The
main technologies used for this purpose are heat pumps and electric
resistors.
Reserves Generating capacity, kept in reserve to compensate for all possible
(re: system services) deviations in the power balance that may occur between normal
conditions and those which actually occur, and thus to ensure a
reliable and economic electricity supply. (Source: Electropedia)
Sector coupling The process of interconnecting the power sector with the broader
energy sector (e. g., heat, gas, mobility). It includes charging of
battery-electric vehicles and production of heat and hydrogen from
electricity.
Technical Studies to assess a power system’s ability to 1) operate reliably under
network studies normal (steady-state) conditions and 2) recover effectively in the
event of a contingency (dynamic conditions).
Uncertainty The inability to perfectly predict the future output of solar and wind
(re: solar and wind power sources.
power)
Variability The fluctuating nature of solar and wind resources, which translates
(re: solar and wind to possibly rapid changes in electricity generation.
power)
Variable renewable A renewable energy source that is characterised by variability and
energy uncertainty, such as wind power and solar power. Less common VRE
includes run-of-river hydropower and wave power.

PART 1: OVE RVIE W FOR P OLICY M A KE R S 7

EXECUTIVESUMMARY
EXECUTIVE SUMMARY

Flexibility has become a common by-word for The present report discusses flexibility in the
Flexibility
the energy hastransition.
become a While
common by-word agrees
everyone for the In addition
context of to
theassessing
energy atransition
power system’s flexibility
and proposes
energy transition. While everyone agrees that we levelapproach
by looking into traditional supply-side
that we need more flexibility in future power an in planning for flexibility in
need more flexibility in future power systems, views flexibilitysystems
sources, the approach to
of the International
systems, views vary widely on how to achieve power expecting achieve high
vary widely on how to achieve this, particularly to Renewable
this, particularly to improve grid integration and VRE sharesEnergy
(VRE).Agency (IRENA)toincorporates
In addition assessing
improve grid integration and make maximum use of at an equal level demand-side flexibility, grid
make maximum use of solar and wind potential. a power system’s flexibility level by looking
solar and wind potential. reinforcements,
into traditional storage and flexibility
supply-side sector coupling
sources, as
To additional flexibility sources and potential game
To transform
transform our our energy
energy system
system towards
towards one one the approach of the International Renewable
dominated by renewable energy, flexibility changers. Agency (IRENA) incorporates at
Energy
dominated by renewable energy, flexibility has
has
to betoharnessed
be harnessedin all in all of
parts parts
the of the system.
power power an equal level demand-side flexibility, grid
system. Power flexibility
Power system system flexibility
spans fromspans fromflexible
more more reinforcements, storage and sector coupling
flexible generation to stronger transmission
generation to stronger transmission and distribution and as additional flexibility sources and potential
distribution
systems, more systems,
storage more
and morestorage and
flexible more
demand.
Heat
game and hydrogen
changers.
flexible
Production
gas
demand.
(e. g., hydrogen)
Production
of heat of heat and
and synthetic
fromelectricity
renewable
gassynthetic
(e. g.,
electricity
production from
The idea is based on the fact that when coupled
hydrogen) from renewable is also key for
is also key
energy systemfor decarbonisation
energy system indecarbonisation
the long term, renewables
into can also
a power grid, technologies at this interface
in
andthe
oncelong term, itand
in place can once in place itadditional
be a significant can be effectively also become a component of the
asource
significant additional
of flexibility source
for the power of flexibility
system. boost
power system
system. That wayflexibility
electric vehicles (EVs),
for the power system. electric boilers, heat pumps and electrolysers
and help with energy
for hydrogen production provide flexibility to
decarbonisation
the power system by 1) adjusting their demand
Power system flexibility profile based on price signals, and 2) making
Flexibility has to be any integrated storage a source of energy
involves
harnessed varied
in allmethods
parts of storage for the power system, to decouple
of the
generation,
power system. combined The timing
the
into
idea is based
a power
on the for
of demand
grid,
factfinal
technologies
that energy
at
when coupled
from
this interface
electricity demand.
with stronger transmission effectively also become a component of the power
system. That way electric vehicles (EVs), electric
and distribution networks Heat
boilers, heat and
pumps hydrogen
and electrolysers for hydrogen
production provide flexibility to the power system
Power system flexibility production from
by 1) adjusting their demand profile based on price
involves varied methods renewables can also
signals, and 2) making any integrated storage a
The present report discusses flexibility in the context
ofenergy
of the generation,
transition andcombined
proposes an approach boost
source system
of energy storage flexibility
for the power system, to
with for
in planning stronger
flexibility intransmission
power systems expecting andthe
decouple help with
timing energy
of demand for final energy
and high
to achieve distribution networks.
VRE shares (VRE). fromdecarbonisation.
electricity demand.

8 P OW ER S YS T EM FL EX I BI LI TY F O R TH E ENERGY TRANSI TI ON
For example, in some jurisdictions with limited these. The resulting analysis may be useful
For example, in some jurisdictions with limited The resulting analysis may be useful to countries
supply-side flexibility, electric water heaters to countries aiming to test more aggressive
supply-side flexibility, electric water heaters aiming to test more aggressive deployment
have been used as a source of flexibility for deployment scenarios and to explore
have been used as a source of flexibility for many scenarios and to explore untapped solar and wind
many years. Today, significant attention is untapped solar and wind potential. This
years. Today, significant attention is dedicated to potential. This report aims to inform policy makers
dedicated to EVs, as they can act as battery report aims to inform policy makers on the
EVs, as they can act as battery storage devices if on the options available to scale up power system
storage devices if regulations and technologies options available to scale up power system
regulations and technologies are aligned, and flexibility. It comes as part of a package, along with a
are aligned, and they can provide short-term flexibility. It comes as part of a package, along
they can provide short-term storage and grid FlexTool methodology for technical experts as well as
storage and grid services. In the future, the with a FlexTool methodology for technical
services. In the future, the electrification of heat four country case studies on power system flexibility
electrification of heat and fuels can provide experts as well as four country case studies
and fuels can provide medium- and long-term options based on application of the IRENA tool.
medium- and long-term storage for the power on power system flexibility options based on
storage for the power system, dealing with seasonal
system, dealing with seasonal unbalances. application of the IRENA tool.
unbalances.
IRENA is working with its members to foresee
IRENA is working with its members to foresee
Flexibility has to be
possible flexibility shortages in their long-
possible flexibility shortages in their long-term
term renewable energy plans and to identify harnessed in all parts
renewable energy plans and to identify the
the least-cost mix of solutions to address
least-cost mix of solutions to address these. of the power system

Studies on the IRENA FlexTool, both in principle and in practice

Studies
Report on
titlethe IRENA FlexTool,
Typeboth in principle and inFormat
of content practice Target audience

Power system flexibility

for theReport
energy transition,
Title Discussion on role of
Type of content Format Target audience
Brief report Policy makers
Part I: Overview for flexibility
policy makers
Power system flexibility
for the energy
Power system flexibility Discussion on role of
transition, Power system
Part I: Overview Technical description of Brief report Policy makers
for the energyfor policy
transition, flexibility modellers, energy
method behind the new Detailed report
Part II: IRENA FlexTool
makers planners, power system
IRENA FlexTool
methodology operators, academia

Power system
FlexTool flexibility
case studies on Technical
Summary of Power system modellers,
description of Brochure, communication- energy
Policyplanners,
makers, power
energy
for the energy Panama,
Colombia, transition, engagement and
method behind the new Detailed
orientedreport planners, general public
Part II: IRENAUruguay
Thailand, FlexTool analysis system operators,
IRENA FlexTool
methodology academia

FlexTool case studies

Summary of engagement Brochure, communication- Policy makers, energy
on Colombia, Panama,
and analysis oriented planners, general public
Thailand, Uruguay

PART 1: OVE RVIE W FOR P OLICY M A KE R S 9

1 F
 LEXIBILITY IN THE ENERGY
TRANSITION

Keeping global temperature rise below 2 IRENA’s global roadmap for the energy
degrees Celsius as per the Paris Agreement transformation, REmap, suggests that
requires the global energy system to undergo a renewables could contribute to two-thirds
profound transformation, from a system based of total primary energy supply globally by
largely on fossil fuels to one that enhances 20501. Large-scale electrification of end-
energy efficiency and is based on renewable use sectors such as buildings, industry and
energy. transport, as well as gradual decarbonisation
of the power sector, are key for the energy
transition. Under the REmap scenario the share

Figure 1: Share of electricity in total final energy consumption, REmap Case, 2015–2050

Global final energy demand (PJ/yr)

400 000

350 000

300 000

250 000

200 000

150 000

100 000

50 000

0
2010 2015 2030 2040 2050

REmap Case
Electricity Non-Electricity

Source: IRENA, 2018a

1 Under the REmap scenario, energy efficiency could stabilise global final energy consumption to nearly
current levels.

10 P OW ER S YS T EM FL EX I BI LI TY F O R TH E ENERGY TRANSI TI ON
of electricity in total final energy consumption Transforming our energy system towards one
will increase from 20 % today to 40 % by 2050 dominated by renewable energy comes with
(see Figure  1). At the same time the share of some challenges, as high VRE shares increase
renewable energy in the power sector would system requirements for balancing supply and
need to more than triple compared to current demand. To effectively manage large-scale
levels – where variable renewable energy VRE a number of flexibility sources need to be
(VRE) sources such as solar and wind will exploited and planned ahead of time. Flexibility
account for 60 % of total electricity produced has to be harnessed in all sectors of the energy
(see Figure 2). This means that many countries system, from power generation to stronger
will need to gradually transform their power transmission and distribution systems, storage
systems to solar and wind becoming the (both electrical and thermal) and more flexible
backbone of electricity supply (IRENA, 2018a). demand (demand-side management and
sector coupling) (see Figure 3).

Figure 2: A 2-degree Celsius scenario for electricity generation, REmap Case, 2015–2050

Electricity generation (TWh/yr) Others

(incl. marine
50 000 and hybrid)
4%
3% Geothermal

40 000 Wind

36 % CSP

30 000 Solar PV
4%

24 %
<1 %
3.5 %
1%
85 %
Renewables
Bioenergy

20 000 Renewables 16 % Hydropower

3.5 % 22 %
10 % 4% Nuclear
23 %
10 000 76 % 4%
12 % Natural gas
Non-Renewables
39 %
1%
4%
10 %
15 %
Non-Renewables
Oil

0 Coal
2015 2015–2050 2050
changes REmap
Case

Note: Based on REmap analysis the share of renewables in the power sector would increase from 24 % in 2015 to
85 % by 2050. Around 60 % would be VRE.

