Efficient Dispatch Toolkit Proposal Stephen Beuning Xcel Energy, Director of Market Operations...

Efficient Dispatch Toolkit Proposal

Stephen BeuningXcel Energy, Director of Market

Operations3/11/10

Discussion Outline

● Congestion management and energy imbalance toolkit overview

● Cost / Benefit analysis

● MIC approval ballot

WECC background

● The WECC Seams Issues Subcommittee (SIS) assignment:

Propose an effective congestion management and imbalance mechanism

No Regional Transmission Organization (RTO) proposal

No full LMP-style market design

What's the problem?

● Not bad today Very little WECC congestion but an increasing burden

for balancing area resources

● Big in the future High penetration of renewables will increase the

balancing burden and will result in less predictable impacts on grid flows

● Proposed solution: A toolkit that mitigates balancing obligations and

manages congested power flows

Increasing Renewable Penetration

● Western Wind and Solar Integration Study Example: If the United States footprint of WECC is at

27% of 2017 load forecast from renewable energy supply, this would be an energy volume of 242,000 GWh per year!

The level of supply in this example could include 69,000 MW of wind resource and 13,000 MW of solar resource

● Regional planning collaborations are established to address power lines and interconnections, but not dispatch operations

● Question: Who will own the operating solution?

Change Drivers

Why a WECC opportunity?

● Capitalize on existing Reliability Coordinator assets and infrastructure

Achieve ability to perform efficient, equitable management of grid reliability

Situational awareness tools help the WECC RC anticipate potential degraded reliability situations; now the industry needs better tools to respond rapidly and efficiently to the operating conditions

Toolkit components – two parts

● #1: Seams coordination tool used by the WECC RC throughout the footprint

Likely accomplished through augmentationof the webSAS tool used by many partiesin the WECC today

● #2: Coordinated economic dispatch capability for congestion and energy imbalance in a subset of the WECC footprint

Background: WECC SIS activity

●The WECC SIS developed a draft high-level design specification for the proposed toolkit The EIS design is based on the SPP regional

market Energy imbalance and redispatch services

Seams tool design coordinates across entire WECC

●The SIS also developed a benefit / cost analysis proposal

WECCSeams coordination between the

independent dispatch areas

CAISOLMP

Market

AESO MarketWECC

Imbalance+

Congestion Redispatch

WECC toolkit development

WECC toolkit development

ProposedWECC EIS Area

WECC Seams Coordinationwith CAISOand AESO

Note – this is not a BalancingArea consolidation.This is an area of coordinated dispatchoperations.

WECCSeams coordination between the independent dispatch areas

CAISOLMP

Market

AESOMarket

3rd Party “A”

Imbalance+


3rd Party “B”

Imbalance+


3rd Party “n”

Imbalance+


(Still includes new WECC seams coordination tool)

Alternative: Non-WECC imbalance

Alternative: Non-WECC ImbalancePotential 3rd

party EIS Areas

WECC Seams Coordinationwith CAISOand AESOand each3rd-party EIS

Note – these areas are for illustration of the potential proliferation of seams coordinating parties.

Seams Tool Proposal

●Augment webSAS and UFAS capabilities Ensure comparable treatment for

transmission service curtailments Foundation for effective seams

coordination across the interconnection

13

EIS Tool Proposal

●Provide energy imbalance service and redispatch service Security-Constrained Economic

Dispatch via dynamic setpoints Function is integrated with a new

Seams Coordination Tool (augmented webSAS/UFMP)

Transmission Provider Impacts

●Balancing generation and load Replace some local OATT services with

a new regional service Schedule 4 Energy Imbalance Schedule 9 Generator Imbalance

●Regional transmission fee collected for EIS delivery service

●Transmission providers keep their own OATTs

Balancing Area Impacts

● Participating Balancing Areas (BAs) contract with the toolkit operator to assign the reliability standards compliance role

