Assignment 2

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School

Northeastern University *

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Course

5600

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Economics

Date

Feb 20, 2024

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pdf

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Uploaded by EarlStar4961

NAME – ATISHEY SINGH NUID 002290988 RENEWABLE ENERGY DEVELOPMENT

ASSIGNMENT 2 Question 1: You now know the reasons why a Capacity Market exists in ISO NE. The annual cost of such a market to all New England consumers is around $2.5B. Are we better off or worse off with a Capacity Market? Compare your findings to ERCOT, which does not have a Capacity Market, and estimate the net cost or benefit to the consumers. Ans: To find whether we are better off or worse off with a capacity market as it annually costs the consumers of New England around $2.5 billion, we need to deeply analyze it and compare it to the energy only market of ERCOT Texas. The purpose of Capacity market is to purchase sufficient capacity for reliable system operation for a future year at competitive prices where all resources, both new and existing can participate. [1] Firstly, let us understand the need for the capacity market. The electricity market faces a problem known as “Missing money Problem” which states that prices for energy is competitive and may not adequately reflect the value of investment in the resources needed for reliable electric service. [2] A capacity market or forward capacity market exists to make sure that there is enough electricity supply to meet for the future demands, A capacity market pays the supplier for generating capacity they promise to make available during the peak requirement in future, The extra cost is generally paid by the end-use customers, which are home and business owners. [3] There are two major advantages of Forward capacity markets, the first is hedge load from spot prices and other is, reduced risk by replacing peak energy rent with a constant capacity payment, the reliability options provide a mechanism by securing a capacity payment due to which electricity consumers are protected from the market price during the peak demands or scarcity, which results as consumers paying higher prices than energy only markets. [4] The ERCOT market operates as a deregulated energy-only market, where power generation utilities are compensated for the electricity produced, and it falls outside the oversight of the Federal Energy Regulatory Commission (FERC). [5]. In a cheap and energy only market like ERCOT, where power generation costs seem lower than a capacity market, the critical challenge arises from ensuring a consistent and sufficient power supply to meet the state's needs, introducing risks associated with the balance of demand and supply in electricity. [6] In February 2021, due to the freezing cold wave impacted the power producers vastly, this resulted a massive electricity generation failure in the state of Texas, which resulted in a loss of power for more than 45 million homes in Texas, caused 57 deaths across 25 Texas counties. [7] [8]

In February 2021, industrial prices as well as commercial prices rose from 5.40 cents per kilowatt hour in February 2020 to 12.15 cents per kilowatt hour in 12.15 cents per kilowatt hour in February 2021, and 7.89 cents per kilowatt hour to 16.29 cents per kilowatt hour, in February 2021, wholesale prices held at or neat the $9000/MWH ERCOT price cap for approximately 77 hours. [9] In January , the New England wholesale electricity prices went to hike due to winter storm averaging $160/ MWh and in July heat wave in texas, the electricity prices averaged $183/MWh. [10] The net benefit of having capacity market In conclusion, the annual cost of $2.5 billion cost is justified with increased reliability and predictability, ERCOT Consumers benefit from lower costs but may face potential reliability challenges in extreme conditions. In Energy only markets, the absence of guaranteed capital source from capital market may discourage the construction of new power plants. [11]Due to absence of capacity payments, there also develop concerns regarding adequacy of investment in maintaining grid reliability, creating problem as market manipulation. Forward capacity market is good for the long run and more reliable. Question 2: Calculate the capacitance (in kVARs) required to improve the power factor from 0.8 to 85 for a 1,000kVA load. a. Calculate the same to improve the P.F. from 0.9 to 0.95 b. What do you observe from the two calculations? Ans: Load (Apparent power) = 1000 kVA Original PF, PF1= 0.8 Desired PF, PF2= 0.85 Solution: For PF1 Sin( cos −1 (0. 8))= Reactive power 1(kVAR) / 1000 kVA Reactive power 1 = 600 kVAR For PF2, Sin( cos −1 (0.85) ) = Reactive power 2/ 1000 kVA Reactive power 2 = 526.78 kVAR Capacitance= Reactive power 2 – reactive power 1

