ERCOT WHOLESALE MARKET OPERATIONS MODULE 2. 2 Essential Concepts Ancillary Services Congestion...

ERCOT WHOLESALE ERCOT WHOLESALE MARKET OPERATIONSMARKET OPERATIONS

MODULE 2MODULE 2

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Essential ConceptsEssential Concepts

Ancillary ServicesAncillary Services

Congestion ManagementCongestion Management

TopicsTopics

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Topic 1:Topic 1:Essential ConceptsEssential Concepts

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Essential ConceptsEssential Concepts

Market Structure

Wholesale Concepts and Roles

Introduction to the Day-Ahead and Operating Day process

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TOPIC 1: Essential ConceptsTOPIC 1: Essential Concepts

Wholesale MarketWholesale Market::

Zonal DesignZonal Design

Bilateral MarketBilateral Market

RequirementsRequirements::

QSE RepresentationQSE Representation

Balanced SchedulesBalanced Schedules

ERCOT StructureERCOT Structure

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Market Participants qualified by ERCOT to:

Submit Balanced Schedules

Submit Ancillary Services Bids

Settle with ERCOT

Qualified Scheduling Entity (QSE)Qualified Scheduling Entity (QSE)

QSE


All Resources and LSEs must be represented by a QSEAll Resources and LSEs must be represented by a QSE

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Definition / SummaryDefinition / Summary

A trade agreement between two entitiesA trade agreement between two entities

Bilateral transactions are scheduled with ERCOT Bilateral transactions are scheduled with ERCOT

Examples:Examples:

1.1. QSE A sells a block of 50 Mwh (North Zone), to QSE B for QSE A sells a block of 50 Mwh (North Zone), to QSE B for Hour-Ending 1100-1300 Hour-Ending 1100-1300

2.2. QSE A sells 3 Mw of Responsive Reserve to QSE B for Hour-QSE A sells 3 Mw of Responsive Reserve to QSE B for Hour-Ending 1400.Ending 1400.

Bilateral TransactionsBilateral Transactions


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For each Interval of a QSE schedule:For each Interval of a QSE schedule:

Qty of Resources and Obligations must Qty of Resources and Obligations must BalanceBalance

Bilateral Transactions must Bilateral Transactions must MatchMatch (Qty, QSE, Zone) (Qty, QSE, Zone)

Resources: Generation or purchasesResources: Generation or purchasesObligations: Load or salesObligations: Load or sales


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““Relaxed” Balanced SchedulesRelaxed” Balanced Schedules

For each Interval of a QSE schedule:For each Interval of a QSE schedule:

Qty of Resources and Obligations must Qty of Resources and Obligations must BalanceBalance

Bilateral Transactions must Bilateral Transactions must MatchMatch (Qty, QSE, Zone) (Qty, QSE, Zone)

QSE may QSE may setset obligations equal to supply, and/or schedule obligations equal to supply, and/or schedule BES via ERCOT to meet Obligations*BES via ERCOT to meet Obligations*

Resources: Generation or purchasesResources: Generation or purchasesObligations: Load or salesObligations: Load or sales


* Limited by QSE’s collateral with ERCOT

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ERCOT does not require QSEs to be balanced within each ERCOT does not require QSEs to be balanced within each Congestion Zone. However, not being balanced within each Congestion Zone. However, not being balanced within each zone may result in zone may result in congestion charges (or payments).congestion charges (or payments).

SQSESQSE SQSESQSE


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QSE Balanced Schedule – Portal DisplayQSE Balanced Schedule – Portal Display


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Balanced, but Balanced, but mismatchedmismatched


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What is the What is the Resource Plan?Resource Plan?

Each QSE representing a Resource or Load Acting as a Each QSE representing a Resource or Load Acting as a Resource must submit a Resource Plan!!Resource must submit a Resource Plan!!

Plan of how Generation Resources will operatePlan of how Generation Resources will operate

Due to ERCOT Due to ERCOT by 4:00 pmby 4:00 pm of the day-ahead period of the day-ahead period

Used by ERCOT to determine resource adequacyUsed by ERCOT to determine resource adequacy

Validated against balanced schedulesValidated against balanced schedulesLet’s

CheckUnder the

Hood!

Resource PlanResource Plan


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SYSTEM RELIABILITYSYSTEM RELIABILITY

ERCOT is here to ensure reliability by:ERCOT is here to ensure reliability by:

Resource capacity planningResource capacity planning..

