MIC Market Assessment Expansion Working Group Overview of - - PowerPoint PPT Presentation

Qualitative Reliability Assessment of Expanding the EIM to Day-ahead Market Services

February 19, 2020 Seattle, WA

MIC Market Assessment Expansion Working Group

▪ Introduction and Overview of Report: Alaine Ginocchio, WIRAB ▪ Reliability Themes: Alaine Ginocchio ▪ Day-Ahead Operations: Jason Smith, Xcel Energy ▪ Resource Sufficiency: Andrew Meyers, BPA ▪ Transmission, Seams and Congestion Management: Robert Follini, Avista ▪ Ancillary Services: Angela Amos, FERC ▪ Contingency Analysis, Severe Weather Events and Unexpected Conditions: Jomo Richardson, FERC ▪ Wrap-up and Next Steps: Alaine Ginocchio

2

Overview of Presentation

▪ Expanding the EIM to Include Day-Ahead Market Services is under consideration ▪ A qualitative assessment of potential reliability impacts 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.

• Reliability in a general sense

3

Overview of Report

▪ Goals of Report

• Describes key changes in day-ahead processes

and the potential impact these changes could have on reliability

• Provide clear understanding of core operations

and concepts in the two markets

▪ Accessible: WECC Board of Directors & state & provincial policymakers and regulators

4

Overview of Report

▪ Evaluating impact of DAMS addition only

• EIM impacts have been evaluated
• DAMS impact on real-time operations included

▪ What we are comparing

• How DA operates now outside of CAISO:

Bilateral Market Paradigm

• Real-time operations: EIM
• DA operations in an EIM + DAMS: CAISO’s

current DA operations with some adjustments

5

Overview of Report

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 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

6

MIC Working Group

Methodology ▪ Expertise in Group ▪ Review of Documents and Reports ▪ Informational Meetings with Subject Matter Experts ▪ Outside Review

7

Overview of Report

What do we mean by “EIM + DAMS”? Assumptions for Market Framework. Core Assumptions

• BAA boundaries and NERC-related compliance

responsibilities will remain intact.

• Control of transmission facilities will not be transferred

to a market operator.

• Integrated resource planning, resource adequacy

procurement, and transmission planning and investment decisions will remain with each BA (and state/local regulatory authority).

• DAMS will be a layer on top of the EIM, using CAISO’s

market services as the model

8

Assumptions

• Participation: BAs, voluntary, no DAMS stand-alone
• Geographic Footprint: All EIM Entities
• CAISO’s Market Analysis Engine:
• Security Constrained Unit Commitment (SCUC)
• Full Network Model (FNM), Locational
• Marginal Pricing (LMP)
• Ancillary Services: Offered as an option
• Resource Sufficiency: RS Evaluation in the Day-

ahead, no assumptions about design of test

9

Assumptions

▪ Transmission

• complement the contract reservation regime
• Sufficient incentives to make enough transmission

available to address reliability requirements

• No assumptions about design

▪ Other Markets: DAMS will operate along-side the Day-Ahead bilateral market; no centralized capacity market

10

Assumptions

▪ Improved coordination across a broader geographic footprint ▪ Utilizing an advanced set of tools in the day-ahead time frame and applying them uniformly over multiple BAs.

• Improved wide-area view by the market operator for use in

developing the day-ahead commitment

• Improved response to variability
• Improved congestion management and relaxed impact of

seams

▪ Better positioning and set-up for real-time operations

11

Reliability Benefits: Themes

▪ Additional complexity for transmission

• perations: new challenges managing seams

between organized markets and operating closer to System Operating Limits (SOLs) ▪ Reduction of liquidity in the bilateral trading market ▪ Voluntary transmission provision: there may be incentives to retain transmission capacity

12

Potential Risks

Day-Ahead Operations Jason Smith, Xcel Energy

13

▪ What is done today – 3 paradigms

• CAISO BAA
• EIM BAA's
• Non-EIM BAA's

▪ Common General Processes

• Assess the situation
• Constraints (trans, AS, load, VER, fuel, etc)
• Make decisions to serve obligations
• Buy? Generate? Sell?
• Go forth! (and adjust....)