● BA scheduled interchange is adjusted continuously as internal generator dispatch setpoints are updated by the regional security-constrained dispatch Sum of internal generator adjustments equals

adjusted scheduled interchange at BA level

WECC Impacts

●Use existing tools as foundation State Estimator Contingency Analysis Optimal Power Flow Software

●Potential new division of WECC organization to provide toolkit operations

Some details about the toolkit…

Priority of Toolkit Flows

●Proposal: the EIS redispatch and energy imbalance flows will be evaluated with a curtailment priority of zero In other words, toolkit flows are not

allowed to cause curtailment of any tagged OASIS transactions or any firm network service flow

Flow “types”

BA#1

BA#3

BA#2

G11L1

G31

L2

Delivery from G11 to L1 is an untagged flow*.

Delivery from G21 and from G31 to L2 is are tagged flow using ETAG, note differencesin businesses practicescompared to BA#1!

G21

Flow impact representation

●Self-scheduled

●ETAG

●EIS Gen setpoint

●EIS Demand value

System POR System POD

Tariff POR Tariff POD

Gen node MW Aggregate load

Aggregate gen System POD

Flow impact evaluation: terms

● Definitions:● System POR – all dispatchable generation resources

scaled in balancing area● System POD – all LSE load served in balancing area● Tariff POR – Specific generator source points identified

in OASIS● Tariff POD – Specific load interconnection or system

POD delivery points in OASIS● Gen node – specific generator modeled by EIS state

estimator● Aggregate load – all load eligible for EIS settlement● Aggregate gen – all generation eligible for EIS

settlement

Notes: No displacement of same priority transactions except Firm. Firm curtails pro-rata.

Loading

Deck

The EIS flows use unloadedline capabilityor else cause counterflowon a binding constraint

Priority 3 - ND

Priority 4 - NW

Priority 1 - NS

Priority 5 - NM

Priority 6 - NN

Priority 7 - F

Flowgate Loading

Priority 2 - NH

Priority 0 – EIS Flow Impacts

Unloading

Avoid Overflow

Curtailment priority coordination concept:

Determining imbalance market flows

Total MWFlow on

Flowgate A

WECC EISDispatch

Untagged

CAISO

AESO

WECC EISDispatch

Flowgate A

Seams coordination tool calculates all components of flow on grid Element “A”

Tagged

TotalFlow on

Flowgate A

WECC EISDispatch

Untagged

Tagged

Flowgate MW limit

In this example EIS flows for imbalance are within the line loading limit

Includes MW contributions onFlowgate A from all WECC participants.

This EIS MW amount is limited so as not to cause congestion.

TotalFlow on

Flowgate A

Tagged and untagged flow contributions abovebinding limit – identified with a curtailment obligation

Untagged

Tagged

Flowgate MWbinding limit

In this example EIS flows offset the flow components that have a curtailment obligation

WECC EIS dispatch offsets the identified curtailment obligations

Includes MW contributions onFlowgate A from all WECC participants.

Operation Timeline and Activity for the WECC EIS Toolkit

Schedule Day-Ahead & Up-to 30 minutes prior toOperating Hour

Real-time Dispatch Post-Operating

time

Forecast andunit CommitGeneratorsself-scheduleGenerators voluntary submitoffersDSM resources voluntary submitoffersPrepare and finalize pre-dispatch schedules

Perform security-constrained economic dispatch to keep balanceProvide redispatchif any congestionoccursSend dispatchset points togeneratorsCoordinate anycontingencyreserve deploymentsWith EIS dispatch

Market Participant: WECC EIS Market Operator:Gather meterdata to supportsettlementsProvide settlement statementand invoices

Transmission Provider:

Provide meterdata to supportsettlements

Some open design issues…

Full development after benefit/cost study is completed

WECC Toolkit Funding

● Seams coordination tool: cost allocated to all entities in WECC footprint A Reliability Coordinator tool with traditional