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= (600-526.78) kVAR = 73.21 kVAR a) Calculate the same to improve the P.F. from 0.9 to 0.95 For PF1, Sin( cos −1 (0.9) ) = Reactive power 1/ 1000kVa Reactive power 1 = 435.89 kVAR For PF2, Sin( cos −1 (0.95) ) = Reactive power 2 / 1000 kVA Reactive power 2 = 312.25 kVAR Capacitance = 123.64 kVAR b) What do you observe from the two calculations The capacitance required in the first case from PF 0.8 to 0.85 is 73.21 kVAR and in the second case, from PF 0.9 to 0.95 is 123.64 kVAR. Improving the power factor from a low initial PF value requires less capacitance than relatively higher initial PF value. As the power factor reaches 1, the amount of capacitance required increases, so we can say that the relationship between required capacitance and power factor improvement in non-linear. We can infer that correcting a poor power factor is more cost efficient in terms of capacitance than correcting a power factor that is already high and close to 1. Question 3: Read the first three chapters of the book Photovoltaic Systems (by J. Dunlop) and write a short para on what should be the optimum tilt angle and orientation for a solar project in Boston, MA. Answer: The Optimum tilt angle is a parameter in placing PV panels that influence the efficiency of panels while harnessing solar energy. The optimum tilt angle is the angle at which the solar panel inclined to the ground so it have the maximum exposure to the sun. There are a lot of factor that affect the optimum tilt angle for PV panels such as geographic location, time of the year and environmental factors. To determine this angle, we start with geographic information of the area such as latitude of the installation site. The geometry of solar window is such that it in summer the sun is in the sky for longer than winters, which decided the inclination for the PV. For example, in summers the tilt is comparatively lower than in winters and less air mass between the sun and the collector because in summers the sky is more clearer and more solar radiation is visible.

Generally the Optimum tilt angle is calculated by the approximate difference between optimum tilt factor and latitude of the given area, the optimum tilt angle factor is determined by using computer models and average climate conditions at weather stations. As the New England region lied in the Northern Hemishphere, the optimum azimuth would be due to south. In term of latitude the location of New England is 43.9654 ̊N The Optimum Tilt angle factor for New England would be 8 as according to the Map. Optimum Tilt Angle = 43.9654 – 8 = 34.9654 Degrees. References [1] ISO, "ISO NEW ENGLAND," [Online]. [2] M. Hogan, " Follow the missing money: Ensuring reliability at least cost to consumers in the transition to a low-carbon power system," The electricity journal, p. 61, 2017. [3] A. james, "Energy News Network," 13 june 2013. [Online]. Available: https://energynews.us/2013/06/17/explainer-how-capacity-markets-work/. [Accessed 2023]. [4] p. A. O. a. s. s. Cramton, "Capacity Market Fundamentals," Economics of energy and enviornmental policy, 2013. [5] M. Hourihan, "Cpower Energy," 10 april 2019. [Online]. Available: https://cpowerenergy.com/why-doesnt- texas-have-a-capacity-market/. [Accessed 26 JANUARY 2024]. [6] N. E. Voices, "nrg," 6 july 2023. [Online]. Available: https://www.nrg.com/insights/energy- education/electricity-markets-what-s-the-difference-between-a-wholesale-en.html. [Accessed 26 january 2024]. [7] C. W. King, "The timeline and events of the February 2021 Texas electric grid blackouts.," The university of texas Energy Institute , 2021. [8] EIA, "EIA," EIA, 2023. [Online]. Available: https://www.eia.gov/electricity/data/eia861m/. [9] A. G. Anodyne Lindstorm, "Average Texas electricity prices were higher in February 2021 due to a severe winter storm," EIA, [Online]. Available: https://www.eia.gov/todayinenergy/detail.php?id=47876. [10] EIA, "Today in Energy," 2023.

[11] "NEXT KRAFTWERKE," NEXT, [Online]. Available: https://www.next-kraftwerke.com/knowledge/energy- only-market. [12] P. C. Bhagwat, "The effectiveness of capacity markets in the presence of a high portfolio share of renewable energy sources," Elsevier , p. 91, 2017. [13] A. James, "ENERGY NEWS NETWORK," [Online].

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