Source: IRENA, 2018a

PART 1: OVE RVIE W FOR P OLICY M A KE R S 11

Figure 3: Power system flexibility enablers in the energy sector

Generation

Distribution Heat

Power
System Sector
H2
Gas
coupling
Transmission Flexibility (e.g.,Hydrogen)

Storage Electric
Vehicles
Demand-Side
Management

Before solar and wind power became widely Over the last five years the impact of solar
deployed worldwide, power systems were and wind variability has begun to be felt in a
designed with flexibility attributes that would number of power systems where aggressive
allow them to balance varying demand and VRE targets were in place. Even before
deal with uncertainty related to unexpected this, studying the potential impacts of VRE
losses of system elements. In conventional integration on system operations had become
power systems (i. e., systems with low or no a hot topic of research in institutions around the
VRE shares) supply-side assets traditionally world (Denholm et al., 2008; Holttinen et al.,
have been used as the main source of flexibility. 2007). Multiple studies showed that additional
Thermal generators with advanced cycling sources of flexibility would be needed to
capabilities (e. g., open-cycle gas turbines), effectively integrate high VRE shares.
flexible renewables such as hydropower, and
pumped hydro storage traditionally have been Since then solutions of varying complexity,
used to balance demand fluctuations and time scale, level of effectiveness and cost
provide operational reserves. have been implemented successfully and have
facilitated the integration of high shares of VRE
in large interconnected systems (as in the case
Solar and wind power call for of Denmark), in gigawatt-scale isolated power
greater system flexibility systems (as in Ireland) and in small-island
systems (such as King Island in Australia) (RTE,

12 P OW ER S YS T EM FL EX I BI LI TY F O R TH E ENERGY TRANSI TI ON
2018; EirGrid and SONI, 2018; Kroposki, 2017). Also, it could make accessible – as a source
Such solutions include geographic distribution of energy storage for a power system and an
of VRE generators, pooling of resources, important source of flexibility on the demand
restructuring markets to remunerate flexibility, side – significant amounts of thermal storage
enhancing grid infrastructure, deploying existing in district heating systems and all the
advanced battery technologies, developing way down to millions of residential electric
demand-side management programmes and water heaters. Other advantages of heat
enhancing the cycling capabilities of thermal electrification could be reductions in total
generators (Mills and Wiser, 2010; Denholm, costs and in emissions, and an increase in
2015; Xiang, 2017; IEA, 2018; IRENA, 2017a). power system reliability.

Many of the above solutions are investment In addition, some parts of the energy sector
free and can be used to unlock existing power cannot be reached directly with an electric
sector flexibility as a first action to overcome cable and therefore require the use of
flexibility issues. To further progress and fuels. This is the case for large segments of
achieve the goals of the energy transition, the transport (except for battery-electric vehicles
full flexibility potential of the energy system and electric trains), especially road freight,
should be unlocked, with demand flexibility shipping and aviation. This is also the case for
and sector coupling becoming increasingly some of the industrial processes where the
important. cable could get to the industrial facility, but
a fuel is required for either process reasons
In the case of electricity demand, the (hydrogen for ammonia, polymers or refining)
traditional approach for the last century has or because of the high temperature required in
been that demand is inflexible, with good the process.
predictability and uncertainty limited to a few
percentage points, covered by operational At very high shares of VRE, the production of
reserves provided by thermal or hydro carbon-free electrofuels such as hydrogen from
generators2. Even though the role of demand- renewable electricity could have a significant
side management in the form of interruptible role in the context of decarbonisation of the
loads3 has been recognised as an effective energy sector, beyond electricity. For heat, the
and affordable mitigation measure, there is a production of hydrogen can provide significant
much larger potential on the demand side – for flexibility for the power system (depending
instance, linking the power sector to heating on the type of electrolyser), as well as, most
and cooling even more strongly (today, cooling importantly, seasonal storage of renewable
is mostly electrified, but heating is not). electricity by blending hydrogen into natural
gas grids.
Electrifying heat through the use of resistive
heating as well as heat pumps, also known Planning for flexibility within a dynamic
as power-to-heat, could provide significant environment is a continuous process that is key
flexibility on the demand side if well managed to successfully transforming the power sector.

2 Failure of large power plants is the main source of uncertainty in conventional power systems.
3 The value of demand-side management has been enhanced lately through aggregating diverse portfolios
of small and medium-sized customers to participate in the energy and ancillary services markets. This is
becoming particularly relevant when such portfolios aggregate demand as well as storage assets such as
behind-the-meter battery storage systems.

PART 1: OVE RVIE W FOR P OLICY M A KE R S 13

Achieving the goals of the energy transition The present report outlines an approach for
requires many countries to achieve VRE shares assessing flexibility and uses a multi-step
greater than 60 %. Practical experience has method. The first step is to assess inexpensive
shown that this is possible. Denmark and ways to unlock existing flexibility through
Ireland, for example, are front runners in wind improvements in operational practices and
energy integration, with wind power shares of market restructuring. Subsequent steps
44 % (RTE, 2018) and 27 %, respectively, and focus on identifying future investments in
maximum instantaneous penetration beyond generation, transmission and storage and
150 % and 60 % of demand, respectively (RTE, exploring the full long-term flexibility potential
2018; EirGrid and SONI, 2018). of demand through implementation of
demand-side management programmes and
This did not happen overnight. The power sector coupling.
systems of both countries have been going
through a transformation process from which The methodology suggests using one or more
we can extract valuable lessons: tools with specific computational capabilities
such as geospatial planning, dispatch
1) It makes much more economic sense to plan simulation and long-term asset optimisation.
ahead for flexibility rather than exploring Such tools have capabilities to optimise system
suboptimal investments after flexibility operations and investments at time scales that
issues arise in a power system. are representative of electricity markets.

2) 
Substantial amounts of VRE can be
integrated by unlocking existing flexibility
rather than investing in new costly assets. Many countries need to
boost their solar and wind
3) 
Project development time, in particular
permitting and construction times, have
use to 60 % or more for the
to be accounted for in the selection of world to achieve a sustainable
solutions4. energy future
4) 
Planning for flexibility is based on
sophisticated tools and methods that evolve
over time to account for developments in the
areas of policy, economy and technology/
science.

4 On paper, transmission expansion can often be the least-cost option, but if expanding transmission takes
many years, and significant VRE curtailment is taking place in the meanwhile, more costly solutions with
short deployment time should be explored (e. g., battery storage systems).

14 P OW ER S YS T EM FL EX I BI LI TY F O R TH E ENERGY TRANSI TI ON
2 FLEXIBILITY IN POWER SYSTEMS

One of the main tasks of a power system intensity, social awareness and culture towards
operator is to balance electricity supply and best energy uses, and gross domestic product
demand at all times5 (Kirby, 2007). Balancing (GDP) (see Figure 4).
supply and demand at all times is crucial for a
system’s reliable operation since even a small In addition, power system operators have
mismatch can disturb power system frequency defined and procured ancillary services to
and possibly affect the reliability of system deal with uncertainty related to unexpected
operations6. Put simply, power system flexibility loss of a generator (or a load) and real-time
refers to a power system’s ability to respond imbalances due to demand forecast errors.
to both expected and unexpected changes in To date, in most power systems the main
demand and supply (Cochran et al., 2014). source of uncertainty is the loss of one or
more of the largest in-feeds (i. e., generators
As a more complete definition, which also or transmission lines). Conventional power
touches on economics, “Power system flexibility systems generally incorporate a least-cost
is defined as the ability of a power system mix of controllable generation assets with
to reliably and cost-effectively manage the desirable techno-economic characteristics to
variability and uncertainty of demand and supply balance varying demand at all times.
across all relevant timescales” (IEA, 2018).
Baseload units have limited cycling capabilities
Traditionally, power systems did not have any but are able to generate large amounts of energy
VRE7 and therefore are designed to deal with at relatively low operational costs. Typical
non-VRE related variability and uncertainty. baseload units include coal, biomass and nuclear
The main source of variability in conventional power plants, mostly using steam turbines to
power systems is electricity demand, including generate electricity (and, in combined heat and
both intra-day and seasonal variability8. The power (CHP) plants, also heat).
shape of electricity demand depends on a mix
of climatic and socio-economic parameters
Traditional power systems
such as local weather, season of the year, were designed to deal with
level of industrialisation, a country’s energy non-variable sources

5 Additional core system operator tasks are: 1) maintain voltage levels within acceptable limits throughout
the power system, 2) avoid overloading transmission lines and other system elements and 3) restart the
system if it collapses due to a contingency that causes failing in one or more of the above.
6 Power systems are designed to operate under nearly constant frequency. Frequency deviations beyond
acceptable limits and time periods can damage generators and electromechanical equipment and thus
create a chain reaction of loss of load and/or generation that can lead to a blackout.
7 VRE sources are wind, solar photovoltaics (PV), run-of-river hydropower and concentrated solar power
(CSP) without thermal storage. In this report the term VRE refers to the most common sources, solar PV
and wind.
8 Electricity demand could also present, for example, weekend or inter-year variability.

PART 1: OVE RVIE W FOR P OLICY M A KE R S 15

 Figure 4: Seasonal variability of hourly electricity demand in ERCOT

1.0

60 000 0.9

Load (Fraction of Annual Peak)

0.8
50 000
0.7
Load (MW)

40 000 0.6

0.5
30 000
0.4

20 000 0.3

0.2
10 000 Summer maximum Winter Spring Maximum
0.1

0 0.0
0 24 48 72 96 120 144 168
Hour

Source: Source: Denholm and Hand, 2011

Peaking generators usually have opposite Over the last decade the traditional structure of
techno-economic characteristics. They are power systems has changed due to increasing
designed for flexible operation with rapid shares of VRE in the electricity generation
start-up and fast ramping capabilities and low mix. VRE growth is driven by rapid cost
minimum operational level. Peaking units are reductions and by national policies that stem
usually gas turbines (open-cycle gas turbines) from multinational agreements such as the
and internal combustion generators (internal Paris Agreement to limit global temperature
combustion engines). Modern combined-cycle increase due to climate change. Increased
gas turbines (which combine gas and steam levels of VRE deployment are leading to a
turbines) and reservoir hydropower units are transformation of the power sector, with VRE
considered intermediate generators, as they sources gradually becoming the new backbone
can be used to provide either base or peak of power systems.
load (see Figure 5).

