Presentation on theme: "Development of CAISO / PacifiCorp Energy Imbalance Market Briefing on CAISO Straw Proposal & Benefit Study Presentation to WECC Market Interface Committee,"— Presentation transcript:
1 Development of CAISO / PacifiCorp Energy Imbalance Market Briefing on CAISO Straw Proposal & Benefit StudyPresentation to WECC Market Interface Committee, July 18, 2013Jim Price, Senior Advisor, Market Development & Analysis, CAISOAdditional info:
2 Presentation overview: PacifiCorp implementation and EIM stakeholder process are in progress (following study of benefits)20132014Implementation agreementFERCreviewImplementation workSystem testing market simulationBoard authorization 3/20/2013Filing 4/30/2013FERC acceptance 6/28/2013Process MergerGo live 10/1/2014tariff languageEIM stakeholder processFERCreviewExpand on principles in the MOUEstablish the project description and scheduleDescription based on EIM straw proposalSchedule identifies project tasksBoard authorization 11/8/2013FilingFERC acceptanceStakeholder meetings:4/11/2013 – Folsom6/6/2013 – Folsom7/9/2013 – Phoenix8/20/2013 – Portland9/30/2013 – Folsom
3 March 2012, CAISO proposed a scalable approach for implementing Energy Imbalance Market (EIM) No critical mass required – each participant can enter EIM when readyPreserves participants’ autonomy and current practicesBalancing authorities balance and provide their own ancillary servicesBalancing authorities can trade bilaterallyParticipants retain all physical scheduling rightsFlexible modes of participation are availableBAA 1BAA 2BAA 3Confidential - Attorney Work Product - Prepared in Anticipation of Litigation
4 CAISO proposed a scalable approach for implementing Energy Imbalance Market (EIM) network modelingtransmission monitoringBAAsbidding/self-schedulingintra-hour dispatchsettlements
5 Benefits of Energy Imbalance Market Leverages existing CAISO marketEnhances reliability through improved situational awareness in CAISO and EIM footprintCaptures the benefits of geographical diversity of load and resourcesPotentially reduces reserve requirementsProvides easy entry/exit for EIM participation
6 Energy Imbalance Market definitions EIM Entity is a balancing authority that enters into the pro forma EIM Entity Agreement to enable the EIM to occur in its balancing authority area (BAA). By enabling the EIM, real-time load and generation imbalances within its BAA will be settled through the EIM.EIM Participating Resource is a resource located within the EIM Entity BAA that is eligible and elects to participate in the EIM.In the 5-minute market, eligible resources may include Generating Units, Physical Scheduling Plants, Participating Loads, Proxy Demand Resources, Non-Generator Resources and Dynamic Schedules.In the 15-minute market, imports and exports that can be scheduled on a 15-minute basis are also eligible to participate.
8 Real-time market processes Hour Ahead ProcessCAISO accept block intertie transactions15-Minute Market: Real-Time Unit Commitment (RTUC)CAISO unit commitment, incremental AS, energy schedulesEIM energy schedule changes from base schedule5-Minute: Real-Time Dispatch (RTD)Energy dispatch within CAISO and EIM footprint
9 Market input data As needed Prior to operating hour (T-75 minutes) Resource operational characteristicsNetwork model topologyStatic contingencies observedPrior to operating hour (T-75 minutes)Economic bids and hourly base schedulesOngoingTransmission and generation outages15-minute base schedulesLoad and VER forecastsDynamic contingency listActual ETC/ATC scheduling limits and ETC uses
10 Hourly process for real-time market T-75: Real-Time Bid Submission DeadlineT-45: Results from Hourly Process to Accept Block Schedules PublishedT-20: Intertie Hourly Transmission Profile andEnergy Schedule for Market 1 E-Tag DeadlineTT = Start of the HourT-37.5: Start of Market 1 OptimizationNo hourly financially binding schedules in real-time
11 15-Minute market timeline under FERC Order 764 Financially BindingMarket 2T-5: Market 2 Energy Schedule E-Tag DeadlineT-22.5: Self Schedule Changes for Market 2T-7.5: Market 2 Energy Schedule AwardsTT-22.5: Market 2 Optimization Starts37.5 Minutes20 MinutesT = Start of the HourHonor intra-hour 20 minute e-Tag submission to avoid seams issues
12 RTD Market Timeline under FERC Order 764 Financially BindingMarket 1Market 2T+15RTD 4RTD 2RTD 6T+7.5: RTD 4 Optimization StartsT+12.5: RTD 4 Dispatch, RTD 5 Optimization BeginsRTD 3RTD 5T = Start of the Hour7.5 MinNo changes to RTD 5-minute dispatchRTD provides operational instruction to all generation and demand response resources
13 Establishment of Load Aggregation Points (LAP) EIM Entity defines the LAPs within its BAAFor example, internal to the CAISO LAPs are defined by utility service territoriesThe number of LAPs must be weighed against the availability of multiple granular load forecastsCAISO will determine Load Distribution Factors (LDFs) using its state estimatorCAISO uses LDFs to distribute LAP forecast to individual nodes within the network modelCAISO publishes LDFs used in the day-ahead market process three days after the trade date
14 Load forecasting Load forecast by LAP should: Be the net of “behind the meter” generationInclude lossesTwo options for load forecast for establishing base schedule:Use ISO forecastUse EIM Participant forecast, but subject to under-scheduling charges when errors exceed 4% threshold
15 Base schedule should be balanced prior to start of real-time market Load forecast from prior slideResource plans: base schedulesSelf-scheduled resourcesIntertie schedulesBase generation schedulesResource plans also include:Ancillary services reservations protected from dispatchOperational characteristics (e.g., ramp rate)Economic Bids=Base schedule must be balanced or they will be adjusted prior to start of EIM.
