1

ECONOMIC EVALUATION OF ENERGY PRODUCTION SYSTEMS WITH

HIGH WIND POWER PENETRATION; APPLICATION TO THE GREEK
NATIONAL INTERCONNECTED SYSTEM

I. Skotinos, A. Dimeas, A.G. Tsikalakis, N.D. Hatziargyriou

NATIONAL TECHNICAL UNIVERSITY OF ATHENS

SCHOOL OF ELECTRICAL & COMPUTER ENGINEERING
ELECTRIC POWER DIVISION
9, Iroon Polytechneiou Str., GR-15773 Zografou, Athens, GREECE
Tel.: +302107723696, Fax: + 30210772356

Abstract

The scope of this paper is the economical evaluation of the performance of the Greek Interconnected system with
high wind power penetration. Typical operating days have been examined, with actual power demand data, for two levels
of spinning reserve, at different percentages of wind penetration (0% to 15% of the maximum load demand and the total
energy demand of each day). The operation of the system for various levels of wind power penetration is studied based on
the unit commitment routines developed within the MORE CARE software. The profit evaluation and the comparison
between the examined scenarios are based on the avoided fuel costs derived from the assumed use of wind power. In all
cases the economic results are thoroughly presented.

Keywords

Economic evaluation, interconnected system, unit commitment, wind power penetration

I. INTRODUCTION

During the biggest part of the 20th century, energy has been produced globally by conventional power stations using
mostly lignite and oil. After 1973, year of the first global oil crisis, and after the Rio conference and the voting of the
Kyoto Protocol there has been significant effort towards the use of Renewable Energy Sources (RES). The European
Union Commission has published a draft directive in 2001 on “A framework for greenhouse gas emissions trading within
the European Community”. It is proposed that 38% of the CO2 emission in EU should be included in the quota system by
2010, with a penalty of 50 €/tn of CO2 exceeding the quota [1]. Greece, as a member of the European Community is
obliged to comply with this quota by reducing its CO2 emissions.
The electric power generation is one of the most important sources of CO2, SOx and NOx emissions. The use of
Renewable Energy Sources (RES) by Wind Parks and Photovoltaic stations and the wide penetration of Distributed
Generation coordinated in Microgrids in the future can therefore reduce the hazardous emissions and restrain the
Greenhouse effect. The use of RES has been promoted in Greece by a legal framework (laws 2244/94, 2773/99) providing
significant stimulus to the private sector to invest in RES. According to this framework, the private Sector can build RES
units and sell the produced energy to the local grid at a fixed price-the feed-in tariff structure. In island networks, the
Greek Utility, Public Power Corporation (PPC) is obliged to buy all wind power produced at a fixed price of 90% of the
retail price of the kWh (7.97 €ct/kWh). In the Greek mainland this price is set at 6.45 €ct/KWh [2]. In order to increase
the development of RES there have been calls for tender for two measures within the 3rd Community Operational
Framework Programme "Competitiveness” [3].

1
I. Skotinos is with the School of Electrical and Computer Engineering, National Technical University of Athens, Athens, Greece
(e-mail: irskot@power.ece.ntua.gr)
2
A. Dimeas is with the School of Electrical and Computer Engineering, National Technical University of Athens, Athens, Greece
(e-mail: adimeas@power.ece.ntua.gr)
3
A. G. Tsikalakis is with the School of Electrical and Computer Engineering, National Technical University of Athens, Athens, Greece
(e-mail: atsikal@power.ece.ntua.gr)
4
N. D. Hatziargyriou is with the School of Electrical and Computer Engineering, National Technical University of Athens, Athens, Greece
(e-mail: nh@power.ece.ntua.gr)
 2

