Benjamin F. Hobbs Benjamin F. Hobbs Theodor Theodore K. and Kay - - PowerPoint PPT Presentation

Benjamin F. Hobbs Benjamin F. Hobbs

Theodor Theodore K. and Kay

• K. and Kay W. Schad
• W. Schad Prof

rofessor

• r of
• f Env

Environm

• nmental

ntal Mana Management nt Whiting School Whiting School of Engineer

• f Engineering,

ing, JHU JHU Founding Director, E Founding Director, E2SHI SHI Chair, C air, CAISO Market ISO Market Surveillan Surveillance C e Committee mmittee

Worksh Workshop on

• p on Economic Approach

Economic Approaches es to Unders to Understanding tanding and and Addres Addressing ng Resilien Resilience in the Bulk ce in the Bulk Power System Power System RfF RfF 30 May 2018 30 May 2018

• I. Traditional

resource adequacy (independent

• r correlated

forced

• utages)
• III. Long,

wide-area network

• utages
• II. Extreme

supply

• utages,

multiple stressors

 General principles  Three classes of disruptions Mainly markets Primarily Planning

 When rely on markets?

When rely on markets?

• When sol

When solutions tions not not

• bvious, re

vious, require quire private private information information

• Actions by

Actions by many (price- many (price- taking) parties needed taking) parties needed

• Responsibility/propert

sponsibility/property rights can rights can be assign be assigned & ed & traded traded

• When events are

When events are (relati (relatively) ely) frequent, not severe frequent, not severe

 When regulation/central

When regulation/central planning? planning?

• So

Solutions lutions o

• bvious

vious

• Acti

Actions by s by few or few or 1 party 1 party needed needed

• Public good, markets likely

Public good, markets likely to be to be suspende suspended in event d in event

• Events rare, potential

Events rare, potentially ly catastrophi catastrophic

 Assume: Assume:

• Generator outages are random ..

Generator outages are random .. ..and (conditionally) indepen ..and (conditionally) independent of ent of each other & of each other & of load load

 Can be extended to: Can be extended to:

• Correlated outages

Correlated outages, e.g.: e.g.:

 100 MW 100 MW unit, 0.1 unit, 0.1 FOR, 0 FOR, 0 correlation correlation  EL ELCC = CC = 92 92 MW MW

 Classic engineering methods: Classic engineering methods:

• LOLP

LOLP by convolution methods by convolution methods (Billin

illinton

• n/Allan)

/Allan)

• Expe

Expect cted Load Load Carryin Carrying Capabilit g Capability

(Ga (Garver, ver, IEEE TPAS IEEE TPAS, 1966) 1966)

= Increase = Increase in peak in peak load th load that can be accommodated by at can be accommodated by addi adding ng resource resource … while maintaining LOLP … while maintaining LOLP  If 0.3 corr If 0.3 correlation ion  EL ELCC = CC = 55 MW 55 MW

(Base (Based on N load,

• n N load, 2000 MW peak

2000 MW peak hour, hour, ident identical units, LOLP = units, LOLP = 2.4 hr/yr) 2.4 hr/yr)

 Saint Fred (Schweppe): Spot markets with

Saint Fred (Schweppe): Spot markets with appropriate scarcity pricing alone can incent appropriate scarcity pricing alone can incent

• ptimal investment and flexibility
• ptimal investment and flexibility

 Capacity markets can too, in

Capacity markets can too, in theory theory

• Desirable if:

Desirable if:

 scarcity underpriced in scarcity underpriced in spot markets, or spot markets, or long run contract long run contract markets absent markets absent

• General result

General result (Bothw

(Bothwell, ll, Hobbs, Hobbs, Energy Energy J J, 2017) , 2017):

 There exist supporting prices for optimal generation mix: There exist supporting prices for optimal generation mix: Capacity market pays each generator: Capacity market pays each generator:

(margin (marginal capacity contr apacity contribu butio tion) * (market price for * (market price for capacity) capacity)

 MCC = MCC = ∂(expected unserved energy)/ (expected unserved energy)/∂(capacity) (capacity)

 Need good

Need good rules rules

• Credits based on marginal contributions

Credits based on marginal contributions

• Forfeit payments if

Forfeit payments if unavailable when unavailable when needed needed

 Simulate impact of Simulate impact of efficient spot market efficient spot market

• Look-ahead, locational

Look-ahead, locational

 4 calls/mo 4 calls/mo demand respons emand response  Fly wheels ( Fly wheels (15 minutes stored) 15 minutes stored)

 However, awkward way to incent

However, awkward way to incent flexible flexible investment investment

• CAISO FRACMOO.

CAISO FRACMOO. But how do you compare the following? But how do you compare the following?

 Fully dispatchable CTs Fully dispatchable CTs  Rene Renewables wables that can turn down that can turn down  1 start/day resources 1 start/day resources

• Problem: What’s the marginal contribution when:

Problem: What’s the marginal contribution when:

 operating conditions & syst

• perating conditions & system response are complex?

em response are complex?  event probabilities event probabilities, failure failure mechanis mechanisms poorly known? ms poorly known?

