LMP s and Congestion Relief

Transcription

1 LMP s and Congestion Relief Lens, Crystal Ball, or Alice s Looking Glass? Jim Mitsche jmitsche@power-gem.com 1

2 Opinions, Based on What? Analysis of NY State Congestion Cost and Causes Report at Analysis of Delmarva Peninsula (PJM) Congestion Cost and Causes Report At Years of Decision Support to Major TCC Owner in New York Thanks to my co-workers Boris Gisin and Manos Obessis, and to Scott Gass of PJM! 2

3 LMP s Add to Price Volatility, What Do We Get for That? In A Nutshell LMP s point to congestion causes and impacting load/generation very well (with a little more data than usually available) LMP differences (congestion cost) patterns are often very mysterious and difficult to predict Financial products based on LMP differences are good for hedging, but not investment Some new approaches may reduce LMP price volatility and encourage LMP based transmission investment 3

4 LMP s Point to Congestion Causes Delmarva Congestion Cost Components by Constraining Facility Constrained Facility Average Shadow Price in $/MWHr Average MW Load Affected Average Hourly Congestion Cost in $/hour KEENEY 500 KV KEENEY AT51 XFORMER $ $90,551 KEENEY 500 KV KEENEY AT50 XFORMER $ $68,418 KEENEY 230 KV KEENEY AT20 XFORMER $ $49, KV BRIDGEVI-GREENWD $ $40, KV GREENWD-SHARRING $ $39,139 INTERFACE DPLSOUTH $ $32,442 CHURCH 138 KV CHURCH AT2 XFORMER $ $32,125 PINEYGRO138 KV PINEYGRO AT1 XFORMER $ $17, KV EDGEMOOR-HARMONY $ $16, KV NELSON-VIENNA $ $14,817 4

5 LMP s Point to Impacting Load/Generation Manhattan Same Hour Average Price Components (156 weeks) $60 $50 $40 $30 $20 $10 $0 5 Sun 01:00 Sun 13:00 Mon 01:00 Mon 13:00 Tue 01:00 Tue 13:00 Wed 01:00 Wed 13:00 Thu 01:00 Thu 13:00 Fri 01:00 Fri 13:00 Sat 01:00 Sat 13:00 $/MW Hour of the Week Energy Congestion Losses

6 A Little More Data is Needed Shadow Prices Are More Useful than LMP s for Cause Impact & Analysis Shadow Prices (cost of relieving a constraint) reflect Multiple Constraints (1.9 per hour in PJM, 5+ is common) Outages (4 per hour average in Delmarva alone, 10+ is common in ISO s) Relief Cost & Effectiveness PJM Shadow Prices vary $0 to $1269 Amount of Load Affected These Data + LMP s Inform Markets 6

7 Congestion Patterns are Often Mysterious Shadow Price Variation with Load Level Delmarva Estimated Shadow Price in $/MW $1,000 $800 $600 $400 $200 $ Load in MW Why is Congestion Occurring at All Load Levels? Why Doesn t Congestion Cost Go Up with the Supply Curve? 7

8 % of Hours Occurring 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% Frequency of Congestion Occurrence at Varying Load Levels Delmarva % Load Level MW All Congested Hours No Outages Congested Hours All Hours (Congested or Not) Does Congestion Increase with Increasing Load Level? Generally No! Somewhat more frequent congestion with no outages at higher loads 8

9 What Causes Congestion At Shoulder Load? Transmission Outages Generation Outages Unit Commitment Decisions and Restrictions Unit Minimums Ramp Rates Minimum Run Times Bidding Patterns & Generation Location 9

10 Delmarva Peninsula Summary of Congestion by Cause August August 2002 Hours $/hour None $6,774 Construction $10,000 Forced $26,667 Planned $47,143 Average $14,366 Construction Outages No Outages Cost Forced Outages Planned Maintenance Outages 10

11 CRR s Make Good Hedges but Bad Investments NY Central East Limit Congestion Cost Weekly Average TCC Value NY Central East TCC $/MW $80 $60 $40 $20 $0 -$ Week Number 2000 ($785 Million) 2001($175 Million)

12 Why Spend $$ on New Transmission? Reliability Needs Entry Fee Safe Interconnection and Capacity Deliverability Costs Insurance Policy LMP s Provide Actuarial Data CRR s Define Hedges Investment Volatile and Unpredictable Where is the Pay-Back? 12

13 Improving LMP Based Markets Is There a Way? Embryonic Ideas Reducing LMP Volatility Create a financial resource (bilateral transactions or bilateral secondary market?) to use in commitment/dispatch to avoid going over the congestion cliff. Clear congestion with a longer term (one week?) to reduce the effect of outages and unit commitment. More volatile and transient (Day Ahead and real time?) congestion charged to load. Transmission Investment Flowgate Set Asides Identify Persistent but Somewhat Approximate Transmission Weaknesses Identify or Offer Flowgate Increase Opportunities Calculate & Use Flowgate Shadow Prices Reserve and Pay-out a New Set Aside Like CBM 13