W in DS-H2 MODEL W ind D eployment S ystems H ydrogen Model

1. NREL  1617 Cole Boulevard  Golden, Colorado 80401-3393  (303) 275-3000 Operated for the U.S. Department of Energy by Midwest Research Institute  Battelle  Bechtel WinDS-H2 MODELWind Deployment Systems Hydrogen Model Workshop on Electrolysis Production of Hydrogen from Wind and Hydropower Walter Short Nate Blair September 9, 2003

2. Presentation Contents • Background • Representation of wind in WinDS • Representation of hydrogen in WinDS-H2 • Questions that WinDS-H2 might answer • System configuration • Factors considered/Assumptions/Control strategy • Preliminary results • Conclusions • Additional Modeling Required

3. Background/Status • Initial WinDS model did not include H2 • Under development since 2002 • First results for wind electricity only available in May 2003 • WinDS-H2 development began in June 2003 • Initial version does not consider sources of H2 other than wind • Have a few preliminary results today • Seeking your input on how to improve our current approach

4. WinDS Model • A multi-regional, multi-time-period model of capacity expansion in the electric sector of the U.S • Designed to estimate market potential of wind energy in the U.S. for the next 20 – 50 years under different technology development and policy scenarios

5. WinDS is Designed to Address the Principal Market Issues for Wind • Access to and cost of transmission • Class 4 close to the load or class 6 far away? • How much wind can be transmitted on existing lines? • Will wind penetrate the market if it must cover the cost of new transmission lines? • Intermittency • How does wind capacity credit change with penetration? • How do ancillary service requirements that increase non-linearly with market penetration impact wind viability • How much would dispersal of wind sites help?

6. WinDS Addresses These Issues Through: • Many wind supply and demand regions • Constraints on existing transmission available to wind • Explicit accounting for regulation and operating reserves, wind oversupply, and for wind capacity value as a function of the amount and dispersion of wind installations • Tracking individual wind installations by supply/demand region, wind class and transmission line vintage

7. General Characteristics of WinDS • Linear program optimization (cost minimization) for each of 25 two-year periods from 2000 to 2050 • Sixteen time slices in each year: 4 daily and 4 seasons • 4 levels of regions – wind supply/demand, power control areas, NERC areas, Interconnection areas • 4 wind classes (3-6), wind on existing AC lines and wind on new transmission lines • Other generation technologies – hydro, gas CT, gas CC, 4 coal technologies, nuclear, gas/oil steam

8. WinDS Regions

9. Updated Wind Resources with Fewer Land-Use Exclusions

10. Transmission in WinDS

11. Wind Intermittency in WinDS • Constraints • Capacity credit to reserve margin requirement • Operating reserve • Surplus wind • Probabilistic treatment • Explicitly accounts for correlation between wind sites • Updated values between periods

12. Wind Contribution to Reserve Margin • Uses LOLP to estimate the additional load (ELCC) that can be met by the next increment of wind

13. Operating Reserve Constraint • Ensures adequate spinning reserve, quick-start capacity and interruptible load are available to meet normal requirements plus those imposed by wind

14. Surplus Wind

15. Wind Costs • Cost and performance vary by wind class, and over time according to user inputs or with learning • PTC or ITC with start/stop dates, term, rate • Capital cost can increase with rough terrain • Price penalty on capital costs for rapid national and regional growth • Financing explicitly accounted for • Transmission costs – • Existing lines: $/kWh/mile or postage stamp • New lines: $/kW/mile; penalties for rough terrain and dense population

16. Conventional Technology Constraints Planned Outages Forced Outages Reserve Margin Operating reserve Load Imports Exports

17. Hydroelectricity in WinDS • No capacity expansion allowed • Retirements – both scheduled and unscheduled • Generation constrained by water availability (set to average over last 5 years) • Dispatched as needed for peaking power • Not constrained by irrigation, recreation, environmental considerations, etc.

18. WinDS-H2 • Modified form of the WinDS model that includes the on-site use of wind generated electricity to produce H2 through electrolysis • Status: • Initial version under development • Selected preliminary results available today • Seeking your comments

19. Questions WinDS-H2 Can Help Answer • What is the market potential for H2 from wind – nationally? Regionally? • What improvements are required in electrolyzers, storage, fuel cells and H2 transport to make wind-H2 competitive? • Does the possibility of H2 production from wind increase the potential of wind power? • What will be the principal use of H2 from wind - H2 fuel or fuel-cell-firming of wind? • Will local H2-fuel demand spur much wind-H2?

20. Wind-H2 System Configuration Transmission to Grid Fuel cell H2 Storage Electrolyzer Compressor H2-fuel transport

21. H2 Factors Considered by WinDS-H2 • H2 and fuel cells: • Fuel cells contribute 100% to reserve margin • Higher transmission line capacity factor • Fuel cells contribute 100% to operating reserves • Reduction in surplus wind • H2 transportation fuel production • Transportation cost • Local vs remote transportation fuel demand

22. Major Assumptions in WinDS-H2 • Only new wind farms have the option to produce H2, because: • Power purchase agreements • Wind turbine and power controls • Transmission requirements • There is a market for H2 fuel at a fixed price • Market size varies with region • Fuel cells used only to fill-in behind wind

23. Control Strategy Summary • The fraction of each wind farm’s capacity dedicated to H2 production is the same from one year to the next • The fractions of H2 sent to the fuel cell and sold as fuel are the same from one year to the next for each wind farm • Size H2 storage for daily peak load use of H2 in fuel cell • Generate with the fuel cell only during daily peak load period to firm up the wind generation • Use fuel cell generation to provide operating reserve as required • Use electrolyzers to reduce/eliminate surplus wind generation

24. Base Case H2 Inputs

25. Base Case Capacity Results

26. Base Case H2 Inputs (cont’d) • Price of H2 fuel = $2.50/kg • Maximum regional demand for H2 fuel = 5 million kg

27. H2 Fuel Production Sensitivity

28. Sensitivity to H2 Component Capital Costs

29. PreliminaryConclusions • H2 can be modeled in the WinDS model • H2 from wind can be attractive at reasonable electrolyzer and fuel cell cost and performance • Wind market penetration may be increased if the cost and performance of the electrolysis-fuel cell cycle can be improved

30. Additional Modeling Required • Refine existing WinDS-H2 model • Implement consensus suggestions from this workshop – both data and model • Include competitive sources of H2 • Distributed electrolysis • Natural gas SMR • Biomass • Hydroelectricity