The key question concerns the economic performance of a system operating with high RES penetration versus its
operation without RES. Another important aspect relates to the size of the grid (i.e. small island grids, large
interconnected systems) and therefore how the type of generation units in the grid affects the economic operation of the
system. Studies performed for the Greek islands, where conventional units are expensive (oil and gas units), have shown
that the use of Wind Parks is always profitable [7, 12, 13, 14]. This paper provides results of analysis of the operation of
the Greek mainland interconnected System with high wind power penetration. It should be noted, that such a development
is quite realistic, since on the islands of the Aegean Sea, in Thrace, Evia and the eastern parts of the mainland there exists
high Wind Potential with an average wind velocity over 8 m/sec [4]. Typical operating days have been examined, with
actual power demand data, for two levels of spinning reserve (10% and 15%), at different percentages of wind penetration
(0% to 15% of the maximum load demand, up to 1200 MW, and the total energy demand of each day, up to 24050 MWh).

II. THE GREEK NATIONAL INTERCONNECTED SYSTEM

The Greek National Interconnected System consists mainly of Power Stations owned by the Public Power
Corporation (PPC) at a percentage of 97% of the total installed power [5]. The rest 3% is owned by the Private Sector,
mostly in Wind Parks. The following table (Table 1) summarizes the type of units and the total installed power capacity of
each type in the Greek mainland (Greek National Interconnected System).

Total Installed Capacity per type Percentage

Type of Unit
(MW) (%)
Lignite 5229.00 48.35
Combined Cycle 1057.00 9.77
Natural gas 360.00 3.33
Oil 777.00 7.18
Hydroelectric 3098.00 28.64
Wind Parks 255.30 2.36
Small & Mini Hydroelectric 39.04 0.36
Photovoltaic 0.06 < than 0.01
Total 10815.40 100
Table 1: Type of Units and Installed Capacity per type of unit in the Greek National Interconnected System

From the above table we conclude that excluding large hydro stations, the total installed operational RES in Greece
are currently only a small percentage (less than 3%) of the total installed power, despite the 2010 target of 20.1% RES
penetration [1]. The following table (Table 2) summarizes the operational, positively qualified and under construction
RES installations in the entire Greece (not only the Greek Interconnected System) approved by the Greek Regulator
Authority for Energy (RAE) [2].

RES type In operation Under construction New project Total

(MW) (MW) (MW) (MW)
Wind 417 139 3120 3676
Small hydro 61 53 293 407
Biomass 21 5 80 106
PV 3 - - 3
TOTAL 502 197 3493 4192
Table 2: Operational, positively qualified and under construction RES installations in Greece

Two main difficulties exist in the increase of RES share in Greece. The first one is the weak transmission system in
the high wind potential regions. This problem is even larger in the autonomous island power systems where there are
difficulties in the co-operation of the power stations with the wind Turbines and dynamic security issues lead to upper
limits in the installed capacity of RES [7]. The second difficulty is the complex process for obtaining installation and
operation license since many public institutions have to approve the installation site.

III. FORMULATION OF THE UNIT COMMITMENT PROBLEM IN THE GREEK NATIONAL

INTERCONNECTED SYSTEM

For modeling the unit commitment problem, a software code has been developed in Visual Basic 6 using the
Incremental Fuel Cost based priority list [8, 9]. This is a modification of the main algorithm used in the MORE CARE
application software [10, 11]. Each unit is placed on a list according to its incremental fuel cost from the cheapest to the
most expensive. The main idea of the algorithm is that for each time step, the cheapest units are committed until the
corresponding power demand and spinning reserve level is met. In our formulation, other characteristics have been taken
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care of, such as the generation limits of each unit, special treatment for pumping storage hydroelectric units, wind forecast
curves for the wind parks, special treatment for base units (i.e. lignite thermal stations), start-up costs and start-up time for
each unit etc.
Each unit’s fuel consumption function is given by the following equation (1), satisfying the constraints of equation
(2).
Fi = A + B ⋅ Pi (1)
Pi min ≤ P i ≤ Pi max (2)
Fi is the fuel cost of each unit measured in kg/h, Pi is the production of the unit in MW and A, B are measured in
kg/MWh and kg/MW2h, respectively. If λi is the fuel cost in €/kg, for each unit, then we can determine the fuel cost
function Ci (€/h) for each unit from (3). The fuel cost used for each type of unit is presented in Table 3.
C = ( A + B ⋅ P ) ⋅ λ (3)
i i ι
Type of Unit Lignite Oil Natural Gas
Fuel Cost 0.02€/kg 0.204€/kg 0.18 €/m3
Table 3: Fuel cost for each type of unit in the Greek National Interconnected System

