Qualitative Reliability Assessment of Expanding the EIM to Day-ahead Market Services October 17, 2019 MIC Market Assessment Expansion Working Group
Overview of Presentation ▪ Project Update ▪ Report Assumptions ▪ Market Design Assumptions ▪ Potential Risks and Benefits • Themes • Operational Areas ▪ Next Steps 2
Qualitative Reliability Assessment ▪ Expanding the EIM to Include Day-Ahead Market Services is under consideration ▪ Overview of Paper • The informational paper will be a qualitative analysis of potential reliability benefits and risks from expanding EIM to include day-ahead market services. • It will not address potential economic benefits or estimate cost savings. • It will be based on assumptions for the market design 3
Framework for Paper ▪ Educational • Provide a description of how day-ahead processes are conducted in a bilateral market and contrast that with how they would be conducted if taking day-ahead market services • Focus on how these changes could affect reliability • Illustrate potential reliability risks and benefits by analyzing examples: real or hypothetical. Using events in which the presence of market services may have provided reliability benefits or increased risks ▪ Accessible: WECC Board of Directors & state & provincial policymakers and regulators 4
Working Group Name Organization Robert Follini Avista Andrew Meyers Bonneville Power Administration Darren Lamb California ISO Jamie Austin PacifiCorp Charles Faust WAPA, Sierra Nevada Region Jason Smith Xcel Energy Michael Goggin Grid Strategies Angela Amos FERC, OEMR Ben Foster FERC, OEPI Dillon Kolkmann FERC, OEPI Jomo Richardson FERC, OER Monica Taba FERC, OER Layne Brown WECC Jennifer Gardner Western Resource Advocates Alaine Ginocchio WIRAB 5
Schedule Milestones from MIC 2019-2021 Work Plan ▪ Feb. 20, 2019: Working group assembled ▪ Outline prepared ▪ Draft report ▪ Dec. 31, 2020: Final report Working Group has to-date: ▪ Met regularly since February 2019 ▪ Developed a more detailed work plan ▪ Agreed to Draft Report Assumptions ▪ Agreed to Draft Market Design Assumptions ▪ Drafted and Prioritized Potential Risks and Benefits 6
Upcoming Milestones ▪ Assumptions and prioritized risks and benefits presented today to the MIC (October 2019 Meeting) ▪ Final Draft of Report February 2020 (next MIC meeting) ▪ Final Report March/April 2020 7
Report Assumptions 8
Report Assumptions ▪ Qualitative analysis: No cost-benefit or economic analysis. ▪ Reliability in a general sense • Include both adequacy and security but not draw distinctions between them • Reliability benefits and risks identified will probably impact compliance with specific reliability standards, however, will not attempt to identify the specific reliability standards at issue ▪ Bandwidth of the market being analyzed: Addition of day-ahead market services to an existing EIM (EIM + DAMS). We are analyzing the reliability benefits/risks of the DAMS portion, this includes impacts on the EIM/real- time market. 9
Market Design Assumptions 10
Core Assumptions 1. Participants will be EIM Entities (BAs). 2. EIM Entities will participate in the day-ahead market while retaining their BA planning functions. Balancing Authority Area (BAA) boundaries and NERC-related compliance responsibilities will remain intact. 3. Control of transmission facilities will not be transferred to a market operator. 4. Transmission costs will continue to be collected under each entity’s Open Access Transmission Tariff (OATT). 5. Integrated resource planning, resource adequacy procurement, and transmission planning and investment decisions will remain with each BA (and state/local regulatory authority). 6. Participating Entities will use existing infrastructure and market services offered by CAISO (with adjustments); the DAMS will be an additional market service layered on top of the EIM. 11
Additional Assumptions 1. Geographic Footprint: all EIM Entities (current and pending) 2. Participation is voluntary at all levels (e.g., BAs and resources). 3. The market will offer Ancillary Services products to EIM + DAMS participants on the same basis as full ISO participants (reg-up, reg-down, spinning reserve, non-spinning reserve) 4. Participants in an EIM + DAMS may continue their participation in Reserve Sharing Groups (RSGs). 12
Additional Assumptions 5. An EIM + DAMS will employ a Security Constrained Unit Commitment (SCUC) optimization process. • The SCUC optimization process simultaneously optimizes energy and ancillary services costs while ensuring transmission and reliability constraints are not violated. • The SCUC will provide the day-ahead schedule used for the real-time dispatch, i.e., Security Constrained Economic Dispatch (SCED) optimization process. 13
