New York Capacity Market (NYISO Installed Capacity Market) The term Installed Capacity in the ICAP Manual and the NYISO Services Tariff Manual describes the market as opposed to the product. For example, the NYISO administers Installed Capacity auctions where Installed Capacity Suppliers offer Unforced Capacity that LSEs will purchase to meet their NYCA Minimum Installed Capacity Requirements. NYISO uses an Unforced Capacity methodology to determine the amount of capacity that each resource is qualified to supply to the New York Control Area (NYCA), and to determine the amount of capacity that Load Serving Entities (LSEs) must procure. The Unforced Capacity estimates the probability that a resource will be available to serve load, considering forced outages. NYISO Services Tariff defines unforced capacity as follows [1]: The measure by which installed capacity suppliers will be rated, in accordance with formulae set forth in the NYISO Procedures, to quantify the extent of their contribution to satisfy the NYCA Minimum Installed Capacity Requirement, and which will be used to measure the portion of that NYCA Minimum Installed Capacity Requirement for which each LSE is responsible. Every Capability Period, the NYISO will translate the NYCA Minimum Installed Capacity Requirement and the Locational Minimum Installed Capacity Requirement into a NYCA Minimum Unforced Capacity Requirement and a Locational Minimum Unforced Capacity Requirement. From the NYCA Minimum Unforced Capacity Requirement and the Locational Minimum Unforced Capacity Requirement, the NYISO will then calculate and establish each LSE s minimum unforced capacity requirement. On the supply side, the NYISO will compile 12-month rolling averages of operating data that it will use to determine the amount of Unforced Capacity that each Installed Capacity Supplier is qualified to supply to the NYCA [1]. To qualify as an Installed Capacity Supplier, certain Resource must meet the requirements for or have been granted Capacity Resource Interconnection Service (CRIS) status. The NYISO conducts 3 types of Installed Capacity auctions: 1) The Capability Period Auction 2) The Monthly Auction 3) The ICAP Spot Market Auction Participation in the monthly auction and the capability period auction shall consist of: i) LSEs seeking to purchase Unforced Capacity ii) Any other entity seeking to purchase Unforced Capacity iii) Qualified Installed Capacity Suppliers iv) Any other entity that owns excess Unforced Capacity Participation in the ICAP Spot Market Auction shall consist of all LSEs and any other entity that has an Unforced Capacity shortfall. Separate ICAP Demand Curves shall be used in the ICAP Spot Market Auction: to determine the locational component of LSE Unforced Capacity Obligations for each Locality, and to determine the total LSE Unforced Capacity Obligations for all LSEs in the NYCA.
Overview of Installed Capacity Planning and Procurement Process [1] The New York State Reliability Council ( NYSRC ) sets the Installed Reserve Margin NYISO determines the NYCA Minimum Installed Capacity Requirement and converts it into a NYCA Minimum Unforced Capacity Requirement. The NYISO also determines the Locational Minimum Installed Capacity Requirements and converts them into Locational Minimum Unforced Capacity Requirements. The NYISO determines these requirements in accordance with the New York State reliability Council ( NYSRC ), the Northeast Power Coordinating Council ( NPCC ) and the New York Public Service Commission ( PSC ). The NYISO assigns Minimum Unforced Capacity Requirements, including Locational Minimum Unforced Capacity Requirements, to LSEs on a Transmission District basis. LSEs may procure adequate Unforced Capacity from Installed Capacity Suppliers, with bilaterally or through NYISO-administered auctions, to meet their requirements. NYCA Installed Reserve Margin [1] NYCA Installed Reserve Margin is established annually by the NYSRC and is based on the NPCC standard for resource adequacy. The NPCC Resource Adequacy Standard requires the probability of disconnecting firm Load due to a Resource deficiency (LOLE) to be, on the average, no more than once in 10 years after due allowance for: Scheduled and forced outages and scheduled and forced deratings; Assistance over interconnections with neighboring Control Areas and regions; and Capacity and/or Load relief from available operating procedures. The NYISO uses a base model of the NYCA electric power system and its interconnections with neighbouring control areas to perform this analysis for the NYSRC. NYCA Minimum Installed Capacity Requirement [1] NYISO calculates the NYCA Minimum Installed Capacity Requirement in MW for the Capability Year: Minimum Installed Capacity Requirement = NYCA Coincident Peak Load *(1+ NYSRC IRM) A load serving entities (LSE s) minimum Installed Capacity requirement ( Minimum Installed Capacity Requirement ) is the sum of the Installed Capacity Requirements of each of its customers. NYCA Minimum Unforced Capacity Requirement [1] For each capability period, the NYISO calculates the NYCA Minimum Unforced Capacity Requirement: Minimum Unforced Capacity Requirement = NYCA Min Installed Capacity Requirement *NYCA translation factor Translation factor = 1- weighted average of the derating factors associated with all resources electrically located in the NYCA for that Capability Period. Locational Minimum Installed Capacity Requirements [1]
