Constraint Specific Transmission Demand Curves

Transcription

1 Constraint Specific Transmission Demand Curves Jennifer Boyle Associate Energy Market Design Specialist MIWG December 5, 2017, Krey Corporate Center

2 Today s Agenda Background Project Objectives Scope of Study Summary of Market Participant Comments Potomac Economics Q Historical Analysis Potential Transmission Demand Curve Options Timeline/Next Steps 2

3 Background March 29, 2017 Management Committee As part of the approval of revisions to the transmission constraint pricing (TCP) logic, the NYISO committed to return and discuss potential further enhancements. The revised TCP logic was implemented on June 20, State of the Market Report Recommends constraint-specific graduated transmission demand curves to set constraint shadow prices during transmission shortages. The NYISO recognizes that the current single graduated Transmission Shortage Cost mechanism (or graduated transmission demand curve) which is applied to certain facilities and Interfaces may not be optimal for all situations. Constraints can vary according to the severity and/or duration of the transmission constraint violation. An initial project kick-off was presented at the October 3, 2017 MIWG. 03/Constraint%20Specific%20Demand%20Curves.pdf. 3

4 Project Objectives The NYISO is considering ways to avoid potentially over and under valuing transmission constraints related to the current TCP logic. Currently, the NYISO uses a single graduated mechanism to value all transmission shortages for facilities/interfaces with a non-zero value constraint reliability margin (CRM). The study will seek to identify under what circumstances/system conditions transmission constraints are potentially being under/over valued. Identify instances where a transmission constraint may be routinely relaxed because there are frequently insufficient resources to resolve the constraint. Identify scenarios where a transmission constraint has a high Shadow Price which may be over valuing the reliability need. The study will seek to determine the appropriate CRM level, if any, for facilities at less than the 230kV transmission level and the implications thereof on application of a graduated pricing mechanism. 4

5 Scope of Study Initial Step: The NYISO will perform preliminary data analysis to gather historical results. The results will assist in determining the design of the market prototype to run market simulations. Assess what does the market performance looks like since the June 20 th implementation of the revised pricing logic. June 20 th implementation included modifying the second step of the graduated mechanism from $2,350 to $1,175/MWh and applying the graduated mechanism more broadly to include all non-zero CRM facilities Will provide information to assist in establishing appropriate transmission demand curve MW and pricing values to be modeled in the simulations to be conducted as part of the second step of the NYISO s analyses. Second Step: The NYISO will conduct simulations to assist in determining appropriate transmission demand curve MW and pricing values for different constraints and system conditions. The analysis will include, but is not limited to: Evaluating which transmission constraints are frequently relaxed along with the severity and frequency at which they are relaxed. Evaluating appropriate transmission demand curve MW and pricing values, including consideration of whether any Shadow Price capping mechanism should be retained. Third Step: Publish a study report including simulations results. The results gathered will allow the NYISO to make an informed recommendation as to how to value transmission constraints considering the appropriate level of trade offs and maintaining reliable dispatch. 5

6 Summary of Market Participant Comments Market Participant Comments/Suggestions: Stop the practice of relaxation where there are insufficient resources to resolve the constraint and instead apply a penalty factor. Suggests that the penalty factor should represent the highest pricing level on the applicable transmission demand curve The NYISO should develop an objective approach to define under/over valued and excessive congestion. Should use historical and prospective analyses to target chronic constraints as a priority to eliminate relaxation. Research how other ISOs/RTOs apply transmission constraint pricing and utilize the research in assessing what may be appropriate for the NYISO. If the NYISO chooses to have constraint specific transmission demand curves, such curves should be developed using consistent criteria, such as voltage level, thereby reducing the possibility of subjectivity being introduced to the process. NYISO s MMU Comments/Suggestions: Suggested that the NYISO consider security and reliability issues: Consider different voltage levels. Consider addressing treatment of normal limit vs. short-term emergency limit vs. long-term emergency limit. Consider type of contingency. 6

7 Potomac Economics Q Historical Analysis The NYISO s MMU analyzed the recently implemented changes to the TCP logic as part of the congestion management analysis conducted for its quarterly report for Q MMU s observations regarding pricing outcomes for Q compared to Q3 2016: Incidents of constraint relaxation dropped to 6 percent from 59 percent. Constraint Shadow Prices moderately improved; however, in some cases, Shadow Prices did not appear to appropriately reflect the severity of the transmission shortage. Considerations based on the MMU s analysis: Certain CRM values may be over valuing transmission constraints. Pricing outcomes for the West and North zones should be further assessed given the prevalence of relaxation being used in conjunction with graduated Transmission Shortage Cost mechanism to resolve transmission constraints. The historical analysis being undertaken will analyze the above-noted considerations and other additional factors to assist in framing the transmission demand curve MW and pricing values to be used in the simulations conducted as part of the second step of the NYISO s analyses. 7

8 Potential Transmission Demand Curve Options Establish transmission demand curves based on the historical analysis of Shadow Prices, Shift Factors, CRM values and unit prices. Transmission demand curves could be characterized by: Voltage level Transmission Owner (TO) subzone Line rating Specific constraints Potential transmission demand curve designs: Single percentage curve - Model the transmission demand curve to have the capability to take a percentage of the price and MW value depending on different criteria, such as voltage level (e.g., 115kV lines added to the market model could be modeled at a percentage of the current curve). Single multiplier curve - Model the transmission demand curve with multiplier capability (e.g., set price as X*the highest bid of resources capable of providing relief for the constraint). This would allow the market to set prices and would dynamically incorporate fluctuations in resource costs over time (e.g., gas prices) Multiple curves Model various transmission demand curves based a set of criteria (e.g., voltage level, TO subzone, line rating, specific constraints). 8

9 Timeline/Next Steps Near-Term Next Steps: On or before October 31st - Receive any written feedback from Market Participants that is in addition to or supplements comments provided during today s meeting. December 5, Present at MIWG meeting to review feedback and provide potential criteria for study. January 16, 2018 Review NYISO s historical analysis and proposed transmission demand curve criteria for use in market simulations. Longer-Term Next Steps: January/February Market simulations targeted to begin. Q Complete study and present results. 9

10 The Mission of the New York Independent System Operator, in collaboration with its stakeholders, is to serve the public interest and provide benefits to consumers by: Maintaining and enhancing regional reliability Operating open, fair and competitive wholesale electricity markets Planning the power system for the future Providing factual information to policy makers, stakeholders and investors in the power system 10