Additional Assumptions 6. An EIM + DAMS will utilize some form of Locational Marginal Pricing (LMP)-based congestion management over the entire CAISO and EIM + DAMS footprint. 7. There will be a Resource Sufficiency (RS) evaluation for entities participating in an EIM + DAMS in the day-ahead (DA) time frame. The DA RS evaluation will ensure adequate capacity by each participating BA to balance load and manage any contingencies in their BAA (no leaning). No assumption about specific scheme. 14
Additional Assumptions 8. Transmission: An EIM +DAMS would complement the contract reservation regime and there will be a compensation/incentive scheme that provides adequate motivation to make enough transmission available to ensure adequate transmission capacity to satisfy minimum reliability requirements. No assumption about specific scheme. 9. An EIM + DAMS would supplement or operate along-side the bilateral market in the Western Interconnection. 10. There will not be a capacity market. 15
Potential Risks and Benefits 16
Thematic Benefits ▪ Improved coordination across a broader geographic footprint ▪ Better positioning / set-up for real-time operations ▪ Improved situational awareness ▪ Improved congestion management ▪ Expanded solution set for addressing reliability issues ▪ Improved response to variability 17
Potential Risks ▪ Managing seams between markets ▪ Operation of the transmission system ▪ Maintaining additional data and software requirements How these general themes apply to operations…. 18
General Day-ahead Operations ▪ SCUC – Security Constrained Unit Commitment ▪ Potential Benefits • Broader ◦ Fleet ◦ Geographic Diversity (load, resources, risk exposure) • Improved Situational Awareness • Flow Based Transmission usage 19
Transmission: Seams and Congestion Management ▪ Assumptions – • Sufficient Transmission will be made available to satisfy minimum reliability needs (reserve deliveries, resource adequacy, etc.) • Additional Transmission “may” be made available • Seams between separate market footprints will require a higher level of coordination in resolving reliability issues and congestion 20
Transmission: Seams and Congestion Management ▪ Potential Benefits • Increased deliverability • Increased Situational Awareness • Improved congestion management ▪ Potential Risks • Uncoordinated response across seams • Increased Transmission Usage? • Transmission flows different than historical? 21
Resource Sufficiency ▪ RS Tests for today’s EIM BAs • Evaluate if BAs have sufficient resources and flexible capacity to serve load and manage VER uncertainty ▪ EIM RS comprised of 4 tests • Transmission Feasibility (Binding Test) • Balancing Test • Bid Range Capacity Test (Binding Test) • Flex Ramp Sufficiency Test (Binding Test) ▪ Failure of RS results from failing Capacity or Flex Ramp Sufficiency Test • Failure results in limitations to market solutions depending upon which direction failed 22
Resource Sufficiency ▪ Our Assumption: RS in an EIM + DAMS will continue to prevent leaning and avoidance of incurred costs of capacity, flexibility, or transmission ▪ RS in an EIM +DAMS may be a different flavor of existing EIM RS tests but we make assumptions about the specific scheme • External Resources used to help meet RS and located outside an entity’s BA to will likely need to demonstrate a firm TX path from the Resource • Failure of RS on DA offers a chance to correct prior to RT ▪ Without details of RS evaluation in the day-ahead time frame unable to assess reliability impacts 23
Ancillary Services (AS) ▪ Potential Benefits of Procuring AS in a Day- Ahead Market • Economic efficiency (not the focus of this report) • Operating reserves may be deployed more effectively • May reduce overloaded constraints ◦ Reduces the likelihood that lines will reach thermal capacity ◦ May reduce losses • Larger geographic footprint, broader pool of resources, and automated processes may improve the speed and quality of contingency response 24
Ancillary Services ▪ Potential Risks of Procuring AS in a Day- Ahead Market • Positioning resources to accommodate needs of larger EIM footprint may make certain resources “less available” for individual BAs • Economic – investment in Day-Ahead services may not yield material reliability-specific benefits 25
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