Real-time transmission managementReal-time transmission management..

Procure balancing energyProcure balancing energy..

Issue deployment instructions to units, as needed.Issue deployment instructions to units, as needed.

ERCOT Roles: ReliabilityERCOT Roles: Reliability

ERCOT is similar to an Air Traffic ControllerERCOT is similar to an Air Traffic Controller


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Energy Buyers and SellersEnergy Buyers and Sellers submit their bilateral transactions submit their bilateral transactions (trades) to a Qualified Scheduling Entity (QSE).(trades) to a Qualified Scheduling Entity (QSE).

QSEsQSEs submit Balanced Schedules, Ancillary Services Bids and a submit Balanced Schedules, Ancillary Services Bids and a Resource Plan (if applicable) to ERCOT. Resource Plan (if applicable) to ERCOT.

ERCOTERCOT manages any manages any real-time imbalancesreal-time imbalances during the Operating during the Operating Period between forecasts and actual demands by deploying Period between forecasts and actual demands by deploying balancing energy.balancing energy.

Wholesale Process: From Scheduling to Power FlowWholesale Process: From Scheduling to Power Flow


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Wholesale Market TimelineWholesale Market Timeline

ERCOT Market Timeline

Market Operations

AdjustmentPeriod:Precedes Operating Period

Operating Period: Balancing Energy Clearing Occurs every 15 minutes

PowerOperations

Day-AheadPeriod: 6:00am to 6:00pm prior to Operating Day.

Commercial Operations

Initial Settlement10 days afterOperating Day

FinalSettlement59 days afterOperating Day

True-upSettlement:180 days afterOperating DayAnd/or specificProtocolCriteria is met


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Day-Ahead Period6:00AM to 6:00PM on the day prior to the Operating Day (“flow” date) QSEs submit balanced schedules and ancillary services bidsERCOT clears Ancillary Services Markets, and publishes results.

Adjustment PeriodTime between the close of the Day-Ahead Market and the start of the Operating Period.QSEs may modify their schedules and/or bids during this time.

Operating PeriodIncludes the Operating hour (“flow hour”) and the hour prior to Operating hour (look-ahead studies).



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Midnight



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Day-Ahead Period Key Times

06:00 Forecast Information Published11:00 Deadline for Day-Ahead Scheduling (Bilateral, A/S)11:15 Deadline to resolve Day-Ahead Mismatches13:00 Deadline for A/S Capacity Market Bids

Deadline for Adjusted Day-Ahead Schedules13:30 A/S Capacity results & MCPC16:00 Deadline for Resource Plan submittal

Replacement Reserve BidsSystem Lockdown for Day-Ahead Analysis

18:00 Day-Ahead Period complete; start of AdjustmentPeriod

Wholesale Market Timeline – Day Ahead PeriodWholesale Market Timeline – Day Ahead Period


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Adjustment Period – ERCOT does not have an “Hour-Ahead” period, as in some ISOs – it is referred to as the Adjustment Period.

On the Operating Day, the Adjustment Period is anytime up to one hr prior to Operating (“flow”) Hour when QSEs can alter or remove existing schedules, or submit new schedules for the Operating Hour.

Deadline for QSEs to submit schedules & changes is one hour prior to the “flow” hour. (i.e., deadline for HE1300 is 1100, because HE 1300 begins at 1200).

Wholesale Market Timeline – Adjustment PeriodWholesale Market Timeline – Adjustment Period


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Operating Period is 2 Hours. It starts immediately after the Adjustment Period, when all QSE schedules have been submitted and cannot be altered or removed.

First Hour – system lockdown – allows for system studies for the upcoming flow hour based on QSE schedules

Second Hour is the Operating (“Flow”) Hour

Wholesale Market Timeline – Operating PeriodWholesale Market Timeline – Operating Period


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Topic 2:Topic 2:Ancillary ServicesAncillary Services

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Ancillary Services (Reserves)Ancillary Services (Reserves)

Definitions and Requirements Definitions and Requirements (and why we need them)(and why we need them)

LSE Obligations and Supply OptionsLSE Obligations and Supply Options

Descriptions of ServicesDescriptions of Services

Merit-Order vs. Out of MeritMerit-Order vs. Out of Merit

TOPIC 2: Ancillary ServicesTOPIC 2: Ancillary Services

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What are Ancillary Services, and why does ERCOT What are Ancillary Services, and why does ERCOT need them?need them?