16 P OW ER S YS T EM FL EX I BI LI TY F O R TH E ENERGY TRANSI TI ON
 Figure 5: Legacy categorisation of various types of conventional electricity generation units
based on their generation characteristics

Demand
Peak Load

Intermediate Load
Megawatts

Baseload

0 2 4 6 8 10 12 14 16 18 20 22

Source: Chang et al., 2017

As the share of VRE sources in a power system Estimating the profile of the net load over
increases, the operations of the power system various VRE shares is a crucial step to plan for
increase in complexity. More specifically, flexibility, as it essentially indicates the portion
gradual integration of VRE introduces of the load to be supplied by dispatchable
additional levels of variability and uncertainty (controllable) generators (Denholm et al., 2010).
into the so-called net load9. The net load is an
important system characteristic because its
profile is used to extract important information
As the share of variable
for long-term power system design for power renewables rises, so does
systems with high VRE shares (see Figure 6). operational complexity

9 The net load is the electricity demand minus generation from VRE. The net load needs to be balanced by
the remaining group of dispatchable generators – such as thermal generators and hydropower units – as
well as by storage units.

PART 1: OVE RVIE W FOR P OLICY M A KE R S 17

Figure 6: Impact of wind variability and uncertainty (forecast error) on net load

180

160

140

120
MW

100

80

60

40

20

0
00:00 01:00 02:00 03:00 04:00 05:00 06:00 07:00 08:00 09:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 18:00 19:00 20:00 21:00 22:00 23:00

load residual load residual load forecast wind wind forecast

At low VRE deployment levels, very little and Clancy, 2011; EWIS, 2010; Holttinen et al.,
difference exists between the net load and 2016). Large-scale VRE integration makes the
the demand. As VRE integration increases, the process of balancing supply and demand more
shape of the net load changes until increasingly challenging due to the higher frequency of
noticeable differences appear between the occurrence and magnitude of forecast errors
two. Three main characteristics of the net load on net load, and has been associated with
profile that affect system flexibility are: 1) the increased requirements for cycling of thermal
rate of change of net load (or ramp rate), 2) the generation, overgeneration and fluctuating
range between the maximum and minimum net electricity prices (Denholm et al., 2015). A
load within a day (also called ramping range) power system with flexibility gaps might
and 3) the uncertainty related to forecast experience VRE curtailment and, in extreme
error (the combination of demand, solar and situations, loss of load, as detailed below
wind forecast errors). Higher VRE penetration (Rogers et al., 2010; Bird et al., 2014).
increases one or more of the above.
When more electricity than is needed is being
The direct impacts of a continuously changing supplied due to technical constraints on the
net load on power systems operations has ability of thermal generators to further reduce
been studied extensively (Denholm et al., their output a situation of overgeneration
2010; GE Energy, 2010; Lew et al., 2013; Clifford can trigger the need to disconnect (curtail)

18 P OW ER S YS T EM FL EX I BI LI TY F O R TH E ENERGY TRANSI TI ON
generation from VRE to maintain frequency In a market environment, energy oversupply
at its nominal value. (Denholm et al., 2015) causes a reduction in electricity prices, even
Figure  7 illustrates a typical hypothetical reaching negative levels. Negative pricing is
dispatch where one can observe the a market mechanism to restore balance in the
characteristic duck-shaped curve of the net system13; however, it is also a symptom of lack
load in power systems with high solar shares. of flexibility in the power system.

There are two periods with increased risk Besides the economic implications of
of overgeneration. The first is during early overgeneration, very high instantaneous
morning hours when thermal units get VRE shares pose system reliability risks
commissioned in partial loading mode, being related to lack of so-called system inertia14.
standby to accommodate the forthcoming Inertia is a technical term referring to a
typical morning increase of demand10,11,12. The system’s instantaneous ability to recover
second period is during peak solar production, from instantaneous imbalances in supply and
when online thermal units are pushed demand. It is closely related to the amount
down to their minimum operating point to of conventional synchronous capacity that is
accommodate PV generation. Overgeneration online (spinning) at each moment, and it is
also can be a side effect of wind generation inversely proportional to the speed at which
during late night hours when wind production frequency can change during a disturbance
is at the highest level while demand is at its (rate of change of frequency): the lower the
lowest. inertia, the faster the change in frequency,
the more difficult it is to maintain reliable
The Electric Reliability Council of Texas operations.
(ERCOT), for example, experienced wind
curtailment levels of 17 % in 2009 due mainly Every power system has pre-specified
to transmission constraints (Bird et al., 2014). requirements for inertia that impose having
However, curtailment levels were reduced some synchronous capacity that is dispatched
to less than 0.5 % in 2014 by restructuring at all times. In practical terms, achieving
the regulatory framework and encouraging instantaneous VRE penetration levels of
transmission investments that contributed to 100 % is very challenging unless a system is
reducing wind curtailment (Ye et al., 2018). appropriately interconnected15 to get inertia

10 The early morning increase in demand is related to residential loads being activated when people wake
up to start their day. The increase continues as commercial and industrial loads are activated later on.
11 Thermal units need time to warm up before getting online. Thus they are committed ahead of the expected
increase in demand to ensure timely response.
12 The issue of overgeneration at various future levels of VRE has been analysed by the California Independent
System Operator (CAISO). See https://www.caiso.com/Documents/FlexibleResourcesHelpRenewables_
FastFacts.pdf.
13 By creating additional demand when electricity buyers are willing to get paid to increase their demand.
14 Power system inertia refers to the total instantaneous inertia from the spinning rotors of synchronous
generators. Such inertia helps generators resist changes in their rotational speed from system imbalances
and gives system operators time to activate necessary controls to help the system recover safely.
15 Inertia is a property supplied by synchronous generators. It can be shared within two systems only if the
interconnection is also synchronous. For example, Ireland cannot currently share inertia with the United
Kingdom as the regional interconnections are in direct current (DC).

PART 1: OVE RVIE W FOR P OLICY M A KE R S 19

from a neighbouring country that is part of VRE curtailment reduces the capacity factor
the same synchronous grid. In Denmark, for of solar and wind power and thus negatively
example, wind penetration exceeds 140 % at affects both their economic attractiveness
specific moments; however, the system gets and system benefits from VRE (environmental
inertia from mainland Europe (ENTSO-E) and benefits, cheaper electricity, fuel savings,
the Nordic countries through synchronous etc.). Unless flexibility gaps are addressed,
interconnections (Zaman, 2018). curtailment rates increase with increased
VRE penetration, until a point where
Modern power electronics found in wind and any incremental VRE capacity becomes
solar PV generators, as well as battery energy economically unattractive due to the high
storage systems and some DC transmission marginal curtailment (Bird et al., 2014; Rogers
systems (voltage source converter high-voltage et al., 2010).
direct current, VSC-HVDC), have capabilities to
simulate inertial response (also called synthetic Increase in net load ramping18 is another
inertia) that are constantly improving. Besides effect of large shares of VRE. Figure  7
synchronous interconnections, upgrading grid illustrates rapid reduction of the net load as
codes to require power electronics-based solar PV production increases before noon.
technologies to provide some synthetic inertia, As an example, in spring 2017 the California
the use of synchronous energy storage16 Independent System Operator, which has
and sector coupling are some ways to deal added more than 6 gigawatts (GW) of solar
with the reduction of inertia caused by the energy since 2013 (CAISO, 2017), experienced
displacement of synchronous generators due morning ramps around six times higher
to VRE deployment. compared to 2012 (Greentech Media, 2017)19.
Simulations highlight that when solar PV
When overgeneration or inertia shortage reaches 11 % of total electricity supply in
conditions appear, system operators often California the system could experience ramps
resort to VRE curtailment as a mitigation as high as approximately 7  GW per hour
measure. VRE curtailment refers to a system (Denholm et al., 2015) or around three times as
operator reducing the output of VRE units much as 2017 ramping levels.
to address flexibility issues, and it requires
automatic access to plant operations. In wind In addition to increasing ramping rates, VRE
turbines this can be done by turning the blades increases ramping ranges, as discussed earlier.
away from the wind. In solar PV technologies The main implication on the system is that
the output can be reduced through smart the conventional (dispatchable) units need to
inverters or by simply disconnecting some of cycle faster and more frequently according to
the inverters17. the new ramping requirements. In addition the
capacity of flexible generation (i. e., the total

16 VRE (a form of non-synchronous power) can be stored and released later using synchronous energy
storage technologies. Pumped hydropower and compressed air energy storage (CAES) are two such
technologies that can contribute to system inertia in addition to other beneficial system services (see
section 3.1).
17 VRE curtailment is more challenging for rooftop units as system operators usually do not have access to
small systems.
18 Ramping is a term used to denote the rate of change of the net load or the rate of change of generation.
19 Data refer to average values for the last week of March for each year.

20 P OW ER S YS T EM FL EX I BI LI TY F O R TH E ENERGY TRANSI TI ON
Figure 7: Flexibility issues in a system with high penetration of solar PV

Loss of load VRE Curtailment

1 800
1 600
1 400
1 200
1 000
WM

800
600
400

0
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71

Time (hour)

Loss of load Curtailed PV Thermal Gen. Demand

capacity of online units providing intermediate frequently used in VRE integration analysis to
and peak net load) needs to be sufficient to assess a system’s flexibility20.
cover increased ramping range requirements.
A flexible system also needs to be capable
VRE curtailment is a mitigation measure that of dealing with uncertainty. Regulation in
is usually applied when a system cannot cope power systems requires at each moment some
with down ramping requirements. Similarly, amount of reserved capacity to be procured by
upward ramping challenges are experienced the system operator to deal with uncertainty.
during late afternoon hours when solar PV Such reserved capacity is controlled by the
production is reduced towards sunset. Lack system operator and traditionally has been
of system flexibility during upward ramping used in conventional power systems for one of
might lead to loss of load. Loss of load together two purposes. The first is to help the system
with VRE curtailment are indicators that are recover in case of a contingency (e. g., loss of

20 Flexibility resources need to be managed by the system operator, which has two main ways to procure the
services it needs for reliable and secure system operation: grid assets can be required to provide specific
services, or, if they are owned by market participants, they can be incentivised to do so through markets
for energy and ancillary services. If both fail, then the system operator may be forced to resort to VRE
curtailment or load shedding. The failure may be due to insufficient requirements or incentives for the
market participants, but it also may be caused by actual deficit in necessary assets, which would be the
result of regulatory failure in providing long-term incentives for investment in the necessary assets (e. g.,
in case of no capacity market and no scarcity pricing allowed).