The RES Energy used in our study case is assumed to come exclusively from Wind Parks owned by the Private
Sector. The cost c of each kWh is assumed equal to the compensation of the Wind Park owners (0.06449 €/kWh).
Therefore, the calculation of the cost of the Wind energy CWP (€) is based on (4), where EWP is the total energy (kWh)
bought from the Private Sector for each day examined.
CWP = EWP ⋅ c (4)
The hydroelectric units cost was set to zero during our analysis, since according to the methodology used the solution
of the unit commitment problem is based on the incremental fuel cost and not any other operative costs. The unit
commitment of hydroelectric units has considered their water storage. The main idea of the algorithm developed is shown
briefly on the following flow chart (Figure 1).

start
Read input data Priority list algorithm

Create reserve table

Create cost table Reserves handling Print Data

Create availability table

Base unit handling Store data
end

YES NO
Other hours
available?

Figure 1: Flow chart of the program developed to solve the unit commitment problem in the Greek Mainland

IV. THE SCENARIOS SIMULATED

Two typical days of the Greek Interconnected System with actual demand, for two levels of spinning reserve (10%
and 15%), at different percentages of wind penetration (0% to 15% of the maximum load demand and 0% to 15% of the
total energy demand of each day) have been examined. The characteristics for each day (Energy and Load demand) are
shown in Table 4.

Date Energy Demand (MWh) Maximum Load (MW) Minimum Load (MW)
January 19th 2003 121828.5 6129 3797.1
July 18th 2003 160317.9 8007.3 5054.5
Table 4: Energy and Load demand data for each day examined

For each scenario the following have been calculated:

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• The unit commitment schedule of the conventional units of the Greek Interconnected System without Wind
Power generation
• The average usage of each type of conventional unit, according to equation 5, where U j is the average usage of
each unit type, Pi , j is the power generation of the i-th unit at the j-th step.
24

∑P i, j
Uj = 1
(5)
24
• The average usage of each type of conventional unit to meet the spinning reserve R j , according to equation 6,
where Ri , j is the amount of generation to meet the spinning reserve demand of the i-th unit at the j-th step.
24

∑R i, j
Rj = 1
(6)
24
• The total operational cost of the Greek Interconnected System of the day examined for the conventional energy
production units.

Two cases for the Wind Park power have been considered. In the first case, it is assumed that Wind power generation
has been a constant percentage of the maximum demand of each day. In the second case, Wind power generation varies
during the day according to actual wind data, so that the penetration level is a percentage of the total Energy demand of
each day. The first case is based on the fact that the Greek mainland Wind Park sites are situated in different areas of the
country as it can be seen is Figures 2, 3 & 4 [2], so the total Wind Park power generation can be assumed constant. The
second scenario is more realistic, since a small random variation in Wind Park Generation is expected.

Figures 2, 3 & 4: Wind potential in Evia, Thrace and Peloponnese

V. SIMULATION RESULTS

For each day simulated and for every Wind Park power generation scenario the average usage of each type of unit in
order to meet the corresponding demand and spinning reserves is firstly calculated. The simulation results are presented in
Table 5 (January 19th 2003) and Table 6 (July 18th 2003). From these results it can be noted that the spinning reserve units
are mostly gas, combined cycle units and hydroelectric units, since these are units characterized by quick response rate.
Lignite units are used mostly to meet the demand of each day, together with hydro, gas and combined cycle units. Oil
units have not been used in the first day examined, since they are too expensive and the demand was relatively low. In the
second day examined, oil units were used since demand was high for several hours and the system needed more
generation.
As the Wind penetration increases, lignite and hydroelectric units reduce their power generation, as the generation of
gas and combined cycle units remains almost constant. This is due to the policy followed, aiming to ensure the usage of a
certain amount of natural gas for the energy production branch, which was suitably modeled in the unit commitment
algorithm.
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Energy Average Usage of conventional system units

