Renewable Integration: Market & Product Review Phase 1

Transcription

1 Renewable Integration: Market & Product Review Phase 1 Margaret Miller Manager, Market Design & Regulatory Policy Gillian Biedler Senior Market Design & Policy Specialist Cindy Hinman Senior Market Design & Policy Specialist Stakeholder Meeting January 6, 2011

2 CAISO Stakeholder Process Renewable Integration: ti Market & Product Review Phase 1 We are here Project is triggered Issue ID Paper Straw Proposal Final Draft Proposal Board of Governors FERC Opportunities for Stakeholder Input Slide 2

3 Agenda and Overview Margaret Miller Manager, Market Design & Regulatory Policy

4 Agenda Time Topic 10:00 10:30 Introduction & Overview 10:30 12:00 Updates on Dec Bid Adequacy & PIRP Proposal 12:00 12:45 Lunch 12:45 2:00 Bid Floor Proposal 2:00 2:15 Wrap up and next Steps Slide 4

5 Meeting Objectives Phase I Renewable Integration ti Market & Product Review Review and invite input on proposals developed for phase I design elements Straw Proposal posted on December 22 at: Stakeholder comments requested by close of business January 20 th to: RIMPR@caiso.com Slide 5

6 Plan for Phase 1 and Phase II Jan Feb March April May June July Aug Sept Oct Nov Dec Phase I Stakeholder Process BOG Phase I Implementation Phase 2 Stakeholder Process BOG Slide 6

7 Dec Bid Adequacy Gillian Biedler Senior Market Design & Policy Specialist

8 Summary of the concernce Given 20% and 33% RPS, the supply conditions and challenges associated with intermittency are expected to increase The management of over-supply conditions and intermittency requires flexible response, economic bids Economic bids, especially decremental energy bids, will enable the market optimization to most efficiently dispatch the generation fleet Slide 8

9 Challenges with renewable e e integration [+] Intermittency [+] Over-supply conditions Efficient Dispatch Requires [+] Ramping capacity, especially downward [+] More economic bids, especially decremental bids Slide 9

10 Addressing the challenges MSG [+] Ramping Capacity RIMPR Phase II [+] Dec Bids Reduce self-scheduling Lower energy bid floor Slide 10

11 Reducing self-schedulingsc edu Given the changes below, no administrative measures to reduce self-scheduling are recommended at this time MSG modeling functionality implemented More extreme prices anticipated, lower energy bid floor Freeze on PIRP participation Overview of self-scheduling by resource type QFs Interties Renewables Combined cycles and other MSGs Slide 11

12 Qualifying Facilities Most of the gas turbine and other resources identified as frequent self-schedulers are in fact QFs MW capacity more than 1,800 MW Little or no dispatchability among current QFs CPUC has given IOUs MW capacity targets for Combined Heat and Power resources Slide 12

13 Interties t es Nearly 90% of imports are self-scheduled scheduled in the HASP This includes Day-ahead schedules that roll into HASP as s/s Incremental HASP s/s Incremental HASP s/s insulated from price signals in over-gen situations Other bilateral financial and physical transactions Slide 13

14 Renewables e es Hydro is the most prevalent renewable self-schedulingscheduling Highly seasonal PIRP requires self-scheduling of intermittent resources in the HASP to the level of the VER forecast 1,100 MW of wind and solar participate Renewables have not historically been dispatchable on a five-minute basis Technology improvements improved economic incentives Slide 14

15 Combined cycles + others with operating constraints ts Resources and others with multiple configurations and/or FORs s/s to guard against disadvantageous dispatch MSG modeling, improved FOR will help Some units, especially steam, have long downtimes so avoid cycling at night by s/s Slide 15

16 Summary Economic bids Extreme prices will incent submission of economic bids Changes to the energy bid floor Changes to PIRP will reduce s/s by EIRs Other enhancements MSG functionality implemented December, 2010 New market product? stay tuned for Phase II Slide 16

17 Participating Intermittent Resource Program Gillian Biedler Senior Market Design & Policy Specialist

18 Background Eligible intermittent resources can participate in PIRP Put in place in June, ,100 MW out of about 3,300 MW of intermittents participate Resources in PIRP Pay 10 /MWh forecasting fee Self-schedule le supply in HASP based on independent forecast RT UIE charges are netted across the month and charged the monthly average LMP Settlement benefit Jan 05 to Mar 09 > $3.46/MWh; Apr 09 to Aug 10 > $1.32/MWh Reduction is driven by reduction in forecast error, and not by LMPs May not submit economic bids and keep settlement benefits Slide 18

19 Goals Goas for intermittent tte t resources Minimize reliance on administrative measures to successfully participate in ISO markets Provide economic bids, especially decremental bids By so doing, help avoid and even relieve challenging system conditions while maximizing production by intermittent resources Slide 19

20 Motivation o for revisiting PIRP Under PIRP, the incentive is to self-schedule rather than supply economic bids Economic bids enable the market optimization to efficiently dispatch the fleet, and efficiently curtail when necessary Need for downward capacity is expected to increase as more intermittent resources on the system Without decremental energy bids, increasing need to un- economically dispatch Slide 20

