Grid operators make instantaneous adjustments to ensure grid stability when forecasts are wrong or when things do not go as planned on the power grid.
• Regulated market: Utilities take the full responsibility and shall include necessary capacity during resource planning
• Deregulated market: ISO/RTOs typically conduct via ancillary services market, which will be further discussed in section 3 Ancillary Service Markets evolving to support high RE Many of the cases focus on the refinement of these procurement mechanisms and
optimizing the systems by which planning, scheduling, redispatch, and contingencies are managed. As more renewable energy is added to the grid, and additional flexible operation is required, a good deal of those needs can be met by evolving these processes held by balancing authorities. The nuances of how these are handled will be discussed in the following cases.
1.5 Overview of U.S. Trends, and State Deep Dives
Across all regions in the U.S., some trends are shaping regional decision-making, with the most notable being:
• Continually declining solar and wind prices.
• The shale gas boom, which has made natural gas, cheap and plentiful. This has spurred investment in combined cycle natural gas (CCNG) across the U.S.. While open cycle natural gas combustion turbines are very good at providing flexibility, U.S. CCNGs are roughly as flexible as a coal plant.
• Deployment of distributed energy resources has increased rapidly, and is creating significant disruption to the traditional utility business model, which focused on electricity sales rather than on energy services.
California
These three trends are prevalent in California, largely driven by the state’s aggressive emissions reduction goals (figure 5): renewable energy should contribute 33% of total electricity by 2020 and 50% by 2030. Its total electric energy demand is 206,336 GWh, with a peak demand of 50,116 MW. Peak demand and bulk demand have been growing year on year, despite some of the most aggressive energy efficiency programs in the country, in large part due to electric vehicle growth and a boom in manufacturing consumption.
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Coal
4% Large Hydro 15%
Natural Gas 34%
Small hydro 3%
Solar 10%
Wind 10%
Unspecified Energy
9%
Figure 5: California’s energy mix11
The California Public Utilities Commission (CPUC), the state’s regulator, is very active shaping programs with the states IOUs and the ISO to advance California’s renewable energy goals and wants California to become an incubator for innovative energy solutions.
The state has three IOUs, San Diego Gas and Electric (SDG&E), Pacific Gas and Electric (PG&E), and Southern California Edison (SCE). It also has a handful of municipal utilities, including two large one overseeing Los Angeles and Sacramento.
California deregulated wholesale market in mid 90s and formed California Independent System Operator (CAISO) to operate the wholesale market and manages the transmission grid12. Further deregulation in retail was halted after the California energy crisis in 2000, where unforeseen energy shortages and market manipulation derailed this early pilot of wholesale electricity markets. This resulted in one of the more unconventional market designs in the U.S. While CAISO operates all resources in the market, its 3 major member utilities still remain responsible for procuring adequate generation, either by owning the generation themselves, or contracting with IPPs and other suppliers such as other utilities.
Also, as a consequence of the early deregulation experiments, CAISO operates a true gross pool model, because the schedules submitted by member utilities and their contracted generators frequently resulted in infeasible schedules and a lack of coordination during scheduling and real-time dispatch. CAISO operates several markets to meet this obligation:
energy markets (day-ahead and real-time), and ancillary services.
• Day-ahead market: receives bids from all generators, and schedules for those
generators under special dispatch conditions (e.g. hydro, geothermal, etc.), determines a feasible day-ahead schedule at least cost. This schedule is co-optimized with Ancillary Service markets when making the schedule.
11 http://www.energy.ca.gov/almanac/electricity_data/total_system_power.html 12 http://www.caiso.com/about/Pages/OurBusiness/Default.aspx
Part I USA
43• Real-time market: dispatches every 15 and 5 minutes, and even for a single 1-minute interval under special conditions13.
• Ancillary services: 4 types of products- regulation up, regulation down, spinning reserve and non-spinning reserve.
California’s growing amounts of renewables, solar in particular, has driven increased needs for flexibility. The challenges they are facing are moments of oversupply during moments of low demand when firming resources are online at their minimum run-rates.
The more infamous problem is the “duck curve” (figure 6), an operation situation when solar generation decline at sunset coincides with demand increasing toward system peaks. This creates a very long, sustained period of ramp that requires a lot of flexible generation to be “waiting in the wings” at minimum run rates to meet this ramp, and increased risk of a ramping generator tripping offline and creating a contingency event14.
Figure 6: CAISO’s duck-shaped net load curve15
13 http://www.caiso.com/market/Pages/MarketProcesses.aspx
14 https://www.vox.com/energy-and-environment/2018/7/31/17611288/california-energy-grid-regionalization-caiso-wecc-iso
15 https://www.energy.gov/eere/articles/confronting-duck-curve-how-address-over-generation-solar-energy
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2. Western States Energy Imbalance Market (EIM)
2.1 Key messages and takeaways
EIM is a voluntary real-time energy-only market in which CAISO and surrounding utilities meet their real-time balancing needs more efficiently by pooling their resources and allowing a centralized dispatcher, in this case CAISO, to optimize exchanges to ensure balanced schedules.
• The EIM limits the amount of balancing action necessary, since the net difference
between day-ahead schedules and real-time is typically smaller across multiple regions than in an individual balancing area. EIM also allows participating utilities to use others’
cheaper resources to fulfil their own demand and export surplus energy to others, including renewables that would otherwise be curtailed.
• CAISO tried to bring together the Western U.S. into a more coordinated balancing arrangement before, but other utilities were concerned about losing autonomy. EIM avoided this by allowing each participant to control their own scheduling decisions, and only in real-time pooling together to optimize any divergences across their schedules.
• Participating balancing areas are still responsible for scheduling: submitting balanced schedules, maintaining their own required operational reserves, and maintaining adequate ramping capacity to support real-time flexibility needs.
• CASIO, on the behalf of EIM, is responsible for real-time dispatch. To allow for CAISO to technically manage this coordination, all Balancing Authority Areas’ (BAA) updated their dispatch to CAISO’s standard, which also resulted in large savings for individual BAAs through improved dispatch.
• EIM has, as of 2017, reduced energy costs by $330 million since its implementation in 2014, curtailment fell by 161,097 MWh (more than 42% of total CAISO renewable curtailment) in 2017, and the need for additional ramping in EIM footprint was reduced by about 450 MW (roughly 38% of total ramping need) monthly in 2017 by allowing generators outside of CAISO to support intraday ramps.