Market Design with Consideration for Intermittent Wind Resources

IEEE - Power Engineering Society 2005/2006 General Meeting June 18 - 22, 2006
Robert de Mello David Lawrence
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The New York Control Area (NYCA)

IESO

Hydro Quebec 35,137 MW*

ISO-New England 26,922 MW*

26,160 MW*

New York ISO 32,075 MW*

Northeast ISOs have a combined customer load equal to the entire Western Connection Political, financial and cultural centers of the country and the world 25% of the US population 62% of the Canadian population

PJM / PJM West 135,000 MW*

NYCA over 19 million people

* = Peak Load in Megawatts

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NYCA - ~11,000 miles of HV transmission lines NYCA over 335 generators represented in the markets

The New York Control Area (NYCA)

Energy flow is largely West to East and North to South delivering energy to the greater NYC area Congestion is common Prices in NYC and LI tend to be higher than in the rest of the NYCA.
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The New York Control Area (NYCA)

2006 CAPACITY BY FUEL TYPE

MW

9% 35%

GAS - 6508 (17% ) OIL - 3659 (9% )

15%

GAS & OIL - 13831 (35% ) COAL - 3505 (9% ) HYDRO - 5700 (15% )

13% 9% 17% 1%
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NUCLEAR - 5169 (13% ) WIND - 245 (1% ) OTHER - 341 (1% )

1%

The New York Control Area (NYCA)

New York State Renewable Portfolio Standard (RPS) The RPS goal is to have 25% of the energy consumed in New York provided by renewable resources by 2013. A significant increase in wind generation is expected over the next few years:
Up to 550 MW by the end of 2006 Up to 2800 MW by 2013

NYISO has expressed its support for the overall RPS policy goals to:
Reduce New Yorks reliance on fossil fuels Diversify the states fuel mix Improve New Yorks energy security Reduce the environmental impacts of electric generation Reduce energy price volatility
For Discussion Purposes Only

The NYISO

NYISO Functions
Operate the high-voltage transmission system Administer the energy, reserve, and regulation markets Administer the capacity market Monitor the markets Settle the markets

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Capacity Market

The capacity market provides a payment to suppliers so that the marginal supplier can cover fixed costs. Variable costs are covered in the energy market. The NYCA is divided into three regions for purposes of the capacity market New York City (NYC) Long Island (LI) Rest of State (ROS) NY loads are obligated to acquire enough unforced capacity to cover their peak plus a margin (~18%) NYC loads must acquire at least 80% of their requirement from generators within NYC LI loads must acquire at least 99% of their requirement from generators within LI The NYISO administers periodic capacity auctions Bilateral deals (agreements outside the auction) are generally OK.

For Discussion Purposes Only

Capacity Market 2005 Clearing Prices for Unforced Capacity ($/KW-month)

New York City (NYC) Long Island (LI) Rest of State (ROS)
$12.00

2005 Avg $9.36 $6.48 $0.81

Winter Avg $6.89 $4.42 $0.47

Summer Avg $11.83 $8.54 $1.15

$8.00

$4.00

$0.00 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

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Capacity Market

The current method of determining unforced capacity (by periodic test with adjustments for forced outages) does not work well for wind generators. Unforced capacity can be estimated by measuring actual performance during peak periods.
16:00 to 20:00, June - August (Summer) 14:00 to 18:00, December - February (Winter)

Capacity suppliers are obligated to participate in the Day-Ahead Market this may expose wind generators to an unacceptable financial risk.
Requirement may be removed for wind generators.
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Energy & Ancillary Service Markets

Real-Time (~5% )

Market Activity
Bilateral (~50% )

Day-Ahead Market (~45% )

Bilateral Contracts outside the NYISO ~50% (congestion settled Day-Ahead) NYISO Day-Ahead Market 45-50% NYISO Real-Time Market <5%
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Energy & Ancillary Service Markets 2005 Average Monthly Energy Prices ($/MWh)
$150.00

Day-Ahead Real-Time
$100.00

$50.00

$0.00 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

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Energy & Ancillary Service Markets

$200

$150

$100

Dec 2005 Aug 2005

$50

$LI NYC Capital West

Sample Real-Time Energy Prices ($/MWh)

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Summary The basic attributes of the NY electricity markets work well for intermittent generators. Energy and Capacity sales can be lucrative. Variations in rules to meet unique characteristics of any particular resource are usually necessary. The same will hold true for wind. Existing market rules are being re-examined in light of the characteristics of wind generators
Real-Time performance penalties Capacity value Participation in the Day-Ahead Market

Processes enhanced or implemented to accommodate wind generators

Day-Ahead security analysis Day-Ahead and Real-Time wind forecasting

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Summary

Other changes to market rules may impose additional costs on wind generators.
Wind generators will almost certainly be required to maintain meteorological instrumentation with communication channels to the NYISO. Market rules may require wind generators contribute to the cost of wind forecasting. It may become necessary to assign to wind generators those operational costs that can be traced to wind generators.

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