Due to transmission limitations into certain areas within the NYCA, LSEs serving Load in these areas must procure a percentage of their total Minimum Unforced Capacity Requirement from Installed Capacity Suppliers electrically located within the constrained areas. There are 3 areas called Localities, within the NYCA where Locational Minimum Installed Capacity Requirements are imposed. These are New York City, Long Island and the G-J Locality. The Locational Minimum Installed Capacity Requirements are established annually by the NYISO. For each Capability Period, the NYISO converts the Locational Minimum Installed Capacity Requirements of LSEs into Locational Minimum Unforced Capacity Requirements. Locational Minimum Unforced Capacity Requirements [1] Locational Minimum Unforced Capacity Requirement = Locational Min Installed Capacity Requirement * (1- weighted average of the derating factors associated with all resources electrically located in the relevant locality for that Capability Period). Storage in New York s Market FERC NOPR addressing Energy Storage In November 2016, FERC issued Notice of Proposal Rulemaking addressing Energy Storage Resource Participation in wholesale markets [2]. FERC proposed to require ISO/RTOs to [2]: Permit energy storage resources to provide all the services they are capable of providing (i.e. Capacity, Energy and Ancillary Services) Include bidding parameters that reflect energy storage resource physical and operational characteristics Permit energy storage resources to set clearing price (load, generation) Set minimum size requirement to no larger than 100 kw Set the price for energy storage resource charging and discharging at the applicable Locational Based Marginal Pricing (LBMP) Currently, the NYISO has several resource classifications that can accommodate participation of storage in the wholesale markets [3]: Energy Limited Resource (ELR)- may provide regulation service, operating reserves, energy and capacity o To be eligible to see capacity, the resource must be able to provide at least 1MW of grid injection for at least 4 consecutive hours where aggregation is not supported. o If a capacity supplier, ELRs must offer their capacity obligation into the Day-Ahead Market (DAM). o ELRs without a capacity sales obligation, may participate in the DAM, Real-Time Market (RTM) or both. o ELRs are modeled as an in front of the meter generator with the capability to withdraw at that location. Limited Energy Storage Resource (LESR)
o May only provide regulation service o Eligibility limited to storage resources that can sustain maximum injection or withdrawal rate for less than one hour (Due to storage capability limitation, ineligible to provide operating reserves, energy or capacity). o Aggregation is not supported- Must have at least 1 MW of dispatch capability. Demand Side Ancillary Services Program (DSASP) o May provide regulation service and operating reserves o May be aggregated must at least 1 MW of dispatch capability Special Case Resources (SCRs) o Allows demand response to sell capacity o To be eligible to sell capacity, the resource must be able to provide at least 100kW of load curtailment for at least 4 consecutive hours o Aggregation is supported 100kW of minimum curtailment capability requirement can be met through aggregation of resources. o Load with storage can be in the SCR program as long as it can meet all the program requirements. Hydro Pumped Storage accounts for 4% of New York s generating capacity. In 2016, NYISO launched an Energy Storage Integration and Optimization initiative to examine the options available for storage to participate in the NYISO markets and begin discussions with stakeholders on ways to enhance market accessibility for storage resources. This initiative was mainly to address FERC s proposed rule that there should bidding parameters that reflect energy storage resource physical and operational characteristics. The Energy Storage Integration and Optimization market design concept improves market integration and optimization of storage resources 1 MW or larger [2]. Energy Storage resources <1MW will be addressed through the DER Roadmap projects. The market design includes two tracks [2]: 1) 2017-2020: Energy Storage Integration will develop the participation model for storage resources. NYISO will work with stakeholders to refine a market design concept that will add new modeling parameters to allow storage resources to better represent their capability. 2) 2018-2020: Energy Storage Optimization will develop the optimization methodology for storage resources. A whitepaper will be drafted in 2018 addressing the potential benefits of the proposed optimization alternatives involving Energy Storage Resources. Bid Parameters [2] : Initial NYISO Design