Generation that is intentionally Generation that is intentionally reservedreserved,, in the in the event it is needed. (i.e., a plant that generates 50 event it is needed. (i.e., a plant that generates 50 Mw of its maximum of 100 Mw has 50 Mw of Mw of its maximum of 100 Mw has 50 Mw of reservereserve capacity available) capacity available)

ReserveReserve capacitycapacity can be utilized (converted to can be utilized (converted to energyenergy) to keep the lights on ) to keep the lights on in the event of an in the event of an unforeseen system disturbance. unforeseen system disturbance.


““Energy InsuranceEnergy Insurance””

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As a QSE that schedules load, why do I need to As a QSE that schedules load, why do I need to know about A/S?know about A/S?

Market Participants Market Participants serving loadserving load have an have an A/S A/S ObligationObligation as a “ as a “cost of doing businesscost of doing business.”.”

Similar to Auto Insurance: If you own a vehicle Similar to Auto Insurance: If you own a vehicle in Texas, Liability Insurance is a mandated in Texas, Liability Insurance is a mandated cost that goes along with owning the vehicle.cost that goes along with owning the vehicle.


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Annual ProcedureAnnual Procedure

ERCOT establishes the ERCOT establishes the procedure for determining A/S procedure for determining A/S system requirementssystem requirements. It is reviewed and approved in the . It is reviewed and approved in the stakeholder process.stakeholder process.

Monthly CalculationMonthly Calculation

System-wide requirement is calculatedSystem-wide requirement is calculated, based on , based on statistical calculations and historical deployments.statistical calculations and historical deployments.

ERCOT System RequirementsERCOT System Requirements


““ERCOT Methodologies for ERCOT Methodologies for Determining Ancillary Determining Ancillary Service Requirements” Service Requirements” posted under Key posted under Key Documents.Documents.

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OK, what is my share of the ERCOT System OK, what is my share of the ERCOT System Requirement?Requirement?

It is based on your load relative to total ERCOT load, or Load Ratio Share (LRS).

If you have 10 Mw of Load, and ERCOT has 100 Mw of total load, your LRS is 10%. Your obligation will be 10% of each service that ERCOT requires.

QSE Day-Ahead LRS Obligations are posted each morning by 6AMQSE Day-Ahead LRS Obligations are posted each morning by 6AM


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Do I have a requirement if I am a QSE that has no Do I have a requirement if I am a QSE that has no load?load?

No. If you only have bilateral transactions and no load, you will not incur any A/S Obligations, UNLESS……

…you have an EXPORT on the DC Tie. An export is considered load, so if you schedule an export, you can expect to see an A/S Obligation 14 days later.

QSE Day-Ahead LRS Obligations are posted each morning by 6AMQSE Day-Ahead LRS Obligations are posted each morning by 6AM


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Where can I get Ancillary Services to fulfill my obligation?Where can I get Ancillary Services to fulfill my obligation?

QSEs can Self-Arrange:QSEs can Self-Arrange:a.a. Using its own resourceUsing its own resourceb.b. Purchase from another entity (A/S Bilateral Trade)Purchase from another entity (A/S Bilateral Trade)

QSEs can purchase from ERCOT at the Day-Ahead MCP QSEs can purchase from ERCOT at the Day-Ahead MCP for Capacity (MCPC).for Capacity (MCPC).

Note: Per Note: Per Protocol Section 4.3.1Protocol Section 4.3.1: QSEs that intend to purchase : QSEs that intend to purchase their obligation from ERCOT their obligation from ERCOT MUSTMUST schedule a bilateral schedule a bilateral PURCHASE from ERCOT.PURCHASE from ERCOT.

Ancillary Service Supply OptionsAncillary Service Supply Options


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A/S providers must be qualified by ERCOT to provide each A/S

Must keep awarded capacity in reserve

Must meet performance metrics (perform when called upon)

Ancillary Services SellersAncillary Services Sellers

A/SA/S


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Out-of-Merit vs. Merit-Order Out-of-Merit vs. Merit-Order

Merit-OrderMerit-Order Based on bidsBased on bids, “stacked” from least to most expensive, “stacked” from least to most expensive Market Price for Capacity and Energy is produced.Market Price for Capacity and Energy is produced.

Out-of-MeritOut-of-Merit:: Without respect to costWithout respect to cost Needed for reliability, regardless of economics.Needed for reliability, regardless of economics. Also utilized when no market solution exists.Also utilized when no market solution exists.

