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«NATIONAL RENEWABLE ENERGY LABORATORY RENEWABLE ENERGY OPPORTUNITY ASSESSMENT FOR USAID MEXICO November 2015 Andrea Watson, Ricardo Bracho, Rachel ...»

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Focusing on grid integration will help Mexico to most economically include a high percentage of renewable energy in its clean energy mix, while at the same time maintaining reliable system operation. Capacity building, technical assistance, and grid integration studies (both regional and national) are area of potential collaboration between USAID and the GOM. A grid integration study specific to Mexico can be designed to quantify penetration impacts more precisely. Such a study will help identify specific measures that will allow for efficient renewable energy integration. Mexico to most economically include a high percentage of renewable energy in its clean energy mix, while at the same time maintaining reliable system operation.

The role for USAID in Mexico in this area is beyond simply coordinating studies, and instead would be to take an active, substantive role. This role may include coordinating stakeholders, providing technical assistance and advising, assisting with data collection and validation, and capacity building and learning programs.

2.1.1.1 Program Theme Assisting Mexico as it plans for its renewable energy future could be a pivotal part of a USAID program of support. As part of this effort, USAID could consider partnering with SENER to lead a full integration study for Mexico. SENER will ultimately lead implementation efforts and decision making, but GOM has expressed a need for a third party coordinator that can take a leadership role in engaging diverse government agencies and stakeholders. Coordinating studies combined with leadership activities, stakeholder collaboration, and an education and outreach campaign would help Mexico reach their clean energy goals with the greatest mix of renewable energy possible and at the lowest cost. As part of the leadership and stakeholder coordinating activities, it may be important that USAID identify the implementation pathways for the application of study results. All activities would be done under the guidance of SENER. Detail on each of these programmatic elements can be found below.

Leadership: Moving toward a more sophisticated analytical framework for grid integration, incorporating results into planning, and identifying implementation pathways will require the ability to bring together and lead diverse stakeholders, technical competence, and the ability to translate technical results into actions. This leadership component is as important as the technical component to maximize results of a USAID program in renewable energy planning and grid integration. While the GOM will ultimately lead implementation efforts and decision making, the GOM has expressed a need for a third party coordinator that can take a leadership role in engaging diverse government agencies and stakeholders. USAID activities, under the guidance of SENER, would likely include coordinating education and outreach, convening stakeholders, seeking in-kind or funding contributions, and shepherding implementation.

39 Parson, Brian et al., “Renewable Electricity Grid Integration Roadmap for Mexico: Supplement to the IEA Expert Group Report on Recommended Practices for Wind Integration” (National Renewable Energy Lab, December 2014).

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Convening Stakeholders: Identifying the right Mexican stakeholders to participate • in a renewable energy and grid integration planning effort will be crucial. The SENER-led Consejo Consultivo para las Energías Renovables 40, or similar, can be the sort of group to carry forth grid integration studies. Targeting participants from institutions that can lend technical input or data and can also be involved in implementation of results, along with commitment from at least one Mexican organization, likely SENER, to carry studies forward, will ensure that they are modified over time to reflect changes in infrastructure, markets, generation mix, and demand. In addition, the stakeholders can provide input into design and scope of the study, funds, in-kind participation, and data. Coordinating and designing may be appropriate for a donor organization such as USAID, if it can provide the necessary leadership and technical expertise.

In addition, stakeholders may be more engaged and a grid integration study more impactful and better implemented, if the core group of stakeholders have all made commitments to the project’s success through funding or in-kind work. CENACE, SENER, and the Instituto de Investigaciones Eléctricas (IIE), for instance, might take a lead role in running models while the National Autonomous University of Mexico (UNAM) and the Danish donor organization supply solar and wind data. Some funding commitment from the government of Mexico would also likely contribute to greater success.

A full grid integration study: According to the International Energy Agency (IEA) Wind Integration Study report, uncertainty about variable renewable energy impact can limit development. Well-executed integration studies and implementation of results can curb uncertainty and lead to the most cost-effective pathway for reaching high penetration levels of variable renewable energy. 41 In Mexico, the EC-LEDS collaborated with the SENER-led Cosejo Consultivo para las Energías Renovables to develop a grid integration roadmap (Renewable Electricity Grid Integration Roadmap for Mexico). 42 40 The Consejo is a SENER-led group made up of other Mexican agencies and relevant non-governmental stakeholders including NGOs and non-profits. SENER coordinates analysis, research, and informational workshops that the group used to draft the Special Programs for RE and forthcoming policies, not only from the energy sector but also from other sectors represented at the Council.





41 “IEA Wind Expert Group Report on Recommended Practices 16. Wind Integration Studies” (International Energy Agency, September 12, 2013), https://www.ieawind.org/index_page_postings/100313/RP%2016%20Wind%20Integration%20Studies_Approved%

20091213.pdf.

42 Parson, Brian et al., “Renewable Electricity Grid Integration Roadmap for Mexico: Supplement to the IEA Expert Group Report on Recommended Practices for Wind Integration.” 17 The roadmap and the IEA Expert Group Report on Recommended Practices for Wind Integration Studies are excellent resources if USAID chooses to develop a program around grid integration and renewable energy planning. A brief summary of the elements of a full grid integration study is highlighted below and the checklists from the Renewable Electricity Grid Integration Roadmap for Mexico are included in Appendix III.

Define Scope and Objectives: Prior to starting the full study, planning the • execution of the study is an important step to take. Additionally, the creation of stakeholder teams ensures the project moves forward smoothly.