21 MSC Input Participants in PIRP do not have incentives to Forecast their own output accurately Increase the dispatchability of their resources Provide economic bids PIRP is unlikely to be viable in the long-term given renewable portfolio standards Recommend treating all resources symmetrically y If it is necessary to subsidize VERs to meet policy goals, do so on a fixed basis not a per MWh subsidy Slide 21

22 Straw Proposal information o requirements e e Telemetry requirements Maintain additional telemetry requirements for EIRs Required for 3 rd party forecast service provider which is needed for reliable grid operation Energy forecast Under the data release phase 3 proposal, p will be shared with all market participants Fee currently assessed to all eligible intermittent resources Proposed that the forecast fee be rolled into the grid ops part of the grid management charge Note: grandfathered resources and resources that opt to continue to receive resource-specific specific forecasts will continue to pay forecast fee Slide 22

23 Straw Proposal bidding and scheduling Eliminate requirement to self-schedule schedule in HASP and settle against RT deviations If an EIR does not have a DA schedule and runs in RT, it will settle at the RT LMP If an EIR does have a DA schedule and runs in RT, its uninstructed deviations from that schedule will be settled as UIE EIR resources will be considered use-limited resources for the purpose of RA bidding requirements TariffSection Slide 23

24 Straw Proposal settlement e e t Settle EIRs as other supply resources Eliminate i netting of deviations across the month and paying/charging monthly average LMP for UIE Slide 24

25 Straw Proposal grandfathering ga dat g Resources in PIRP can opt to stay in PIRP Extends to resources with signed contracts, not necessarily built as of the date of the FERC order Applies for the duration of the existing contract Can opt out of PIRP, but not subsequently opt back in Resources in PIRP still charged 10 /MWh forecasting fee which is then applied as an offset to the grid ops charge Slide 25

26 Energy Bid Floor Straw Proposal Cynthia Hinman Sr. Market Design and Policy Specialist

27 Energy egybid Floor Goal A liquid supply of decremental bids for overgen situations and to manage congestion. Issue - Influence of RPS goals require that the current -$30/MWh bid floor be reviewed. Issue The bid floor should be low enough to incent all types of resources to participate including: Conventional generation VERs Exporters Storage Demand Slide 27

28 Stakeholder Comment Excerpts Negative prices are due to uneconomic adjustments. Lowering the bid floor will discourage conventional generators. Currently bids below the bid floor are acceptable if they can be justified; no need to change. Will lowering the bid floor increase the liquidity of decremental bids? There are differing opinions on symmetry issue. Slide 28

29 Benchmarking ISO/RTO Energy Bid Floor Bid Cap PJM No Bid Floor $1000/MWh NYISO -$999.99/MWh $1000/MWh MISO -$500/MWh $1000/MWh ERCOT -$250/MWh $2250/MWh CAISO -$30/MWh $750/MWh ISO-NE $0/MWh $1000/MWh Only NYISO has symmetry between bid floor and cap ERCOT bid cap will rise to $3000/MWh later this year ISO- NE is considering lowering their bid floor Slide 29

30 Considerations o s for lowering the bid floor The floor should be low enough so that: VERs have an incentive to decrement energy - must be more lucrative than incentives provided to VERs for energy production Marketers will have the incentive to export energy when needed d DR and storage may participate Use a cautious approach to reducing the bid floor level Benefit of symmetry between bid floor and bid cap (more detail on following slides) Reduce inconsistencies between scheduling and pricing run parameters Place equal value on incrementing and decrementing energy. Slide 30

31 Rationale for symmetry between bid floor and bid cap Uneconomic Adjustments t Market Processes Scheduling run Pricing run Scheduling run - Self schedules have higher priority than economically bid schedules self schedule penalty prices must be higher than bid cap (example on next slide) Pricing run - uses bid cap and floor to establish prices Conclusion - Lowering the bid floor to be symmetric with bid cap will reduce inconsistencies between scheduling and pricing run parameter values Slide 31

32 Example penalty prices for self schedules must be higher h than bid cap Supply Inc Bid $0 Dec Bid $0 A B Supply Self Scheduled Option 1 - Inc C, Dec A - cost is $750 Load C Supply Inc Bid $750 Option 2 - Inc A, Dec B cost depends on penalty price of B Penalty price $750, Option 1 will be used Penalty price <$750, Option 2 will be used - self schedule will be reduced instead of using economic bids Slide 32

33 Bid dcost Recovery ey Attachment A provides clarification requested by stakeholders Conclusions When the LMP falls below a resource s bid price and the resource is following dispatch instructions, they are eligible for bid cost recovery. Bid cost recovery is netted over all markets in a trade day so a resource may, or may not, recover costs depending on the status of other market outcomes. Benchmarking - other ISOs do not net uplifts over all markets Slide 33

34 Straw Proposal The goal is for the bid floor to be symmetric with the bid cap in A phase-in period will be implemented. Year Bid Floor $500/MWh $750/MWh $1000/MWh Each year, the effect of lowering the bid floor will be re- evaluated. Slide 34

35 Next Steps Gillian Biedler Senior Market Design & Policy Specialist

36 Next steps Comments are due January 20, 2011 Please submit your comments to Look for the kick-off to Phase II in February Slide 36