Selection ScenariosSelection Scenarios

ERCOT NEEDS YOU!


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Ancillary ServiceAncillary Service StatusStatus DeploymentDeployment ReasonReason

Regulation UpRegulation Up On-LineOn-Line ImmediateImmediate Small changes in FrequencySmall changes in Frequency

Regulation DownRegulation Down On-LineOn-Line ImmediateImmediate Small changes in FrequencySmall changes in Frequency

Responsive ReserveResponsive Reserve On-LineOn-Line Within a few Within a few minutesminutes

Significant deviation in Significant deviation in FrequencyFrequency

Non-Spinning ReserveNon-Spinning Reserve Off-LineOff-Line Within 30 MinutesWithin 30 Minutes >92 degrees, < 30 degrees, >92 degrees, < 30 degrees, or contingency of resource or contingency of resource lossloss

Target Frequency: 60 HzTarget Frequency: 60 Hz

Other Attributes:Other Attributes:• Day-Ahead Capacity MarketDay-Ahead Capacity Market• Selected in Merit OrderSelected in Merit Order

Ancillary Services: Option to Self-ArrangeAncillary Services: Option to Self-Arrange


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Day-Ahead A/S Capacity Market: Selection ProcessDay-Ahead A/S Capacity Market: Selection Process

System Requirement – 2300 MwSystem Requirement – 2300 Mw

23002300

13801380

Self-Arranged QtySelf-Arranged Qty(from A/S schedules)(from A/S schedules)

ERCOT to procure ERCOT to procure 920920 Mw via Mw via A/S Capacity MarketA/S Capacity Market


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920920

ERCOT moves “up the bid stack” until it reaches the necessary qty. The price ERCOT moves “up the bid stack” until it reaches the necessary qty. The price associated with that qty sets the MCPC. ($2.10 in this example)associated with that qty sets the MCPC. ($2.10 in this example)


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A/S Cash FlowsA/S Cash Flows

QSE AQSE A ERCOTERCOT

Day-Ahead Capacity ResultDay-Ahead Capacity ResultAward * $ Hourly MCPCAward * $ Hourly MCPC

““I will reserve X Mw I will reserve X Mw (awarded qty) of (awarded qty) of

generation”generation”


Mw * $ MCPE (BES)Mw * $ MCPE (BES)Deployment on Operating DayDeployment on Operating Day

ERCOT-instructed MwERCOT-instructed Mw


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Day-Ahead Capacity ResultDay-Ahead Capacity ResultAward * $ Hourly MCPCAward * $ Hourly MCPC

““I will reserve X Mw I will reserve X Mw (awarded qty) of (awarded qty) of

generation”generation”

If NO Deployments are issued by ERCOT:If NO Deployments are issued by ERCOT:

QSE A KEEPS the capacity payment QSE A KEEPS the capacity payment

Also similar to paying auto insurance premium, but not having a claim before the Also similar to paying auto insurance premium, but not having a claim before the policy expirespolicy expires


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How does ERCOT get the money to pay for Capacity?How does ERCOT get the money to pay for Capacity?

Net ObligationNet Obligation

ERCOT charges load QSEs for non-self-arranged obligationsERCOT charges load QSEs for non-self-arranged obligations

ERCOT remains revenue-neutral!ERCOT remains revenue-neutral!

$$$$$$$$

CapacityCapacity CapacityCapacity


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Replacement ReserveReplacement Reserve

Resources planned to be off-line, but availableResources planned to be off-line, but available

Deployed for Capacity Insufficiency, Zonal Congestion or Deployed for Capacity Insufficiency, Zonal Congestion or Local CongestionLocal Congestion

Black StartBlack Start

Widespread black out eventWidespread black out event

Started without support of the power gridStarted without support of the power grid

Contracted by ERCOT annuallyContracted by ERCOT annually

Exclusively Arranged by ERCOTExclusively Arranged by ERCOT


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Reliability Must-RunReliability Must-Run

Resolves local system reliabilityResolves local system reliability

Contracted by ERCOT Contracted by ERCOT

Otherwise would not be an active resourceOtherwise would not be an active resource



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Out-of-Merit Capacity (OOMC)Out-of-Merit Capacity (OOMC)

CapabilityCapability of providing additional Balancing Energy Service of providing additional Balancing Energy Service