16 Market optimization uses the economic bids submitted at T-75 minutes CAISO will provide advisory feedback on schedules up to the binding 15-minute market, so base schedules can be developed without congestion15-minute process builds on FERC Order No. 764Multi-interval Security Constrained Unit Commitment, with 15-minute interval granularityImbalance energy = difference between base schedule and 15-minute schedule5-minute dispatch processMulti-interval Security Constrained Economic Dispatch, with 5-minute interval granularityImbalance energy = difference between 15-minute schedule and 5-minute dispatch
17 Congestion management CAISO will manage congestion in EIM by automatically activating constraints, before flows approach capacityThis allows the EIM dispatch to try and resolve the congestionAlerts the EIM Entity that they may be required to initiate UFMPOnce activated, constraint will be enforced to maintain flows below the limitEIM will coordinate with WECC’s Unscheduled Flow Mitigation Procedure (UFMP) and Enhanced Curtailment Calculator (ECC)If EIM Entity initiates UFMP, CAISO will reflect the affected schedules in EIM dispatch, and enforce constraint limits as requested by RC.
18 EIM Entity identifies resource constraints to address reliability issues which cannot be modeled CAISO will not issue exceptional dispatch instructions to EIM Entity resourcesCAISO’s dispatch will reflect reliability constraint within EIM area until the base schedule can be updatedAny resource constraint for reliability will be settled at the EIM LMP
19 Publication of schedules 15-minute base schedules and energy schedules will be published to SCs through CAISO Market Results Interface (CMRI)5-minute dispatch instructions will be communicated to the EIM Entity and the SCsNet scheduled interchange will change every five minutes through the Dynamic Schedule to ensure AGC control accuracy for the CAISO and EIM Entity
20 Publication of prices and other information Locational marginal prices for 15-minute market and RTD will be published on OASIS for all nodes and LAPs.Binding transmission constraints and shadow prices will be published on OASISLMP marginal cost of congestion component reflects congestion contribution from binding network constraintsAdditional market data that requires an NDA is published on CMRI
21 Ancillary service requirements EIM Entity remains responsible for meeting ancillary services requirements per NERC and WECC, dispatching contingency reserves, and managing load reductionsReserve sharing schedulesEIM Entity is responsible for their share of DCS complianceEIM Entity deploys operating reserves and regulation in conformance with NERC, WECC, and reserve sharing group policiesIf reserves are dispatched, they will be subject to EIM imbalance settlement until reflected in the base scheduleCapacity to meet reserve sharing obligations is included in the resource plans used for base schedules. The capacity is protected for dispatch through EIM.
22 EIM settlementInstructed imbalance energy settled in two tiers at the relevant LMP:15-minute instructed imbalance energy5-minute instructed imbalance energyUninstructed imbalance energy treatment based upon meter granularityGeneration, participating load, and dynamic resources that are metered in 5-minute intervals settle at relevant interval LMPNon-participating load settles at the volumetric hourly weighted average LMP for the LAP based upon the difference between the load forecast and the actual useAllocation of uplift costs will track costs within EIM Entities and minimize comingled charges to the extent possible.
