EXPERIENCES AND CHALLENGES OF SUSTAINABLE GRID OPERATION Ernesto

EXPERIENCES AND CHALLENGES OF SUSTAINABLE GRID OPERATION Ernesto Huber J. Operation Manager National Electric Coordinator (Chilean ISO) www. coordinador. cl www. coordinadorelectrico. cl

“Challenges and Solutions for System Operations with high share of RE– Chile Experience” www. coordinador. cl @coord_electrico You. Tube Linkedin Coordinamos la Energía de Chile 2

Agenda 1 The Chilean National Electric System 4 Final comments www. coordinador. cl @coord_electrico You. Tube Linkedin 2 Renewable Energy Context Coordinamos la Energía de Chile 3 Main Callenges and Opportunities 3

The Chilean National Electric System www. coordinador. cl @coord_electrico You. Tube Linkedin Coordinamos la Energía de Chile 4

Coordinador Eléctrico Nacional We are an independent technical public-service organization that coordinates the operation of the national electric grid, ensuring a secure, reliable and economic energy supply, and guaranteeing open access to the transmission systems 14 www. coordinadorelectrico. cl

NATIONAL ELECTRIC COORDINATOR: CHILEAN ISO Chile has a long electric grid www. coordinador. cl @coord_electrico You. Tube Linkedin Coordinamos la Energía de Chile 6

Chile in comparison www. coordinador. cl @coord_electrico You. Tube Linkedin Coordinamos la Energía de Chile 7

Electric Systems – Total National System (2017) Capacity & energy by fuel type 100% 80% • • • Installed Capacity: 23, 729 MW Energy Generated: 74, 222 GWh Peak Demand: 10, 363 MW Population: 17. 1 Millions BESS: 52 MW 60% 40% 20% ISO: Coordinador Eléctrico Nacional 0% Thermal Hidro Installed capacity MW Solar Wind Others Energy generated GWh SEN 3. 100 km www. coordinador. cl @coord_electrico You. Tube Linkedin Coordinamos la Energía de Chile 11 8

Electricity Market Framework National Energy Commission (CNE) • • • Regulatory body Laws, decrees, norms Set rates Other organizations: • Panel of Experts • National Economic Prosecution Office (FNE) • Transparency Counsel Generation Companies Ministry of Energy National Electric Coordinator (Chilean ISO) Transmission Companies Fuels & Electricity Superintendency (SEC) • • • Sanctioning body Interprets regulations Norms compliance oversight Distribution & Large Customers 4 www. coordinadorelectrico. cl

Generator A LMP Pricing National Electric Coordinator LMP Pricing • • • Wholesale Energy, Capacity & AS Markets Chilean ISO defines day-ahead generation schedule based on economic dispatch LMP from economic dispatch is based on declared variable costs (LMP settlement ex-post) Chilean ISO determines energy balances by differences (contracted vs. actual generation priced at LMP Competitive long-term energy bids for regulated customers conducted by the CNE Capacity payments based on plants’ availability during peak demand Ancillary services will transition from cost-based to auction-based for balancing Long-term Contracts Generator B Bilateral Contracts Distribution (Regulated) • Proportionally charged to demand (Postage Transmission (Regulated/ Competitive) stamp) • Tariff based on tender process for new transmission projects Large Customers 5 www. coordinadorelectrico. cl

GENERATION AND ENERGY PRICES: HISTORICAL EVOLUTION First Natural Gas curtailment from Argentina Argentinean Natural Gas Crisis LNG (Quintero Plant) www. coordinadorelectrico. cl

Renewable Energy Context www. coordinador. cl @coord_electrico You. Tube Linkedin Coordinamos la Energía de Chile 1 2

Renewable Energy in Chile has significant resources: more than 1, 865 GW of wind, solar and hydro energy, and probably 2, 000 or more MW geothermal power and 2, 000 MW of biomass. Source: Presentations CNE y Min. Energía: http: //www. minenergia. cl/documentos/estudios/2014. html www. coordinador. cl @coord_electrico You. Tube Linkedin Coordinamos la Energía de Chile 1 3