WECC funding Costs to support EIS role are allocated to EIS

● Energy Imbalance Service (EIS) tool: cost allocated only to participating transmission customers Tool development and operation costs

recovered from EIS participants

Areas for detailed development

●Harmonize with UFMP process Reliability fallback Coordinated phase-shifter

operations

●Transmission losses for EIS delivery

Energy Imbalance & Redispatch

Toolkit Component 1

Congestion Management

Toolkit: Congestion management

● Today: Only six “Qualified Paths” in the entire WECC for congestion coordination Assumptions used in today’s UFMP method

could be improved:o System intact topology assumption is used

o During congestion, the “intact” assumptionmay be in error – line outages contribute to congestion!

o Currently use a seasonal case assumption(two updates per year) and zonal approximationsfor source/sink

Future: Increase congestion coordination on all relevant grid components

Current congestion process

● What happens if the transmission owner or reliability coordinator sees a potential overload?

● Initiate the UFMP - if the element is a WECC Qualified Path

● Or – Transmission Owner manages the issue locally using their own accommodation or tariff curtailments

Current congestion process

● If the limiting element is “local”, there is no WECC method to ensure loop flow impacts of lower service priority are curtailed prior to curtailing the higher priority use

● And even if the limiting element is a Qualified Path, there is no process to differentiate the priority of the external loop flow contributions

Energy Imbalance

Toolkit Component 2

Today’s energy imbalance

●Each BA sets aside resources to provide balancing service

As BA variability increases, the amount of flexible dispatch margin set aside by each BA increases, along with corresponding costs

Toolkit proposal – Energy imbalance

● Real-time energy imbalance transactions occur on unused transmission capability

Regional balancing pool eliminates the limitations of the balancing area boundary and scheduling deadlines

EIS provides multi-party dispatch coordination with 5-minute setpoint adjustments

● Replaces OATT Schedules 4 and 9 on participating transmission provider systems

Energy Imbalance Service - EIS

● EIS creates a holistic solution● For example: bilateral dynamic scheduling

only moves the problem● Bilateral dynamic scheduling does not

capture the aggregate diversity benefit It does establish infrastructure that could be used

by an EIS

● EIS captures aggregate diversity benefit

Benefit / Cost

Analysis Plan

Evaluating the toolkit

Timeline goals

● Stage 1: Benefit/cost analysis

Plan: begin in 2010, or early in 2011, depending on funding

Duration: ~5-7 months

Result: Information for an EIS toolkit “go” or “no-go” decision by WECC Stakeholders and Board of Directors

Timeline goals

● Stage 2: If “Go” = Project development activity

Prepare mid-level design specification(s)

Prepare regulatory, organizational and funding plans

Duration: 1 – 1.5 years

Result: Ready to arrange vendors and proceed to implementation of the EIS market and seams coordination tool

Timeline goals

● Stage 3: Project implementation activity EIS software and settlements Requisite tariff filings Market testing pre-launch Initiate EIS operations Duration: TBD Result: functioning regional toolkit for

redispatch and energy imbalance services

Q/A items

Some Questions and Answers

● Why the SPP Model instead of other models? Low cost of implementation (see next slide) Retain existing practices to large extent

Bilateral and self-schedule options No regional unit commitment No “must-offer” requirement

Demonstrated existing design as compared with a blue-sky alternative

Source: December 2009 MISO Board of Directors Finance Committee Report

WECC will need to establish a cost allocation for the development of the toolkit.This slide compares the cost per MWH of end-use load for some of the ISO/RTOs in North America. The WECC already has some foundational work complete with the state estimator and contingency analysis software.


● How would the EIS be funded? Capital – the financing method will be

determined as part of the mid-level specification process if the benefit/cost analysis leads to a “go” decision

Ongoing – the admin/operating costs for the EIS are proposed to be recovered in a fee allocated to EIS energy settlement volume


● Would this be an expansion of WECC’s scope? Yes. The benefit/cost analysis can likely be

funded under WECC’s existing structure, but the EIS Operator function would have to be in a separate division of the organization

EIS operation is not a NERC Regional Entity function


● What pieces would be voluntary? Transmission provider participation in the EIS

But in or out of the EIS footprint, the seams coordination tool would be used throughout WECC