PART 1: OVE RVIE W FOR P OLICY M A KE R S 21

generation) through a fast-acting frequency have a related temporal dependency; for
containment reserve (FCR)21 and to restore example, very short-term variability affects
the frequency to its nominal value following a system’s ability for frequency regulation,
the contingency (through slower frequency while variability at time scales of 15 to 30
restoration reserve, FRR). The second is to minutes affects load following and sizing of
compensate for demand forecast errors during operational reserves. Seasonal variability, on
normal operation (also called regulating the other hand, might affect medium-term
reserve) (Ela et al., 2011). hydro storage planning and a system’s long-
term capacity planning.
As the share of VRE generation grows, VRE
forecast errors (rather than demand forecast System flexibility needs to respond at time
errors) become the main source of net load scales relevant to the impacts of solar and
uncertainty and therefore the main driver wind variability and uncertainty. Milligan et al.
of regulating reserve requirement. As the (2015) describe the time range for flexibility as
shares of VRE increase, operating reserve22 being from sub-seconds (inertia response as a
requirements need to be revised regularly first line of defence against system imbalances)
to account for VRE uncertainly (Moeller & to a few years (power system planning
Poeller Engineering, 2017)23. There will be a and investment horizon). As electrification
point where any incremental VRE capacity becomes increasingly relevant in the energy
will require additional regulation and/or transition, planning for flexibility will need
contingency reserves. Significant operational to account for the effects of variability, for
flexibility measures to minimise the impact example on EV charging/discharging decisions
of VRE uncertainty include the use of modern and seasonal storage in the form of hydrogen
forecast technologies (IRENA, 2016), frequent production (see Figure 8).
accounting of updated VRE forecasts into
market operations and reducing the time step Finally, the development of a well-planned
of day-ahead, intra-day and balancing markets transmission network is of ultimate importance
(IRENA, 2017a). to ensure that flexibility is not only available
but also accessible. Even though the grid is
Solar and wind variability and uncertainty not a source of flexibility per se, it can easily
affect system operations across various time become an inhibitor, especially considering
scales that vary from seconds (i. e., due to that areas with high wind resource potential
the passage of a cloud over a PV farm) to are often located far from load centres. When
months (i. e., seasonal variability of VRE) planning for a flexible power system, geospatial
(Mills et al., 2009). Consequently, system- planning techniques can help to highlight the
wide impacts of solar and wind variability trade-off between the cost of transmission

21 Most power systems are designed so that, under normal conditions, the contingency reserve is always at
least the capacity of the larger generator and/or plus a fraction of the peak load.
22 The definition of various types of reserves is different among different countries. Operating reserves in
this report is assumed to be the sum of contingency and regulation reserves.
23 The process of estimation of regulation reserves requires statistical analysis of historical wind and solar
resource data (both actual and forecasted) to estimate a range of probabilities that correspond to
forecast errors with specific magnitudes. A system might experience forecast errors based on the level of
VRE integration.

22 P OW ER S YS T EM FL EX I BI LI TY F O R TH E ENERGY TRANSI TI ON
and the productivity of renewable generation24 5) 
Maintain capabilities to mitigate possible
(IRENA, 2017b; Madrigal and Stoft, 2012). events that could de-stabilise the power
system through maintaining an adequate
A power system can be considered flexible if it supply of ancillary services at all times. 26
can cost-effectively, reliably and across all time
scales: Operate under a well-designed market
6) 
where existing flexibility is not locked by
1) 
Meet the peak loads and peak net loads, market inefficiencies (see section 3.2).
avoiding loss of load25.
In that respect the report may complement
2) M
 aintain the balance of supply and demand recent efforts to define power system flexibility
at all times, and ensure the availability of for power systems with high shares of VRE
sufficient capability to ramp up and down, (Cochran et al., 2014; IEA, 2018; IRENA, 2017b,
the availability of sufficient fast-starting box 4).
capacity and the capability to operate
during low net loads. With this broader viewpoint, and focusing on
power systems with high shares of VRE, we
3) Have sufficient storage capacity (both can extend the previously given definition for
electricity storage and, through sector system flexibility as follows:
coupling, renewable heat and gas) to
balance periods of high VRE generation “Flexibility is the capability of a power
and periods of high demand but low VRE system to cope with the variability and
generation. uncertainty that VRE generation introduces
into the system in different time scales, from
4) Incorporate capabilities to adjust demand the very short to the long term, avoiding
to respond to periods of supply shortages curtailment of VRE and reliably supplying all
or overgeneration. the demanded energy to customers”.

24 The trade-off refers to the potential benefit of locating renewable generation in areas with higher-quality
resources against the cost of transmission investment. For example, at times the cost of new transmission
capacity may outweigh the benefit of a marginally higher-quality VRE resource. The trade-off is driven
mainly by the fact that transmission is often less costly when compared with generation, and that
renewable resources vary dramatically with location.
25 If the installed generation is lower than the peak demand, peak loads will not be met. In this case there
is not a flexibility issue but a generation adequacy problem. A system is flexible if it can meet peak loads
under the assumption that the generation mix is adequate.
26 Reserves are spare capacity that the dispatched units have to keep in order to compensate an imbalance
between supply and demand. For instance, if there is a sudden increase in demand, generation should
rapidly increase, and this is achieved with upward reserves. The reserves considered here control system
frequency, which is a direct measure of the active power balance. Voltage is a local phenomenon and
needs to be controlled by assets close by. Increasing the share of VRE, especially generation connected
at low voltage levels, can cause voltage issues, but this also can be mitigated by VRE assets that can
participate in voltage control.

PART 1: OVE RVIE W FOR P OLICY M A KE R S 23

3 SOURCES OF FLEXIBILITY

Planning for flexibility requires accounting for In this report technical flexibility sources are
all possible sources. A detailed study needs grouped into supply side, demand side and
to consider both technical and institutional grid related. Each type of system flexibility can
aspects of flexibility, while final decisions optimally perform within a healthy institutional
should be based on least-cost principles. In environment that promotes flexible operation.
this section the different types of flexibility are Both technical and operational aspects of
discussed in greater detail. The main goal of flexibility are discussed below.
this section is to familiarise the reader with the
main characteristics of flexibility sources to be Figure  8 shows the impacts that VRE has at
considered for flexibility planning. different time scales and the relevant flexibility
solutions to handle them.

Figure 8: Impacts of VRE at various time scales and relevant flexibility solutions

10 sec …. 1 min …. 10 min …. 30 min …. 1 hour …. 1 day …. days ….

Regulation Balancing Unit Commitment Time

Load following SYSTEM

OPERATIONS

Frequency stability Increased need Increased cycling,

issues due to high Rate for operating increased challenges to
Increased net dispatch inflexible units
of Change of reserves
load ramps
Frequency
VRE IMPACTS

Pooling of resources
Intra-day markets Co-optimised hydro-thermal unit
commitment
Improved VRE forecasting OPERATIONAL FLEXIBILITY

Demand Response EVs Power-to-Gas

Power-to-Heat
DEMAND SIDE FLEXIBILITY SECTOR COUPLING

Retrofitting units, new flexible units

Synthetic inertia Down regulation by VRE

Geographic dispersion of VRE* SUPPLY SIDE FLEXIBILITY

Flywheels Batteries Pumped Hydro

Cost

ELECTRICITY STORAGE SOLUTIONS

Source:based on World Bank, 2015

24 P OW ER S YS T EM FL EX I BI LI TY F O R TH E ENERGY TRANSI TI ON
3.1 TECHNICAL FLEXIBILITY More specifically, a flexible generator is one
that can ramp up or down fast, has a low
Technical flexibility is closely related to the minimum operating level and fast start-up
physical structure of the system. Technical and shutdown times (IEA, 2018). For example,
flexibility refers to the combination of hydro generators and open-cycle gas turbines
technologies that determine 1) the ability of are considered to be among the most flexible
supply to follow rapid changes in net load, 2) conventional generation types, while large
the ability of demand to follow rapid changes steam turbines such as those in coal and
in supply, 3) the ability of energy storage to nuclear generators usually are on the less
balance mismatches between supply and flexible side of the spectrum; however, due
demand at all time scales and 4) adequate to current emphasis on system flexibility,
grid infrastructure to allow least-cost supply modern designs offer improved performance,
to reach demand at all times, anywhere in the especially for coal technologies (Palchak et al.,
power system. 2017; Cochran et al., 2014; IEA, 2018). Nuclear
power plants have varying levels of flexibility
A list of technical measures to increase system depending on the unit design and type (e. g.,
flexibility is illustrated in Figure 9. boiling water reactors versus pressurised
water reactors). Table 1 compares coal and gas
Supply-side flexibility technologies based on their characteristics
that affect technical flexibility.
Supply-side flexibility is closely related to the
performance of the technologies comprising
the generation fleet of a power system.

Figure 9: Technical options to increase system flexibility

High Cost Supply-side flexibility

pling
r cou
Demand-side flexibility Secto drogen
• Hy mps
Flexibility from storage at pu
• He
dro s
rage d hy • EV
y sto mpe
Grid infrastructure Energ vanced
) pu
(A d
• es
Improved operations • Ba
tteri
l sto
rage
e
issio
n erma el storag
nsm • Th
• Tra ansion le c trofu
exp •E
on
is tr ibuti ning
• D ngthe
stre
onse CTs
resp • FA
and l xible
Dem sidentia w fle
• Re strial • Ne er plants
pow
• Ind
u
p ower
l unit
s • X to
erma
ng th d
existi imum loa
tr o fitting m in m e s
Re sin g ti
crea -up
• De start tes
sing p ra
crea
• De asing ram
re
• Inc

co-optimisation
hydro-thermal
• More efficient ay markets
intervals, intra-d ket)
• Shorter dispatch ments (and mar generation
y services require ly and closer to
• Revised ancillar cast , updated regular
VRE fore
• Improved
Low Cost
Share of VRE
Source: based on Denholm et al., 2010

PART 1: OVE RVIE W FOR P OLICY M A KE R S 25

Technologies previously considered as restarted to some extent. However, past needs
inflexible (e. g., coal-fired units) and so-called and impacts have been minimal, and the
base load have always been required to adjust uncertainty to be covered has been limited to
their output as well as being shut down and load forecast errors and power plant outages.