Chilean electricity market – The historical mandatory target Chile adopted a non-subsidiary model for the integration of renewables. 2016 2012 - 2013 2008 Renewable Energy Law version 2 Renewable Energy Law version 1 - Introduction of a renewable portfolio standard: 10% by 2024 (NCRE). - Increment on RPS target: 20% by 2025 (NCRE) Net-metering Law. Transmission and only one Coordinator (Chilean ISO) - - www. coordinador. cl @coord_electrico You. Tube Linkedin Coordinamos la Energía de Chile Robust Transmission to avoid constrains. Charged to demand (prorate) A. S. Market (check competitive conditions) 1 4

The Development of NCRE Annual generation 2008 NCRE 2, 9% 15% Coal 27, 1% Hidro 40, 7% Annual generation 2017 Hidro 27% 1567 GWh 11139 GWh LNG 17% Diesel 24, 2% LNG 5, 2% Coal 40% Diesel 1% www. coordinador. cl @coord_electrico You. Tube Linkedin Coordinamos la Energía de Chile 1 5

TENDERS PROCESS Regulated customer In 2016 52% of the energy tendered was awarded to NCRE Average price 2016= 47. 6 US$/MWH (include a record bid for Chile PV project=29 US$/MWh Block B)

Compliance the Target 2010 -2017 12, 000 10, 000 GWh 8, 000 6, 000 4, 000 2, 000 0 2011 2012 2013 Generation NCRE 2014 2015 2016 2017 Target NCRE The annual target has been exceeded by projects developed under market conditions www. coordinador. cl @coord_electrico You. Tube Linkedin Coordinamos la Energía de Chile 1 7

Main Challenges and Opportunities www. coordinador. cl @coord_electrico You. Tube Linkedin Coordinamos la Energía de Chile 1 8

Handle lack of transmission capacity for RE In the northern part of SIC (800 km, 220 k. V system): Local Demand: 1000 MW Norte Grande Install Capacity (Wind+PV): 2200 MW Norte Chico Zona Central Zona Sur Northern SIC Coal Power generation: 750 MW (5 units 150 MW, minimum load (25% to 33% ) Transmission capacity North-->South : 224 MW, N-1 criteria. In normal operation it is necessary to order curtailments. Zona Austral “zero” marginal cost during day hours. www. coordinadorelectrico. cl

Lack of transmission capacity for RE The main objective of the scheme is to increase the use of transmission capacity from NORTH → SOUTH, allowing maximum generation from NCRE sources. (N-1 to near “N”) Reducing operation costs of the whole system without affecting security constraints. A design for an automatic scheme for reduction/disconnection of power generation is available. Basically, the scheme will allow transmission levels reduction under contingencies in the Northern SIC and a fine-tuning of power transmission levels under normal operation. www. coordinadorelectrico. cl

SIC-SING INTERCONNECTION PROJECT S/E KIMAL S/E CUMBRE S/E LOS CHANGOS S/E KAPATUR Com. 2017 KAPATUR 220 k. V Com. 2020 140 km S/E NUEVA S/E CARDONES NUEVA MAITENCILLO S/E NUEVA PAN DE AZUCAR S/E POLPAICO 500 k. V Transmission lines Com. 2017 400 km Com. 2017 -2018 189 km 135 km 212 km 408 km www. coordinadorelectrico. cl

SIC-SING INTERCONNECTION: November 21, 2017 www. coordinadorelectrico. cl

ac á Ta rap gu na s La uc ero Cr 400 km S/E S/E tro 189 km En cu en a ca m Ata 135 km S/E S/E Co P. l S/E Pa La lm s as S/E Vil L os os o cill ne s rdo Ca ite n Ma mb re Cu a. Nv S/E Ch Los an go s S/E S/E lpa ico Po Curtaiments RE. Tx>300 MW S/E Alm D. ag ro s ne rdo Ca o cill en S/E Hé D. cto r Ma it S/E Pa Az n de úc ar S/E s ZONA SUR: Nogales. Chiloé S/E No ga le S/E The challenge goes on… Proyecto TEN CTM G S/E TEN S/E Kapatur www. coordinadorelectrico. cl