NYISO proposes to add the following bid parameters for energy storage resources: Transition Time: Time that a resource would require for switching between injection/withdrawal states Minimum Load: Minimum withdrawal level at which the resource can operate Minimum Generation: Minimum injection level at which the resource can operate Mandatory bid parameters proposed by FERC Upper Charge Limit: Maximum quantity of energy that the resource can store Lower Charge Limit: Minimum quantity of energy that the resource must maintain Maximum energy charge rate: How quickly the resource can withdraw electricity from the grid Maximum energy discharge rate: How quickly the resource can inject electricity into the grid Discretionary bid parameters proposed by FERC Minimum charge time: Minimum time that the resource can receiving electricity from the grid Maximum charge time: Maximum time that the resource can inject electricity onto the grid Minimum run time: Minimum time that the resource can stay on Maximum run time: Maximum time that the resource can stay on Additional NYISO Proposals The NYISO is considering whether to include the following bid parameters: Number of cycles per interval: The maximum number of times that the Storage resource can go through full Upper-Lower charge limits cycles in an interval Roundtrip Efficiency: Efficiency of the resource for a charge/discharge cycle after accounting for conversion losses The NYISO will also consider the following parameters in the Optimization phase of this project: Ending State of Charge: Level of energy the resource desires by the end of the interval with an associated cost for deviations Beginning State of Charge: Level of energy the resource desires at the beginning of the interval with an associated cost for deviations Additional Considerations Energy storage resource rules may require NYISO to creating a new Resource type to streamline the implementation process and Tariff amendments. NYISO will assess the creation of a new Resource type for Energy Storage Resources as a part of this effort.
UK Capacity Market Storage Status in UK s Capacity Market According to the 2017 Capacity Market Auction Guidelines, the derating factor for storage used is 96.11% [4]. Storage is defined as plants that convert imported electricity into a form of energy which can be stored, the storing of energy which has been so converted and the re-conversion of the stored energy into electrical energy. Storage includes hydro generating units which form part of a storage facility (pumped storage hydro stations) [4]. Storage has a derating factor of approximately 10% higher than DSR and therefore storage would receive correspondingly higher remuneration per MW of nameplate capacity than DSR if successful at the auction. The auction results from 2016 showed that battery storage is a strong competitor now compared to other storage technologies. Also, the 2017 T-1 auction (for delivery in 2018) requires an additional 6 GW of capacity. There is a chance that battery projects may make a strong showing in this auction due to their relatively quick construction period and the number of projects in the market. There are some concerns that are currently being studied by the Department of Business, Energy and Industrial Strategy (BEIS). Some of these concerns are: (i) system stress events may last longer than the period for which a battery is capable of discharging power without recharging; (ii) batteries degrade over time so their performance is not constant; (iii) a battery that is seeking to maximize its revenues from other sources may not be fully charged at the start of a system stress event. There are 3 main concerns that were mentioned above regarding battery participation in the CM [5]: 1. Stress events may last longer than the duration of the battery Stakeholders are concerned that there would be an impact on security of supply when short duration storage units and longer duration storage units are rewarded the same. The National Grid (UK s system operator) estimated that if stress events do occur, they last up to 2 hours on average, although few are expected to last more than 4 hours. Certain types of storage that cannot discharge for this long without recharging will not be able to meet its capacity obligation for the full duration of many stress events. 2. Battery performance degradation over time Batteries are expected to degrade over time but the rate of degradation depends on the how they are used (the depth of charge/discharge) and how often they are cycled (charged and discharged). Therefore, this performance degradation may reduce the length of time for which a battery can discharge and the power at which it does so. The storage units must provide assurance of performance for the full length of the capacity market agreement not just the first delivery year especially if the unit has a multi-year agreement. 3. Some batteries may not be fully charged at the start of a stress event Some batteries have received both enhanced frequency response (EFR) contracts and agreements in the capacity market to stack revenues. There may be security of supply challenges if a battery is not sufficiently charged at the start of a stress event and can not met its capacity obligation for the duration of the stress event. These concerns will be addressed by reviewing the derating factors for storage and splitting storage into a series of distinct categories based on the length of time for which they can discharge without recharging. Bidders will self-select which duration category they fall into.
