2019 ANNUAL REPORT HIGHLIGHTS WITH SELECT HIGHLIGHTS … asom stakeholder... · 2020. 5. 26. ·...

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2019 ANNUAL REPORT HIGHLIGHTSWITH SELECT HIGHLIGHTS FROM WINTER 2020 QUARTERLY REPORT

MAY 26, 2020

2MMU

ANNUAL REPORT OVERVIEW

3MMU

MARKETS COMPETITIVE OVERALL

• Low energy prices

• Low frequency of offer mitigation

• All frequently constrained areas removed

4MMU

MARKET DRIVERS

• Factors influencing prices higher:• Increased generation outages

• Factors influencing prices lower:• Lower gas prices• Increase in low-cost generation resources

5MMU

IMPORTANT ISSUES GOING FORWARD

• Price formation during emergency and scarcity conditions

• Incentives for resource adequacy capacity

• Proper reporting of outages

• Distortion of prices by self-committed generation

• Under-scheduling of wind resources in day-ahead

• Analyzing and addressing seams issues

6MMU

RECOMMENDATIONS – NEW

• Improve price formation during• Emergency conditions• Scarcity events

• Incentivize capacity performance

• Update and improve outage coordination methodology

7MMU

RECOMMENDATIONS – EXISTING • Enhance market efficiency

• Reduce need for self-commitment• Address under-scheduling of wind

• Increase flexibility• Develop an uncertainty product• Enhance commitment logic• Continue development of energy storage design

• Limit market power of changing parameters

• Enhance credit rules for known information

• Enhance ability to assess a range of transmission planning outcomes

8MMU

MARKET DRIVERS

9MMU

SPP GENERATION CAPACITY MIX

Coal26%

Gas, simple cycle26%

Wind25%

Gas, combined cycle15%

Hydro4%

Nuclear2%

Oil2%

Solar0% Other

0%

10MMU

LOAD DECREASED 0.5% IN 2019 COMPARED TO 2018

10

14

18

22

26

30

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2017 '18 '19

GW

h (t

hous

and

s)

2017 '18 '19

11MMU

SPP PRICES, AND GAS COSTS, DECREASED IN 2019

$0

$1

$2

$3

$4

$5

$0

$10

$20

$30

$40

$50

2014 2015 2016 2017 2018 2019

$/M

MB

tu

$/M

Wh

Day-ahead price Real-time price Panhandle Eastern Pipeline gas cost

12MMU

WIND CAPACITY ADDITIONS CONTINUE TO OUTPACE RETIREMENTS

0

600

1,200

1,800

2,400

2017 2018 2019 2017 2018 2019

Nam

epla

te c

apac

ity (M

W)

Coal Wind Hydro Gas Oil

retirements additions

13MMU

WIND CAPACITY AND GENERATION CONTINUED TO INCREASE

0

20,000

40,000

60,000

80,000

0

6

12

18

24

2014 2015 2016 2017 2018 2019

Gen

erat

ion

(GW

h)

Cap

acity

(GW

)

Dispatchable capacity Non-dispatchable capacity Wind generation

14MMU

GENERATION OUTAGES – SPECIFICALLY GAS, SIMPLE-CYCLE OUTAGES – INCREASED

0

30,000

60,000

90,000

2017 '18 '19 2017 '18 '19 2017 '18 '19 2017 '18 '19

Derate,forced

Derate,maintenance

Out-of-service,forced

Out-of-service,maintenance

Out

age

(GW

h)

Coal Gas, combined-cycle Gas, simple-cycle Hydro Nuclear Oil Other Renewable Wind

15MMU

SELF-COMMITTED START-UP INSTRUCTIONS DOWN2017 2018 2019

Day-ahead market 68% 74% 75%Self-commitment 15% 11% 8%Intra-day RUC 8% 7% 7%Manual, regional reliability 4% 5% 7%Short-term RUC 2% 3% 2%Day-ahead RUC <1% <1% <1%Manual, local reliability 1% 1% 1%

Starts 28,160 35,328 33,643

16MMU

MARKET PERFORMANCE

17MMU

ALL-IN COSTS WERE DOWN 12 PERCENT AND WERE DRIVEN BY ENERGY COSTS

$0

$1

$2

$3

$4

$0

$10

$20

$30

$40


Nat

ural

gas

co

st ($

/mm

Btu

)

All-

in p

rice

($/M

Wh)

Energy (LMP) Reserves Day-ahead MWP Real-time MWP Gas PEPL

18MMU

FREQUENCY OF REAL-TIME NEGATIVE PRICES INCREASED IN ALL HOURS IN REAL-TIME

0%

3%

6%

9%

12%

15%


Perc

ent n

egat

ive

pri

ce in

terv

als

LMP −$0.01 to −$25.00 LMP −$25.01 to −$50.00 LMP less than −$50.00

19MMU

MARKET REVENUE INSUFFICIENT TO SUPPORT NEW GENERATION

Technology

Average marginal

cost ($/MWh)

Net revenue from SPP market

($/MW yr.)

Annual revenue

requirement ($/MW

yr.)