14

Day-Ahead Operations

▪ "How" it will be done changes ▪ Single decision maker (ultimately) ▪ Data submissions

• Additional commitment details (unit parameters)
• Added scrutiny on data
• Financially binding
• Increased transmission coordination

15

Day-Ahead Operations

▪ Tools

• SCUC (security constrained unit commitment)
• Minimize commitment costs (not energy)
• SCED (security constrained economic dispatch)
• Minimize energy production cost
• SCUC and SCED require a Full Network Model

(FNM)

• LMP (locational marginal pricing)
• Flow-based congestion management
• Reflective of "value" of energy at a location

16

Day-Ahead Operations

▪ Locational Marginal Pricing

• Marginal Cost of Energy
• Marginal Cost of Congestion
• Marginal Cost of Losses

▪ Day-Ahead vs Real-Time ▪ "Link" to provide translation between economic and reliability impacts

17

Day-Ahead Operations

▪ Carving out Reliability vs Economic benefits is more difficult than one would think ▪ Reliability Benefit Examples:

• Better positioning for real-time
• Lowered flexibility needs
• Variability addressed (better)
• "complementary diversity"
• Informed stakeholders
• LMP (investment indicators)
• Commitment decisions (revenue recovery)

18

Day-Ahead Operations

▪ Reliability Risk Examples:

• Seams between market footprints
• Transmission deliverability assumptions
• Economic/equity issues bleeding over into the

reliability world (congestion management)

• Coordinated congestion management
• Operating the transmission system more "fully"
• Change – Benefit/Risk? - closer to the edge?
• Depends on point of view

▪ Not Benefit or Risk: Optimized Commitment

• Change - less "excess" capacity on the system?

19

Day-Ahead Operations

Resource Sufficiency Andrew Meyers, BPA

20

▪ Current EIM approach to RS

• 4 Resource Sufficiency Tests administered by

CAISO

• Transmission Feasibility Test → provides an opportunity to manage potential

Transmission constraint violations prior to the operating hour [Non-Binding Test]

• Balancing Test → checks that resource base schedules balance to the area load

forecast, otherwise an over/under scheduling penalty may apply [Non-Binding Test]

• Bid Range Capacity Test (Capacity Test) → checks that there’s sufficient bid

range capacity to manage any imbalance from the Balancing Test and historical interchange deviations [Binding Test]

• Flexible Ramp Sufficiency Test (FRST) → checks that there’s sufficient within

hour ramping capability and bid range capacity to meet intra-hour load ramping needs and historical net load uncertainty [Binding Test]

21

Resource Sufficiency

▪ During an RS failure, the EIM BA is limited, not fully “locked out”, of the EIM

• If an EIM BA fails in the Up direction, then EIM net imports cannot increase via

EIM Transfers

• If an EIM BA fails in the Down direction, then EIM net exports cannot increase

via EIM Transfers

• If an EIM BA fails in both directions, then EIM net imports and net exports

cannot increase via EIM Transfers

▪ The limits on EIM Transfers help to prevent EIM BAs that failed RS from leaning on other EIM BAs that passed RS ▪ While limited, the EIM market engines (FMM/RTD) continue to economically dispatch resources within the EIM BA, but EIM optimal dispatch and benefits will likely be impacted

22

Resource Sufficiency

▪ EIM + DAMS

• Detailed market design has yet to be published
• EIM + DAMS RS is not anticipated to impact or replace

Resource Adequacy (RA) assessments

• RA requirements are expected to remain at state local

regulatory authority

• Without detailed market design, speculation on EIM +

DAMS RS construct would be premature and inaccurate

• Anticipate a RS check on EIM + DAMS to

limit/eliminate BA leaning

23

Resource Sufficiency

▪ EIM + DAMS participants will turn over DA unit commitments to market operator

• Anticipate a natural reduction in DA physical

bilateral activity as entities join EIM/EIM + DAMS

24

Liquidity in the Bilateral Market

6-8 AM Bilateral Trading Activity 10 AM DA Market Bids Due 1 PM DA Unit Commitment & Market Awards

▪ Scheduling deadlines are driving the division between EIM and Bilateral activity ▪ EIM + DAMS creates different pools of liquidity in the Day-Ahead arena