For transmission customers of EIS transmission providers, participation in EIS settlements is mandatory (just like Schedule 4 is mandatory under current OATT) Voluntary offer from participating generators to provide

redispatch Customer may avoid EIS settlement by matching actual to

scheduled delivery


● How would this be coordinated with the UFMP? The UFMP process would need to be revised

to coordinate with the EIS process COPS revision Curtailments on the basis of transmission service

priority Administrative fallback if insufficient voluntary

redispatch capability is available to EIS tool

Reference and Discussion

Materials

Overview of EIS Concepts

EIS concepts

● Majority of grid delivery remains traditional self-schedule or bilateral dispatch

● For example in the SPP EIS: 90% of the energy delivery continues under

self-schedule and ETAG mechanisms 10% uses voluntary offers to manage

congestion and supply energy imbalanceo Percentage increasing

EIS concepts

●The EIS-style design provides for real-time dispatch operation only

●Schedules against which imbalance service is calculated must be provided to the EIS Operator by a deadline prior to the operating hour

EIS concepts

●Unit commit decisions remain with individual utility / generators The option to offer resources for economic dispatch to

the EIS remains with the generator owner.

Not a must-offer requirement as exists in full-LMP-based RTO markets.

Just like today, each load-serving entity must bring sufficient available resources to real-time operations to meet their load obligation

EIS concepts

● The EIS design does not require Balancing Area consolidation, as demonstrated by SPP's experience

● EIS does create a diversity benefit for balancing ACE Diversity benefits are achieved under the

proposed EIS design with the added benefit of a security-constrained evaluation of the pseudo-tie transfers

Energy balances are settled financially rather than through adjustments to inadvertent

EIS concepts

● The WECC EIS design leverages the existing investment in WECC Reliability Coordinator Infrastructure Makes use of existing State Estimator and

Contingency Analysis software already in-use as well WECC-owned (but currently unused) optimal power flow software

WECC Unscheduled Flow Mitigation Procedure (UFMP)

Curtailment Priority Example

Example Discussion

UFMP curtailment: ExampleBase assumptions

TP ATP B TP C

TP D

TP E TP F TP GTP H

TP J TP K

Diagram Key:

“TP ‘n’” = TransmissionProvider “n”

Line T1 in “TP J” is the limiting element in the Path.

Etag from G1-L1 usesTSR J-K

Etag from G2-L2 usesTSR A-D

Etag from G3-L3 uses TSR E-H

G1 L1

G2

G3

L2

L3

T1

UFMP example: TSR assumptions(TSR = Transmission Service Request)

TP ATP B TP C

TP D

TP E TP F TP GTP H

TP J TP K

Diagram Key:

Etag from G1-L1 usesTSR J-K (Firm* service)

Etag from G2-L2 usesTSR A-D (Firm* service)

Etag from G3-L3 uses TSR E-H (Non-firm** service)

G1 L1

G2

G3

L2

L3

T1

* Firm= Firm Curtailment Priority F7; **Non-firm= Non-firmHourly Curtailment Priority N2

F7 F7

F7F7F7

F7

N2N2 N2

N2

UFMP example: Assume T1 is a qualified path

TP ATP B TP C

TP D

TP E TP F TP GTP H

TP J TP K

G1 L1

G2

G3

L2

L3

T1

Diagram Key:

Etag from G1-L1 is aScheduled Flow on T1

Etag from G2-L2 is anUnscheduled Flow on T1

Etag from G3-L3 is anUnscheduled Flow on T1

The purpose of the “flow”illustration is only to showimpact on T1. Clearly theflow distributesthroughout the grid based on physics.

UFMP example: Assume TSR A-D and TSR E-H have same % TDF on Qualified Path T1

TP ATP B TP C

TP D

TP E TP F TP GTP H

TP J TP K

Discussion: Under UFMP today, TSR A-D and TSR E-H wouldboth be curtailed at the samestep and by the same amount.Also TSR J-K would curtail (accommodate) to permit some continuation of TSR E-H.

In other words, the UFMP is not able to differentiatebetween the F7 externalflow and the N2 externalflow. And UFMP compels F7Accommodation of N2.