Able to recover

new entry cost

Annual fixed

O&M cost($/MW

yr.)

Able to recover

avoidable cost

Scrubbed coal $28.89 $18,170 $801,540 NO $83,750 NO

Advanced gas/oil combined-cycle $24.43 $76,898 $110,007 NO $10,300 YES

Advanced combustion turbine $41.69 $20,157 $93,783 NO $7,010 YES

Wind -$30.00 $178,165 $252,355 NO $48,420 YES

Solar $0.00 $69,196 $195,541 NO $22,460 YES

20MMU

WIND AND COAL GENERATION TRENDING IN OPPOSITE DIRECTIONS

0%

10%

20%

30%

40%

50%

60%

70%

2014 2015 2016 2017 2018 2019

Perc

ent o

f to

tal g

ener

atio

n

Coal Gas, simple cycle Gas, combined cycle Wind Hydro Nuclear

21MMU

WIND GENERATION OUTPACED COAL GENERATION IN APRIL AND OCTOBER

0%

10%

20%

30%

40%

50%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Perc

ent o

f to

tal g

ener

atio

n

Coal Gas, simple cycle Gas, combined cycle Wind Hydro Nuclear

22MMU

VIRTUAL TRANSACTIONS CONTINUE TO GROW STEADILY

-8,000

-6,000

-4,000

-2,000

0

2,000

4,000

6,000

8,000


Ave

rag

e ho

urly

vo

lum

e (M

W)

Cleared bids < $30/MWh Cleared offers < $30/MWhCleared bids > $30/MWh Cleared offers > $30/MWhUncleared bids Uncleared offersNet cleared

23MMU

SPP EXPERIENCED FIRST CONSERVATIVE OPERATIONS SINCE START OF INTEGRATED MARKETPLACE• February 7-9 (cold weather, icing impacts) • March 3-5 (cold weather, icing impacts, gas supply concerns) • May 29-June 1 (generation outages, low wind, increasing load) • June 4-7 (generation outages, low wind, summer load) • July 1-3 (generation outages, low wind, summer load) • July 10-17 (generation outages, high load) • August 6-8 (generation outages, high load, low wind, EEA 1) • August 12-13 (high load, low wind, hot weather) • August 20-21 (high load, hot weather) • September 5-7 (generation outages, high load, low wind)

24MMU

PRICES DURING EEA 1 DID NOT REFLECT EMERGENCY CONDITIONS

$0

$300

$600

$900

$1,200

$1,500

8:00

9:00

10:0

0

11:0

0

12:0

0

13:0

0

14:0

0

14:3

0

15:0

0

15:3

0

16:0

0

17:0

0

18:0

0

19:0

0

20:0

0Mar

gin

al e

nerg

y co

mp

one

nt ($

/MW

h)

Marginal energy component

EEA1Conservative operations

25MMU

CONGESTION

26MMU

CONGESTION HAS SHIFTED TO THE SOUTHEAST

27MMU

FREQUENTLY CONSTRAINED AREAS CHANGING AS CONGESTION SHIFTS

Day-aheadmarginal congestion

component

Central Kansas2018 study addition2019 study removal

Southwest Missouri2018 study addition 2019 study removal

28MMU

MARKET-TO-MARKET PAYMENTS INCREASED

-$14

-$7

$0

$7

$14

$21

$28

$35

-$6

-$4

-$2

$0

$2

$4

$6

$8


Mill

ions

Mill

ions

Payments from MISO to SPP Payments from SPP to MISO Net payments

Total

29MMU

TRANSMISSION CONGESTION AND AUCTION REVENUE RIGHT FUNDING

0%

20%

40%

60%

80%

100%

-$200

$0

$200

$400

$600

$800

2017 2018 2019

Fund

ing

per

cent

Mill

ions

TCR funding

Day-ahead revenue Transmission congestion right fundingSurplus/shortfallFunding percent

0%

40%

80%

120%

160%

200%

$0

$100

$200

$300

$400

$500

2017 2018 2019

Fund

ing

per

cent

Mill

ions

ARR funding

Transmission congestion right revenue Auction revenue right funding Surplus/shortfallFunding percent

30MMU

MARKET EFFICIENCY

31MMU

DAY-AHEAD MAKE-WHOLE PAYMENTS INCREASED BY 16 PERCENT

$0

$2

$4

$6

$8


Mill

ions

Coal Gas, combined-cycle Gas, simple-cycle Hydro Wind Other

$0

$10

$20

$30

$40

2017 '18 '19

Mill

ions

Total

32MMU

REAL-TIME MAKE-WHOLE PAYMENTS INCREASED BY ALMOST 55 PERCENT

$0

$2

$4

$6

$8

$10


Mill

ions

Coal Gas, combined-cycle Gas, simple-cycle Hydro Wind Other

$0

$15

$30

$45

$60

$75

2017 '18 '19

Mill

ions

Total

33MMU

SCARCITY EVENTS INCREASED IN 2019

$0

$250

$500

$750

$1,000

0

50

100

150

200


Mar

gin

al e

nerg

y co

st ($

/MW

h)

