ERCOT ISO: Current Market and Trends in Future Market Design Reza Alaghehband, P.E. Control Engineering, Austin Energy, Austin, TX EMS Users Group Meeting September 12-13, 2005 Providence, RI
Outline: A. Overview of Austin Energy B. Overview of ERCOT ISO C. Current ERCOT Zonal Market D. New Nodal Market Design
A. Overview of Austin Energy: Municipal electric Utility 390,000 customers Peak net load of 2383 MW Generation Resources: coal, gas, nuclear, wind, and co-gen. 2750 MW capacity 9 Trans/68 Distribution subs ERCOT Member QSE, NOIE,
B. Overview of ERCOT ISO A NERC Member Organization
B.1: ERCOT One of 10 regional Reliability Councils in NERC. ERCOT members serve about 85% of the load in Texas and 75% of TX area. ERCOT members have a generation capacity of approximately 75,000 MWs and 38,000 miles of transmission lines. The PUCT is the principal regulatory authority.
B.1: ERCOT (Cont d) ERCOT membership consists of: - 17 Industrial Consumers - 3 Retail/Commercial Consumers - 41 Electric Cooperatives - 16 Independent Generators - 19 Independent Power Marketers - 36 Independent Retail Electric Providers - 8 Investor Owned Utilities - 19 Municipal Owned Utilities
B.1: ERCOT Role Expansion 1970 1995 1999 2003 ERCOT Role Coordinate Coordinate Texas Senate PUCT electricity trans. deregulation of Bill 7 (SB7) - Order Reliability and of the wholesale Create and manage for Nodal power transfer generation a retail electricity Market Exploration among members market market and development
B.1: Market Participants ERCOT QSEs (Qualified Scheduling Entities) PGCs (Resource Entities) LSEs (Load serving Entities) TDSPs (Transmission and Distribution Service Providers) NOIEs (Non Opted-in Entities) Other Participants (i.e., - Aggregators - Power Marketers - PUCT (Public Utility Commission of Texas)
Customers ERCOT B.1: Market Participants (Cont d) ERCOT Competitive Market Participants Qualified Scheduling Entity (QSE) Resource Power Marketer (Optional) Load Serving Entity (LSE) Aggregator (Optional) Transmission and Distribution Service Provider (TDSP) NOIEs (Municipality/Cooperative) Public Utility Commission of Texas (PUCT) Legend Key Information Flow Power Flow Non-Regulated Organization Regulated Organization
B.1: ERCOT s Primary Operations Production Operations Market Operations Financial Operations Registration ERCOT Core Operations Registration Market Operations Power Operations Load Profiling, Data Acquisition and Aggregation Settlements, Billing & Financial Transfer
C. Current ERCOT Zonal Market The ERCOT market is Zonal based. Zonal model is based on the transfer capability of the 345 KV transmission System. Zones are determined by clustering load and generation buses according to their shift factors(impacts) on selected CSCs (Commercially Significant Constraints) Northeast West North South Houston
C.1: ERCOT Retail Electricity Market ERCOT Bilateral Market Electricity sellers Electricity buyers Resources Bilateral Transactions Load Serving Entities Retail Customers QSEs Bilateral Transactions QSEs
C.2: Key Reliability Concepts As operator of the single control area: Ensure generation availability to support the system load Ensure Transmission capacity Real-time balancing of Energy Supply and demand
C.3: Ancillary Services - Capacity -Regulation Reserve -Responsive Reserve -Non-Spinning Reserve -Replacement Reserve -Voltage Support -Reliability Must Run (RMR) -Out of Merit (OOM) -Black start
C.3: Ancillary Services - Energy -Balancing Energy -RMR Energy -OOM Energy -Black Start Energy
C.4: Market Operations Process Four Major Sets of activities - Day-Ahead Market - Adjustment Period - Hour-Ahead Period - Real-time Balancing Energy Market Clearing
C.5: ERCOT Technical Interfaces Five main technical interfaces: 1. Portal Bowser-based interface 2. Transaction Clearinghouse 3. Application Programmatic Interface (API) 4. Real-time ICCP Interface 5. Real-time Remote Terminal Unit (RTU) Interface
D. New Nodal Market Design: PUCT Subst. R 25.501 (9/2003) Ordered ERCOT: Explore and develop a framework for a nodal based congestion management system With: a Day Ahead (DA) market for energy and a DA reliability unit commitment process.