The proposed EIS would instead curtail all N2 flow impacts on the limiting element prior to F7 cutsor F7 redispatch.

G1 L1

G2

G3

L2

L3

T1

Energy Imbalance Service (EIS)

EIS Discussion Examples

What is “Imbalance Energy”?● Imbalance energy (or Energy Imbalance) is the

difference between what actually happens for each generator and load location, and what they prearranged through schedules.

Energy Imbalance = Actual Production/Usage – Scheduled Production/Usage

● Asset owners instructed to move their generation output based on offer curves while maintaining reliability and balance (matching generation to load).

● The amount of increase or decrease in generation is paid for by the asset owner needing the energy.

What is the “Energy Imbalance Service”?

● EIS is the dollar amount associated with the imbalance energy.

● EIS is calculated by taking the amount of Energy Imbalance and multiplying by the price at a specific point on the energy grid.

Energy Imbalance Service = Imbalance Energy x Locational Imbalance Price (LIP)

What is the “SPP Energy Imbalance Service” Market?

● Provides asset owners the infrastructure to offer resources into a marketplace for providing Energy Imbalance.

● SPP is responsible for accounting and financially settling all EIS amounts. SPP remains revenue neutral

● Does not supersede any MP’s obligations with respect to any other capacity or ancillary service obligations. Control Areas (CA) and asset owners will continue to use the same procedures used

today to manage capacity adequacy, reserves, and other reliability-based concerns.● All asset owners must register with the SPP

EIS market.

Imbalance Energy ExampleImbalance (Gen A) = (-90 MWh Actual) – (-100 MWh Scheduled)

Imbalance (Gen A) = 10 MWh

Imbalance (Load B) = (90 MWh Actual) – (100 MWh Scheduled)

Imbalance (Load B) = -10MWh

Notice that even though the system was in balance (generation matched load), by definition there was an imbalance at each location. Actual and Scheduled were not equal.

Actual minus

Scheduled

Actual minus

Scheduled

Note: Generation Injections are (-) and Load Withdrawals are (+) as viewed from an SPP settlement reference frame for EIS.

Settling an Imbalance Financially

Suppose the following:

LIP @ (Gen A) = $30/MWh

LIP @ (Load B) = $40/MWh

The resulting charges would be:

EIS (Gen A) = $30/MWh x 10 MWh = $300 (MP pays SPP)

EIS (Load B) = $40/MWh x -10 MWh = -$400 (SPP pays MP)

● The net imbalance is zero (generation equaled load), but there is a net payment of $100 ($300+(-$400)) to Load B because of different prices at different points in the system.

NOTE: A (+) EIS indicates that SPP will receive payment from the Participant (a charge)A (-) EIS indicates that SPP will pay out to the Participant (a credit)

EIS Tariff Activity & Misc Info

Tariff Discussion

WECC Toolkit Funding

● Seams coordination tool: cost to all entities in WECC footprint A Reliability Coordinator tool with traditional

WECC funding Costs to support EIS role are allocated to EIS

● Energy Imbalance Service (EIS) tool: cost to participating transmission owner’s network and point-to-point customers Tool development and operation costs

recovered from EIS participants

Impact on transmission revenues

● An additional aspect to the WECC development option is protecting transmission revenues

● Participating transmission owners could provide inputs into a rate design for the EIS adder

● Possible rate design goals Hold harmless from present HN2 revenue levels, with

annual true-up mechanism Establish potential for increased revenues based on

successful utilization of the EIS toolkit Note – transmission providers retain their own tariffs

for all non-EIS transmission service

Umbrella EIS tariff proposed

● EIS service only for real-time imbalance and redispatch

● Replace some service sold under current OATT Replace Schedules 4 and 9 (imbalance service)

for all participating transmission providers Recover EIS market development and admin

costs through a fee levied against the EIS settlement volumes

Recover revenues for participating transmission providers to replace lost sales of hourly non-firm (priority 2) transmission service

