The Impact of Variable Market Price on Optimal Control of Wind-Hydro Storage System in Kenya

The Lake Turkana Wind Power Project (LTWP) in Northern Kenya is currently under development, scheduled to bring 300MW of wind generation online by the end of 2016. The economic issues raised by the structure of the Kenyan electricity market include a fixed feed-in tariff for the wind generators on the system, and a strict Power Purchase Agreement (PPA). This agreement appears to significantly constrain the ability of the Kenya Power Company to operate the power system in a reliable and efficient manner. This paper analyzes the impact of different price policies on the operation of the LTWP coupled with pumped hydro storage. In particular the modeling results compare the system behavior when operating under the fixed price regime versus dynamic pricing defined by use of locational marginal prices. In addition, benefits from allowing the Kenya Power Company to spill wind as needed, rather than a strict requirement to take all wind power generated are investigated. The results demonstrate that the inclusion of system-driven prices produce a significantly different operational strategy than the fixed price model. Results also show that the exclusion of dispatch flexibility in the form of wind curtailment results in increased price volatility, particularly during periods of high winds.