D.1: Drivers Issues associated with Zonal, including: 1. Congestion Costs - Intra-zonal congestion costs have been significant (averaging $200 million/year in 2002, 2003, and 2004). 2. Operational Issues with Zonal Model - Complexity. Market clearing - 3 step now. Congestion management not transparent for Market Participants. Constraint oscillation problem under 2 step process. Zone and CSC changes 3. Politics
The cost to solve Local Congestion will be uplifted pro rata to each QSE based on the Load Ratio Share by QSE. (ERCOT Protocols 7.1) D.1: Uplifted Congestion Costs Over $1Billion, in Less Than 4Years Uplifted Congestion Cost 7/31/01-5/31/05 1200000000 1000000000 800000000 600000000 400000000 200000000 OOMC OOMC ADR LBEDN LBEUP OOMDN OOMUP RMR (net) TOTAL 0 OOMC OOMC ADR LBEDN LBEUP OOMDN OOMUP RMR (net) TOTAL Service
D.3: Sept 2003: PUCT Guidelines Project 36376 Bidding Pricing Resource Specific (including Loads) Nodal for Resources, Zonal for Loads DA Markets Hubs Congestion Revenue Rights Ancillary Service, Energy (Voluntary Participation), Reliability For Energy Trading Options, Obligations, Flowgates Two-Settlement Prices and Financial Obligations in Day Ahead & Real Time
D.4: Texas Nodal Status Spring 04 summer 04 2/05 3/05 10/06 ( 09 now) Subject to Change! 1 st draft { } Protocol TX Nodal TNT Protocol Protocol Filing at PUCT proposed Developed Comment& PUCT Implementation Development,Economist Recommend
D.5: Nodal Fundamentals 3 Part Resource Specific Offers + SCUC + SCED = BACK of Nodal
D.5: Nodal Fundamentals Definition Security Constrained Unit Commitment (SCUC): Mathematical process for finding a projected dispatch that minimizes the total bid-cost of meeting demand subject to all transmission and reliability constraints Security Constrained Economic Dispatch (SCED): Mathematical process for finding a dispatch (and LMPs) that minimizes the total bid-cost of meeting demand subject to all transmission constraints
D.5: Nodal Fundamentals Definition (Cont d) Resource Bidding Under Nodal--3 Part Offers for Each Resource Start up Cost Minimum Energy Energy $/MW LSL Three part bids are used in DA Energy Market (DAEM) and in the DA Reliability Market (in RUC) The Energy component of the 3-part bid is used in RT market as the basis for SCED MW
D.6: Nodal Market Building Blocks Day Ahead -Energy Market -Ancillary Service Capacity Market -Reliability Commitment Real Time -Hour Ahead (HA) Processes -Real-Time Dispatch -Performance Measurement Settlement -Day-Ahead -Real-Time Congestion Revenue Rights -Types -Acquisition Method Mitigation Nodal will Retain Existing QSE Structure & Communications Incentive s Cost Efficiency Wholesale Impact on Retail
D.6: Integrated Day Ahead Market Inputs Energy Offers Energy Bids AS Offers AS Bids CRR Offers CRR Bids Self Schedules SCUC & SCED Outputs Resource Commitments Hourly LMPs ASMarket Results
D.6: SCED & Unit Basepoints Inputs Energy Offers SCADA Network Model Self- Schedules Resource Parameters from COP SCED Outputs Resource Dispatch Points 5 minute LMPs
D.7: Perceived Benefits of Nodal vs. Current Operation Attribu te Current Texas Nodal Benefits DA Reliabi lity Replacement Mkt (Residual) Centralized Unit Commitment More Efficient Overall DA Energy Market None officially DAEM: solving for Energy, Commitment & CRRs Choice for all participants Trans missio n Rights Flow-gates PTP Options, Obligations & Flowgates More Hedging Choice
D.7: Perceived Benefits of Nodal vs. Current Operation (Cont d) Attribute Current Texas Nodal Benefits Real Time Dispatch RT Reliability Congestion Clearing Portfolio + Unit Specific HA Studies Resource Specific HA RUC More Efficient, More Granular Control More Efficient Overall Zonal Nodal More Efficient, Improved Price Signals, Improved Congestion Management
D.8: Major Changes With Zonal Market Portfolio Bidding & Dispatch (out) - Resource Specific (3-Part) Offers - Resource Specific Dispatch Expanded DA Process - DA Energy Market (no official one now) - Capacity Trading (only bilateral) - Reliability Unit Commitment 15 minute dispatch (out) - 5 minute dispatch Resources paid Zonal MCPE for Balancing Energy (out) - Paid Location Price Load Energy Prices Calculated on Basis of Aggregated LMPs within 2003 Congestion Zone Geographic Areas
D.9: High Level Systems Impacts & Operational Impacts - New System Development - New Communications? - Much More Data!! - Maintain Current System Operation & Settlement while developing new systems - Operation of 2 systems in parallel for period of time - AGC by ERCOT not members
Thank You!!!