23 EIM accounting Unaccounted-for energy Inadvertent energy Net energy delivered into UDC adjusted for service lossesEIM Entities need to define UFE service areas within footprintInadvertent energyCAISO will maintain a dynamic schedule to track energy between EIM Entities and CAISOThe hourly energy will be updated on the e-Tag within 60 minutes of the end of the operating hourEIM Entity responsible for tracking and administering payment for inadvertent energy via WECC processSettlement metering is required for generators. Options:CAISO Metered EntityScheduling Coordinator Metered Entity
24 EIM administration Administrative Costs Forecasting Services Administrative rate if $0.19 per MWh volume as calculated by:Generation = max (5% of gross generation, generation imbalance energy), plusLoad = max (5% gross load, load imbalance energy)Startup costs equal $0.03 times an EIM Entity’s total annual energy usageForecasting ServicesCAISO load forecast is included in Administrative RateVER forecasting available for $0.10 per MWhDispute resolution is through Customer Inquiry, Dispute and Information (CIDI)Market monitoring provided by CAISO
25 Transmission ServiceSince initial transfer capability between CAISO and PacifiCorp will be limited and as-available, initial design proposes no charge for transmission for EIM dispatchEIM stakeholder process will continue discussion of transmission rate design for EIM transfers
26 CAISO is committed to ensuring EIM design will properly account for GHG costs Entities that import energy to California have obligation to surrender compliance instruments to CARBThe net incremental transfer to CAISO from EIM will be tracked through e-Tag for dynamic schedulesThe market optimization will consider GHG costs
27 Other design itemsParallel stakeholder initiative will address governance, with white paper published by August 13 for discussion starting at August 20 stakeholder meeting in PortlandProcess for new EIM Entities:Interested parties are encouraged to engage as early as possibleFuture implementations may occur on an annual commitment cycle with month lead time, reflecting significant network modeling changes and alignment with CAISO’s spring and fall software release cycleImplementation agreement filed with FERC will establish specific schedule and start-up payment ($0.03/MWh of annual energy)
29 E3 quantified 4 benefits of PacifiCorp-CAISO EIM Interregional dispatch savings, by realizing the efficiency of combined 5-minute dispatch, which would reduce “transactional friction” (e.g., transmission charges) and alleviate structural impediments currently preventing trade between the two systems;Intraregional dispatch savings, by enabling PacifiCorp generators to be dispatched more efficiently through the ISO’s automated system (nodal dispatch software), including benefits from more efficient transmission utilization;Reduced flexibility reserves, by aggregating the two systems’ load, wind, and solar variability and forecast errors; andReduced renewable energy curtailment, by allowing BAs to export or reduce imports of renewable generation when it would otherwise need to be curtailed. (GridView simulations first estimated economic imports to CAISO using projected solar, wind, & load profiles, then fixed the imports as a minimum and observed renewable curtailments using actual profiles.)
30 Interregional Dispatch and Flexibility Reserve Benefits: modeling approach used production simulation
31 * Intraregional Dispatch Savings PacifiCorp 2017 savings = CAISO 2009 savings1 *PAC 2017 peak loadCAISO 2009 peak loadorPacifiCorp 2017 savings =$105 MM*10,079 MW=$23 MMyr45,486 MWRefer to Frank A. Wolak, 2011, “Measuring the Benefits of Greater Spatial Granularity in Short-Term Pricing in Wholesale
32 A range of assumptions were considered with focus on making low end conservative Low and high range assumptions under low (100 MW), medium (400MW), and high (800MW) transfer cababilityAssumptionLow transfer capabilityMedium transfer capabilityHigh transfer capabilityLow RangeHigh RangeMaximum hydropower contribution to contingency and flexibility reserves*25%12%Share of intraregional dispatch savings achieved10%100%Share of identified renewable energy curtailment avoided*Percent of nameplate capacity for each project
33 Significant benefits observed using range of assumptions Low and high range annual benefits (Million 2012$)under low (100 MW), medium (400MW), and high (800MW) transfer capabilityBenefit CategoryLow transfer capabilityMedium transfer capabilityHigh transfer capabilityLow RangeHigh RangeInterregional dispatch$ 14.1$$$$$Intraregional dispatch$$$Flexibility reserves$$$$$Renewable curtailment$$$Total benefits$ 21.4$$$ 102.8$$ 128.7
34 Low and high range annual benefits (million 2012$) Conclusions:Significant benefits for PacifiCorp and ISO exist under an EIM, based on conservative assumptions.Higher range of potential benefits exist depending on transfer capability and operational conditions.Low and high range annual benefits (million 2012$)
35 Attribution of EIM benefits to PacifiCorp in 2017 Low and high range benefits attributed to PacifCorp (Million 2012$)under low (100 MW), medium (400MW), and high (800MW) transfer capabilityBenefit CategoryLow transfer capabilityMedium transfer capabilityHigh transfer capabilityLow RangeHigh RangeInterregional dispatch$$$$Intraregional dispatch$$Flexibility reserves$$$$$$Renewable curtailment$Total benefits$$$$$$Note: Attributed values may not match totals due to independent rounding.