Otherwise not selected because of the place (or absence) Otherwise not selected because of the place (or absence) in the Merit Order bid stackin the Merit Order bid stack

Out-of-Merit Energy (OOME)Out-of-Merit Energy (OOME)

ProvisionProvision of balancing energy to solve local congestion, or of balancing energy to solve local congestion, or when no market solution existswhen no market solution exists

Exclusively Arranged by ERCOT / Out of MeritExclusively Arranged by ERCOT / Out of Merit


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Balancing Energy (Merit Order)Balancing Energy (Merit Order)

Energy deployed by ERCOT every 15 Energy deployed by ERCOT every 15 minutesminutes

Deployed when load forecast is higher or Deployed when load forecast is higher or lower than scheduled ORlower than scheduled OR

Also deployed to resolve CongestionAlso deployed to resolve Congestion

Market Clearing Price for Energy (MCPE)Market Clearing Price for Energy (MCPE)


Example:Example:

Load Imbalance (LI) settles at BES MCPLoad Imbalance (LI) settles at BES MCP

LI: Difference between scheduled and LI: Difference between scheduled and metered metered loadload


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Ancillary Services SummaryAncillary Services Summary

Option to Self Arrange OR Purchase from ERCOTOption to Self Arrange OR Purchase from ERCOT

No Option to Self Arrange: Exclusively provided by ERCOTNo Option to Self Arrange: Exclusively provided by ERCOT


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A FULL SERVICE QSEA FULL SERVICE QSE

Markets and Schedules Markets and Schedules WATTScoWATTSco power generation. power generation.

Wholesale Supplier and Scheduler for Wholesale Supplier and Scheduler for POWERMARTPOWERMART and and EZWattsEZWatts, , retailers.retailers.

Qualified to provide Ancillary Services.Qualified to provide Ancillary Services.

Provide Power Marketing Services. Provide Power Marketing Services.

INTRODUCING!!

SQSESQSE


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A/S Obligation – A/S Obligation – Load Ratio ShareLoad Ratio Share

ERCOT calculates the ERCOT calculates the “load-ratio share”“load-ratio share” (LRS) of each (LRS) of each Load Serving Entity (LSE).Load Serving Entity (LSE).

QSE’s Load Ratio Share is the aggregate total of the LSE QSE’s Load Ratio Share is the aggregate total of the LSE LRS that it represents.LRS that it represents.

QSE’s A/S Obligation is its LRS of the Total ERCOT-wide QSE’s A/S Obligation is its LRS of the Total ERCOT-wide requirement.requirement.

SQSESQSE


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Example: Day-Ahead A/S Obligation for 4/26/04Example: Day-Ahead A/S Obligation for 4/26/04

SQSESQSE represents represents POWERMART [88]POWERMART [88] and and EZWatts [55]EZWatts [55], LSEs. , LSEs. On April 12, 2004 (14-days ago) the aggregated load for these two On April 12, 2004 (14-days ago) the aggregated load for these two LSEs came to:LSEs came to:

SQSESQSE

April 12 Load LRSApril 12 Load LRS


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A/S Obligation – For Example!

For intervals “hour-ending” 1000 through 1200 the A/S obligations are determined by taking the LRS times each ERCOT-wide obligation, rounded to a whole MW.

SQSESQSE


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A/S Obligation – For Example!- SQSE represents represents LSE_LSE_8888 and LSE_ and LSE_5555-- SQSE A/S Obligation = sum of the obligations of LSE_88 and LSE_55:

SQSESQSE


26-Apr-0426-Apr-04

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Day-Ahead Obligation:

Based on the Load Ratio Share of the Load from the Initial Settlement data, for the Operating Day that is 14 days before the day in which the Obligation is being calculated.

After the Operating Day: (PRR 451)

The AS Obligation calculations are adjusted (trued-up) based on the most up-to-date Load Data for each settlement run.

SQSESQSE

A/S Obligations: Recent Change!A/S Obligations: Recent Change!


