The challenge of integrating offshore wind power in the U.S. electric grid. Part II: Simulation of electricity market operations

The purpose of this two-part study is to analyze large penetrations of offshore wind power into a large electric grid, using the case of the grid operated by PJM Interconnection in the northeastern U.S. Part I of the study introduces the wind forecast error model and Part II, this paper, describes Smart-ISO, a simulator of PJM's planning process for generator scheduling, including day-ahead and intermediate-term commitments to energy generators and real-time economic dispatch. Results show that, except in summer, an unconstrained transmission grid can meet the load at five build-out levels spanning 7-70 GW of capacity, with the addition of at most 1-8 GW of reserves. In the summer, the combination of high load and variable winds is challenging. The simulated grid can handle up through build-out level 3 (36 GW of offshore wind capacity), with 8 GW of reserves and without any generation shortage. For comparison, when Smart-ISO is run with perfect forecasts, all five build-out levels, up to 70 GW of wind, can be integrated in all seasons with at most 3 GW of reserves. This reinforces the importance of accurate wind forecasts. At build-out level 3, energy from wind would satisfy between 11 and 20% of the demand for electricity and settlement prices could be reduced by up to 24%, though in the summer peak they could actually increase by up to 6%. CO2 emissions are reduced by 19-40%, SO2 emissions by 21-43%, and NOx emissions by 13-37%. This study finds that integrating up to 36 GW of offshore wind is feasible in the PJM grid with today's generation fleet and planning policies, with the addition of 8 GW of reserves. Above that, PJM would require additional investments in fast-ramping gas turbines, storage for smoothing fast-ramping events, and/or other strategies such as demand response.