Amending the storage technology classes [5] Storage technology classes will be split into multiple categories depending on their different full connection capacity without recharging (its duration). The final number of categories and the range of each will be decided by the National Grid but the figure below shows the proposed classes so far. Figure 1: Proposed Generating Technology Classes for Storage [5] Amending de-rating factors [5] Amendments will be made to the derating factor of storage to take into consideration the duration. The current derating factor of generating units is based on the historical performance data of all units in the same technology class. Storage has a high derating due to the good historical performance of pumped hydro storage. Therefore, it is critical to take the duration of storage into consideration when calculating the derating factor and not just the technical reliability. This will allow a fair reward to both short and long duration storage based on their contribution to the security of supply. Storage units that have a long duration will fall under the minimum of 4 hours class and pumped hydro storage will also fall into this category with a derating factor almost equal to the one used today. The government proposed that the shorter duration storage categories would be defined as energy limited and would be derated according to their Equivalent Firm Capacity (EFC). The EFC values will be updated each year to reflect the changes in market penetration and system reliability. Technology Class [5] The UK government is proposing to further categorize the current generating technology classes. Ofgem (the regulator) announced amendments to the CM rules so that the generating technology class and primary fuel type are available on the public CM Register. This information was only available to the Delivery Body and now being openly available will allow interested parties to perform their analysis of the CM. The figure shown below shows the proposed amendments now. Categorizing the generating technologies further will result in a larger number of classes and allow for a more specific application of derating factors. This new disaggregated generating technology classes will apply to the 2018 auctions.
See Figure 1 for storage categories
New England Capacity Market (NE Forward Capacity Market) Storage status in the FCM in NE [6] Energy Storage Participation in FCM Energy Storage may qualify for a Forward Capacity Auction (FCA) as either a generator or demand response. The threshold for participation is 100kW. o If the storage facility participates as a generator, it is treated like a pumped-storage hydro resource in terms of qualification and participation. o If the energy storage resource is participating as a demand response, it must reduce load at a specific retail delivery point. Demand reduction is calculated at asset level as difference between actual load and historical baseline and it can participate as either an active or passive demand response. To be able to manage dispatch in system operations and maintain system reliability, all energy storage must qualify as separate FCM resources (and register as separate assets) o If a storage facility is co-located with wind or solar facilities then they can t be combined into a single FCM resource. They must be registered as separate assets. o An exception is if more than one passive demand resource located at same facility behind a single retail delivery point can register as a single resource. Energy Storage as a Generator Energy Storage facilities are studied by ISO New England or transmission providers, when storage is asked to participate as a generator, to determine impact to the power system. The results of power system analyses determine resources interconnection rights in MWs and necessary transmission upgrades. The capacity network resource capability (CNRC) is allocated separately to each FCM resource. Energy Storage as a Demand Response To participate as a demand response resource, you need to proof the rights of ownership or control of energy storage capacity as part of the Forwards Capacity Auction qualification. Output of energy storage facilities cannot exceed load at site. The table below shows the two types of demand response in with a storage facility can operate.
Summary of Potential FCM Qualification Options For examples on the qualification of storage: https://www.iso-ne.com/staticassets/documents/2017/05/20170428-ncqp-energy-resources.pdf
References [1] NYISO, "Installed Capacity Manual," August 2017. [Online]. Available: http://www.nyiso.com/public/webdocs/markets_operations/documents/manuals_and_guides/ Manuals/Operations/icap_mnl.pdf. [Accessed 25 September 2017]. [2] D. F. Noriega, "Energy Storage Integration and Optimization," 5 May 2017. [Online]. Available: http://www.nyiso.com/public/webdocs/markets_operations/committees/bic_miwg/meeting_m aterials/2017-05- 05/2017%2004%2020%20Energy%20Storage%20I%20O%20MIWG%202017%2005%2005.pdf. [Accessed 24 September 2017]. [3] J. Pigeon, "Energy Storage Market Integration and Optimization," 1 March 2016. [Online]. Available: http://www.nyiso.com/public/webdocs/markets_operations/committees/bic_miwg/meeting_m aterials/2016-03-01/energy%20storage%20- %20Market%20Integration%20and%20Optimization%20MIWG.pdf. [Accessed 24 September 2017]. [4] National Grid, "Capacity Market Auction Guidelines," 7 July 2017. [Online]. Available: https://www.emrdeliverybody.com/lists/latest%20news/attachments/114/capacity%20market %20Auction%20Guidelines%20July%207%202017.pdf. [Accessed 25 September 2017]. [5] BEIS, "Capacity Market Consultation-Improving the Framework," July 2017. [Online]. Available: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/631842/cm_c onsultation_-_detailed_proposals-template.pdf. [Accessed 25 September 2017]. [6] C. P. Sedlacek, "New Capacity Qualification for Energy Storage Resources," 28 April 2017. [Online]. Available: https://www.iso-ne.com/static-assets/documents/2017/05/20170428-ncqpenergy-resources.pdf. [Accessed 27 September 2017].