Table 1: Comparison of technical characteristics between coal-fired and gas-fired power

generation technologies
Property Open cycle gas Combined cycle Hard coal-fired Lignite-fired
turbines (OCGT ) gas turbines (CCGT) power plant power plant
Most commonly used power plants
Minimum load 40–50 % 40–50 % 25–40 % a 50–60 %
(% P Nom)
Average ramp rate 8–12 % 2–4 % 1.5–40 % 1–2 %
(% P Nom per min)
Hot start-up time 5–11 minb 60–90 min 2.5–3 h 4–6 h
(min) or (h)
Cold start-up time 5–11 minc 3–4 h 5–10 h 8–10 h
(min) or (h)
State-of-the-art power plants
Minimum load 20–50 % 30–40 % 25e–40 %f 35g–50 %
(% P Nom) (20 % with SCd)
Average ramp rate 10–15 % 4–8 % 3–6 % 2–6h %
(% P Nom per min)
Hot start-up time 5–10 mini 30–40 min 80 min–2.5 h 1.25j–4h
(min) or (h)
Cold start-up time 5–10 mini 2–3 h 3–6 h 5k–8 h
(min) or (h)

a
Source: (Heinzel, Meiser, Stamatelopoulos, & Buck, 2012)
b
Large heavy-duty gas turbines such as the Siemens SGT5–4000F typically have longer start-up times. A fast
start takes about 11 minutes and a normal start about 30 minutes.
c
The amount of fuel that can be burned at the maximum continuous rating of the appliance ultiplid by the net
calorific value of the fuel and expressed as megawatts thermal. The thermal input is specified by the manufacturr
of a plant.
d
SC (sequential combustion): Some state-of-the-art CCGT power plants are equipped with sequential combustion,
which enables a very low load operation without exceding emission limits.
e
See (then, 2016)
f
Minimum load: 25–30 % in "recirculation mode" and 35–40 % in "once-through mode".
g
See Boxberg "unit R", with a minimum load of 35 %
h
See the "Belchatów II Uni 1" power plant in Poland or the Boxberg power plant in Germany, both with a ramp rate
of up to 6 % Pnom.
i
Large heavy-duty gas turbines such as the Siemens gas turbine SGT5-8000H typically have lonter start-up
times. A fast start takes about 11 minutes and a normal start about 30 minutes.
j
See the Boxcberg power plant "unit R" with start-up time (hot) of 75–85 minutes.
k
See the Boxberg power plant "unit R" with start-up time (cold) of 290–330 minutes.

Source: Agora Energiewende, 2017

26 P OW ER S YS T EM FL EX I BI LI TY F O R TH E ENERGY TRANSI TI ON
At the same time decarbonising the power However, caution should be used before
sector requires, on the one hand, decreasing making decisions to retrofit coal units, as
the share of thermal generation, and, on the some systems may not experience a reduction
other, increasing system flexibility. This means in carbon dioxide (CO2) emissions, especially
that less conventional capacity will have to considering that retrofits usually extend the
supply greater flexibility more frequently lifetime of units and might increase their
and rapidly. However, technical innovations, running hours. Detailed production cost
regulatory and market reforms and the analysis can indicate the benefits and costs
combined use of a variety of flexibility sources (technical, economic and environmental) of
(such as energy storage and demand-side retrofits (see Section 4).This is especially true
flexibility) reduce system reliance on thermal in power systems where coal competes with
units as a source of flexibility. natural gas.

The benefits of flexibility vary depending on In some cases carbon pricing mechanisms
the stakeholder involved. From a generator’s might be necessary to achieve climatic goals
perspective flexibility is gradually becoming (Agora Energiewende, 2017). In others, a new
a vital revenue source in deregulated wave of affordable gas has been pushing coal
environments. As an example, a number of out of the merit order (US DOE, 2017), de facto
coal assets in Denmark became stranded after making investments in improving the flexibility
the country joined the Nordic market in the of coal an additional stranded investment.
early 2000s. This is because in market settings
generation needs to respond to price signals, System-wide benefits and costs from increasing
and thus flexibility gets remunerated. Within supply-side flexibility can be assessed using
this new reality there are cases where owners specific analytical tools discussed in Section 4.
of old, inflexible generation assets invested
in technical improvements in existing assets At higher shares of VRE, situations may arise
(e. g., the 2 × 630 megawatt (MW) Neurath and where the VRE is the most cost-effective source
the 700 MW Steag Voerde units in Germany of flexibility. A limited amount of curtailment
(IEA, 2018). could be a cost-effective source of flexibility
in the economic dispatch as well as providing
In regulated environments, retrofitting down-regulation. In contrast, up-regulation
programmes also have been implemented to – although technically demonstrated – is
increase the flexibility of thermal generators generally not cost effective, unless the VRE
(see Box 1). Improving thermal flexibility as a is already curtailed for other reasons such as
short- to medium-term solution is becoming a over-supply situations, or remunerated for
hot topic in a number of countries. For example, additional services provided when operating
thermal power plant flexibility is the core below full capacity.
topic of the Advanced Power Plant Flexibility
Campaign of the Clean Energy Ministerial,
which is being led by China, Denmark and
Germany (IEA, 2018).

PART 1: OVE RVIE W FOR P OLICY M A KE R S 27

Energy storage namely response time, power capacity and
energy capacity (Denholm et al., 2010).
Over the last decade there has been increased Besides technical suitability, factors such as
interest in electricity storage. Traditionally, roundtrip efficiency, capital expenditures and
most of this storage has been pumped hydro, operating expenditures are also important in
and this is mostly still the case today. Due to making investment decisions.
a variety of parallel developments, interest in
storage has expanded beyond pumped hydro. At the shortest time scale (seconds) certain
These developments include advancements in storage technologies such as pumped hydro,
storage technology and reductions in storage synchronous flywheels and CAES can provide
costs (for lithium-ion batteries in particular), inertia as a first line of defence in case of
the development of energy markets and sudden loss of generation and can reduce a
markets for ancillary services, challenges in system’s dependence on thermal generators to
building new transmission and distribution limit the rate of change of frequency. At a time
infrastructure, the enabling role that storage scale of seconds to minutes storage has been
can play for solar and wind in the off-grid used mainly for the provision of operational
context, and the need for solutions to integrate reserves (mainly batteries and pumped hydro).
the large amounts of VRE being deployed in
large power systems. Technologies such as pumped hydro, CAES,
long-duration batteries and thermal storage
Electricity storage systems have been used provide flexibility over longer time periods.
primarily to shift the timing of electricity In the short- to medium-term, batteries can
supply by storing electricity when its value potentially offer a wide range of services in
is the lowest and discharging when the value addition to those offered by pumped hydro,
is the highest. The value of electricity in this such as providing multiple ancillary services
type of application comes from preventing at once, displacing fossil fuels for mobility
more expensive generators from running when batteries are installed in EVs, enabling
and from reductions in the overall generation high shares of renewables in mini-grids and
cost27. When associated with VRE generation, supporting self-consumption of rooftop solar
storage can be used to facilitate high shares of power.
VRE by mitigating the impacts of VRE on grid
operations. Besides the wide range of advantages of
energy storage, the technical potential of
The impacts of VRE are characterised by a many technologies is yet to be realised due
range of time scales that extend from seconds to technology cost vis-à-vis monetisable
(for example, when a cloud passes over a PV revenues. Currently, pumped hydro dominates
plant) to years (implications on the lead time electricity storage (representing 96 % of
of new transmission lines to ease congestion). global storage capacity in mid-2017) because
Thus, to be effective towards a specific of its favourable economics and technical
application a storage technology needs to attributes28 (long-term storage at competitive
have the appropriate technical characteristics, cost, established technology, high flexibility

27 Although this is partially offset by an increase in demand due to efficiency losses in the storage charging
and discharging cycle.
28 Much of that pumped hydro was built during the 1960s-2000s. It was the only economically feasible
option during that period.

28 P OW ER S YS T EM FL EX I BI LI TY F O R TH E ENERGY TRANSI TI ON
and source of synchronous inertia). Modern per MW of storage deployed) on reducing
pumped hydro also can provide system VRE curtailment is very high, especially for
services in a very sophisticated and efficient storage technologies capable of discharging
way through variable speed pumping power for several hours. However, it is
(Fulgencio et al., 2017). Batteries are expected reduced as storage deployment increases,
to become an important storage technology and at some point the incremental amount of
for the energy transition – complementing avoided VRE per MW of incremental storage
pumped hydro thanks to an expected decline falls off rapidly (Denholm and Mai, 2018). At
in costs – but due mostly to the operational very high VRE levels, completely eliminating
benefits that batteries provide (IRENA, 2017c). curtailment using storage only as a mitigation
measure might be economically impractical.
At very high levels of VRE integration the Thus an optimal level of storage utilisation can
need for seasonal storage will emerge. Where be identified with the use of analytical tools
large pumped hydro is not available, storing (see Section 4).
hydrogen produced from renewable electricity
can provide a renewable fuel to sectors that Demand-side flexibility
are otherwise difficult to decarbonise through
electrification (IRENA, 2018c). Such sectors Demand response can be used along with
include: energy storage to further reduce VRE
curtailment. Demand response refers to
• Industry: hydrogen is widely used in several specific types of demand-side management
industry sectors (refineries, ammonia programmes where the demand pattern is
production, bulk chemicals, etc.). shifted to better match electricity supply.
Demand response is an effective method
• Buildings: hydrogen from renewable energy that provides an opportunity for consumers
can be injected into existing natural gas to play a role in the operation of the grid by
grids up to a certain share – reducing gas adjusting their electricity consumption subject
consumption – or into dedicated hydrogen to price signals or long-term direct-control
grids. agreements.

