Integrating higher shares of variable renewable energy (VRE) technologies, such as wind and solar PV, in power systems is essential for decarbonising the power sector while continuing to meet growing demand for energy. Thanks to sharply falling costs and supportive policies, VRE deployment has expanded dramatically in recent years. However, the inherent variability of wind and solar PV power generation raises challenges for power systems operators and regulators.

Power system transformation

Power systems around the world are undergoing significant change, driven particularly by the increasing availability of low-cost variable renewable energy (VRE), the deployment of distributed energy resources, advances in digitalisation and growing opportunities for electrification. These changes require a profound power system transformation.

The increasing prominence of VRE is among the most important drivers of power system transformation globally. The properties of VRE interact with the broader power system, giving rise to a number of relevant system integration challenges. These challenges do not appear abruptly, but rather increase over time along with the increase in VRE penetration.

The impact of, and issues associated with, VRE depend largely on its level of deployment and the context of the power system, such as the size of the system, operational and market design, regulation and fundamentals of supply and demand.

The integration of VRE can be categorised into a framework made of six different phases, which can be used to prioritise different measures to support system flexibility, identify relevant challenges and implement appropriate measures to support the system integration of VRE.

Key characteristics and challenges in the different phases of system integration

Power system flexibility refers to the capability of a power system to maintain continuous service in the face of rapid and large swings in supply or demand, whatever the cause. Flexibility has always been an important requirement for power systems due to the need to plan for unexpected contingencies such as plant and transmission outages. However system flexibility has become increasingly important for policy makers as the share of VRE generation increases and needs to be addressed in all time domains from real-time operations to long-term system planning.

Phase 1 captures very early stages where VRE deployment (often no more than a few percent of annual energy demand) has no immediate impact on power system operation. Phase 2 flexibility issues emerge but the system is able to cope with them through minor operational modifications. Phases 3 through 6 respectively indicate greater influence of VRE in determining system operations; starting from the need for additional investments in flexibility; structural surpluses of VRE generation leading to curtailment; and structural imbalances in energy supply at seasonal and inter-year periods requiring sector coupling.

Power system flexibility is required across a range of timescales, and different flexibility hardware solutions and operational practices solutions offer timescale-specific capabilities. Shorter flexibility timescales help to provide services such as system stability and balancing, whereas longer timescales help to address seasonal imbalances in supply and demand, often driven by weather and the availability of renewable energy resources.

The first issues that become apparent are at short to medium timescales, followed by stability concerns at ultra-short timescales. As VRE becomes a dominant source of supply in the system, long- to very long-term issues are encountered in the highest phases.

Issues seen at different flexibility timescales

Depending on the institutional aspects of the system and markets, there are four key categories of infrastructure assets that feed flexibility into the system; these include: (a) power plants (both conventional and VRE); (b) electricity network interconnections; (c) energy storage; and (d) distributed energy resources.

Conventional power plants, electricity networks and pumped storage hydropower have historically been the primary sources of flexibility. However, operational improvements in VRE power plants, electricity networks and the advent of affordable distributed energy resources and battery energy storage systems, are enabling a wider set of flexibility options for consideration.

As power systems transition towards higher phases of system integration, these flexibility resources can work together to enhance system flexibility in a cost-effective, reliable and environmental sound manner. Modifications to policy, market and regulatory frameworks ensure that battery energy storage systems and distributed energy resources can participate in the power system to provide flexibility services.

Power systems exist within very varied institutional contexts that determine who can take part in it, how the system is operated and what type of technologies are deployed. For systems in transition, technological development may oftentimes outpace development of the institutional framework which can lead to suboptimal operation or slower deployment of clean energy technologies.

Policy makers seeking to accelerate power system transformation should also consider reviewing and updating the policy framework. Innovations in this area include grid code development, revamping power system regulations or even introducing new laws. These processes include a variety of organisations ranging from ministries to power plant operators and it is important to engage all actors across the sector. The ongoing energy modernization strategies in Brazil or Chile and Ontario IESO’s market reform programme provide useful examples in this regard.

Layers of power system flexibility