Input Data: The EC-LEDS program is collaborating with SENER and UNAM to • develop solar radiation time series data. This, along with the wind speed data the Danish are developing for Mexico, can be used as input data into a grid integration study. Robust wind input data are based on meso-scale modeling over at least one year with a geographic resolution of 2.5 km2 and a temporal resolution of 5-10 minute intervals, and include development of realistic wind forecasts. In addition, a grid integration program for Mexico would need to seek appropriate sources and collaborators for load data, transmission grid interconnection data, power plant data, and demand side management and storage data.

Portfolio Development and System Management: Involved renewable energy • planning stakeholders, including SENER, CFE, CENACE, and CRE, must define the parameters of a grid integration study for Mexico including a baseline, scenarios for variable renewable energy, conventional generation, demand response and storage, and institutional and market structures.

Capacity value: Capacity value refers to the contribution a generator makes to • meeting peak load. Capacity value of variable renewable energy depends on load profiles, generation mix, and outages. The capacity value of the system, including the identified future percent penetration of variable renewable energy, must be adequate to meet future peak demand. Before launching into further studies, it is important to understand if the proposed scenarios identified in the Portfolio Development Stage will meet peak demand. If not, the scenarios can be reworked before proceeding to other studies.

Production Costs and Flexibility Assessments: A grid integration study will seek • to model operational costs and system flexibility of different variable renewable energy penetration scenarios. System characteristics and responses can be demonstrated through modeling unit commitment and economic dispatch (UCED). 43 A study such as this requires significant labor to secure input data, run and validate the models, do the analysis, and ensure that the results are technically accurate.

43 “IEA Wind Expert Group Report on Recommended Practices 16. Wind Integration Studies.”

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Analyzing and Presenting Results: The complexity of power systems makes • caution important when interpreting and using the results. Results can be used for initial planning and operation decisions and over time, the studies can be adapted as needed based on real-life feedback.

If stakeholders in both U.S. and Mexican governments are prioritizing expansion of cross-border interconnection, the study could include a look at these interconnection possibilities.

As Mexico emerges from the electricity reform and pursues ambitious emissions reductions goals and plans for integrating more renewable energy, increasingly sophisticated and adaptable grid integration studies will be a foundational analytical tool for planning and implementation.

Forecasting: Forecasting is an important aspect of the renewable energy integration and planning effort. USAID could work with Mexico counterparts to determine a renewable

energy forecasting platform. This effort could include elements such as:

Help CENACE to determine what characteristics of forecasts will benefit system • operations and reliability the most. Forecasts can provide a wide range of types of information and can be tuned to different aspects of power generation planning and operational practices at various time scales.

Characterize forecast errors over larger versus smaller regions to show the value • of centralized forecasts.

Analyze the impact of forecast errors on reserve requirements.

• Facilitate decisions on how to integrate forecasting information into scheduling • and dispatch decisions (e.g., at what time frames).

Help identify pathways to best use and integrate forecasts into Market Design • and Grid Operation practices.

Identify and Pursue Intervention Pathways: As the effort of convening a leadership group for comprehensive grid integration study is underway, complementary and concurrent projects that will help maximize variable renewable energy penetration can

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Access demand response as a reserve and provide sufficient incentives for end users to participate in demand–side management programs.

Enable demand response to compete on par with supply-side alternatives in • utility resource planning and acquisition through mechanisms such as demandside bidding into electricity markets.

Incentivize more flexibility from current and future generating elements to help • support renewable energy integration and assess conventional generation characteristics that will help accommodate renewable energy integration.

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o Providing technical and regulatory guidance on maintaining reliability on distribution grid (technical parameters of solutions, regulatory frameworks) o Analyzing the impact of distributed PV on the high-voltage network o If impacting high-voltage network, advising what type of communications and controls might be necessary, including smart inverter technology Consider using pumped storage hydropower optimized to flexibility needs • instead of its traditional use as a peak/off-peak resource.

For more examples, see USAID’s Grid Integration Toolkit at http://greeningthegrid.org/.

Sustainability: Over the course of developing a renewable energy planning and grid integration study and convening the appropriate stakeholders, a pathway for sustainability can be identified. This will likely occur through institutional capacity building, Mexican counterpart ownership and involvement in the studies, and participation in international fora.

GHG Emissions: By leveraging new technologies and sustainable development best practices from around the world, Mexico has an opportunity to further mitigate GHG emissions and lead the global transformation to cleaner, more efficient energy systems. 45 Integrating clean energy 46 into centralized electrical power systems is of 44 “Greening the Grid,” June 24, 2015, greeningthegrid.org.

45 According to the Intergovernmental Panel on Climate Change (IPCC), in order to reach a concentration of atmospheric GHG emissions that avoids the worst impacts of climate change, the majority of global climate change emissions mitigation through 2100 relative to the baseline scenario will need to take place in developing countries (IPCC, 2014).

20 paramount importance to curbing global GHG emissions in developing countries.

Relative to deploying decentralized clean energy systems, enhancing the capability of large electricity grids to support high levels of renewable energy generation and demand response has the potential to enable significantly more long-term GHG mitigation in a way that meets future energy demand, while minimizing costs and other negative impacts.

2.1.1.2 Other Stakeholder Activity Grid planning and integration work in Mexico is a clear need and a very large undertaking. Therefore and appropriately there are many other groups working in this area. As mentioned previously, the Danish are involved in wind resource data collection. LICORE and LARCI are involved in smart grid and distributed generation.



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