• Non-EIM + DAMs entities may only be able to

trade among themselves

• Entities failing RS would likely seek supply from

entities in the bilateral pool

• As more entities join (EIM +DAMS) the number of

participants in the bilateral pool decreases

25

Liquidity in the Bilateral Market

Transmission, Seams and Congestion Management Robert Follini, Avista

26

▪ What is done today​ ▪ EIM and non EIM BAA’s OATT ▪ CAISO BAA Tariff ▪ Full Network Model ▪ Congestion Management ▪ Seams ▪ Benefits​

27

Transmission

▪ Transmission Operator(s) control and manage their transmission in a BA ▪ Use contract path methodology ▪ Operate to not violate a System Operating Limit (SOL) ▪ Non discriminatory remedy for loading relief

28

Transmission Non CAISO

▪ OATT

• Transmission providers offer transmission service

according to FERC approved OATT

• Defines all aspects of the transmission service
• FERC determines rates
• Customers take network and or point to point

service to serve obligations

• Use OASIS for acquiring service
• Sunk and incremental transmission used for
• ptimization

29

Transmission Non CAISO

▪ Transmission centrally controlled and

• perated by CAISO

▪ Flow based congestion management system

• Optimal use of transmission
• Manages transmission constraints
• Wide area view
• Actual system data
• Day Ahead and Real Time congestion management
• Optimize parallel paths

30

Transmission CAISO

▪ Full Network Model (FNM)

• Representation of the market area transmission

network to allow for a power flow analysis

• Includes commercial and operational data
• Resources
• Equipment
• Topology
• Determine operating state of the system
• Constrains the market optimization

31

Transmission

▪ Flow based model

• Optimal use of transmission
• Maximize the transmission usage
• Operate closer to transmission limits
• Possibly increasing transmission limits with more

accurate tools

32

Transmission

▪ Congestion

• Inadequate transmission capacity to allow for the
• ptimal dispatch solution
• Transmission constraints cause price differences
• Dispatch of more expensive solution to meet

demand

33

Congestion Management

▪ Congestion

• Outside of EIM, BA’s manage congestion through

block schedules, BA resources and contract curtailments.

• Difficult to determine cause of loop flow through

their own system

• Difficult to predict and manage on a forward

basis

• Conservative limits to prevent SOL exceedance
• Potentially reactive instead of proactive dispatch

34

Congestion Management

▪ Congestion

• CAISO uses a flow based, Locational Marginal

Price (LMP) congestion management design

• Take into account electric and cost effects of

dispatch to mitigate congestion

• Anticipate and manage forward congestion
• Benefits are directly proportional

to transmission availability!

35

Congestion Management

▪ Seams are barriers and inefficiencies that inhibit the economic transfer of capacity and energy between neighboring wholesale markets or between BA’s

36

Seams

▪ Caused by differences in market rules and design, operating protocols, differences in transmission scheduling and tariff services. ▪ Inability to resolve seams issues may decrease market liquidity and cause reliability issues!

37

Seams

▪ EIM+DAMS benefits on transmission

• Central forward congestion management function
• vs. balkanized
• Increase transmission and generation supply
• Transmission and resource visibility to better

manage congestion

• Unit commitment footprint wide to manage tight

system conditions

• Allow for a security constrained unit commitment

(SCUC) in the DAM of longer start resources to manage modeled congestion in Real Time

38

Transmission

Ancillary Services Angela Amos, FERC

39

NERC Definition Ancillary services (AS) are "those services that are necessary to support the transmission of capacity and energy from resources to loads while maintaining reliable operation of the Transmission Service Provider's transmission system in accordance with good utility practice."

40

Ancillary Services

▪ There are many kinds of AS, including:

• Black start capability
• Reactive supply
• Primary frequency response
• Operating reserves
• And more!

▪ BAs must comply with AS requirements as established by NERC or regional coordinating councils (such as WECC)

41

Ancillary Services

▪ BAs will retain their existing NERC and WECC requirements independent of their participation in the EIM + DAMS market ▪ In the current EIM, AS are not currently traded

• r co-optimized

▪ In CAISO, AS market products include:

• Regulation Up
• Regulation Down
• Spinning Reserve
• Non-spinning Reserve

42

Ancillary Services

▪ The primary benefit of co-optimizing energy with AS in the EIM + DAMS market may be economic. ▪ Reliability benefits may include:

• Improved speed and quality of contingency

response

• Proactive resource positioning

▪ But market design is important: over- procurement may be a risk

43

Ancillary Services

Contingency Analysis, Severe Weather Events and Unexpected Conditions Jomo Richardson, FERC

44

▪ Balancing Authorities and Transmission Operators are required by NERC to have an operating plan for the next day that help to ensure the reliable operation of the transmission system.