36 Attribution of EIM benefits to CAISO in 2017 Low and high range benefits attributed to CAISO (Million 2012$)under low (100 MW), medium (400MW), and high (800MW) transfer capabilityBenefit CategoryLow transfer capabilityMedium transfer capabilityHigh transfer capabilityLow RangeHigh RangeInterregional dispatch$$$$Intraregional dispatch$Flexibility reserves$$$$$$Renewable curtailment$$Total benefits$$$$$$Note: Attributed values may not match totals due to independent rounding.
37 Interregional dispatch savings assumptions Benefit CategoryAssumptions (conservative, moderate, aggressive)RationaleInterregional dispatchConservative- ModerateE3 limited PacifiCorp-ISO transmission transfer capability in the low transfer capability scenario to 100 MW, which limited EIM benefitsE3 used hurdle rates to inhibit interregional trade in Benchmark Case (moderate assumption)Hourly cost differences between natural gas-fired generators are understated in production simulation models due to the use of uniform heat rates assumptions and normalized system conditions; these models understated EIM benefits
38 Intraregional and intra-hour assumptions Benefit CategoryAssumptions (conservative, moderate, aggressive)RationaleWithin hour dispatchConservativeProduction simulation analysis modeled at hourly level, omitting potential benefits of sub-hourly dispatch (other studies indicate that these benefits could be substantial)Intraregional dispatchConservative-ModerateE3 calculated nodal dispatch savings by scaling estimated ISO peak load-normalized savings by PacifiCorp peak load (moderate assumption); E3 assumed only 10% of these savings materialize for low range (conservative assumption)
39 Flexibility reserve assumptions Benefit CategoryAssumptions (conservative, moderate, aggressive)RationaleFlexibility reservesConservativeE3 limited PacifiCorp-ISO transmission transfer capability in the low transfer capability scenario to 100 MW, which limited EIM benefitsE3 included operating cost only; no capacity cost savings are included, which limited EIM benefitsE3 allowed 25% of total hydropower capacity to contribute to flexibility reserves in the low range estimates, which limited EIM benefitsE3 did not require lock-down of dispatch 45 minutes prior to the operating hour, as done in other studies, which would have raised the quantity of reserves required and increased EIM benefits
40 Renewable curtailment assumptions Benefit CategoryAssumptions (conservative, moderate, aggressive)RationaleRenewable curtailmentConservativeE3 did not evaluate renewable curtailment for PacifiCorp. Which limited EIM benefitsIn low range estimate, e# assumed wind and solar not producing significant over- generation (conservative assumption)Production simulation models understate the frequency with which low net load/high generation events occur due to their use of idealized operating assumptions; these models limit EIM benefits
41 Hurdle rates between PacifiCorp-ISO to reflect removal of impediments to trade under EIM *No CO2-related hurdle rate is applied to ISO exports to PACW because CO2 permit cost under AB32 isdirectly modeled in the dispatch for generators located inside California.
42 Gas prices based on prices used in long term procurement proceeding (in 2012$/MMBtu)Area2017PACE_ID$3.99PACE_UT$3.81PACE_WY$3.95PACW$3.91PG&E_BAY$4.09PG&E_VLYSCE$4.18SDG&E$3.96
44 Flexibility reserve assumptions 10-minute flexibility reserves by transfer scenario, Standalone & EIM CasesPacifiCorp-CAISO TransferMinimum Reserve Holdings (MW)Standalone (no EIM)2,011100 MW, with EIM1,932400 MW, with EIM1,687800 MW, with EIM1,58310-minute flexibility reserve detail for 2017, Standalone Case (no EIM)AreaAverage Regulation Up (MW)Average Load Follwing Up (MW)PacifiCorp East103313PacifiCorp West45146PacifiCorp Combined115357CAISO2761,128
45 120 GWh curtailment potential based on comparison of two simulation runs: First run (representing unit commitment based on forecasted needs), projected solar, wind, and load profiles were used to estimate economic imports into ISO.Second run (representing real-time dispatch), actual solar, wind, and load profiles were used along with minimum import limits set to the level of economic imports from the first simulation.Curtailment occurred in second run represents conservative estimate of renewable curtailment.
46 $90/MWh avoided cost of curtailment based on: Renewable energy certificate (REC) value, assumed to be $50/MWh;Production tax credit (PTC) value of $20/MWh; andAvoided production cost of the thermal unit that an EIM enables to dispatch down, estimated to be $20/MWh.