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Implementation of regulation and load following services require telemetry and telecommunications to the grid operator. Ancillary service manuals published by the grid operator are very explicit in specifying performance standards, telecommunication requirements, and other eligibility requirements for the resource (load or generator). The eligibility requirement is usually a minimum resource size (in most cases 1 MW) to participate in the ancillary markets. The minimum resource size and the telemetry requirements are usually the major barriers for smaller distributed load resources to be utilized in these reserve and regulation markets. A smart grid is capable of delivering ancillary services on both counts. With respect to the minimum resource requirement, the smart grid can easily aggregate smaller units’ demand response from many, rather than a single customer. The strengths of a smart grid are its real-time ability to respond coupled with the lower risk of meeting the minimum load requirement. Implementation requires recognition of these strengths through inclusion of these types of resources in ancillary service manuals. In Minnesota, the RPS for 2025 is 25% from renewable energy. This amount (25%) was studied for a four-utility combined balancing area that had a peak load of 20,984 MW. The estimated regulation requirement increased from 0.65% in the base case to 0.75% at the RPS level of 25%. More telling, the total operating reserve (regulation, spinning, non-spinning, load following, and reserve margin) increased from 5% of the balancing area peak load capacity to 7% in the RPS 25% case (Smith et al. 2007). A review of eight studies on wind integration on utilities (Parsons et al. 2006) showed that the cost of ancillary services to integrate wind ranged from approximately $2 to $5/MWh, with the cost generally increasing with the penetration from approximately 4% to 30%. Cost increases associated with the provision of ancillary services needed to accommodate increasing penetration of wind can be moderated with the integration of large and diverse balancing areas, improved forecasting, and cooperative markets for ancillary services (Parsons et al. 2006). For wind penetration of up to 20%, operating cost increases are less than or equal to 10% of the wholesale value of the wind energy. However, it is not known if the relationship is linear and can be scaled to higher wind penetration (Smith et al. 2007). I.3 Summary Wind energy has benefitted greatly from RPSs and tax credits, but it is characterized by intermittency and ramping that requires additional capacity to provide ancillary services in the form of regulation, load following, and scheduling. A review of efforts indicates that the electrical system can accommodate penetrations of wind energy on the order of 20% to 25% at little additional cost for the additional capacity needed to provide ancillary services. The studies also indicate that wind integration is facilitated in cases where the service area is geographically large and has a diversity of loads. The contribution of the smart grid technology can be to replace the additional capacity used to provide ancillary services with demand response by using advanced communication and control technologies, as evidenced by a limited demonstration. The calculated energy and CO2 emissions for an RPS of 20% without smart grid technologies are presented in this paragraph. It is assumed that there are no end-use energy reductions, so the delivered kWh will be the same without and with RPS, but there is a reduction in input fossil energy associated with generating this electricity. An estimate of this is the average kWh/GW capacity of approximately 4,300,000 kWh/GW. Applying the average heat rate of approximately 10,000 Btu/kWh for conventional thermal generation, the reduction in primary energy is approximately 6.9 quads. This amounts to I.3PDF Image | The Smart Grid: An Estimation of the Energy and CO2 Benefits
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