• Transport: fuel cell EVs provide a low- Time-of-use rates fluctuate based on
carbon mobility option when the hydrogen electricity market prices, in most cases
is produced from renewable energy sources providing incentives for reducing consumption
and offer driving performance comparable to during peak demand times. Reducing the need
conventional vehicles. In addition, hydrogen for conventional peak capacity is important
from carbon-lean electricity and CO 2 can be especially at high VRE penetration when the
used to produce synthetic electrofuels that marginal capacity value of solar and wind can
can run conventional engines (IEA, 2017a). drop significantly at high shares (Denholm,
2015). Time-of-use pricing can support VRE by
The built-in storage capacity of downstream increasing demand during overgeneration and
sectors (e. g., gas infrastructure, hydrogen adjusting demand to reduce ramps in net load.
supply chain) can serve as a buffer to decouple
seasonality of VRE and demand over long Direct control programmes provide the
periods and allow for seasonal storage. The opportunity for power companies to cycle
effectiveness of energy storage (measured in electrical equipment in residences and
megawatt-hours of VRE curtailment reduced industry. Large, controllable industrial loads

PART 1: OVE RVIE W FOR P OLICY M A KE R S 29

are of significant value due to their enhanced Grid flexibility
contribution to managing demand. Another
important operational benefit of direct control Grid flexibility refers to the existence of a robust
is the provision of operational reserves to transmission network to balance supply and
reduce the impacts of VRE uncertainty on the demand over larger balancing areas, as well
system (Agora Energiewende, 2015). as cross-border interconnections to enable the
exchange of flexibility across national or other
One of the challenges of demand response is jurisdictional borders (if the market allows for
structured co-ordination of loads of various size it)� It also refers to the existence of advanced
that are usually connected to low- and medium- controls to enhance communication among
voltage distribution grids to achieve expected system elements that enables, for example,
response rates or capacity reduction goals. automated control of generators, automatic
Many markets encourage the participation of activation of demand response or advanced
aggregators for that purpose. Aggregators power flow control (e� g�, a fl exible alternating
are companies that act as a participant in current transmission system, or FACTS)�
the electricity (and ancillary services) market
by controlling assets belonging to electricity Grid flexibility acts like a bridge for supply-
end-users and distributed energy resource and demand-side flexibility a nd n ets o ut
owners on their behalf. Aggregators contract imbalances in real time� If grid flexibility is
with individual demand sites (residential, low, then it can become a limiting factor�
commercial, industrial) and aggregate them For example, a system with high supply-
to operate as a single demand-side response side flexibility can experience difficulties
aggregator. Such aggregated pools often in integrating high shares of VRE due to
contain a mix of different types of demand, congestion issues� As a separate example, a
as well as storage and flexible generation, to system with high hydropower shares can have
maximise the ability of the aggregated pool to much of its hydro flexibility locked if there is
provide flexibility to the system and capture not enough transmission capacity to connect
revenues from it. areas with high VRE generation to areas with
high pumped storage capacity�
As in the case of storage there is a practical
limit on the maximum demand response
capacity to be planned. Both the economic and
technical effectiveness of demand response Demand response requires
are maximum during the very early stages of the co-ordination of loads
demand response deployment and decrease of varying sizes
as this capacity increases. Costs and benefits
of demand response need to be compared
with other flexible options to identify optimal
deployment levels at the various stages of
the energy transition. The value of demand
response can be estimated within the context
of a least-cost system-wide optimisation
exercise, as detailed in Section 4.

30 P OW ER S YS T EM FL EX I BI LI TY F O R TH E ENERGY TRANSI TI ON
3.2 OPERATIONAL FLEXIBILITY Box 1 describes some of the challenges
associated with rapidly introducing large
Operational flexibility refers to how the shares of VRE on technical and operational
assets in the power system are operated. It aspects of the power system, and the solutions
is dependent, in addition to the constraints being adopted to improve integration.
of each technology’s capabilities, on the
regulatory and market environment that Market flexibility can exist in different time scales
surrounds the physical system and drives (see Figure  10), which should be considered
system operations. by regulatory authorities.

Like grids, market and regulatory frameworks In the long term the system has to ensure that
can act as an inhibitor to existing flexibility. enough operational flexibility is built so that it
An example of a market acting as an inhibitor can operate properly with a significant level of
is the case of large countries that, from an VRE. To make this possible regulators might
operational perspective, are broken down need to incentivise the investment by using, for
into provinces operating in isolation, with example, capacity markets in which flexibility
limited to no exchange of energy based on is incentivised, or by increasing the space
centralised merit order dispatch or a market to and time granularity of wholesale markets,
regulate such exchange. In some cases, intra- providing better long-term price signals to
border electricity exchanges between such invest in flexible resources.
provinces is limited due to a lack of efficient
co-ordination, and as a result a portion of the In the long to medium term the system has to
system’s supply-side and grid-related flexibility balance the seasonal and inter-annual energy
is locked (Milligan et al., 2015). variability, which traditionally is achieved with
hydro scheduling under uncertainty in systems
Central dispatching and the creation of a with significant shares of hydropower.
market to schedule electricity exchanges based
on price signals are good measures to address In the medium to short term the commitment,
such flexibility issues. Maintaining different, and the economic dispatch, of generation units
cost-reflective wholesale electricity prices for should be planned before real-time generation.
different areas within a country (zonal pricing) In this time scale the design of day-ahead and
or for the different nodes in the transmission intra-day markets will be relevant to enable the
network (nodal pricing) also helps to reflect full flexibility potential of the system. Measures
possible transmission congestion issues and such as increasing time and space granularity
to take them into account when building the (e. g., lower settlement period or shift from
merit order, avoiding predictable redispatch zonal to nodal prices) or setting the market’s
and associated costs. gate closure closer to real time are measures
that increase market flexibility (IRENA, 2017a).

PART 1: OVE RVIE W FOR P OLICY M A KE R S 31

 BOX 1. Unlocking power system flexibility in China
Since 2000 China has accounted for more than half the world’s increase in energy
consumption and for more than 80 % of the net global growth in coal demand (Zhou and
Lu, 2017). As of 2015 coal-based installed capacity reached 900 GW, which accounted for
around 60 % of total installed capacity (Xiang, 2017). However, heavy reliance on coal did
not come without a cost, as air quality in China has been seriously deteriorating.
Air quality issues, as well as a number of economic, industrial, geopolitical and societal
factors, have driven a shift towards cleaner energy sources. During the period 2011–
2015 China experienced an unprecedented increase in renewable energy capacity,
characterised by average annual growth of around 26 % for wind power and 90 % for
solar PV (IRENA, 2018b). As of 2016 wind and solar PV accounted for less than 1 % and
approximately 4 % , respectively, of China’s energy supply, and the combined VRE share
is expected to surpass 10 % by 2022 (IEA, 2017b). On the negative side, the rapid growth
of VRE in China was accompanied by unusually high curtailment of VRE generation, of
around 17 % for wind and 10 % for solar PV in 20161.
Curtailment in China has resulted from a mix of issues including 1) transmission constraints,
2) the existence of contracts that guarantee minimum generation for coal power plants,
3) a lack of market structures that promote flexible generation, 4) a geographic mismatch
between renewable energy resources and load centres, 5) inter-provincial transmission
barriers2 and 6) forced operation of inflexible CHP plants due to needs for district heating3.
China nevertheless has achieved significant progress in reducing curtailment rates, mainly
through transmission enhancement and power-to-heat projects (Liu, 2017); Reuters,
2017). As a result the national average curtailment rates for wind and solar PV dropped
to approximately 12 % and 6 % , respectively, in 2017, according to the National Energy
Authority. In late 2016 China issued the 13th Five-Year Plan for Power Sector Development
(NDRC, 2016)4. The plan sets aggressive VRE targets for the future including 210 GW of
wind power and 110 GW of solar power (including more than 60 GW of distributed PV)
(IEA, 2016) and also focuses on measures to address VRE curtailment.
Among the measures proposed to address curtailment are 1) improvement of operational
practices, 2) implementation of competitive wholesale energy markets, 3) modernisation
of the grid infrastructure, 4) implementation of a major retrofitting programme to
increase the flexibility of existing conventional coal units, 5) implementation of demand-
side programmes with a focus on interruptible loads, 6) investments in pumped hydro
and 7) roll-out of EVs (Xiang, 2017).

1 According to National Energy Authority data released in early 2018, the curtailment of wind and
solar in 2017 has decreased 5.2 % and 4.3 % , to 12 % and 6 % . Thus, the curtailment levels of wind
and solar in 2016 are 17 % and 10 % , respectively.
2 Related to fixed bilateral contracts between provinces rather than being based on central
optimisation.
3 More specifically, generation flexibility is reduced in the northern provinces during winter as CHP
coal-fired plants operate as base load to provide heat.
4 This was the first time since 2002 that China released a specific Five-Year Plan for electricity. This
demonstrates the priority that the government is placing on central co-ordination of power sector
planning (Retzer, 2017).

32 P OW ER S YS T EM FL EX I BI LI TY F O R TH E ENERGY TRANSI TI ON
Finally, in the short to very short term, ancillary response (FFR) that can be supplied by
services markets are required to procure grid batteries and VRE if the proper power
services, including to compensate sudden electronics are in place. The challenge for the
imbalances between supply and demand. Here system would be to define how much inertia
regulators need to define operating reserves in can be replaced by FFR (Everoze, 2017).
a way that flexible resources are incentivised
to participate. The most innovative service – See Figure  11 for a summary of the operating
being used already by some systems, such as reserves in power systems.
in the United Kingdom – is the fast frequency

Figure 10: Different time scales in which flexibility has to be analysed

1 2 3 4
Balancing Balancing forecast Balancing variability in net Balancing seasonal/
unpredictable fast errors in load and load (load minus variable interannual energy availability
changes generation generation)

Real Time Balancing

Hydro Scheduling under
Intra-day Balancing Uncertainty

Operating Reserves and Inertia Day-ahead Balancing Investments

Now Seconds Minutes Hours Days Months Years

Figure 11: Summary of operating reserves

Replacement Reserves (RR)

Frequency
Containment Frequency Restoration Reserves (FRR)
Reserves (FCR)

Fast Frequency
Response (FFR)

Now Seconds Minutes Hours

PART 1: OVE RVIE W FOR P OLICY M A KE R S 33

Operational decisions in the future will need Like grids, existing markets
to ensure that a balance between system and regulatory frameworks
needs, technical restrictions and profitability
can inhibit flexibility
is achieved. The Irish case is a relevant
example where a set of measures were taken
to gradually enhance flexibility to facilitate
the integration of high wind shares over time,
implementing a series of studies to identify
relevant measures (see Box 2).

