Forecasting and Operations Austin Electricity Conference 2018 April 12, 2018 Ross Baldick, Department of Electrical and Computer Engineering, University of Texas at Austin

Outline Growth of renewables. How has this been achieved? Where do we go from here? The panelists: Beth Garza, Potomac Economics, Tim Aliff, MISO, Guillermo Bautista, CAISO, Sandip Sharma, ERCOT, Arne Olson, Energy and Environmental Economics, Inc.

Growth of renewables. In early 2000s, integrating even just a small amount of intermittent renewables was considered challenging. Today, most ISOs have a significant amount of renewable generation. Plans for more.

How has this been achieved? Infrastructure, Changes in market rules, Wider scale balancing, Dispatchability (down) of renewables, Changes in operations, Real-time data, Improved forecasting, Improving utilization of ancillary services, Increasing amounts of faster responding resources.

Where do we go from here? Operational challenges: Are their levels of renewable power or energy penetration that will necessitate qualitative changes in operations? How does timing of renewable production affect integration? Will curtailment increase inexorably? Role of storage? Role of dispatchable demand-side?

Where do we go from here? Forecasting challenges: Are there further reductions possible in forecast errors? More explicit representation of randomness in market, including stochastic unit commitment?

Beth Garza Director, Independent Market Monitor, ERCOT. Responsible for monitoring ERCOT market participant activity, evaluating wholesale market operations, and recommending improvements to the wholesale market design.

Tim Aliff Director, System Wide Operations, MISO. Oversees control room operations including dispatch, commitment, balancing, scheduling, and compliance.

Guillermo Bautista Director, Market Analysis and Forecasting, CAISO. Oversees market quality analysis, market performance and reporting, price validation, calculation of reference bids, and short-term forecasting.

Sandip Sharma Manager, Operations Planning Group, ERCOT. Roles in renewable integration, frequency response, ancillary services, and operational readiness.

Arne Olson Senior Partner, Energy and Environmental Economics (E3). Leads E3’s Resource Planning and Asset Valuation practice areas and helps utilities, developers, government agencies, and environmental organizations to understand and cope with the impacts of clean energy policy.

Wind Integration in ERCOT Beth Garza Director, ERCOT IMM bgarza@potomaceconomics.com 512-225-7077 Austin Electricity Conference April 12, 2018

Thoughts on ERCOT’s Wind Generation Experience More wind, more wind, more wind Better reliability metrics Reduced Ancillary Services Requirements

ERCOT Annual Energy by Fuel Type

2017 Unit Specific Wind Generation Capacity Factor

Wind Output and Estimated Curtailment

Improved Reliability Metrics

Declining Requirements for Ancillary Services

Forecasting and Operations CAISO Case Guillermo Bautista, Ph.D. Director, Market Analysis & Forecasting Austin Electricity Conference Texas, April 2018

California ISO Nonprofit public benefit corporation Part of Western Electricity Coordinating Council 65,225 MW of power plant capacity 50,270 MW record peak demand (July 24, 2006) 26,014 circuit-miles of transmission lines Energy Imbalance Market: Facilitates integration of renewables 2030 State Policy Goals -50% of load served by renewables -Double energy efficiency existing buildings -Greenhouse gas reductions to 40% below 1990 levels

Percentage of load served by wind/solar, total RPS and non-carbon resources Daily 1-minute

Main operational challenge for integration of renewable is about ramps and flexibility We are four years ahead of the original estimate !

