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In 2004 MED and EECA established a project group to advance knowledge and understanding of the potential for wind generation to be integrated into the New Zealand electricity supply system. This study is part of the first phase of the project. It is intended to present an initial assessment of the potential for wind integration, primarily based on information already available, and also to identify where there is a need for better information or further investigation.

For example, the key factors which impact on the potential for wind energy integration ultimately require more detailed assessments using a database of indicative wind farm outputs in various regions around the country. A wind speed database for this purpose is not yet available, but creating one is recommended in this study.

The study was contracted to Energy Link Ltd with MWH NZ as electrical engineering sub-consultant. Energy Link is a New Zealand company, with offices in Wellington and Dunedin, which specialises in providing expertise and information to the domestic energy market. Energy Link is the leading provider of forecasting and modelling services for the New Zealand electricity industry and has participated actively in industry working groups and development projects covering market pricing, dispatch and operational rules and processes.

MWH NZ is part of the MWH global consulting company which operates in 37 countries and has over 6,000 employees. MWH NZ has 18 offices in New Zealand with more than 650 employees and is a leading provider of engineering, environmental, technology and management services to the public and private sector.

The study complements the significant work being done by the EC in conjunction with the SO which is focussed on ensuring ongoing effective market operations and system security with increasing levels of wind integration.

The outcomes required of the study relate to how much wind generation can be integrated into the electricity supply system. They are:

• Identification of relevant parameters affecting levels of wind integration on both a nationwide and regional basis;
• A list of other wind energy generation parameters that are considered either not significant or not relevant to wind integration;
• Reference to international research on this subject and its applicability to the New Zealand context;
• Development of a methodology that can be used to assess levels of wind integration - both nationwide and regionally - including identifying the limiting parameters and the costs and consequences of exceeding those levels;
• An initial application of this methodology;
• Definition of further discrete studies in order of priority to improve upon the current level of knowledge and understanding of wind integration limits, including the information requirements associated with these studies and a program for the additional work that is identified.

The potential for wind energy in New Zealand is very high. The country lies across the prevailing mid-latitude westerly air flow and has a long coastline relative to its total area - so it has the advantage of both westerly flows and sea breezes.

EECA has calculated that, in theory at least, wind energy could meet all of the nation's future energy needs⁶ for the foreseeable future. Wind is currently also the fastest growing sector of the generation market.

Table 1: Existing Wind Farms.

Table 1 above shows that the installed wind energy base has increased by over 200% since 2000. Table 2 shows proposed wind farms and wind regions at various stages of investigation or approval.⁷

Table 2: Proposed Wind Farms

Trustpower's Tararua Stage III is an expansion of an existing wind farm. It will add 120 MW to the existing farm capacity of about 70 MW and make the Tararua wind farm the largest in New Zealand.

Though our wind energy potential is very high, significant issues remain as to how much of that potential can be realised.

Wind energy is unlike any conventional form of large-scale generation, including gas-fired, coal-fired and oil-fired thermal generators, or hydro-electric systems, because wind, as a source of energy cannot be stored.

We can store fuel to use later in thermal generators and we can store water to use later in hydro-electric generation. Even so-called run-of-river hydro schemes can store water on a limited basis, typically for a few hours or longer.⁸ But wind only ever arrives at a wind farm on a "use it or lose it" basis.

Figure 1: Output Curve for a Typical Wind Turbine

Furthermore, wind does not always blow steadily. WTG output increases with wind speed, as shown in Figure 1, but only between limits. The WTG has no output until the wind speed exceeds the low wind cut-in speed which is typically between 4 and 6 m/s (14 - 22 km/h.)

WTG output then rises⁹ until maximum output is reached, after which power output remains constant until the high wind cut-out speed is reached. When the average wind speed exceeds the cut-out speed the WTG drops its output to zero to avoid structural damage. In Figure 1, the high wind cut-out speed is shown as 25 m/s (90 km/h) but it can be higher.¹⁰

The volatile nature of wind farm output poses significant challenges for the electricity supply industry as the installed wind energy base increases. This is particularly so for the wholesale electricity market and for the SO.

Virtually all generation is offered into the market in a series of prices and quantities on a half-hourly basis. For example, for a particular half hour in the day,¹¹ a generator may offer to generate 100 MW for a low price, a further 100 MW for a higher price and 50 MW more for an even higher price. The SO enters these offers into a computer model¹² of the electricity market each half hour and the model calculates the optimum dispatch of generation. With only a few exceptions, each and every generator is then dispatched at the level specified by the model.

Until recently, the Electricity Governance Rules (EGRs) were predicated on the expectation that large-scale generation would be offered into the market and dispatched at a constant output in line with its offers. For example, if a generator offered 100 MW for a particular half-hourly "trading period" then it could be dispatched at 100 MW and it would be expected to generate as close to 100 MW as reasonably possible for that trading period.

This key assumption breaks down for wind generation. The best a wind generator can do is to offer its expected output,¹³ based on a forecast of wind speed. It probably won't generate at 100 MW, if that is what it is dispatched at, but at a value which is greater than or less than the dispatched amount. So the primary impact of wind generation on the market is its variability, resulting in challenges to well-established practice.

There are wider implications, however, than the impact on the market. The SO's task of ensuring grid security becomes more complex and difficult in the presence of large amounts of wind generation due to the uncertainty surrounding how much a wind farm is going to generate at any particular time, despite its offers in the market.

In section 3 of this study, first define what is meant by wind integration and also how we measure it. We then review recent changes to the EGRs, made specifically to accommodate wind generation, and experience with wind farms in the Manawatu.

We review international experience in section 5 and modern wind generator technology in section 6. Factors which will affect the degree of integration of wind energy are described in section 7. The key factors are analysed with respect to the most informative case - when demand is lowest on warm summer nights - in section 8, including discussion around key assumptions.

In section 9, we propose a methodology for calculating the potential for wind integration, and in section 9.2 we apply the methodology to make the initial assessment of the limits to wind integration.

In section 10, we briefly review trends in technology that indicate how WTGs might expand the limits on wind integration as the technology becomes widespread.

Finally, in section 11, we list recommendations for further work.

The appendices contain a glossary of terms and a list of references for further reading.

In this report we adopt the convention of the wholesale electricity market and express electricity prices in dollars per megawatt hour or $/MWh, noting that $10/MWh is equal to the commonly used 1 c/kWh.

⁶EECA,Review of New Zealand's Wind Energy Potential to 2015, May 2001.

⁷Based on publicly available information. As with any form of generation, there are likely to be more wind farms under investigation but on a confidential basis. Likewise, some of the wind farm projects shown may never be developed.

⁸The smallest hydro schemes may not be able to store water, however the focus in this study is on large scale generation. Tiny systems such as "micro hydro" are ignored as their output is not comparable to that of wind farms.

⁹The power available from a WTG is actually proportional to the cube (third power) of the wind speed.

¹⁰Data from Windflow Technology, a local manufacturer of WTGs, shows a high wind cut-out speed of 30 m/s or 122 km/h.

¹¹Each half hour is known as a trading period.

¹²Commonly referred to as "SPD"

¹³This limitation is likely to become less significant over time given trends in WTG technology - refer sections 8.1 and 10.