The Value of (Improved) Renewable Energy Forecasts to Operational and Market Stakeholders. Justin Sharp, Ph.D.

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1 The Value of (Improved) Renewable Energy Forecasts to Operational and Market Stakeholders Justin Sharp, Ph.D. As yet the wind is an untamed and un-harnessed force; And quite possibly one of the greatest discoveries hereafter to be made Will be the taming and harnessing of the wind. Abraham Lincoln, Bloomington, IL. April 4, NE Oregon Street, Portland, OR Klondike Wind Farm. Photo Justin Sharp AMS Renewable Energy Committee July 14, 2015

2 Justin Sharp, Ph.D. and Sharply Focused 1 year at BPA 6 ½ years at Iberdrola Founded Sharply Focused LLC in March 2012 Bridges the meteorology/ electric utility knowledge and culture divide Major clients include EPRI, PGE, DOE, Vaisala and Lockheed Martin NE Oregon Street, Portland, OR justin@sharply-focused.com AMS Renewable Energy Committee July 14, 2015

3 Integration of Forecasting into System Operations EPRI R&D project in Renewable Integration Program Goal: Develop methods to better integrate variable generation forecasts into system operations, including improved consideration of uncertainty in operational processes Several topical areas being researched (2013-present) Evaluation of Wind/PV forecast accuracy and value in operations Technology watch and integration of new forecasting methods into operations Use of probabilistic forecasts in grid operations Other EPRI efforts related to forecasting and value: National Research Council Weather Forecasting Needs for the Electricity Industry Solar forecasting trials Numerous other projects related to forecasting Data requirements for behind the meter PV in load forecasting Sky imaging techniques and demonstration Long range lidar for wind forecasting (w/asu) Load forecasting: Artificial Neural Network approach (ANNSTLF tool) Understanding value is key to application of forecasting in grid operations Electric Power Research Institute, Inc. All rights reserved.

4 4 Definition of VALUE (from Merriam-Webster) 1 : a fair return or equivalent in goods, services, or money for something exchanged 2 : the monetary worth of something 3 : relative worth, utility, or importance <a good value at the price> <the value of base stealing in baseball> <had nothing of value to say> Application to forecasting: Avoided cost or ability to monetize knowledge (1 & 2) The value of sometimes being right (3) The value of falling within a particular range (3)

5 A Brief History of Renewable Energy Forecasting : Early entry/early adopter forecasts In-house NWP, in-house statistical engines, in-house wind power Typical cost: $2000-$3000/farm/month NWP improvements, many competing products No objective way to assess value except cheaper is better WWSIS (GE) values DA forecasting improvement (SOA->perfect) at $3B/yr for 20% penetration! Specialization Situational awareness and decision support tools : Commodization Almost exclusive government NWP inputs Maximum automation; economies of scale Little diversity in skill Typical cost: $100-$200/farm/month The Future? Typical cost: $2K- $3K/farm/month

6 6 Forecast Cost Versus Forecast Value Numerous studies show the value of VG forecasts is in the hundreds of millions to billions of dollars range Yet VG forecasting has become commoditized Why are prices so low? Cheaply/freely available good NWP Difficult to quantify value with current use and evaluation practices Over supply and competition Consequences: Little innovation/improvement is occurring. Price hurdle is prohibitive. Incentive to run own models is low. Philosophical Is forecasting good enough? At current penetrations? As penetration increases? Will reliability concerns drive investment in data-driven short range forecasting?

7 7 Definition of VALUE (from Merriam-Webster) 1 : a fair return or equivalent in goods, services, or money for something exchanged 2 : the monetary worth of something 3 : relative worth, utility, or importance <a good value at the price> <the value of base stealing in baseball> <had nothing of value to say> Application to forecasting: Avoided cost or ability to monetize knowledge (1 & 2) The value of sometimes being right (3) The value of falling within a particular range (3)

8 Variability and Uncertainty Plant Output Hrly Ave (Perf ect Fcst?) Park Ave Wind Power (MW) Wind Speed (m/s)

9 9 Managing Variability and Uncertainty The optimal application of forecasting fits hand in glove with market design and system operation Forecasting provides knowledge and reduces uncertainty Market design/operating practices appropriate for VERS and designed to utilize forecasting help manage variability impact and reduce risk. Generation/MW Figure adapted from testimony in BPA 2012 rate case written by Kirby and Castille for NWG

10 10 What determines VER and load forecast value? Market design/rules and operating practices System operator charges, incentives and penalties Forecast accuracy and reliability Forecast confidence and a reliable measures of it Variability of the wind resource in time and space How the forecast is communicated and used Forecasting Is Not A Silver Bullet It Needs To Be Melded With Market/System Changes That Maximize Benefits And Minimize Costs of VERs

11 11 The Weather Forecast Value Chain Weather Atmospheric Monitoring Weather Prediction (usually NWP) Tailored Forecast Datasets Dissemination and Communication Perception & Interpretation Use & Decision Making Actions & Outcomes VALUE Adapted for Energy. Original from Jeff Lazo, NCAR Pretty Good Lots Of Room For Improvement VG and load forecasts provide enormous ROI But value chain is not being fully utilized, esp. for VG More value can be extracted if there is more focus on the elements to the right These convert data into actions and outcomes

12 Value is in the Eye of the Beholder (and of your BAA s) 12 Wake Example of mountain waves coming off the Cascades and a wake in the lee of Mount Hood from a 1KM WRF model simulation

13 13 An Integrated Approach to Forecasting is Needed As VG penetration increases, net load begins to look very different Behind the meter VG will make traditional load forecasts obsolete Deterministic forecasts will be insufficient Optimal deployment of forecasting: Enables commitment of cheapest units Minimizes the amount of reserves that need to be held to maintain reliability Reduces transmission curtailment and oversupply problems Holistic methods are needed that: Consider system wide (and inter-system) impact of weather Can utilize probabilistic forecasts The duck plot over-simplifies LOAD AND VARIABLE GENERATION ARE NOT INDEPENDENT

14 14 How Do We Bridge the Gap Understand your organization s requirements, motivation and incentives Actionable forecast information and its presentation is different based on an organization s needs Better information has no value if it doesn t lead to better decisions One size fits all format may be cheap but its not always effective Use all the data instead of throwing it away Deploy the best Neural Network to make sense of data Deploy tools that distill information to support decision making and actions (of your well trained staff!)

15 15 Re-inventing the Grid Incorporating Forecasting into System Design For all types of generation (and load is analogous too): Output = Dispatchable (1) + Known Variable Part (2) ± Uncertain Component (3) Some might argue VERS have more attractive uncertainty characteristics than some traditional generators Calibrated probabilistic forecasts could allow (1), (2) and (3) to be determined Shorter dispatch horizons decrease (3) and thus increase (1) and (2) Shorter dispatch intervals increase (1) as (2) and (3) decrease Example: VERS (or load) could be used in ancillary services markets Very cheap, fast regulation; up as well as down Doesn t make sense in current market structures esp. with PTC

16 16 Re-inventing the Grid Incorporating Forecasting into System Design All generation types have costs, benefits and challenges Current operating practices are optimized around thermal generation VER challenges are different => Market/system redesign is needed The value of forecasting (load as well as renewables) is inextricably linked with system design Its contribution MUST be considered in a holistic fashion as we re-optimize towards increasing RE penetration When it stops being an after-thought we might be able to evaluate its value! Wind Dispatchable Load Solar

17 Thank You Questions 3367 NE Oregon Street, Portland, OR Sunset Over Hay Canyon Wind Farm. Photo Justin Sharp It always seems impossible until its done." Nelson Mandela,