Short-Term Operational Flexibility in Long-Term Generation Expansion Planning

In light of the European climate ambitions, there has been substantial growth in capacity of variable renewable energy sources in many Member States, with significant future growth expected. Such sources impact the operation of the power system by challenging its ability to maintain the short-term balance between supply and demand. Firstly, their output is variable and uncertain, increasing the need for short-term flexibility. Secondly, they displace part of the conventional flexibility providers, i.e. the dispatchable generation technologies, decreasing the supply of short-term flexibility. These sources also impact the planning of the power system by challenging its long-term ability to meet the aggregate demand for electricity. Firstly, only a limited share of their capacity can be called upon at any given time. Secondly, their impact on power system operation also has an impact on power system planning. The first aspect, related to \textit{firm capacity adequacy}, is well understood and is mostly dealt with adequately in planning models. The second aspect, related to \textit{flexibility adequacy}, has only recently emerged as an area of interest in planning. To study the importance of short-term flexibility adequacy in long-term power system planning, a high level of temporal and operational detail is needed, while managing the required computational effort. For that purpose, an alternative approach is developed for representing power system operation in planning: a clustered formulation of the unit commitment problem. Using this formulation, a planning model is developed which identifies the optimal investment portfolio, taking into account renewable energy objectives, and determines the scheduled production and consumption levels to deliver energy and reserve. The need for short-term flexibility is represented via the modeling of the day-ahead electricity market with an hourly resolution - to include the effects of variability, and operating reserve requirements following the guidelines of the European Network for Transmission System Operators for Electricity - to include the effects of uncertainty. The supply of flexibility is represented via mathematical models of dispatchable and variable generation, long-term demand response, re-electrifying and non re-electrifying storage, and flexibility through interconnection. First, the developed planning model is applied to a test system to assess the impact of short-term flexibility requirements on the cost and composition of the optimal investment portfolio. The supply of short-term flexibility is limited to the sources most commonly found in European power systems, namely dispatchable generation technologies and pumped hydro energy storage. Results show that renewable uncertainty is the most important driver of the short-term flexibility-related costs. Results further show that the way of handling this uncertainty, i.e. the adopted reserve sizing and allocation strategy, is decisive for the final impact of flexibility adequacy requirements. Based on the findings of this work it can be said that it will most likely no longer be cost-effective to centrally impose a level of reliability in a highly renewable power system. In a liberalized and decentralizing power system context, the value of reliability will also be something to be determined in a liberalized and decentralized way. Finally, it has to be noted that other elements than short-term flexibility requirements may have larger impacts on total system cost, and that it might therefore be more opportune for other planning models to dedicate additional computational resources to these issues, rather than to including the short-term flexibility constraints. This, naturally, depends on the goal of the research. Second, the planning model is used to assess the value of alternative sources of short-term flexibility, and the importance of the level of operational detail for assessing their impact. The supply of short-term flexibility is expanded to include a number of selected technologies of the three other types of flexibility sources: energy storage, demand response and interconnection. Results show that different technologies generate added value in different ways, but that they are also to a certain extent interchangeable. Results further show that the optimal level of investment depends on how well the technologies are able to compound different sources of added value, and that high operational detail in a power system planning model is therefore indispensable, as it enables the model to capture the total added value of the different technologies. The combined flexibility of the considered conventional and alternative flexibility providers allows to significantly reduce the cost of short-term flexibility requirements. Coupled to an ambitious operating reserve strategy, this flexibility could thus enable the integration of large shares of variable renewable energy sources without significant flexibility adequacy-related costs. One of the main challenges to be addressed is the remuneration of the flexibility providers for their added value. Regardless of the specific mechanism through which this will be realized, based on the findings of this work it can be said that such mechanisms should be technology-neutral and developed in an international context.status: publishe