The challenge goes on… - Still Lack of transmission capacity for RE - LNG inflexible - Low demand - Security constrains: reserve, inertia, reactive power control www. coordinadorelectrico. cl

Net Demand: a summer day in 2021 13000 12000 Power [MW] 110000 3600 MW 9000 8000 In two hours the net demand decreases: 800 MW (NCRE Law) and 1. 200 MW (NCRE Law+30%) 7000 6000 In four hours the net demand increases: 1. 600 MW (NCRE Law) and 2. 400 MW (NCRE Law+30%) 5000 1 3 5 7 NCRE Law+30%. www. coordinador. cl @coord_electrico You. Tube Linkedin 9 11 13 Time [h] 15 17 19 21 23 NCRE Law Demand Net demand +30% Coordinamos la Energía de Chile 2 5

CHALLENGE INTEGRATION NCRE FLEXIBILITY CHALLENGES FLEXIBILITY 1) Conventional power plant operation regime (Parameter Campaign, improve turndown) 2) 3) Environmental Regulations Others flexibility sources

CHALLENGE INTEGRATION NCRE FLEXIBILITY

CHALLENGE INTEGRATION NCRE INTERCON NECTIONS HYDRO RESERVOIR THERMAL POWER FLEXIBILITY PUMP STORAGE TRANSM. SYSTEM BATTERIES DEMAND SIDE RESP STORAGE SYSTEM

Power System Resilience: 6, 000 Earthquake: 27 de febrero de 2010 • Richter 8. 8; 03: 34 hrs. Demanda en MW 27/02/2010 5, 000 4, 000 3, 000 2, 000 1, 000 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Forest Fire: summer 2016 -2017 Drought: From 20102017… and. . . www. coordinadorelectrico. cl

The near future… • AS Market: opportunity for RE. • First Tests with a 141 MW PV Plant (First. Solar PV LDN), building on the California Experience (CAISO, NREL, First Solar) • Distributed Generation: Microgrid • Storage System: BESS, PSH • HVDC • SSR • Decommissioning of coal power generation www. coordinadorelectrico. cl

The near future…. • The Electrical Chilean Law allow to evaluate the convenience to implement Storage Capability as a transmission asset in the Planning process. • As a results of the transmission expansion planning study, conducted by Coordinador, the storage resources would be necessary as a transmission asset after 2026 (it depends on the RE integration). • Regarding the ancillary services, the batteries could play an important role as a primary response resource in a scenario of high RE integration. • The new ancillary service policies, that we must implement in the upcoming years, introduce new markets schemes (a bidding process in a very short term - intraday and day ahead). It might represent an opportunity for the battery technology to participate in this electrical market. • The National Energy Commission has been reviewing the current distribution policies in order to implement changes that impulse the integration of new technologies at the distribution scale. www. coordinador. cl @coord_electrico You. Tube Linkedin Coordinamos la Energía de Chile 3 1

Final Comments www. coordinador. cl @coord_electrico You. Tube Linkedin Coordinamos la Energía de Chile 3 2

Final Comments: q The fast integration of renewables energy in the Chilean power system is bringing new challenges in order to keep the reliability standards and guarantee an efficient operation. q The interconnection SING-SIC (2017 -2018) is a valuable support to face these challenges (flexibility from hydro reservoir) but it could be not enough. We have to think, for instance, in redesign the A/S market q National and regional control centers q System Resilience (forest fires, hydrology variability, drought conditions prolonged 8 years) q Integration of high levels of renewables (high potential wind&solar) q Centralized forecasting V-RE, National AGC, situational awareness q NCRE: Grid friendly, participation in the supply of Ancillary Services.

THANKS FOR YOUR ATTENTION www. coordinador. cl @coord_electrico You. Tube Linkedin Coordinamos la Energía de Chile 3 4