PCI Overview of Energy Imbalance Markets in West 1 Webinar Purpose - - PowerPoint PPT Presentation
PCI Overview of Energy Imbalance Markets in West 1 Webinar Purpose Purpose of Webinar: Provide high level overview of energy imbalance markets and address common questions that PCI hears from entities considering joining an energy imbalance
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Purpose of Webinar: Provide high level overview of energy imbalance markets and address common questions that PCI hears from entities considering joining an energy imbalance market. Agenda:
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– Software Development for Energy Markets – 160 employees and growing – Founded 1992 / Privately Owned
– Supported better utilization of asset portfolios for over 20 years.
– PCI GSMS (Generation Supply Management System) Portfolio Optimization Market Systems Asset Operations Transaction Management Data Warehouse & BI
– 60% of US generation capacity using PCI – 70% of Fortune 500 Utility & Energy companies
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Energy imbalance markets in most cases can help participants better utilize asset portfolios and/or reduce costs to serve
PCI supports better asset portfolio utilization whether
participates in an energy imbalance market or not.
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EIM History
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EIM History
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Webinar Topics
1. Can an imbalance market cause financial "pain"? 2. Can an imbalance market be avoided while increasing solar or wind resources? 3. If a company is already optimally dispatching resources, is there really any savings that can be realized? 4. If our company stays out of an EIM, but those around us join, how could it impact us? 5. If you are considering joining EIM, what should your analysis take into account? 6. If you are not sure whether you will join a market, are there things that could be done now that will be beneficial either way? 7. What type of software is needed whether you plan to join EIM or participate in one at interface?
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from their system through additional charges and uplifts.
schedules in EIM or Native Load Schedules in other designs) act as a hedge against energy and congestion costs.
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The following example has three companies each serving their own load in an unconstrained transmission system.
LMP is $25.00 at all locations because adding 1 MW anyway will result in the Company A generation being dispatched at a cost of $25.00. ?
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When companies serve their own load through self-scheduling, there are no imbalance charges with the market operator. The following table shows the cost to serve load for each company:
There are no settlement charges or credits because the resources self supplied their own load.
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The following example has three companies participating in an energy imbalance market.
Company A is able to provide less expensive generation to Company C. Both companies profit from the market
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Company A is paid for additional generation at the LMP which will be at or above their
Company A collects $3600 in revenue but it costs them $2000 to produce the additional MWs ($25 x 80 MW) resulting in $1600 of additional margin! Company C gets charged $3600, but avoids production costs of $5200 ($65 x 80 MW) resulting in $1600 of additional margin!
The cost to serve for both Company A & C is lowered with a market!
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The following example has three companies participating in an energy imbalance market with a transmission constraint of 25 MW between Bus 2 and 3.
Transmission congestion alters LMPs, but companies are hedged by their schedules.
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The following example has three companies participating in an energy imbalance market with a transmission constraint of 25 MW between Bus 2 and 3. Real-Time Congestion
which results an over
through load ratio share. In this example congestion has raised Company A’s margins significantly which has reduced their cost to serve their load drastically. Also note that each company’s generation acts as a hedge to rising LMPs. If prices rise to their marginal offer, they are dispatched.
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A company’s generation acts as a natural hedge against high LMP prices. Less expensive generation will be run to offset higher cost generation up to the transmission limitations of the grid. Offering at or near costs provides a safe energy imbalance market strategy. Generation assets will be redispatched to prevent violating transmission limits which will result in a higher utilization factor of the transmission system. Base or Native Load Schedules provide a congestion hedge in the event there is LMP price separation between generators and load. Most companies will benefit from a pooled generation (i.e. SCED-security constrained economic dispatch), but there could be times when a company’s
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large quantities of flexible-ramp reserves. However, maintaining large volumes of flexible-ramp reserves can be very costly
that can ramp quickly both up and down.
where imbalances caused by load-forecast errors, intermittent resources, etc… can be offset across the market footprint. The difference in balancing to 5 minute dispatch in lieu of hourly schedules will reduce the cost of flexible-ramp reserves.
