Qualitative Reliability Assessment of Expanding the EIM to Day-ahead Market Services February 19, 2020 Seattle, WA MIC Market Assessment Expansion Working Group
Overview of Presentation ▪ Introduction and Overview of Report: Alaine Ginocchio, WIRAB ▪ Reliability Themes: Alaine Ginocchio ▪ Day-Ahead Operations: Jason Smith, Xcel Energy ▪ Resource Sufficiency: Andrew Meyers, BPA ▪ Transmission, Seams and Congestion Management: Robert Follini, Avista ▪ Ancillary Services: Angela Amos, FERC ▪ Contingency Analysis, Severe Weather Events and Unexpected Conditions: Jomo Richardson, FERC ▪ Wrap-up and Next Steps: Alaine Ginocchio 2
Overview of Report ▪ Expanding the EIM to Include Day-Ahead Market Services is under consideration ▪ A qualitative assessment of potential reliability impacts from expanding EIM to include day- ahead market services. • It will not address potential economic benefits or estimate cost savings. • It will be based on assumptions for the market design. • Reliability in a general sense 3
Overview of Report ▪ Goals of Report • Describes key changes in day-ahead processes and the potential impact these changes could have on reliability • Provide clear understanding of core operations and concepts in the two markets ▪ Accessible: WECC Board of Directors & state & provincial policymakers and regulators 4
Overview of Report ▪ Evaluating impact of DAMS addition only • EIM impacts have been evaluated • DAMS impact on real-time operations included ▪ What we are comparing • How DA operates now outside of CAISO: Bilateral Market Paradigm • Real-time operations: EIM • DA operations in an EIM + DAMS: CAISO’s current DA operations with some adjustments 5
MIC Working Group Organization Robert Follini Avista Andrew Meyers Bonneville Power Administration Darren Lamb California ISO Jamie Austin PacifiCorp Charles Faust WAPA, Sierra Nevada Region Jason Smith Xcel Energy Angela Amos FERC, OEMR Ben Foster FERC, OEPI Dillon Kolkmann FERC, OEPI Jomo Richardson FERC, OER Monica Taba FERC, OER Layne Brown WECC Jennifer Gardner Western Resource Advocates Alaine Ginocchio WIRAB 6
Overview of Report Methodology ▪ Expertise in Group ▪ Review of Documents and Reports ▪ Informational Meetings with Subject Matter Experts ▪ Outside Review 7
Assumptions What do we mean by “EIM + DAMS”? Assumptions for Market Framework. Core Assumptions • BAA boundaries and NERC-related compliance responsibilities will remain intact. • Control of transmission facilities will not be transferred to a market operator. • Integrated resource planning, resource adequacy procurement, and transmission planning and investment decisions will remain with each BA (and state/local regulatory authority). • DAMS will be a layer on top of the EIM, using CAISO’s market services as the model 8
Assumptions • Participation: BAs, voluntary, no DAMS stand-alone • Geographic Footprint: All EIM Entities • CAISO’s Market Analysis Engine: • Security Constrained Unit Commitment (SCUC) • Full Network Model (FNM), Locational • Marginal Pricing (LMP) • Ancillary Services: Offered as an option • Resource Sufficiency: RS Evaluation in the Day- ahead, no assumptions about design of test 9
Assumptions ▪ Transmission • complement the contract reservation regime • Sufficient incentives to make enough transmission available to address reliability requirements • No assumptions about design ▪ Other Markets: DAMS will operate along-side the Day-Ahead bilateral market; no centralized capacity market 10
Reliability Benefits: Themes ▪ Improved coordination across a broader geographic footprint ▪ Utilizing an advanced set of tools in the day-ahead time frame and applying them uniformly over multiple BAs. • Improved wide-area view by the market operator for use in developing the day-ahead commitment • Improved response to variability • Improved congestion management and relaxed impact of seams ▪ Better positioning and set-up for real-time operations 11
Potential Risks ▪ Additional complexity for transmission operations: new challenges managing seams between organized markets and operating closer to System Operating Limits (SOLs) ▪ Reduction of liquidity in the bilateral trading market ▪ Voluntary transmission provision: there may be incentives to retain transmission capacity 12
Day-Ahead Operations Jason Smith, Xcel Energy 13
