SMALL GENERATOR ELIGIBILITY

Transcription

1 SMALL GENERATOR ELIGIBILITY WHAT IS A MINIMUM SIZE THRESHOLD (MW) TO PARTICIPATE IN THE CAPACITY MARKET? Prepared for AESO Capacity Market Eligibility Working Group For Discussion Purposes Only November 3 rd, 2017

2 FUNDAMENTAL PRINCIPLES Small generator eligibility should ensure a level playing field, Between new and existing facilities; Across various fuels and technologies; Regardless of location and interconnection (T vs. D); and, Relative to utility scale generators. The future electricity supply mix in Alberta will likely include a greater amount of Distributed Energy Resources that are; Often connected to the distribution system; Various sizes ranging from residential rooftop installations to multiple MWs installed; A mix of fuels and technologies (batteries, solar, gas-fired, etc.). The AESO s Jurisdictional Review identified that most US markets allow for aggregation with some allowing facilities as small as 100 kw to participate in the Capacity Market

3 CURRENT ALBERTA SUPPLY SOURCES AESO identified current supply sources < 5 MW (shown on left) Investment in the majority of these existing facilities ( 150 kw) was predicated on receiving hourly pool price in the energy only market (which notionally includes a component that will in future be delivered through the capacity market) Changes to market design needs to allow for incumbent investment to have a reasonable opportunity to earn a return Sources: AESO Eligibility WG Session #3 Minimum Resource Size Presentation (July 4 th, 2017).

4 DER IS EXPECTED TO GROW SUBSTANTIALLY DERs have been identified by many as a significant game changer to global electricity markets and include technologies such as: Solar PV, small scale wind, micro-chp, natural gas fired recips, energy storage, etc These may be developed through the micro-generation regulation, some form of forthcoming community generation regulation/program, or through merchant development As the cost of these technologies declines and markets shift towards lower-emitting electricity sources, DERs are anticipated to become increasingly influential Customer choice preference, moving from consumers to prosumers DERs are anticipated to contribute to meeting the CLP s 30% by 2030 target Already, Alberta has seen significant growth in microgeneration As of August 2017: 1,970 microgen sites, 20.2 MW installed (average 10 kw per site) This represents an increase of 771 sites (11.4 MW) since the AESO s first report in May 2015, average ~500 kw increase per month, though trend could grow non-linearly Access to the capacity market supports DER project economics (otherwise they may require significant out-of-market support mechanisms if policy direction is to encourage development) Range in Growth Relative to 2017 Levels of Various DER Technologies Sources: AESO Micro-generation in Alberta August 2017 Report (August 3 rd, 2017). Source: Illustrative Based on 3 rd Party Analysis

5 EXISTING REGULATIONS Act, Rule or Regulation Consideration Capacity Limitation Activities Designation Regulation Environmental Protection & Enhancement Act MicroGeneration Regulations Hydro and Electric Energy Regulation AUC Rule 007 Defines power plant as a facility that has a rated production output of > 1 MW Possible exemption from the formal Environmental Impact Assessment (EIA) process Set of rules designed to simplify interconnection, metering, pool participation, and settlement processes for individuals who would like to generate their own electricity Defines power plant as being 500 kw (or greater) and outlines statistics and other reporting requirements Variations in application requirements based on installed capacity, interconnection status, in some instances location > 1 MW 1 MW Small < 150 kw; Large 150 kw & < 5 MW > 500 KW Range from > 1 MW to < 10 MW Sources: Activities Designation Regulation (AR 276/2003). Environmental Protection and Enhancement Act (RSA 2000, E-12). Micro-Generation Regulation (AR 27/2008, 140/2017). Hydro and Electric Energy Regulation (AR 409/83). AUC Rule 007 Applications for Power Plants, Substations, Transmission Lines, Industrial System Designations, and Hydro Developments (July 4 th, 2017).

6 CONSIDERATIONS FOR SETTING ELIGIBILITY Existing and anticipated policy support increased penetration for smaller generation (DER market trends, community generation policy in development, updated microgeneration regulation) There is no consistent capacity threshold across the various rules, acts, and regulations, swinging from < 150 kw to 5 MW AESO s Capacity Market Framework Design: Working Assumptions for Interdependencies has articulated that capacity market and energy market participation need not be linked, this eliminates implicit challenges with treatment of smaller suppliers in the energy and AS markets. Allowing smaller resources the opportunity to participate in the capacity market would be in-line with industry trends, diversifying the supply mix, and provide fair treatment for existing investments This does though increase burden (administrative, technical requirements for appropriate metering for resources revenue class interval meters, SCADA (if necessary), ability to determine UCAP). Source: AESO Capacity Market Framework Design: Working Assumptions for Interdependencies (24 Oct 2017)