Scar

city

inte

rval

s

Operating reserve scarcity Regulation-down scarcity Regulation-up scarcityOperating reserve scarcity price Regulation-down scarcity price Regulation-up scarcity price

34MMU

REAL-TIME PRICE VOLATILITY UP, BUT DAY-AHEAD VOLATILITY DOWN

0

20

40

60

80


Vo

latil

ity (s

tand

ard

dev

iatio

n)

real-time volatility day-ahead volatility

35MMU

WIND NOT IN DAY-AHEAD MARKET DRIVING PRICE DIVERGENCE

Wind

Net virtual supply (day-ahead)

RUC/manual committed

Self-committed after day-ahead market

Import increase

0

400

800

1,200

1,600

2,000

2,400

Additional energy Reductions

MW

h

Net additional real-time supply

36MMU

UNDER-SCHEDULING OF WIND IN DAY-AHEAD MARKET CAN CONTRIBUTE TO DISTORTED PRICE SIGNALS

84%

88%

92%

96%

100%

0

2,000

4,000

6,000

8,000


Day

-ahe

ad p

erce

nt c

lear

ed

GW

h

Day-ahead offered GWh Day-ahead cleared GWhWind forecast Day-ahead percent cleared

37MMU

FREQUENCY OF MITIGATION REMAINED LOW

0.0%

0.1%

0.2%

0.3%

0.4%

0.5%


Perc

ent o

f res

our

ce

hour

s m

itig

ated

Day-ahead

Energy Operating reserve No-load

0.00%

0.02%

0.04%

0.06%

0.08%

0.10%


Perc

ent o

f res

our

ce

hour

s m

itig

ated

Real-time

38MMU

MITIGATION OF START-UP OFFERS WAS FLAT, BUT REMAINED LOW

0%

2%

4%

6%

8%

10%


Perc

ent o

f sta

rt-u

p o

ffers

miti

gat

ed

Day-ahead Reliability unit commitment Manual

39MMU

MARKET CONCENTRATION INCREASED INTO THE MODERATE ZONE WITH THE EVERGY MERGER

0

500

1,000

1,500

2,000

Her

find

ahl-H

irsc

hman

Ind

ex


Unconcentrated

Moderately concentrated

Highly concentrated

40MMU

AVERAGE ANNUAL OFFER PRICE MARKUP NEGATIVE FOR ON-PEAK AND OFF-PEAK

-$20

-$16

-$12

-$8

-$4

$0

$4

2017 2018 2019 2017 2018 2019

Off-peak On-peak

Offe

r pri

ce m

arg

inal

co

st m

arku

p ($

/MW

h)

High Average Low

41MMU

QUESTIONS?

42MMU

WINTER 2020 QUARTERLYSTATE OF THE MARKETREPORT

43MMU

COAL GENERATION CONTINUES TO DROP, WHILE WIND & GAS GENERATION CLIMBS

0%

10%

20%

30%

40%

50%

Dec18

Jan19

Feb19

Mar19

Apr19

May19

Jun19

Jul19

Aug19

Sep19

Oct19

Nov19

Dec19

Jan20

Feb20

2018 '19 '20

Nuclear Wind Coal Gas, combined cycle Gas, simple cycle

Winter

44MMU

MARKET COMMITMENTS UP, WHILE SELF-COMMITMENTS DOWN

0%

20%

40%

60%

80%

Dec18

Jan19

Feb19

Mar19

Apr19

May19

Jun19

Jul19

Aug19

Sep19

Oct19

Nov19

Dec19

Jan20

Feb20

2018 '19 '20

Market Self OutageWinter

45MMU

GENERATION OUTAGES ARE DOWN

0

10,000

20,000

30,000

40,000

Sep18

Oct18

Nov18

Dec18

Jan19

Feb19

Mar19

Apr19

May19

Jun19

Jul19

Aug19

Sep19

Oct19

Nov19

Dec19

Jan20

Feb20

2018 '19 '20

GW

h

Coal Gas, CC Gas, SC Hydro Nuclear Oil Other Renewable WindWinter total

46MMU

ENERGY PRICES AND GAS COSTS CONTINUE TO DECLINE

$0

$1

$2

$3

$4

$0

$10

$20

$30

$40

Dec18

Jan19

Feb19

Mar19

Apr19

May19

Jun19

Jul19

Aug19

Sep19

Oct19

Nov19

Dec19

Jan20

Feb20

2018 '19 '20

Gas

pri

ce ($

/MM

Btu

)

LMP

($/M

Wh)

Day-ahead price Real-time price Gas cost

Winter

47MMU

HIGHEST PRICES AND CONGESTION IN SOUTHEAST CORNER OF FOOTPRINT

48MMU

QUESTIONS/[email protected]

or

[email protected]

2019 ANNUAL REPORT HIGHLIGHTS WITH SELECT HIGHLIGHTS … asom stakeholder... · 2020. 5. 26. ·...

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Transcript of 2019 ANNUAL REPORT HIGHLIGHTS WITH SELECT HIGHLIGHTS … asom stakeholder... · 2020. 5. 26. ·...