Increasing levels of renewable curtailments vary by season and hydro conditions 2017 Curtailment Percentage of Potential Production Solar: 2.8% Wind: 1.3% Energy Production

A portfolio of solutions for a plethora of challenges Flexible Resource Adequacy Flexible Ramp Product procured through markets Facilitate economical participation of renewables in the markets Regional diversity and coordination (EIM market) Requirements for regulation and operating reserves with renewables consideration Load and renewables forecasting improvements Ongoing exploration to day-ahead market changes (15-minute granularity and forecast uncertainty)

Forecasting Challenges Impacts on grid operations Impact of behind the meter Need to account for forecast uncertainty Forecast latency Need for probabilistic forecast

Renewable Integration and Adapting to the Changing Resource Mix in ERCOT Sandip Sharma ERCOT Manager, Operations Planning Austin Electricity Conference April 12, 2018

Changing Resource Mix – Installed Capacity (MW) MW please *as of Feb. 2018

Addition of Flexible Gas Units

Key Features that further Renewable Integration Grid Code Renewable Forecast Ancillary Services (Operational Reserves) Real Time Operations

Wind Forecast Errors (Day-Ahead)

Ancillary Services Actual Demand Forecasted Demand 200 MW Error Regulation Non-Spin Responsive Load and generation are constantly changing, due to: Daily load patterns Instantaneous load variation Changes in variable generation output Generators tripping offline Ancillary Services are procured in the Day-Ahead Market to ensure sufficient resource capacity is reserved which can be deployed in a timely manner to restore the balance between the load and generation. Ancillary Services Products Regulation Service ERCOT sends signal every four seconds to increase or decrease output to the generators providing Regulation Responsive Reserve Service Capacity from generators or load resources that is readily available to respond to frequency events Non-Spin Reserve Service Capacity that can be started in 10 or 30 minutes to cover forecast errors or ramps

Discussion

Austin Electricity Conference Austin, Texas April 12, 2018 Achieving High Renewable Penetration with Grid-Friendly Operations Austin Electricity Conference Austin, Texas April 12, 2018 Arne Olson, Senior Partner

2013 California utility study found that 50%+ RPS penetrations are feasible 50% (and higher) renewable penetration is feasible, under one condition: Renewables must be dispatchable based on the needs of the system Renewable dispatch has little to no cost* Lost PTC and REC values Curtailment increases at higher penetrations Significantly impacts economics of incremental investments Portfolio diversity, flexible loads, flexible thermal generation, energy storage become interesting Source: E3, “Investigating a High RPS in California,” https://ethree.com/documents/E3_Final_RPS_Report_2014_01_06_with_appendices.pdf

Solar can be operated very flexibly Results from CAISO/NREL/First Solar demo Demo of 300 MW solar project in California Solar PV resources with smart inverters and advanced plant controls can enhance reliability by providing: Essential reliability services during periods of over-supply, e.g. Regulation Voltage support (daytime and nighttime) Fast frequency response Frequency response for low and high freq. events

Mix of Overbuild and Storage Optimal portfolio minimizes cost by balancing investment in solutions against increasing renewable curtailment Mix of Overbuild and Storage All Overbuild All Storage

Over 100 GW of solar and 50 GW of storage by 2050 California’s long-term strategy looks like a mix of solar and batteries Over 100 GW of solar and 50 GW of storage by 2050 Nearly 40 GW of solar by 2030 Electric sector reduces emissions to 20 MMT by 2050 while serving much higher loads from electrification Other regions may have a different mix

Solar is the new hydro Curtailment of solar will become routine and commonplace Occasional spill is a reality at every hydroelectric facility Solar can be operated very flexibly Solar must contribute to meeting grid needs Abundant, low-cost solar power will become the dominant issue for planning and investment in the West

Natural gas generation will still be needed for reliability and is a good complement to hydro/wind/solar Gas generation is dispatched to help meet electric loads during cold weather events Cold Winter Day under 80% Reduction Without thermal generation, there is not enough energy to serve load during all hours Cold Winter Day Without Gas Production capacity Actual production Energy from Zero-Carbon Resources Pacific Northwest: most challenging conditions system are multi-day cold snaps that occur during drought years Wind and solar production tends to be very low during these conditions, even under “100%” RPS Absent a technology breakthrough, gas generation appears to be needed for reliability

Thank You! Energy and Environmental Economics, Inc. (E3) 101 Montgomery Street, Suite 1600 San Francisco, CA 94104 Tel 415-391-5100 www.ethree.com Arne Olson, Senior Partner (arne@ethree.com)