White Paper Series Exploring Expanded Distributed Energy Resource - - PowerPoint PPT Presentation

Innovation and Sector Evolution White Paper Series

Public Webinar October 24, 2019

Exploring Expanded Distributed Energy Resource Participation in the IESO Administered Markets Part 1: Conceptual Models for DER Participation

• The IESO posted the Part 1: Conceptual Models for DER

Participation white paper on October 17

• To purpose of this webinar is to:

– Provide the IESO’s working definition of DER – Detail the conceptual framework being used to categorize and evaluate DER participation models – Identify which participation models are available in the IESO administered markets today, which are partially enabled, and which are not enabled at all – Identify the key barriers preventing expanded DER participation

• To seek feedback on the barriers to integrating DER to inform the

second white paper in this series

Purpose of the Webinar

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• This initiative kicked off on June 12, 2019 with the posting of a Project Brief
• utlining the objectives and research questions for this white paper.

Stakeholder feedback on the Project Brief included suggestions to:

– Develop a definition of DERs for this work – Identify the drivers of growth of DERs – Consider the full range of benefits and challenges at the transmission and distribution levels – Explain why requirements (that may act as barriers to DER participation) exist

• This feedback was incorporated into the white paper
• This white paper is the first in a two-part series that will identify high-level
• ptions for integrating DERs into the IESO Administered Markets (IAMs)

– This first white paper is intended to level set on the definition of DERs, principles for integrating DERs, participation models that are available, barriers that exist today and an overview of DER models in other jurisdictions – The second white paper will perform a more detailed exploration of the conceptual models identified in the first paper and identify potential options that may be appropriate for integrating DERs into the IESO-administered markets

Background

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Framework for Exploring Expanded DER Participation in IESO Markets

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Step 1 – Whitepaper – Models for DER Participation

• Conceptual description of benefits & challenges with DER integration
• Identify objectives for DER integration
• Identify current participation models in Ontario and in other jurisdictions
• Identify potential barriers to meeting objectives in Ontario (to be explored in whitepaper 2)

Step 2 – Whitepaper – Options for Enabling DER Participation

• Identify high-level options for expanded DER participation in IAMs
• Identify conceptual pros and cons of different options
• Streamline options where possible
• Identify evaluation framework for assessing options (to be used in step 3)

Step 3 – Evaluation of Options

• Align with Market Development Advisory Group and IESO capital project prioritization processes
• Develop high-level cost benefit assessment of options
• Identify targeted pilot projects to prepare for expanded DER participation
• Identify capital project(s) to be considered for prioritization (for step 4)

Step 4 – Prioritization and Implementation

• Use established capital project & MDAG processes to prioritize DER integration with other projects
• Implement pilot projects (if/as necessary) to explore potential for expanded DER participation

2019 2020 2021

Notional Timelines

• Traditionally, electricity systems have relied on large

generators transmitting power across long distances

– Large fixed cost assets with limited flexibility to scale up or down with changes in demand

• DER growth in Ontario has historically been driven by policy

– FIT, microFIT, conservation programs resulted in ~4,000MW (about 10% of Ontario capacity) – Industrial Conservation Initiative (ICI) has driven behind the meter DER storage – Net metering regulatory frameowrk

• DER growth is increasingly being driven by consumer

demand

– Due to declining costs, customer preferences for reliability, generation type

Growth of DERs in Ontario

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DER capacity in Ontario relative to total installed system capacity

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• Enabling DERs in wholesale markets will better enable value to be derived

from these resources to benefit all consumers

– Provide flexibility, scalability to respond to changing demand (avoid large fixed-costs) – Increase options to cost-effectively address future supply needs – Make DERs visible to IESO (reducing today’s challenges of lack of visibility) – Enable DERs to respond to price signals – encouraging location and timing of use to match system need – Discourage DER owners from disconnecting from grid by enabling DER owners to realize revenue streams from assets when not used for self