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Ancillary Service Obligations – Portal ViewAncillary Service Obligations – Portal View

- Posted by 6 AM one day prior to the Operating DayPosted by 6 AM one day prior to the Operating Day- Obligation is under “Required Mw” columnObligation is under “Required Mw” column

Legend:Legend:DRS: Down Regulation ServiceDRS: Down Regulation ServiceNSRS: Non Spin Reserve ServiceNSRS: Non Spin Reserve ServiceRRS: Responsive Reserve ServiceRRS: Responsive Reserve ServiceURS: Up Regulation ServiceURS: Up Regulation Service


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Ancillary Service Scheduling: Keep in Mind…

A/S Scheduling OptionsA/S Scheduling Options

Self-ArrangementSelf-Arrangement

Bilateral purchase from another QSEBilateral purchase from another QSE

If QSE is using its own resource, purchase from selfIf QSE is using its own resource, purchase from self

Purchase from ERCOTPurchase from ERCOT

Bilateral purchase from ERCOTBilateral purchase from ERCOT


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Topic 3: Topic 3: Congestion ManagementCongestion Management

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Congestion ManagementCongestion Management

Definitions and Key ConceptsDefinitions and Key Concepts

Zonal vs. Local CongestionZonal vs. Local Congestion

Cost of CongestionCost of Congestion

Transmission Congestion RightsTransmission Congestion Rights

TOPIC 3: Congestion ManagementTOPIC 3: Congestion Management

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ConstraintConstraintA transmission element or group of elements that A transmission element or group of elements that limit limit the free flowthe free flow of energy. Constraints are typically of energy. Constraints are typically thermal, voltage stability,thermal, voltage stability, and and angular stabilityangular stability limitations. These constraints are the result of defined limitations. These constraints are the result of defined contingencies such as the trip of a generating unit or contingencies such as the trip of a generating unit or transmission circuit.transmission circuit.

Commercially Significant Constraint (CSC)Commercially Significant Constraint (CSC)A constraint in the ERCOT Transmission Grid that is A constraint in the ERCOT Transmission Grid that is found to limit the free flow of energy a found to limit the free flow of energy a commercially commercially significant degreesignificant degree..

Key DefinitionsKey Definitions TOPIC 3: Congestion ManagementTOPIC 3: Congestion Management

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CongestionCongestion

The situation that exists when The situation that exists when scheduledscheduled power flowspower flows, , when netted, when netted, are projected to are projected to exceedexceed the capability the capability of a of a Transmission element or set of elements.Transmission element or set of elements.


Congestion ZoneCongestion ZoneA grouping of busses that create a similar Shift Factor A grouping of busses that create a similar Shift Factor on CSCson CSCs

CSC LimitCSC LimitMaximum flow allowed across a CSC to Maximum flow allowed across a CSC to maintain reliable operationmaintain reliable operation

Key DefinitionsKey Definitions

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Shadow Price (SP)Shadow Price (SP)The The marginal pricemarginal price of the constraint ~ it indicates the of the constraint ~ it indicates the change in the overall cost, in $/MW.change in the overall cost, in $/MW.


Shift Factor (SF)Shift Factor (SF)Measure of power flow impactMeasure of power flow impact on a transmission on a transmission elementelement


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Schedule Impact (SI)Schedule Impact (SI)The The MW impactMW impact that bilateral energy schedules have that bilateral energy schedules have on a CSC. on a CSC.

TCR’sTCR’sTransmission Congestion Rights are a Transmission Congestion Rights are a financial financial instrumentinstrument that enables QSEs to hedge against the that enables QSEs to hedge against the risk of incurring congestion charges. risk of incurring congestion charges.


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Four Congestion Zones

FiveFive CSCsCSCs

1.1. South to NorthSouth to North

2.2. South to HoustonSouth to Houston

3.3. North to HoustonNorth to Houston

4.4. West to NorthWest to North

5.5. North to WestNorth to West

Zones and CSCsZones and CSCs


NorthNorthWestWest

SouthSouth HoustonHouston

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Managing traffic on the electric grid:Managing traffic on the electric grid:

Safe operating limitsSafe operating limits on the transmission system are on the transmission system are projected to be exceeded.projected to be exceeded.

QSEs can modify schedules to QSEs can modify schedules to avoid congestionavoid congestion..

Action is takenAction is taken if the physical flow approaches transfer limits. if the physical flow approaches transfer limits.

Resources are Resources are re-dispatched (“INC / DEC”)re-dispatched (“INC / DEC”)


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Congestion must be managed, and it costs $$$!