• Belts and suspenders

Belts and suspenders (Bushnell, Harvey

(Bushnell, Harvey, Hobbs, CAISO MSC) , Hobbs, CAISO MSC):

Improve spot markets to reward output when system values it Improve spot markets to reward output when system values it

 California 2000-01:

California 2000-01: Seven Plagues of Egypt Seven Plagues of Egypt

• Fuel (compressor outage)

Fuel (compressor outage)

• Hydro shortage

Hydro shortage

• NO

NOx allowan allowance shorta e shortages ges

• Kelp

Kelp

 Compounded

Compounded by by market design failures market design failures

caiso.com

 “When sorrows come, they come When sorrows come, they come not (as) single spies. But in not (as) single spies. But in battalions battalions.” (King Claudius, .” (King Claudius, Ha Hamlet et Act 4 Scene Act 4 Scene 5,Thx to

Thx to Kousk Kousky and and Cook Cooke, RFF-D RFF-DP-0

• 09-

9-03. 03.pdf)

• Multiple e

Multiple events w ents without pre thout preceden edent, no agreed upon pro t, no agreed upon probabilities abilities

 Feb. 1-4, 2011

• Feb. 1-4, 2011 cold snap

cold snap  210 units 210 units on

• n outage
• utage

 High load

High load  4 GW curtailed 4 GW curtailed

www.powermag.com/prepare-your-gas-plant-for-cold-weather-operations/

www.carbonbrief.org/analysis-the-legacy-

• f-the-fukushima-nuclear-disaster

Fukushima: Fukushima: 17% of Japan’s 17% of Japan’s capac capacity ity lost lost

 Not spot markets alone.

Not spot markets alone. For extreme events: For extreme events:

• Pro

Probability e ability estimates unreliable mates unreliable

• Insurance unavailable or

Insurance unavailable or costl costly

“... “...three three particular phenomena of particular phenomena of climate related risk climate related risks that will that will require a require a change in our think change in our thinking ab ng about risk managemen

• ut risk management: global micro-

: global micro- correlations correlations, fat tails, and tail fat tails, and tail dependen dependence. ce. “(The “(Their) consideration …will be r) consideration …will be particularly important for particularly important for natural natural disaster insu disaster insurance, as they call in rance, as they call into question traditional methods of to question traditional methods of secu securitization and diversification” ritization and diversification” (Kous

(Kousky & Cook Cooke, RFF-D RFF-DP-09- 09-03 03-R

• REV.

EV.pdf, 2009) , 2009)

 How to prepare against the unimagined risk?

How to prepare against the unimagined risk?

• Inheren

Inherently stable systems: ly stable systems:

 diverse sources diverse sources  more redun more redundancy ancy, ,  island-able island-able

• Achievable

Achievable by: by:

 Baskin & Baskin & Robbins Robbins capacity markets capacity markets  higher reserves, grid reinforcements higher reserves, grid reinforcements  black black-start, microgrids art, microgrids

• Ye

Yet w what are at are w we willing t willing to pay fo pay for r that st at stability? Is ability? Is the c e cure w re worse rse than the disease (regulatory than the disease (regulatory rent seeking, rent seeking, capture…..)? capture…..)?

(Mukherjee, Nateghi, Hastak, Reliability Engineering & System Safety, 2018)

 Casca Cascadin ing outages, g outages, system system collapse collapse

• Managing frequency excursions

Managing frequency excursions in in a a renewable heavy system renewable heavy system

• Cyber

Cyber in insecurity security

 What is Russia re What is Russia real ally capabl capable of?

• f?

www.cartoonistgroup.com/properties/anderson/art_images/030823grid.jpg

 Electromagnetic disturbance Electromagnetic disturbance

• Solar flare

Solar flares

• Twitch

Twitchy fingers y fingers

Natural disasters Natural disasters

 Fire Fire  Earthquakes & Earthquakes & transformer replacement transformer replacement

(Ende Enders et rs et al.

• al. 2010

2010 Ene Energy Syst System ems) www.businessinsider.com/pictures-of-californias-latest-wildfire-2016-6

www.tdworld.com/test-monitor-control/new-seismic-shock-system- helps-protect-power-grid

 Public good of

Public good of network reliability network reliability

• Central planning

Central planning

• NERC rules

NERC rules

• Tight FERC oversight

Tight FERC oversight

 In identifying risks, remember Tversky/Kahnemann In identifying risks, remember Tversky/Kahnemann biases: biases: imaginability, over-confidence, …. imaginability, over-confidence, ….

 (Quasi) market roles

(Quasi) market roles

• Bidding to

Bidding to provide equipment, services provide equipment, services

• Performance-based ratemakin

Performance-based ratemaking for grid owners for grid owners

• I. Traditional

resource adequacy (independent & correlated

• utages)

Mainly markets Primarily Planning

• III. Large &

long network- caused

• utages
• II. Extreme

supply

• utages due

to multiple stressors, extreme events