• There are currently limited opportunities for existing DERs to participate
• Key challenge for IESO will be timing of any changes to markets, tools,

rules to enable DERs (most likely post-Market Renewal) vis a vis consumer driven DER growth

The Opportunity for Integration

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• This series of two white papers will set the stage for action to integrate

DERs into the IESO-Administered Markets (IAMs) in a rational manner

• This first white paper is intended to be a “level setter” on a number of

topics, including:

– Terminology (including the definition of DER) – Principles the IESO will uphold when considering efforts to integrate DERs – Scope of the exercise (including which markets we are examining for enhanced participation) – Which participation models are available in the IAMs today, which are partially enabled, and which are not enabled at all – Barriers to integration

• The second white paper will perform a more detailed exploration of the

conceptual models identified in the first paper and identify potential

• ptions for integrating DERs into the IAMs. The second white paper will

also identify areas where demonstration projects would be beneficial

Purpose of White Paper

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• There is no universal definition for the term DER

– Definitions tend to differ from jurisdiction to jurisdiction based on the purpose the definition is being used for (e.g. market rules vs a specific program)

• For the purposes of this work, the IESO’s working definition is:

– A Distributed Energy Resource is a resource that:

• 1. Is directly connected to the distribution system, or indirectly connected to

the distribution system behind a customer’s meter; and

• 2. Generates energy, stores energy, or controls load
• The IESO has defined DER in alignment with definitions used by other
• rganizations (e.g. the Ontario Energy Board). The definition focuses on

what the resources do/can do without focussing on specific technologies or arrangements

– This technology neutral approach is more likely to be flexible enough to include emerging technologies and technical models in the future

Definition of DER

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• Provide an appropriate level of visibility of the resources operating

within the distribution system

• Enable increased competition by removing unnecessary barriers

that limit DERs ability to compete within the IAMs

• Expose resources operating within the distribution system to

economic signals reflecting the conditions and needs of the bulk system

• Maintain an appropriate level of system reliability
• Consider and respect the potential impacts on the distribution

system

• Prioritize initiatives with the greatest benefits
• Support sector evolution that enables transparency and competition

at all levels of the system

IESO Principles for Integrating DERs

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• The conceptual framework used for this white paper exists within a

post Market Renewal Project paradigm (i.e. considers markets as they will exist in the future)

• Three key IAMs are being considered within the context of this

initiative

• Removing barriers to participation in these markets is the first step

to allowing DERs to provide other products (e.g. ancillary services)

Markets Being Considered for DERs

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• The conceptual framework uses four operational categories for DER

that refer to the manner in which a DER operates (i.e. how the resource behaves)

• DERs can operate as:

– Generation (of a single fuel type) only – Demand response (a load-modifier that does not inject) – Storage (an energy-limited withdrawal or injection) – Hybrid (combining more than one operational category or generation of multiple fuel types)

Operational Categories of DER

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• The framework then considers whether a DER is dispatchable (or not) and

whether it would participate directly in the IAMs as a single resource, or aggregated with other DERs

Conceptual Models for DER Participation

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• On the next slide the operational categories (generation, DR, storage,

hybrid) and markets under consideration (energy, operating reserve, and capacity) are layered across the conceptual models for participation

• The resulting schematic displays which types of DER can participate in the

IAMs today, which IAMs they can participate in, and how they can participate

– Forms the basis of understanding which participation models are currently enabled, and which ones could be enabled in the future if certain barriers to participation are addressed

DER Participation Models

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DER Participation Models

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• Minimum size threshold of 1MW for all types

DER Participation Model Examples

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Combined cycle gas plant Steel manufacturer Fly-wheel Commercial batteries Smart thermostats Solar + storage CHP facilities Wind + Storage Solar LDC metered load Commercial chillers Back-up power Wind + Solar Residential solar Residential batteries Wind + Solar

• Identifying and categorizing barriers to DER integration is the first

step towards formulating a path forward to enabling additional participation models