Rough Estimate of EIS Admin/Tool

● SPP EIS market clears 10% of the demand in the region

● The SPP EIS all-in cost recovery is $0.20/MWH● Estimate of WECC EIS cost is under

development● Similar costs and volumes for US-WECC

footprint excluding CAISO would yield very roughly estimated $0.50/MWH of EIS settlement volume (i.e. applied to both purchase MWH and sales MWH)

Assume WECC US-non-California annual energy volume of 543,200,000 MWH/yr (from WWSIS 2017 fcst) Assume 50,000,000 MWH EIS Demand Cleared/yr The $50M/yr revenue would fund an operation far larger than SPP, and WECC already has sunk costs that would contribute to the

EIS operation

Initial Tariff Cost Recovery Assumptions

Rough Estimate of TRRF

● The tariff proposal would recoup lost revenue through an EIS Transmission Revenue Recovery Fee that would be distributed to participating transmission providers

● Estimate of fee in development, but the flat “hurdle rate” could be built into the SCED more simply than a path-based transmission cost recovery method

Initial Tariff Cost Recovery Assumptions

Policy of WGA Task Force

● WGA task force on grid utilization DOE funding award of ~$12M Policy promoting “technological and

institutional improvements that minimize the cost of integrating variable renewable generation while maintaining system reliability”

77 77

Incurred Avoided Trade Benefit$286 Million - $ 393 Million = $ 107 Million

Actual 2007 SPP Results

7,560 GWh@ $38 /MWh

7,560 GWh@ $52 /MWh

Detail Transactional Calculation = $103 Million

ValidatesDetailCalculation

Example: SPP Contract w. Balancing AreasTransfers compliance responsibility

● Scheduled and Actual Interchange: INT-002, -003 and -004; BAL-006

● EIS Market: IRO-006; BAL-006; INT-002, -003

● Dynamic Scheduling and Inadvertent Interchange: BAL-005, -006

● Balancing Authority Area Control and Performance: BAL-001, -002, 003; TOP-002; EOP-001

● Data Exchange: TOP-002, -005

● Ancillary Services: Section 3 of Open Access Tariff

● Emergency Operations: EOP-002, -003, -008

Future Tariff Group Contract Issue:

MIC Discussion Materials

Supplementary to WECC Joint Committee Meeting Presentation

Benefit / Cost Analysis Plan

● Independent benefit and cost calculations Benefit Method 1: Production cost model of

WECC Benefit Method 2: Renewable integration cost

reduction model for footprint Cost Estimate with system design

consultants, WECC staff and stakeholders

● WECC staff and stakeholders roll-up the elements into an overall report

Benefit Method 1

● Production cost analysis Simulate stand-alone vs. coordinated

balancing area operations with renewables

● WWSIS analysis at 27% annual renewable energy in WECC showed a $2B/yr. benefit using this method

● Goal: to make use of WECC VGS study already funded with PNNL for this effort

Benefit Method 2

● Renewable integration cost analysis Simulate stand-alone vs. coordinated

balancing area operations with renewables, but evaluate only on a statistical basis regarding unit commitment costs needed for integration

● Goal – use an independent method to evaluate the results obtained by method 1

Cost Analysis

● Use consultants, WECC staff and stakeholders to estimate the capital and operating costs associated with WECC-side development Recognize existing WECC assets Recognize new division requirement for

WECC organization

● Also estimate stakeholder-side and balancing area readiness costs

Analysis report preparation

● The aggregate report and analysis of the benefit/cost segments will be prepared by WECC staff and stakeholders. Consultants may be retained to assist with report preparation

● Aggregate not-to-exceed cost is anticipated at $450,000 for the B/C plan Substantial discount possible however, based

on potential task methods

Motion for MIC consideration

● “The SIS recommends that the MIC advance to the Board of Directors for approval a plan to fund and conduct a cost/benefit analysis regarding the development and implementation of an Energy Imbalance System in the Western Interconnection.”

Efficient Dispatch Toolkit Proposal Stephen Beuning Xcel Energy, Director of Market Operations...

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