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Non-Dispatchable Resources and EIS Market Carrie Simpson May 30,

Agenda Overview of EIS Market Design for Non-Dispatchable Resources Common EIS Market Practices Staff Recommendation Appendix: Changes coming for Marketplace 3

OVERVIEW Section 1 4

EIS Market and Intermittent Resources SPP dispatches Non-Dispatchable Resources to the echo of the resource output every 5 minutes –Wind farms using “Intermittent” status in the resource plan are considered a Non-Dispatchable Resource (NDR)  No economic evaluation is used by the Market for dispatching NDRs –If congestion develops on the system that requires curtailment of the NDRs, SPP uses two methods: 1.Systematic Curtailment through the Market System and Curtailment Adjustment Tool based on transmission priority – New as of March 19, 2013 as a result of three years of stakeholder processes and FERC approval of PRR 240 » More resources will be added on October 15, Manual Curtailment through Reliability Directives using shift factors 5

Systematic NDR Curtailment (PRR 240/242) During non-congested intervals, NDRs are dispatched to persistence (echo of output) For resources under the systematic logic: –In the congestion management process, the SPP Curtailment Adjustment Tool (CAT) includes the unscheduled portion of the output from NDRs in curtailment calculations  Assigns a pro rata relief obligation similar to obligations assigned to other non-firm impacts calculated by SPP CAT and NERC IDC.  GLDF of the unscheduled portion of a NDR is based upon the GSF of the Resource to the constraint and the host BA LSF associated with the constraint. – If GLDF is lower than the cutoff threshold used for interchange transactions no curtailment obligation will be assigned 6

Systematic NDR Curtailment (PRR 240/242) For NDRs with firm transmission service for the full output of the resource: – Any unscheduled output will be assigned a virtual schedule with firm transmission priority (PRR 242 change) For resource without firm transmission service for the full output of the resource: –Any unscheduled output will be assigned a virtual schedule with a non-firm transmission priority of NH2 (in original PRR design) 7

EIS Market and Intermittent Resources MPs may choose to use “Available” status for intermittent resources in the EIS Market, which dispatches based on price and ramp rates –Allows resource to be included in the Market solution and set price –SPP expects the resource to follow dispatch instructions  If the resource does not follow the dispatch instruction it will be subject to URD charges – In addition, adds error to Market solution and causes burden on host BA –Reliability Coordinator can still manually curtail a resource in “Available” status via a directive –Must contact SPP Market Operations before pursuing this option to walkthrough business practices  EIS Market does not use a wind forecast and MPs cannot update resource maxes inside an operating hour systematically – Requires communication to the Market Operator by the Market Participant to update the resource max of the resource in real-time –When using Available status, PRR 240/242 logic does not apply 8

COMMON EIS MARKET PRACTICES Section 2 9

MP Common Practices Many intermittent resources using “Intermittent” status choose to follow the LIP prices for determining when to curtail output –Example:  Wind farm operating at 100MW and sees a price of -$40/MW  Wind farm turns off to 0MW –Reasons:  Market Participants are trying to manage price exposure  Provide relief to the market using the price as a signal of the problem 10

Challenges with Common Practices Challenges with this practice: 1.Creates oscillation in constraint management and pricing in the EIS Market solution  Market solution is always 10 minutes behind real-time Negative LIP  Wind farm turns off  Constraint relieved  Positive LIP  Wind farm turns on  Constraint violated  Negative LIP  process starts over again 2. Causes Reserve Sharing Events for host BA  SPP Criteria requires a BA to report the a loss of generating output of 50 MW or more to the Reserve Sharing Group.  Burdens the host BA for regulation and back-filling the lost generation 11

SPP STAFF RECOMMENDATION Section 3 12

Staff Recommendation If an MP prefers to respond to prices in the EIS Market SPP recommends: –Use “Intermittent” status but only respond in increments of less than 50MW  Causes less price and constraint oscillation in the Market  Prevents host BA from calling RSG event  Limits regulation burden on host BA –Or, use “Available” status in order be apart of the market solution and contact with Market Operations to work through the business practices required 13

Questions 14

APPENDIX Marketplace Changes 15

Marketplace Improvements Marketplace enables Intermittent Resources more flexibility for participation in the market Allows Intermittent Resources to be included in the Market solution, if registered as Dispatchable Variable Energy Resources –Uses the offer curve, ramp rate details, output, and forecast to help determine the optimal dispatch for the resource and the market, together SPP continues to look for way to apply manual curtailments more efficiently 16

Marketplace and Intermittent Resources Variable Energy Resource (VER) –A Resource powered solely by wind, solar energy, run- of-river hydro or other unpredictable fuel source that is beyond the control of the resource operator.  Dispatchable Variable Energy Resource (DVER): – A Variable Energy Resource that is capable of being incrementally dispatched down by SPP – Eligible to offer Regulation-Down, if qualified  Non-Dispatchable Variable Energy Resource (NDVER): – A Variable Energy Resource that is not capable of being incrementally dispatched down by SPP –All VERs must register as a Dispatchable VER except for VERs with an interconnection agreement executed prior to May 21, 2011 that were commerically operational before October 15,

Dispatch of VERs in Marketplace In the Real-Time Balancing Market (RTBM), persistence will be used (echo of actual SCADA output) when there is no congestion on the system –For DVERS:  When there is congestion on the system: – SPP will use the offer curve of the DVER and Market Participants will be a sent a follow signal to lower output  When congestion is over: – SPP will dispatch DVER up at the submitted ramp rate until max limit (lesser of submitted max limit or SPP’s output forecast) is reached –For NDVERs  If SPP needs a NDVER to curtail, the SPP RC will issue a Directive/OOME to curtail the resource down similar to the EIS Market manual process 18