Constraint Specific Transmission Shortage Pricing. Study Approach

Transcription

1 Constraint Specific Transmission Shortage Pricing Study Approach Jennifer Boyle Energy Market Design MIWG April 10, 2018, Krey Corporate Center

2 Today s Agenda Project Plan/Deliverables Scope of Study Proposed Market Design Concept Direction Reliability Criteria Planned Analysis to Inform Concept Next Steps 2

3 Scope of Study Initial Step: NYISO staff will study: 1. The impact of the NYISO s implementation of revised transmission constraint pricing (TCP) logic (implemented on June 20, 2017), which included: The modification of the value for the second step of the graduated Transmission Shortage Cost mechanism from $2,350 to $1,175/MWh. The application of the graduated Transmission Shortage Cost mechanism more broadly to include all non-zero CRM facilities. 2. How other ISO/RTOs implement transmission shortage pricing. 3. How the NYISO implements transmission shortage pricing, including factors such as constraint reliability margin (CRM) values, Shadow Price capping mechanisms, and relaxation of transmission constraints. Second Step: The NYISO will propose potential enhancements and conduct impact assessment to test concepts for improved transmission constraint pricing. Third Step: The NYISO will publish a report summarizing the results of both the proposed improvements and impact assessment, with recommendations for market enhancements. 3

4 Project Summary 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 CRM. This study seeks to identify under what circumstances/system conditions transmission constraints are potentially being under or 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. 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. Transmission constraints can be valued according to three key reliability criteria: 1. CRM value 2. Voltage level 3. Location 4

5 Reliability Criteria Constraint Reliability Margin (CRM) The NYISO assigns a CRM to facilities and interfaces to help manage transmission modeling uncertainty. Represents reduction to the appropriate transmission facility rating or interface limit that is used to set the effective limit in the market software. Two types of assignments: Zero CRM facilities generally represent facilities located out of a generation complex (also includes external interfaces), in these instances the facility should not be further limited. Non-Zero CRM facilities tariff currently requires CRM values equal to or greater than 20 MW. The majority of facilities are assigned a 20 MW CRM value. The current graduated pricing mechanism was designed around a 20 MW CRM value The current design does not recognize the additional limit flexibility of facilities with larger than 20 MW CRM values. The current design does not accommodate the use of smaller CRM values, which may be appropriate for certain facilities (e.g., facilities below 230 kv that are added to the market model as part of the Securing 100+ kv Transmission Facilities in the Market Model project). A design that accommodates varying CRM values may help to better reflect the severity of a constraint violation and improve the efficiency of dispatch. 5

6 Reliability Criteria Voltage Levels The NYISO s historical analysis for Q revealed that, on average, Shadow Prices and instances of relaxation were greater and more frequent for limiting facilities rated at the 345 kv level. In general, a transmission overload at the highest voltage level may have more widespread system reliability impacts. A transmission overload on a line with a lower voltage rating may be limited to more local impacts. 6

7 Reliability Criteria Location This study will consider the varying system impacts of constraints throughout NYCA. NYCA is very transmission constrained and the severity of impacts for constraints can vary by location. For example, the system impact of a 100+kV constraint in NYC may be greater than a 100+kV constraint located outside NYC. Additionally, the area/location will be considered because different areas of the NYCA may have varying costs to resolve a constraint. Cost differentials can arise from differences in transmission topology, resource mix and unique system conditions 7

8 Proposed Market Design Concept Direction Work already completed: Historical analysis after the deployment of the pricing logic enhancements on June 20 th ISO/RTO comparison. Understanding NYISO s key transmission reliability criteria: CRM value, voltage level, location. Continuing Work Proposed: Conduct analysis to understand costs to resolve constraints in the NYISO markets, according to CRM value, line ratings, available resources, and location. Develop multiple potential graduated transmission demand curve designs that vary by voltage level, location and CRM value Account for larger and smaller CRM values through the use of the stepped MW values for the various graduated curves. Goal of concept proposal: To address the potential for under and over valuing of transmission shortages, resulting in improved reflection of the value of varying constraints. Developing a more targeted transmission shortage pricing mechanism that reflects the system impacts of the location and voltage level of a transmission constraint. 8

9 Planned Analysis to Inform Concept Historical analysis of binding transmission constraints Analyze historic constraint data July 1, 2017 March 1, 2018, parsing data by month. Distinguish between binding constraints that are resolved on demand curve vs. non-demand curve constraints. Derive the frequency of the demand curve and non-demand curve binding constraints and determine percent ratio. Plot data and determine if there is trend/pattern in frequency and magnitude (MW) by the following criteria: CRM value Voltage level Location Investigate the shadow price of a non-demand curve binding constraint and the influence on proposed criteria The shadow price of a binding constraint is representative of the: Impact of the marginal unit (generator shift factor) Cost of the marginal unit The price reflects the $/MW amount as the increase in the system dispatch costs if a transmission line limit is decreased by one MW The purpose of the planned analysis is to: Validate/support the concept to move to the Market Design Complete project phase. The following analysis is out of scope for the study phase of this project: The exact variables and values of the potential transmission demand curves. These values will be determined during the Market Design Complete project phase 9

10 Next Steps January 16, 2018 Review NYISO s historical analysis. February 21, 2018 Review treatment of transmission shortages by other ISO/RTO s. April 10, 2018 Review NYISO s market design concept direction & plan for data analysis to inform concept Q Analysis of NYISO s current TCP logic. Q Continue analysis of NYISO s current TCP logic to inform market concept. Provide periodic data analysis updates. Review concepts, review results of supporting analysis and impact assessment plan. Q Publish study and present results. 10

11 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 11