BOX 2. The Irish case

In 2010 Ireland committed in its National Renewable Energy Action Plan to supply 40 % of
its electricity demand from renewables1, primarily wind (Republic of Ireland, 2010). In this
context EirGrid and the System Operator for Northern Ireland (SONI) conducted a suite
of studies on the implications of managing high levels of VRE. One outcome was that the
average level of synchronous inertia system would potentially fall 25 % in 2020 (EirGrid,
2011). Based on reliability and stability requirements, the system at that moment could
tolerate a non-synchronous penetration (SNSP2) limit of 50 % or less.
In 2011 EirGrid and SONI embarked on a multi-year programme, Delivering a Secure,
Sustainable Electricity System (DS3), with a long-term goal of effectively managing
technical challenges related to a potential increase of the SNSP limit from 50 % to 75 % by
2020. The studies indicated that secure operation of the Irish island power system beyond
a 75 % SNSP limit was not possible given technology capabilities.
Within the DS3 programme there are 11 workstreams with collective goals to improve
system performance, system policies and system tools. More specifically the workstreams
focus on 1) improving the system’s capabilities to manage voltage and frequency regulation,
unexpected events and inertia response, 2) developing grid codes to set standards relating
to operation and use of system assets, 3) further developing demand-side management
capabilities and 4) building relevant tools and using them to monitor and develop studies
to facilitate the DS3 work programme (EirGrid and SONI, 2014). Due to work undertaken
by the transmission systems operators under the DS3 programme, the SNSP level has been
gradually reassessed, and currently the All Island (AI) system operates at 65 % (EirGrid and
SONI, 2018).
1 The same target has been adopted by Northern Ireland.
2 System non-synchronous penetration (SNSP) is a metric referring to the instantaneous share of
non-synchronous energy delivered. In the case of Ireland, the SNSP is equal to VRE production
plus energy imports over demand plus exports.

34 P OW ER S YS T EM FL EX I BI LI TY F O R TH E ENERGY TRANSI TI ON
4 F
 LEXIBILITY IN THE PLANNING
PROCESS

Gradually increasing the share of VRE in a In a mature power system, on the other
power system creates challenges of varying hand, many of the thermal power plants
complexity. During the early phase of VRE are likely to have already been depreciated,
integration most systems can accommodate while newly built ones in power systems with
the new situation with existing resources or growing demand might still have significant
simply through improvements in operational way to go before reaching break-even. IRENA
processes. However, as VRE shares increase, addressed this topic in a dedicated working
sooner or later bridging flexibility gaps might paper as part of the REmap analysis (IRENA,
become key for integrating additional VRE 2017d). Planning for flexibility is easier within
capacity. At very high shares of VRE, and a greenfield environment, as flexibility can be
after traditional flexibility sources have been embedded in market design and grid codes
fully exploited, VRE surpluses will emerge. At for new assets, rather than having to invest in
this point electrification becomes important costly retrofits in both thermal and renewable
to further decarbonise the energy sector power plants.
through VRE (e. g., EVs and power-to-heat),
and hydrogen’s role may become key to Planning for flexibility is a complex multi-step
bridge seasonal imbalances between supply process that needs to account for a variety
and demand. of factors that together form a complex
mathematical problem that can only be solved
Planning early for flexibility is critical to avoid using appropriate tools. The process typically
the need for costly urgent solutions once starts with assessment of current needs
flexibility issues arise. A small and inflexible and extends into the future (see Figure  12).
system, for example, might experience Depending on the present status, integration
flexibility shortages at very low VRE shares, measures might be necessary in the future or
while a larger and more flexible system might may already be a matter of urgency, which
experience this at a much later stage. greatly changes the list of available options
and associated costs. Assessment of current
Although the size and level of modernisation of flexibility is key as it creates the foundations for
a power system are key flexibility attributes, the a least-cost, long-term pathway for a flexible
choice of future potential mitigation measures power system that is ready to incorporate
also can be affected by the prospects of future significant shares of VRE.
demand growth. For example, many large,
modern systems suffer from overcapacity
that was built to support past demand growth
that has now stalled due to industrialisation
reaching maturity and an emphasis on energy
efficiency. Investment in new assets in an
environment like this is more costly as system
assets compete for revenue within a more
challenging environment.

PART 1: OVE RVIE W FOR P OLICY M A KE R S 35

Figure 12: Methodology for flexibility planning

Step 1: Assess current flexibility Step 2: Bridge gaps following least-cost

1. Production cost modeling approach
• Assess current levels of curtailment and 1. Unlock existing fl exibility
loss of load • Regulatory, market changes
• Assess overgeneration incidents and • Dispatch units based on merit order
fluctuation of prices • Train staff at generating units to
• Assess cycling of units (start-up ramping If fl exibility operate plants flexibly
and min gen incidents) gaps are • Pooling with neighbors
• Assess if operating reserves are adequate identifi ed go • Adjust operating reserves based on new
to step 2. Else, needs
2. Network studies directly to
• Assess if system can efficiently regulate step 3 2. Implement DSM schemes
frequency and voltages 3. Invest in new assets
• Assess if system can recover from • Transmission enhancements
unexpected events • Retrofit existing units
• Assess if system has sufficient inertia • Invest on new generation and/
• Assess if transmission elements get or storage
overloaded

Step 3: Assess future fl exibility

1. Optimize VRE sitting using 2. Least-cost capacity expansion 3. Repeat step 1
geospatial optimization to identify future assets • Assess operability of long-term
• Optimize VRE capacity mix • Study the net-load to assess plan identified on previous steps
• Estimate VRE production based needs for cycling
on location and policy goals • Optimize non-VRE capacity mix
• Estimate future net-load based on future technologies
• Identify additional flexibility
assets (e� g storage, DSM)
• Assess benefits of sector coupling

More specifically, flexibility assessment structure29. A production cost model simulates

of an existing system is conducted to 1) a system’s performance for a whole year using
identify current flexibility gaps, 2) assess time steps representative of real-world system
how much more VRE can be integrated operations (minutes to one hour). As there is
without significantly changing the non-VRE some complexity involved in representing the
component of the grid, 3) assess the time techno-economic characteristics of a power
left until the existing flexibility is exhausted system, formulating a dispatch problem
(relevant for lead time for new investments, requires some level of expertise.
based on capacity expansion plans) and 4)
identify a least-cost set of solutions to unlock Software in this class of optimisation models
existing flexibility and, at a later stage, procure uses established solvers to optimise the
additional flexibility. commitment and dispatch of generators for a
given demand profile. Typical outcomes from
Production cost modelling (also called dispatch such a study include the dispatch schedule,
simulation) is a widely used approach to assess operational costs, electricity prices, VRE
flexibility in a system with a given physical curtailment and loss of load. A typical approach

29 Existing system or future system where decision of future assets has been completed.

36 P OW ER S YS T EM FL EX I BI LI TY F O R TH E ENERGY TRANSI TI ON
used to assess flexibility using production regulated environments is decided based
cost modelling is to observe changes in the on empirical knowledge. Production cost
above outcomes at different VRE shares. For modelling can be used to assess the benefits
example, at higher VRE shares, the actual of co-optimising hydro and thermal unit
power dispatch is likely to change due to commitment to exploit the full potential of
changes in the net load profile. Meanwhile, hydro storage and advanced hydro cycling
lower prices – due to lower marginal costs for capabilities under uncertainty over future
VRE – or curtailment could also occur. rainfall/inflows and VRE generation.

Observing the main outcomes from dispatch • Assessment of operational benefits from
simulations, one can focus on identifying market restructuring and implementation
flexibility gaps in the system. For example, of advanced VRE forecasting. Advanced
curtailment could be due to overgeneration, forecasting techniques can be used to
severe down-ramping or transmission decrease VRE-related uncertainty in system
congestion. A key advantage of a production operations. In addition, the development of
cost model is high temporal and spatial intra-day markets is necessary to make best
granularity. The analyst can look into fine use of improved, closer-to-delivery forecasts.
details and observe whether thermal units A combination of the above measures can
operate regularly at their minimum loading decrease the need for operational reserves
point (as in the case of overgeneration), in the system and unlock market-related
whether the generation fleet cannot keep up flexibility through more frequent dispatch
with ramping requirements (as in the case of scheduling30.
down-ramping) or whether transmission lines
are frequently congested. Similarly, loss of • Assessing system implications of joining
load could indicate upward ramping issues or a regional energy market. Sharing a pool
insufficient generation capacity. of assets increases operational capabilities
and enhances system flexibility. Production
After flexibility gaps have been identified cost modelling can be used to identify such
mitigation measures can be simulated and benefits. To obtain accurate results, all
assessed for their effectiveness, as well as systems involved in the market have to be
compared based on their costs and benefits. modelled simultaneously, which increases
One such measure, for example, could be the data requirement for the analysis.
improving operations. Below are a few
examples where dispatch simulation can be • Assess operational impacts from different
used to explore the benefits of improved EV integration strategies. The impact of
operations. electric vehicles depends on the level of EV
deployment and on the charging strategy
• Assessment of operational benefits from employed. Large-scale EV integration
improved dispatch practices. There are will change the shape of the load. In this
real-world cases where the unit commitment type of analysis, a good understanding of
of the hydropower portion only or even EV charging patterns is needed prior to
of the whole generation fleet in some production cost analysis. When a pattern

30 Assessing flexibility benefits from market restructuring requires the use of advanced models with
capabilities to simulate energy markets.

PART 1: OVE RVIE W FOR P OLICY M A KE R S 37

 is identified EVs can be accounted for as Such a system input, for example, could be a
static loads or rather mobile battery storage non-synchronous penetration limit (SNSP), as
systems, which will affect the operational detailed in Box 2. Network analysis requires
characteristics of the power system very detailed representation of the grid and
(dispatch, costs, electricity prices, etc.). excludes economic aspects. More on network
analysis can be found in IRENA (2018d).
The impact on the system could be positive or
negative depending on a number of factors. After identifying a pathway to exploit existing
If, for example, a large share of EV owners flexibility, a long-term assessment needs to
charge their vehicles during the evening be conducted to complement the planning
electricity demand peak, the peak would process. The main goal of long-term flexibility
increase, affecting generation adequacy and assessment is to prepare the system ahead of
ramping levels. Smart charging can be used time for operation under VRE levels beyond
to eliminate such issues. By establishing two- what existing flexibility potential can handle.
way communication between the vehicle Usually such analysis is done with long-term
owner and the grid, charging patterns can capacity expansion software. Such models
be manipulated to the benefit of the system. look further in time compared to production
cost models (i. e., a typical study period of 5 to
In the case of vehicle-to-grid (V2G, i. e., 50 years) and thus account for future changes
vehicles can also feed electricity from in demand, fuel costs, capital costs and lifetime
the battery back to the grid, if adequately of potential investments and decommissioning
compensated), production cost modelling times of existing assets.
can be used to optimise V2G charging/
discharging considering both the needs of Unlike production cost models, which consider
the vehicle owners and system requirements only a fixed group of system elements, long-
for flexibility. In that case EVs can be term capacity expansion models also consider
modelled as batteries with constraints on potential future investments at various parts
availability and state of charge. For example of the grid (i. e., generation, transmission,
charging/discharging is optimised so that demand side, storage). The main outcome
the system is allowed to access an EV’s of long-term analysis is the changes on
battery as needed when it is parked (for the physical structure of the grid (both
example, at night or during working hours), commissioning of new and decommissioning
but in a way that will not affect an owner’s of old assets) over the period of study. While
need to have the EV sufficiently charged for long-term capacity expansion models can co-
its mobility requirement, as this is the main optimise VRE and non-VRE assets, a detailed
purpose of an EV. geospatial planning analysis can be done
(depending on data availability) to optimise
Production cost modelling often needs VRE expansion separately, and the result can
to combined with network analysis to then serve as a fixed parameter in long-term
assess system reliability both under normal capacity expansion analysis.
operations and contingencies. Network studies
do not strictly focus on flexibility issues, but Long-term capacity expansion models are
they are, however, complementary to dispatch capable of considering a variety of system
simulations. For example, network analysis can assets that extend to all levels of physical
be used to identify system constraints that infrastructure (generation, transmission,
can be used as inputs on dispatch analysis. demand). Such assets were discussed in detail