Reserve produced from Combined
Lignite Gas Oil Hydroelectric
Scenario level conventional cycle
(%) power units
(GWh) Uj Rj Uj Rj Uj Rj Uj Rj Uj Rj
10 121.828 2881 44 206 124 0 0 441 559 1548 325
0% penetration
15 121.828 3068 48 196 134 0 0 424 576 1389 567

5% penetration on max 10 114.474 2707 37 206 124 0 0 448 552 1410 304
Power 15 114.474 2897 42 201 129 0 0 433 567 1239 495

10% penetration on 10 107.119 2621 64 212 118 0 0 439 561 1191 254
max Power 15 107.119 2754 85 198 132 0 0 426 574 1085 425

15% penetration on 10 99.764 2414 65 216 114 0 0 446 554 1080 250
max Power 15 99.764 2581 94 202 128 0 0 439 561 936 369

5% penetration on total 10 115.737 2747 32 205 125 0 0 437 563 1434 316
Energy 15 115.737 2892 41 196 134 0 0 425 575 1310 528

10% penetration on 10 109.645 2612 24 210 120 0 0 439 561 1308 298
total Energy 15 109.645 2785 27 196 134 0 0 432 568 1156 487

15% penetration on 10 103.554 2606 67 214 116 0 0 449 551 1046 254
total Energy 15 103.554 2652 105 196 134 0 0 427 573 1040 383
Table 5: Average usage of the conventional system units in the Greek National Interconnected System (January 19th 2003)

Energy Average Usage of conventional system units

Reserve produced by Combined
Scenario level conventional Lignite Gas Oil Hydroelectric
cycle
(%) power units
(GWh) Uj Rj Uj Rj Uj Rj Uj Rj Uj Rj
10 160.318 4155 38 200 130 164 55 498 502 1662 250
0% penetration
15 160.318 4231 83 190 140 199 93 486 514 1574 423

5% penetration on max 10 150.709 4015 26 196 134 69 39 472 528 1527 358
Power 15 150.709 4148 40 196 134 124 79 485 515 1326 559

10% penetration on 10 141.100 3686 32 200 130 15 8 454 546 1524 362
max Power 15 141.100 3869 34 196 134 50 30 465 535 1299 586

15% penetration on 10 131.492 3596 61 206 124 0 0 435 565 1241 349
max Power 15 131.492 3824 78 201 129 8 4 437 563 1009 565

5% penetration on total 10 152.302 4030 18 196 134 80 43 477 523 1562 323
Energy 15 152.302 4172 43 196 134 127 81 487 513 1364 508

10% penetration on 10 144.286, 3891 21 203 127 30 16 466 534 1422 371
total Energy 15 144.286 4036 26 196 134 73 46 467 533 1240 592

15% penetration on 10 136.270 3732 58 202 128 0 0 445 555 1299 370
total Energy 15 136.270 3900 47 202 128 26 14 448 552 1102 588
Table 6: Average usage of the conventional system units in the Greek National Interconnected System (July 18th 2003)

For each day examined, the total energy production cost of the system supplied by the conventional units and the
profit resulting from the use of Wind Parks (in € and %) compared to the energy production cost using exclusively
conventional units have been calculated. In addition, the cost of the energy production of the Wind Parks, in case they
were compensated with current tariffs (6.45 €ct/KWh) have been estimated. Tables 7 and 8 summarize the economical
results of the operation of the Greek National Interconnected System for the two days examined. Columns 6 and 7 in each
table show the expected profit by the use of Wind Parks due to avoided fuel costs in € and as a percentage of the initial
 6

energy production cost assuming no wind power penetration. Columns 9 and 10 show respectively the total system
production cost including the Wind Parks cost and the difference of the system production cost between the conventional
units production cost and the total production cost including the Wind Parks cost. The negative value indicates financial
loss and the positive value indicates profit.

