Frequency Response Service and BAL December 14, 2015

Transcription

1 Frequency Response Service and BAL December 14, 2015

2 Two Key Objectives 1. Reliability: CAISO must have sufficient frequency response service to meet NERC BAL-003-1, effective Dec 2016 Will actions taken solely in the operational window (i.e., Day Ahead and Real-Time) be sufficient to ensure a BA meets this standard? Too late to build new facilities, re-schedule maintenance, or make physical changes to units External BAs may also be unable to provide frequency response service with short notice Year-ahead and month-ahead procurement can ensure sufficient frequency response service is available to meet standard (either from internal resources or through agreements with other BAs) Suggests that frequency response service is a resource adequacy issue 2. Efficiency: Frequency response service should be procured at least cost Least cost forward procurement process Procure from internal generation vs. contract with external BAs Least cost Day Ahead and Real-Time dispatch through co-optimization Commitment of internal resources and setting aside unloaded capacity Short-term procurement of frequency response service from other BAs 2

3 Potential Phase 2 Approach 1. Reliability Forward Sufficiency Frequency response service procured on a forward basis, under different possible approaches Centralized CAISO forward procurement? Or, de-centralized LSE procurement via amendments to Flexible RA program? Internal Flexible RA resources qualify toward meeting frequency response obligations Standalone frequency response service from other BAs Powerex understands external frequency response service must be procured from other BAs, not individual external resources 2. Efficiency IFM (and Real-time) Market Optimization Ensure sufficient frequency response service at least cost as part of IFM co-optimization process Headroom on dispatchable generation with governor control awarded as additional reserves Standalone frequency response service from external BAs awarded in co-optimized process Non-RA internal resources and/or frequency response service from external BAs offered in IFM may displace frequency response service that was procured on a forward basis, if lower cost 3

4 Potential Phase 1 Approach Objectives of Phase 1 Develop a bridge program Prior to developing a forward procurement process for frequency response service Prior to incorporating frequency response service in the Day-Ahead or Real-Time markets Ensure CAISO has sufficient frequency response service to meet BAL in all periods Acquire frequency response service at least cost Two potential sources of supply: 1. Internal Resources Increase spinning reserve procurement in the IFM Ensure sufficient internal spinning reserve maintained throughout IFM and real-time 2. Procurement from external BAs External BAs may need sufficient lead time to provide maximum frequency response service 4

5 Potential Phase 1 Approach Consider Forward Competitive Solicitation from External BAs: CAISO would seek FERC approval to conduct competitive solicitation of frequency response service from external BAs Product definition: MW per 0.1Hz Product granularity: monthly, with on-peak and off-peak products Compensation at clearing prices, encourages competitive offers Initial process covers 13 months: December 2016 through December 2017 Aligns Phase 2 launch date (January 2018) with RA program CAISO estimates cost of meeting the frequency response standard without procurement from external BAs, and uses estimate as a price cap in competitive solicitation process e.g., CAISO models incremental cost of procuring additional frequency response service solely from internal units Are there other ways to determine an appropriate price cap that should be considered? Results in least cost forward procurement at monthly on-peak and off-peak granularity Direct competition between external BAs Indirect competition with CAISO s estimated cost of meeting the standard from internal resources 5

6 Potential Timeline December 2015 February 2016: CAISO Phase 1 stakeholder process CAISO and interested BAs work with NERC to confirm frequency response transfer process CAISO estimates monthly on-peak and off-peak internal costs Pre-filing meetings with FERC March 2016: FERC Phase 1 filing May/June 2016: Competitive solicitation process, for service commencing December 2016 September 2016: Launch Phase 2 stakeholder process 6