38 P OW ER S YS T EM FL EX I BI LI TY F O R TH E ENERGY TRANSI TI ON
in previous sections. In addition, long-term met in each period, availability of fuels,
models do optimise dispatch, however at time VRE targets and requirements for reserve
scales much larger than those typical of power margin. Capacity expansion optimisation
system operations31. For that reason the results can be extended to also involve demand-
of a long-term study often need to be verified side management, energy storage and high-
with the use of a production cost model32. level transmission decisions.
In practical terms the long-term capacity
expansion process optimises investments that • Optimise investment decisions in a retrofit
enhance system flexibility. programme to increase thermal flexibility.
Long-term analysis could be used to decide
Production cost modelling as a subsequent whether to retrofit a number of units over
step assesses the operational benefits of the a period of time or to construct new units
proposed system. When combined together or a combination. The model compares
the two models produce a least-cost, long- factors such as the capital cost of the retrofit
term roadmap to achieve specific targets programme versus the cost of new units,
for VRE shares without violating system their lifetimes and technical characteristics33.
constraints (i. e., maintain supply demand For example the cost to retrofit the units
balance, provision of reserves). The examples of an existing power plant is usually much
below show typical uses of long-term models lower compared to building a new one;
for flexibility assessment. on the other hand a potential extension in
the lifetime of a retrofitted unit would not
• Identify optimal capacity mix for future match the lifetime of a new unit. In addition
load growth. This is the most widely used the upgraded unit would still have inferior
application of long-term capacity expansion flexibility attributes compared to new
models. In that case the goal is to decide designs. Production cost modeling could
among a set of generating technologies supplement the analysis by identifying any
to satisfy future load growth subject to a remaining flexibility gaps and giving a more
number of constraints. Such constraints accurate estimate of generation cost and
can represent electricity demand to be emissions of CO 2 and local pollutants.

31 Long-term capacity expansion models stretch much longer in time compared to production cost models
(for example, 15 years versus 1 year). Some level of granularity is then sacrificed, as computationally times
would otherwise be very long for practical purposes.
32 Put more simply, the power system in a future year as identified by long-term capacity expansion analysis
might not be able to handle impacts within time scales lower than what such software can simulate. For
example, long-term capacity expansion software will not understand the operational benefits of batteries
compared to pumped hydro for frequency regulation. The software will make a decision based mainly on
lower capital expenditure and ignore the more advanced ramping capabilities of batteries over pumped
hydro. For that reason the result of long-term analysis needs to be verified with a production cost model.
33 This depends on the time step of simulation. For example, a typical long-term capacity expansion model
will not consider improved ramping rates, as they are irrelevant for the time scale of simulation. However,
a reduction in minimum operating point will be considered.

PART 1: OVE RVIE W FOR P OLICY M A KE R S 39

• Assess long-term costs and benefits • Any combination of the above. A detailed
of power-to-heat. For example, long- capacity expansion assessment can
term capacity expansion analysis can potentially include a variety of choices such
be used to optimise future decisions for as the ones discussed above and others
electrification of heat loads34. The model that might be relevant for the system (i. e.,
would compare the cost of burning fossil investment decisions on electrolysers for
fuels in conventional boilers to investments hydrogen production, decisions on demand-
in new heat pumps, considering the system- side management programmes, pumped
wide benefits from possible flexibility hydro versus batteries versus CAES, etc.).
enhancements, integration of further VRE
generation, emission reductions and power • Finally, the proposed plan as identified
generation costs. The new investments by long-term capacity expansion and
could be attractive, especially if the heat production cost analysis needs to be verified
pumps would operate during hours of low by network analysis to ensure system
electricity prices, storing the heat for later security and reliability under a variety of
use. Additional flexibility could be unlocked scenarios.
if the heat pumps reduce the need for heat
from CHP plants, which are known to reduce Demand-side management,
power system flexibility when demand for
storage and high-level
heat forces co-generation of electricity,
regardless of the electricity price. CHP plants
transmission planning all
possibly can be replaced on the dispatch by help to optimise power
more flexible electricity generators. system capacity expansion

34 Such analysis requires the software to be capable of simulating, for example, heating loads in the case of
electric boilers.

40 P OW ER S YS T EM FL EX I BI LI TY F O R TH E ENERGY TRANSI TI ON
BOX 3. Brief introduction to the IRENA FlexTool

IRENA’s assessment of flexibility is carried out with the IRENA FlexTool. The FlexTool is
a detailed but user-friendly tool that intends to analyse not only the traditional concept
of flexibility (concerning, for example, flexible thermal and hydro generation with high
ramping capability and very low start-up time), but also other innovative technologies
that enrich the concept of flexibility, such as flexible demand, energy storage and sector
coupling.
The FlexTool is capable, on the one hand, of analysing system operations using a time step
that represents real-world challenges (an hour or less in the case of VRE variability) and,
on the other hand, of carrying out long-term analyses and proposing possible flexibility
solutions in a hypothetical future system with high penetration of VRE. The FlexTool,
however, does not study the very short term (second/sub-second time scale) because this,
although also relevant for power system flexibility, calls for another type of assessment.
The FlexTool is data driven. This means that the model structure is relatively general, and
the input data have a large role in specifying what the model does. To perform a FlexTool
simulation the required inputs are, in brief: demand, generation mix, hydrological data,
VRE time series, interconnections and fuel costs. If the system being analysed is divided
into different nodes, transmission data also are required – in addition to the mentioned
data – divided by node. When provided these data, the tool runs for a relatively short
period of time, depending on the size of the system analysed.
The FlexTool has been developed with the VTT Technical Research Centre of Finland
Ltd, with the aim of assisting IRENA members in making a relatively quick assessment of
potential flexibility gaps, as well as highlighting the most cost-effective mix of solutions. It
has become the only publicly and freely available tool that performs capacity expansion
and dispatch with a focus on power system flexibility.
In summary, the FlexTool looks at a one-year horizon and analyses system operations
and capacity expansion with a focus on power system flexibility. Figure  13 shows where
the FlexTool fits into the planning process in comparison with other existing modelling
methodologies.
Figure 13: The IRENA FlexTool in the planning process

FlexTool in the planning process

Capacity Expansion Models
Optimal (PLEXOS-LT3, Opt-Gen4)
Capacity FlexTool Expansion
Energy Planning Models
Expansion (Message5, MARKAL/TIMES6)
Dispatch Models
System Grid Studies (PLEXOS-ST3, SDDP4)
(Power Factory1,
Operation PSS/E2) FlexTool Dispatch

1 Second 1 Hour 1 Year 10 Years 50 Years

Time Horizon Analysed
1 Copyrighted by DIgSILENT GmbH
2 Copyrighted by Siemens PTI
3 Copyrighted by Drayton Analytics Pty Ltd, Australia and Energy Exemplar Pty Ltd, Australia
4 Developed by PSR
5 Developed by the International Atomic Energy Agency (IAEA)
6 Developed by the International Energy Agency (IEA)

PART 1: OVE RVIE W FOR P OLICY M A KE R S 41

5 CONCLUSIONS

Flexibility of a power system is highly power system while helping to accelerate the
dependent on how the power system has decarbonisation of end-use sectors. Heat and
developed over time based on resources and fuels already today have significant energy
policies. storage capacity that can become accessible
to the power sector to decouple, in time,
Certain generation technologies are inherently demand from supply, once the link is made
more flexible than others; however, older and through the adoption of electric heating
less flexible technologies can be improved technologies and electrolysers. Battery
through retrofits (at a cost). EVs can provide significant flexibility when
connected to the grid through smart charges,
Well-developed grid infrastructure allows and are expected to represent the majority of
the system to access existing flexibility, while battery deployment globally.
constrained and congested grids are de facto
a source of inflexibility. Beyond investments in technology, the single
most effective source of flexibility is improved
Demand has a significant potential to system operations. This makes it possible
contribute to the flexibility of the power to reduce requirements for flexibility while
system, from quickly responding to supply unlocking existing flexibility already present in
shortages, to following price signals to change the system.
the demand profile so that energy is consumed
when it is cheaper to supply and when the grid Historically flexibility was not a key concern
does not face congestion. while planning the evolution of the power
system. Increased deployment of solar and
Electricity storage has a key role to play in wind requires that flexibility is taken into
balancing demand and supply at all times, account already at the planning stage. This
which is the essence of flexibility. Well- report provides recommendations on how to
established pumped hydro can be made account for flexibility in the planning process
increasingly flexible through new technologies. and is complemented by a second part that
Batteries are coming down in price and can describes how to assess and improve power
provide very high value thanks to their rapid system flexibility using least-cost optimisation
response and their ability to provide multiple models, in particular the IRENA FlexTool.
services at once, in addition to energy
(arbitrage). The IRENA FlexTool is a least-cost optimisation
tool that performs power system dispatch and
In the long term, coupling energy demand for investments. It has been developed jointly with
heat, fuels and mobility by using power-to- this report to perform flexibility assessment
heat (e. g., heat pumps, resistors), power-to- and is available as open-source software.
gas (e. g., hydrogen from renewable electricity)
and power-to-mobility (e. g., battery EVs)
can provide significant flexibility to the

42 P OW ER S YS T EM FL EX I BI LI TY F O R TH E ENERGY TRANSI TI ON
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