Penetration Conventional WP Energy Total cost Cost

Reserves Profit Profit WP cost
Scenario Level units cost production (with WP) variation
(%) (€) (%) (€)
(%) (€) (MWh) (€) (€)
0 10 5,526,238 0 0 0 0 5,526,238 0
Penetration on max

5 10 5,320,707 7354.8 205,531 3.72 478,062 5,798,769 -272,531

10 10 5,223,912 14709.6 302,326 5.47 956,124 6,180,036 -653,798
Power

15 10 4,993,861 22064.4 532,377 9.63 1,434,186 6,428,047 -901,809

0 15 5,696,852 0 0 0 0 5,696,852 0
5 15 5,515,702 7354.8 181,150 3.18 478,062 5,993,764 -296,912
10 15 5,322,617 14709.6 374,235 6.57 956,124 6,278,741 -581,889
15 15 5,138,985 22064.4 557,867 9.79 1,434,186 6,573,171 -876,319
0 10 5,526,238 0 0 0 0 5,526,238 0
Penetration on total

5 10 5,347,529 6091.43 178,709 3.23 395,942 5,743,472 -217,234

10 10 5,224,630 12182.85 301,608 5.46 791,885 6,016,515 -490,277
Energy

15 10 5,201,989 18274.27 324,249 5.87 1,187,827 6,389,817 -863,579

0 15 5,696,852 0 0 0 0 5,696,852 0
5 15 5,479,180 6091.43 217,672 3.82 395,942 5,875,123 -178,271
10 15 5,359,100 12182.85 337,752 5.93 791,885 6,150,985 -454,133
15 15 5,191,782 18274.27 505,070 8.87 1,187,827 6,379,610 -682,758
Table 7: Economical results of the operation of the Greek National Interconnected System (January 19th 2003)

Penetration Conventional WP Energy Total cost Cost

Reserves Profit Profit WP cost
Scenario Level units cost production (with WP) variation
(%) (€) (%) (€)
(%) (€) (MWh) (€) (€)
0 10 7,932,544 0 0 0 0 7,932,544 0
Penetration on max

5 10 7,195,231 9608.76 737,313 9.29 624,569 7,819,800 112,744

10 10 6,591,976 19217.52 1,340,568 16.9 1,249,139 7,841,115 91,429
Power

15 10 6,411,522 28826.28 1,521,022 19.17 1,873,708 8,285,230 -352,686

0 15 8,445,509 0 0 0 0 8,445,509 0
5 15 7,754,959 9608.76 690,550 8.18 624,569 8,379,528 65,981
10 15 6,941,114 19217.52 1,504,395 17.81 1,249,139 8,190,253 255,256
15 15 6,711,022 28826.28 1,734,487 20.54 1,873,708 8,584,730 -139,221
0 10 7,932,544 0 0 0 0 7,932,544 0
Penetration on total

5 10 7,260,240 8015.89 672,304 8.48 521,033 7,781,273 151,271

10 10 6,927,665 16031.79 1,004,879 12.67 1,042,066 7,969,731 -37,187
Energy

15 10 6,888,680 24047.69 1,043,864 13.16 1,563,100 8,451,780 -519,236

0 15 8,445,509 0 0 0 0 8,445,509 0
5 15 7,799,923 8015.89 645,586 7.64 521,033 8,320,956 124,553
10 15 7,249,219 16031.79 1,196,290 14.16 1,042,066 8,291,285 154,224
15 15 6,781,421 24047.69 1,664,088 19.7 1,563,100 8,344,521 100,988
Table 8: Economical results of the operation of the Greek National Interconnected System (July 18th 2003)

