Energy Storage Integration in Alberta s Energy Only Market. Kevin Dawson Director, Market Design Alberta Electric System Operator

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1 Energy Storage Integration in Alberta s Energy Only Market Kevin Dawson Director, Market Design Alberta Electric System Operator

2 Outline The AESO and Alberta s Wholesale Electricity Market About the AESO Overview of Alberta s Wholesale Electricity Market Energy Storage (ES) Integration Current Interest in Energy Storage in AB ES Integration in the Context of Alberta s Market Technical Requirements Tariff Treatment Participation in Ancillary Services Markets 2

3 About the AESO The Organization Not-for-profit corporation established by the 2003 Electric Utilities Act as the Independent System Operator Operates in the public interest May not own or hold an interest in any transmission facility, electric distribution system or generating unit Has visibility of all market and transmission activities and data No government funding 3

4 Core Functions of the AESO System Operations Direct the reliable 24/7 operation of Alberta s power grid Transmission System Development and Access Plan an unconstrained transmission system to provide reliability and system access for generators and loads Market Operation Develop and operate Alberta s real-time wholesale energy market to facilitate fair, efficient and open competition 4

5 Alberta s Electricity Market 11,139 MW Winter Peak 14,930 MW Total Generation 6271 MW 5954 MW 894 MW Energy only market Strong load growth Wind 1388 MW Other renewables - biomass 423 MW Interties with BC & Saskatchewan and Montana 5

6 Monthly Pool Price ($/MWh) Alberta Electricity Prices Volatile $200 Monthly Average Pool Price $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 Average pool price On- and off-peak average pool price Annual Average Pool Price: $48/MWh, $51/MWh, $76/MWh, $64/MWh, $80/MWh 6

7 Size of the Energy and Reserves Markets Energy Market (the Pool) 77,450 GWh $6.35 billion Operating Reserves Market 932 MW $369 million 7

8 Active Reserves Predominantly Hydro Based Regulating Reserve 14% 10% 4% Spinning Reserve 13% 15% 58% 68% Supplemental Reserve 1% 18% 6% 19% 56% (2013 Actual) Coal Gas Hydro Intertie Load 8

9 Current Interest in Storage in AB Main drivers of the current interest in AB Potential synergies with wind generation Climate Change and Emissions Management Corporation (CCEMC) funding BAL-002-WECC-2 Contingency Reserve approved by FERC Four projects have submitted System Access Service Requests (SASRs) Two battery projects One Compressed Air Energy Storage One Pumped Storage Hydro 9

10 Major Integration Issues Identified What connection and operation standards should be applied to ES facilities? What tariff rate should be applied to ES facilities for system access service? Are certain requirements for the provision of Operating Reserves (OR) undue barriers to the participation of ES facilities? 10

11 Technical Requirements for ES to Connect and Operate - Background Currently, facilities connecting to the AIES are required to meet either the Generation and Load Interconnection Standard or the Wind Aggregated Generating Facilities Technical Requirements The current standards and requirements were developed based on the existing generation and load characteristics The two battery projects that submitted System Access Requests have unique technical and operational characteristics, including: Capable of very fast ramp rates Ability to operate as a sink and source The maximum real power output is variable and dependent on the time frame the power is needed for 11

12 Technical Requirements for ES to Connect and Operate General Principles All facilities must connect to the transmission system with requirements that promote the safe and reliable operation of the transmission system Technical Requirements will be performance-based, not equipment based 12

13 Tariff Treatment of ES - Background Legislative requirements: The AESO is mandated to plan for a congestion-free transmission system Transmission system costs are recovered from parties that receive electricity from the grid and transmission losses are recovered from generators ISO Tariff recovers: Wires costs Ancillary services costs Losses The AESO administrative costs Cost causation principle applied within the legislative requirements 13

14 Tariff Treatment of ES General Principle Consistent with the legislative requirements Recover costs from those who receive electricity Consistent with the cost causation principle Is the cost causation of receiving electricity for ES different from that of other loads or among different ES technologies? Are there any differences in incurring transmission costs between larger scale and smaller scale ES resources? Any similarity to Industrial System Designations? 14

15 Participation in AS Market Background Three types of Operating Reserves (OR): Regulating reserves, spinning reserves and supplemental reserves Procured on a day-ahead basis outside the power pool Using multi-hour block instruments Resources are selected based on offer price Uniform hourly price OR dispatch not co-optimized with energy market dispatch Active and Standby products are used to provide the three types of services Resources procured for Active OR are all dispatched and forgo energy revenue Resources procured for Standby OR are dispatched and forgo energy revenue only when they are activated 15

16 Participation in AS Market Current Technical Requirements Requirement for synchronous generators (for regulating reserves and spinning reserves) Requirement on minimum resource size 15 MW for regulating reserves, 10 MW for spinning reserves and 5 MW for supplemental reserves Continuous real power requirement Regulating reserves: resources must be capable of sustaining real power at either the high limit or the low limit of the range for 60 minutes Contingency reserves: resources must be capable of sustaining real power directed level for 60 minutes 16

17 Participation in AS Market General Principles Modifications to AS product design or deployment practices should be based on the need to efficiently manage system reliability The AESO is reviewing the size requirement The AESO is reviewing historical duration of directives The AESO is exploring the need for a ramping product Modifications to AS market design and procurement practices should be based on the need to have a competitive and efficient market Broader than ES integration 17

18 Thank You