Even when the flow on the constraint is Even when the flow on the constraint is brought down below the limit by redispatch, brought down below the limit by redispatch,

we are in a congestion situationwe are in a congestion situation

Or ELSE Or ELSE - Equipment may be damaged- Equipment may be damaged

- System may become unstable- System may become unstable

ERCOT ObjectiveERCOT ObjectiveKeep flows under limits,Keep flows under limits,


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Local CongestionLocal Congestion

• a.k.a. a.k.a. INTRA-zonalINTRA-zonal congestioncongestion

• Occurs within a congestion Occurs within a congestion zonezone

• Cannot be resolved with Cannot be resolved with Zonal balancing energyZonal balancing energy

• Unit-specific deployments Unit-specific deployments and OOM Energy are and OOM Energy are utilizedutilized

Types of CongestionTypes of Congestion


NorthNorthWestWest

SouthSouth HoustonHouston

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Zonal CongestionZonal Congestion

• a.k.a. a.k.a. INTER-zonalINTER-zonal congestioncongestion

• Occurs between Occurs between congestion zonescongestion zones

• Resolved using Zonal Resolved using Zonal Balancing Energy Balancing Energy (Merit Order)(Merit Order)

Types of CongestionTypes of Congestion


NorthNorthWestWest

SouthSouthHoustonHouston

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How does congestion affect a QSE with load?How does congestion affect a QSE with load?


Total ERCOT cost Total ERCOT cost Uplifted at Load Ratio ShareUplifted at Load Ratio ShareAll All QSEs with loadQSEs with load pay for local congestion if it exists pay for local congestion if it exists anywhereanywhere


Direct AssignmentDirect Assignment to to ALL QSEsALL QSEs with schedules with schedules impacting congested CSCsimpacting congested CSCsCost = Cost = Schedule ImpactSchedule Impact on each CSCon each CSC * Shadow Price * Shadow Price


Cost of CongestionCost of Congestion

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How does congestion affect a QSE that has no load?How does congestion affect a QSE that has no load?


No effect, no charges.No effect, no charges.


Direct AssignmentDirect Assignment to to ALL QSEsALL QSEs with schedules with schedules impacting congested CSCsimpacting congested CSCsCost = Cost = Schedule ImpactSchedule Impact on each CSCon each CSC * Shadow Price * Shadow Price

Cost of Congestion


64South

Houston

10MW

2 MW Zonal Shift Factor S-HZone

0.2South

-0.3Houston

10MW

3 MW

Aggregate Generation = 10 MW

South-Houston CSC

Zonal shift factor is the average effect that changing generation in a zone has on a particular CSC constraint


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Known transmission conditionsKnown transmission conditions

Expected transmission conditions for the next dayExpected transmission conditions for the next day

Resource Plans for next dayResource Plans for next day

Bilateral Schedules for next dayBilateral Schedules for next day

Congestion Studies – Congestion Studies – Day-AheadDay-Ahead


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Procurement of RPRS (Zonal/Local Congestion). Procurement of RPRS (Zonal/Local Congestion).

Procurement of OOMC / OOME Procurement of OOMC / OOME

RMR Delivery Plan is completedRMR Delivery Plan is completed

Congestion Studies – Congestion Studies – Day Ahead and Day Ahead and before each Operating Hourbefore each Operating Hour

The Studies Result in:The Studies Result in:


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Scheduling, Pricing and Dispatch = SPDScheduling, Pricing and Dispatch = SPD

Executes every 15 minutes to deploy Balancing EnergyExecutes every 15 minutes to deploy Balancing Energy

• Calculated CSC flows• Calculated flow for OC2

constraints• Portfolio Balancing

Awards and resource specific instructions

• Zonal MCPEs

Inputs Outputs

• Telemetered Generator MW output

• Shift factors• Forecasted load• QSE Energy Schedules• QSE Resource Plan data• OC1 and OC2 constraint

limits

ERCOT Market Operating System

* Note: Real time (Physical) limits are not visible to SPD

Scheduling, Pricing & DispatchScheduling, Pricing & Dispatch


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Real-time Will be created by Simultaneous Feasibility Test (SFT) software

Local -

Future Use

OC3

Real-time Limit may be changed in adjustment or operating period based on impending congestion conditions

LocalOC2

Real-time SPD limit may be changed in adjustment or operating period based on impending congestion conditions

Setting of 9999 indicates constraint not active

Zonal

CSC / CRE

OC1

Monthly Based on planning studies taking into account planned outages, flow patterns

Basis of TCRs and CSC congestion notifications Suppressed in favor of OC1 in Real-time

Balancing

Zonal

CSC

OC0

FrequencyDescriptionApplicabilityLimit

Types of Constraints used by SPDTypes of Constraints used by SPD


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What the Operator SeesSees


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What the Operator DoesWhat the Operator Does


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BES Deployment PrinciplesBES Deployment Principles

QSEs shall first meet the specific resource deployment and QSEs shall first meet the specific resource deployment and then meet the BES deployment instruction.then meet the BES deployment instruction.