As it can be seen from the above table, the use of Wind Parks can displace conventional power production and
reduce significantly the generation fuel cost. The fuel cost reduction is higher during days with high demand (where
expensive units like oil units are required) and in case of high spinning reserve. The financial profit in this case is
expected to be between 3% and 6% for low demand days with a penetration level between 5% and 15% for 10% spinning
reserve level. If the reserve level increases to 15% then the expected profit is between 4% and 9%. In case of high energy
demand with a penetration level between 5% and 15% for 10% spinning reserve, the expected profit is between 8% and
15%. If the reserve level increases to 15% then the expected profit is between 8% and 20%.
The energy production in the Greek Interconnected System is based on lignite units. These units have a very low fuel
production cost, about 30-40€/Mwh. In case the wind energy is compensated with the current tariffs, the energy cost for
Wind Energy is about 64.5€/MWh. It is expected and confirmed by our analysis that in this case, expensive units replace
less expensive units. As it can be seen from the above tables, days with low power demand (like the 19th of January) result
in financial losses. This happens because during these days the most expensive conventional units like oil units are not
used to meet the energy demand. On the other hand, in case of days with high power demand (like the 18th of August) the
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final balance can be positive since Wind Parks can replace more expensive units like oil units (production cost 70-
80€/MWh).
Examples of the unit commitment analysis are shown in the following figures (Figures 5 - 8). The lower part of the
curves represents production of the lignite units, the one above gas units, combined cycle units, hydroelectric units and
finally the purple curve in figures 7 and 8 correspond to the oil units.

Figures 5, 6: Generation distribution for the conventional production units of the Greek Interconnected System (January
19th 2003, 10% reserves, 0% and 5% Wind Power penetration)

Figures 7, 8: Generation distribution for the conventional production units of the Greek Interconnected System (August
18th 2003, 15% reserves, 0% and 10% Wind Power penetration)

VI. CONCLUSIONS

This paper provides results from the economic performance of the Greek Interconnected system obtained by
simulation. Typical operating days have been examined, with actual power demand data, two levels of spinning reserve,
different percentages of wind penetration (0% to 15% of the maximum load demand and the total energy demand of each
day). The operation of the system for various levels of wind power penetration is studied based on the modified unit
commitment routines developed within the MORE CARE software. The profit evaluation and the comparison between the
examined scenarios are based on the avoided fuel costs derived from the assumed use of wind parks. The results show an
expected profit between 3% and 20% assuming that the Wind Parks were owned by the public Utility and thus had no
cost. If the same energy is compensated by the current tariffs, then in cases of low demand losses and cases of high
demand smaller profits are expected.

REFERENCES

[1] M. Bechberger, D. Reiche, “Renewable energy policies in an enlarged European Union, RE in EU-28”, Refocus
Magazine, Issue September/October 2003
[2] Regulator Authority for Energy, data available on-line at http://www.rae.gr
[3] 3rd Operational program “Competitiveness”, data available on-line at http://www.antagonistikotita.gr
[4] Center of Renewable Energy Sources, data available on-line at http://www.cres.gr
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[5] Public Power Corporation, data available on-line at http://www.dei.gr

[6] European Renewable Energy Council, available on-line at http://www.erec-renewables.org/
[7] CRETE: An ideal Case Study for Increased Wind Power Penetration in Medium Sized Autonomous Power Systems.
John Stefanakis PPC. IEEE Winter Meeting 1999.
[8] Electric power system applications of optimization - James A. Momoh - Marcel Dekker, Inc. - 2001
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Kato - Electrical Engineering in Japan, Vol. 141, No. 3 - 2002
[10] “MORE CARE Overview”, N. Hatziargyriou, et al., Proc. of MedPower02, MED02/002 Athens, Nov 2002
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[13] “Crete system annual report” PPC, 2001
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“Security and Economic Impacts of High Wind Power Penetration in Island Systems”, 2004 Cigre Session, Paris ,
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