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minute balancing mechanism that helps offset impacts from solar, wind and demand changes.
GW, MISO didn’t add any additional regulation because of their geographic footprint!
renewable resources is to be able to spread the forecasting error across a large enough footprint where it is either negated or the impact diluted.
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purchasing energy from lower-cost resources while companies with lower-cost resources will see more benefits from running their resources at higher capacity factor.
regulation and flexible reserves for all players in the EIM market.
savings because the market operator redispatches generation to resolve constraints instead of cutting schedules.
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buy and sell at the tie lines (interfaces) into the market at 15 minute intervals.
dynamically bid and offer into the market and have it cleared automatically in CAISO’s EIM 15 Minute Market. Most designs even support self-scheduling at the ties.
need to create bid and offer curves based on their supply portfolio. These curves must be dynamically updated because they can change every hour.
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loop flows.
transmission system by dispatching resources to reflect transmission constraints. This higher utilization of transmission lines can cause energy sometimes to flow on neighboring systems, thus creating more loop flows.
contract path, but by path of least resistance.
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future electric prices (Gas prices, Weather, Hydro availability, Transmission constraints, Unit outages, etc..)
Unwinding this thought….
‒ Future prices depend on the expected marginal cost of generation. ‒ How much wind and solar will there be? ‒ How much generation will be supplied from hydro production? ‒ Natural Gas is expected to be the marginal fuel source, but at what price? ‒ The availability of Natural Gas from fracking and the impact of fuel switching in the non- electric industries impact price.
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for fuel and electric prices don’t become additive or negate each other.
casted against a known period of time using your future generation
renewable production as a test for reasonableness.
generating resources in the EIM market. The more resources put into EIM, the more savings that should be expected.
follow 5-mn dispatch instructions. Markets are all about stating what you can do and then doing what you said. If you can’t do what you say, then you may have to work on a company’s culture to be successful.
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Every company has a list of improvements that are desirable, but the following list is a recommendation for any company thinking of joining EIM.
Make sure there is a clear understanding of a resource’s costs across their full operating range including minimum and maximum limits, ramp rates and even startup times and costs.
Make sure that the system is being optimally dispatched for the greatest savings. This dispatch will be used to create base or native load schedules for use in hedging congestion in an EIM.
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Identify any potential metering problem that does not support the accuracy or data requirements of a market. This can take time and it is better to get this done prior to joining a market. The second item is make sure your Energy Accounting system can handle the analysis and reporting necessary. Remember all errors in a market are monetized so errors in metering will become dollars in settlements.
A Real-Time Pricing tool determines the cost when to make energy buy and sell
an energy dispatch optimized solution. This capability will help a company to improve margins and validate resource can respond as advertised.
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The following recommendations are not in any particular order but more depends on a current organization’s situation:
Makes sure resources are dispatched based on actual costs. This will also be needed for calculating schedules.
Make sure all metering and calculations support market
Software needed to communicate bids/offers and download results from the Market Operator.
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The following recommendations are not in any particular order but more depends on a current organization’s situation:
Software needed to validate settlements and support reporting needs.
Depending upon your resource mix, a company will need to manage their fuel supply around the demands of the market.
Manage Outages, Plant Interfaces, GADS and Energy Scheduling with plants to streamline the data and communication process.
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Power Costs, Inc.
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PCI is the premier, one-stop provider of essential software solutions for energy supply, trading and marketing organizations. Companies utilize PCI products to capitalize on their portfolio capabilities in
profits.
Feel free to reach out to us with questions or inquiries: Tony Delacluyse
405-326-1496 tony@powercosts.com
Jason Kram
832-228-8474 jmkram@powercosts.com
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http://www.powercosts.com/wp- content/uploads/PCI_ProductBooklet1.pdf ?