In the event that a QSE is unable to provide the BES due to a In the event that a QSE is unable to provide the BES due to a specific resource deployment then the QSE will follow the specific resource deployment then the QSE will follow the notification procedures established in Section 5, Dispatch. notification procedures established in Section 5, Dispatch.


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Balancing Energy Deployments (BES) Balancing Energy Deployments (BES)

When zonal transmission constraints are NOT in effect:When zonal transmission constraints are NOT in effect:

• The BES bid curves submitted by QSEs are used to establish The BES bid curves submitted by QSEs are used to establish a bid stack.a bid stack.

• The ERCOT EMS uses this stack to competitively select up or The ERCOT EMS uses this stack to competitively select up or down balancing energy, whichever is needed in the next down balancing energy, whichever is needed in the next interval for zonal balancing or inter-zonal congestion.interval for zonal balancing or inter-zonal congestion.

Stack’mUP!


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North

South

MW

$

MW

$

MCPE – No Congestion

MW

$

One consolidated bid stack for Balancing Energy

MCPE


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Balancing Energy Deployments (BES)Balancing Energy Deployments (BES)

When zonal transmission constraints ARE in effect:When zonal transmission constraints ARE in effect:

• The BES bid curves are separated out into prospective zonal The BES bid curves are separated out into prospective zonal bid stacks for the EMS to competitively select up or down bid stacks for the EMS to competitively select up or down balancing energy to unload the inter-zonal congestion.balancing energy to unload the inter-zonal congestion.

• The resulting zonal BES deployment is the incremental MW The resulting zonal BES deployment is the incremental MW increase (UBES) or decrease (DBES) each QSE awarded increase (UBES) or decrease (DBES) each QSE awarded BES needs to move their portfolio of resources in addition to BES needs to move their portfolio of resources in addition to their planned schedule.their planned schedule.

NorthZone

SouthZone


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North

South

MW

$

MW

$

MCPE – CongestionCongestion

MCPENorth

MCPESouthMCPESPCS-N


Note - MCPEs might be higher than the $1500 bid cap.

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Total Transfer CapabilityTotal Transfer Capability

The maximum power that may be transferred across a The maximum power that may be transferred across a transmission transmission corridorcorridor while maintaining reliability while maintaining reliability

Calculated on an Calculated on an annual basisannual basis

Updated monthlyUpdated monthly

TTC for each CSC establishes the number of TTC for each CSC establishes the number of Transmission Transmission Congestion RightsCongestion Rights (TCRs) to be auctioned (TCRs) to be auctioned


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Transmission Congestion Transmission Congestion RightsRights (TCRs) (TCRs) Financial instrumentsFinancial instruments Can be a Can be a hhedge against congestion chargesedge against congestion charges Revenues from TCR auctions go to QSEs @ LRS!Revenues from TCR auctions go to QSEs @ LRS!

TCR Auction Distribution:TCR Auction Distribution: Annual - Annual - 40% 40% MonthlyMonthly - 60% - 60%

TCR AuctionsTCR Auctions


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ERCOT sells TCRs

TCR auction revenues to QSEs at LRS

TCR Auction Process

Winning TCR bidder pays ERCOT and receives TCR.

TCR Price = Clearing price X Number of Hours in period

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Total transfer Capability

Amount Collected from CSC Congestion charges

Amount Paid to clear congestion

Amount Paid to TCR Holders

Scheduled transfer amount

Congestion Cash Flow


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ReviewReview

Who determines daily Ancillary Service requirements?ERCOT

Who schedules Ancillary Services?QSE

Who pays for Local Congestion?QSEs at LRS

What is a TCR?Transmission Congestion Right ( a financial hedge)

Bonus – What is the connection between Shadow Prices and MCPEs?

ERCOT WHOLESALE MARKET OPERATIONS MODULE 2. 2 Essential Concepts Ancillary Services Congestion...

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Transcript of ERCOT WHOLESALE MARKET OPERATIONS MODULE 2. 2 Essential Concepts Ancillary Services Congestion...