Day-Ahead Operations ▪ What is done today – 3 paradigms • CAISO BAA • EIM BAA's • Non-EIM BAA's ▪ Common General Processes • Assess the situation ◦ Constraints (trans, AS, load, VER, fuel, etc) • Make decisions to serve obligations ◦ Buy? Generate? Sell? • Go forth! (and adjust....) 14
Day-Ahead Operations ▪ "How" it will be done changes ▪ Single decision maker (ultimately) ▪ Data submissions • Additional commitment details (unit parameters) • Added scrutiny on data • Financially binding • Increased transmission coordination 15
Day-Ahead Operations ▪ Tools • SCUC (security constrained unit commitment) ◦ Minimize commitment costs (not energy) • SCED (security constrained economic dispatch) ◦ Minimize energy production cost • SCUC and SCED require a Full Network Model (FNM) • LMP (locational marginal pricing) ◦ Flow-based congestion management ◦ Reflective of "value" of energy at a location 16
Day-Ahead Operations ▪ Locational Marginal Pricing • Marginal Cost of Energy • Marginal Cost of Congestion • Marginal Cost of Losses ▪ Day-Ahead vs Real-Time ▪ "Link" to provide translation between economic and reliability impacts 17
Day-Ahead Operations ▪ Carving out Reliability vs Economic benefits is more difficult than one would think ▪ Reliability Benefit Examples: • Better positioning for real-time • Lowered flexibility needs • Variability addressed (better) ◦ "complementary diversity" • Informed stakeholders ◦ LMP (investment indicators) ◦ Commitment decisions (revenue recovery) 18
Day-Ahead Operations ▪ Reliability Risk Examples: • Seams between market footprints ◦ Transmission deliverability assumptions • Economic/equity issues bleeding over into the reliability world (congestion management) ◦ Coordinated congestion management • Operating the transmission system more "fully" ◦ Change – Benefit/Risk? - closer to the edge? ◦ Depends on point of view ▪ Not Benefit or Risk: Optimized Commitment ◦ Change - less "excess" capacity on the system? 19
Resource Sufficiency Andrew Meyers, BPA 20
Resource Sufficiency ▪ Current EIM approach to RS • 4 Resource Sufficiency Tests administered by CAISO Transmission Feasibility Test → provides an opportunity to manage potential ◦ Transmission constraint violations prior to the operating hour [Non-Binding Test] Balancing Test → checks that resource base schedules balance to the area load ◦ forecast, otherwise an over/under scheduling penalty may apply [Non-Binding Test] Bid Range Capacity Test (Capacity Test) → checks that there’s sufficient bid ◦ range capacity to manage any imbalance from the Balancing Test and historical interchange deviations [Binding Test] Flexible Ramp Sufficiency Test (FRST) → checks that there’s sufficient within ◦ hour ramping capability and bid range capacity to meet intra-hour load ramping needs and historical net load uncertainty [Binding Test] 21
Resource Sufficiency ▪ During an RS failure, the EIM BA is limited, not fully “locked out”, of the EIM • If an EIM BA fails in the Up direction, then EIM net imports cannot increase via EIM Transfers • If an EIM BA fails in the Down direction, then EIM net exports cannot increase via EIM Transfers • If an EIM BA fails in both directions, then EIM net imports and net exports cannot increase via EIM Transfers ▪ The limits on EIM Transfers help to prevent EIM BAs that failed RS from leaning on other EIM BAs that passed RS ▪ While limited, the EIM market engines (FMM/RTD) continue to economically dispatch resources within the EIM BA, but EIM optimal dispatch and benefits will likely be impacted 22
Resource Sufficiency ▪ EIM + DAMS • Detailed market design has yet to be published • EIM + DAMS RS is not anticipated to impact or replace Resource Adequacy (RA) assessments ◦ RA requirements are expected to remain at state local regulatory authority • Without detailed market design, speculation on EIM + DAMS RS construct would be premature and inaccurate • Anticipate a RS check on EIM + DAMS to limit/eliminate BA leaning 23
Liquidity in the Bilateral Market ▪ EIM + DAMS participants will turn over DA unit commitments to market operator • Anticipate a natural reduction in DA physical bilateral activity as entities join EIM/EIM + DAMS 1 PM 6-8 AM Bilateral Trading DA Unit Commitment & Activity Market Awards 10 AM DA Market Bids Due 24
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