• Barriers can relate to specific market rules, technical requirements,

and systems and processes in place by the system operator

• Barriers can restrict participation altogether, or add costs and

complexity that limit a DERs’ ability to compete in the market

• The IESO’s focus is on barriers that are within our purview to

address

Barriers to DER Participation

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• Minimum Size Thresholds

– System operators impose these rules to manage operational capabilities and simplify resource administration (e.g. market registration) – US system operators have set thresholds at 100 kW for storage (per Federal Energy Regulatory Commission requirements); several have set thresholds for DER generally at the same level – Minimum size for resources in IAMs must be ≥ 1MW

• Aggregation-Specific Rules

– Limits on aggregation include geographic or electrical boundaries and the types

• f resources that are permitted to aggregate together

– System operators face challenges in being able to accurately model the grid impacts of aggregated resources, and may impose restrictions or limitations on aggregation – Aggregation is currently limited in the IAMs (zonal for demand response, single node for generation)

Barriers to DER Participation

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• Operational Data and Telemetry Requirements

– Resources are required to have appropriate metering and data transfer data capabilities to determine performance and allow settlement – Requirements designed for large resources

• Costs to meet these requirements benefit from economies of scale and may be

unfeasible for small resources

– System operators may exempt telemetry requirements, especially for small, non-dispatchable resources

• Measurement and Verification Requirements

– Aggregators access to data from local distribution company (LDC) meters in a timely manner, methodology for settlement and verification

• f operation may not be appropriate for smaller resources

Barriers to DER Participation

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• Interoperability Requirements

– Coordination required between system operators and distributors to ensure deliverability, reliability, and cost effective outcomes (e.g. not contributing to congestion) – Standards or processes for coordination will be required

• Other system operators may share day-ahead schedules, share details of resources that make up

aggregated portfolios or coordinate on the boundaries of aggregation zones

• Registration and Commissioning Requirements

– Required so the system operator knows what the resources are, who is responsible for the resources, how they will be connected, and their behavioural characteristics – Requirements designed for larger resources; can be costly, lengthy and complex and may not capture unique attributes of DERs

Barriers to DER Participation

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• Generally, only certain DERs have complete participation models:

– Direct participant generators (dispatchable and self-scheduling) ≥ 1MW – Direct participant demand response (dispatchable and non- dispatchable) ≥ 1MW – Aggregated non-dispatchable demand response (aggregated portfolio must be ≥ 1MW)

• A set of key barriers should be examined to identify practical

approaches for expanding DER participation in the IAMs

– Stakeholders in Ontario and experience in other jurisdictions have helped to reveal key barriers that limit competition from DERs today – The most substantial of these barriers, in the IESO’s view are:

• Minimum size threshold
• Barriers that limit aggregation

Key Findings

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• The IESO is requesting feedback on the barriers that have been identified

for further investigation in the second white paper: – Are all the major barriers to DER participation in the IAMs (Energy, Capacity, and Operating Reserve) identified in Part I of the paper? Are there any major barriers that are missing? – How specifically do these barriers prevent you from participating in the IAMs? – How significant are each of these barriers in preventing DER participation in the IAMs?

• Responses can be sent to engagement@ieso.ca until November 7, 2019.

Please use the feedback form that can be found under the October 24, 2019 entry on the Innovation and Sector Evolution White Paper Series webpage

• Feedback will be considered in order to maximize the relevance and

usefulness of the Part II white paper (“Options for Enabling DER Participation”) to the IESO and stakeholders

Next Steps: Stakeholder Feedback

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Next Steps: Innovation and Sector Evolution White Papers Series

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White Paper Next Step

Exploring Expanded DER Participation in the IAMs, Part II: Options for Enabling DER Participation Draft options for stakeholder feedback in December 2019 Non-Wires Alternatives in Energy and Capacity Markets Draft for stakeholder feedback in December 2019 Development of a Wholesale Transmission-Distribution Interoperability Framework Consumer Preferences & Behaviours Consumer surveying will be initiated in December 2019 Draft for stakeholder feedback in Q1 2020

• This white paper is available here

Where to Download

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