• Reliable operation means operating the transmission system

within preestablished limits, such that instability, uncontrolled separation, or cascading outages will not occur as a result of a sudden disturbance or unanticipated failure of system elements.

▪ What goes into these plans?

• These plans account for forecasted weather and load, projected

generator output levels, transmission network topology (e.g., which transmission lines/transformers are in/out of service), and other considerations as appropriate.

NERC Requirements for Next-Day Operational Planning

▪ A contingency (e.g., the sudden failure/outage of a transmission line, transformer, or generator) can:

• Result in severe limit violations.
• Rapidly jeopardize system security, before the system operator

has time to take corrective action to prevent a blackout.

▪ Contingency analysis is a critical tool used in next-day

• perating plans and other studies to help ensure reliable

system operations.

• Studies the impacts of contingencies on the transmission system.
• bus voltages
• real/reactive power flows
• system frequency
• Identifies limit violations (e.g., thermal, voltage, frequency).
• Used in advance of real-time operations to predict the

transmission system’s ability to withstand the potential detrimental effects of contingencies.

Contingency Analysis Overview

▪ CAISO operates a competitive day-ahead market that facilitates its next-day reliability obligations in its capacity as a BA.

• The day-ahead market performs, among other things, unit commitment

and congestion management, and procures ancillary services.

• The SCUC process is conducted over multiple varying intervals to

commit and schedule resources. Ultimately, the day-ahead market process generates hourly LMPs for each trading hour of the next trading day.

▪ In advance of the next-day’s operations, CAISO uses its market analysis engine to feed the output of CAISO’s SCUC into the contingency analysis tool.

• Process is iterative.
• Allows CAISO to commit and schedule generation in a “security

constrained” manner in which the transmission system can withstand the sudden loss of certain transmission lines and/or generating facilities.

CAISO’s Next-Day Operations Planning

CAISO’s Next Day Operational Planning (cont.): Market Analysis Engine

▪ As the EIM transitions to include DAMS, the day-ahead planning processes that are currently individually employed by the EIM entities will be complemented by CAISO’s day-ahead market processes. ▪ EIM + DAMS will utilize a more complete set of data that captures a wider area view than that of any individual member BA, and allows for generating capacity to be committed/scheduled from anywhere within the footprint.

• Severe weather.
• Changes in system demand or variability in wind and solar
• utput.

EIM + DAMS: Wide Area View

▪ EIM + DAMS operations will allow market participants to identify the transmission usage patterns of the extended market footprint.

• Can be used to identify frequently constrained areas, and in

turn inform the various transmission planning processes to develop transmission projects that alleviate those constraints and/or allow for low-marginal cost units to interconnect to the market.

▪ However, EIM + DAMS footprint will neither be a single consolidated BA nor transmission operator area, thus the relevant NERC requirements will continue to apply to members.

• Next-day operational planning
• Reserve requirements.

EIM + DAMS

Wrap-up and Next Steps Alaine Ginocchio

51

▪ Improved coordination across a broader geographic footprint ▪ Utilizing an advanced set of tools in the day-ahead time frame and applying them uniformly over multiple BAs.

• Improved wide-area view by the market operator for use in

developing the day-ahead commitment

• Improved response to variability
• Improved congestion management and relaxed impact of

seams

▪ Better positioning and set-up for real-time operations

52

Reliability Benefits: Themes

▪ Additional complexity for transmission

• perations: new challenges managing seams

between organized markets and operating closer to System Operating Limits (SOLs) ▪ Reduction of liquidity in the bilateral trading market ▪ Voluntary transmission provision: there may be incentives to retain transmission capacity

53

Potential Risks

▪ Posting Draft Report: Mid-March

• MIC Blast
• Targeted Readers
• Three-week comment period

▪ Revisions Based on comments ▪ WECC Review #2 ▪ Address WECC comments ▪ WECC Review #3 ▪ Expected Final Report: Late May

54

Next Steps

Contact:

Alaine Ginocchio, WIRAB: aginocchio@westernenergyboard.org Robert Follini, Avista: Robert.Follini@avistacorp.com

55