ancillary markets
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ANCILLARY MARKETS
Rajesh K. Mediratta Director (B.D.) , IEX 10th Apr,13/ New Delhi
In this presentation
• Introduction
• Proposed Market
• Market Design Parameters
In this presentation
• Introduction
• Proposed Market
• Market Design Parameters
Electricity- Charactersitics
• Electricity cannot be stored
– TIME LINE OF PARTICIPATION
– Spot & Forwards
• Quantity- Private good ; Quality- public good
– Any buyer or seller cannot control quality
– Quality is result of collective response of all buyers/sellers
– No one-to-one physical relationship between Buyer-seller
– Need System operator to ensure quality
Transactions needs to be done close to real-time
Electricity as Commodity–market structure
Real-time (TSO) Balancing Market Reserves Market
Near Real-time (MO)
Day-Ahead Intra-day
Short Energy Term (MO)
OTC Trading Exchange based
Long Term (MO)
Capacity Markets Energy Markets - Futures & Forwards
Ancillary Service categories
Frequency Control Ancillary Services (FCAS)
• Maintain frequency
• Load following/imbalance management
Network Control Ancillary Services (NCAS)
• Voltage control
• System Protection
System Restart Ancillary Services (SRAS)
• To restart the system in case of whole or partial system black out
NR frequency … Resources with high ramp-up/down, short periods
Source: NRLDC, 25th May, 2012
Ancillary Market
OTC Markets
Financially settled
Derivatives Exchange/
Options
Time
Ma
rk
et
Ma
tur
ity
Multiple buyers - sellers
Spot Markets on Exchanges
Individual Buyer /Seller
OTC Derivatives
Indian market is here
Capacity Market
Next step in the market development trajectory
Enablers for market based Frequency Control Ancillary Services
Large pool of bottled up generation (~2000MW capacity)
Liquid Day-Ahead Markets
Adequate number of right sized generators available
MW available from each such generator is also adequate
High ramp-rate generators(CCGTs) available
Strong National/Regional Grids
Daily Bids received at IEX >1000 MW Sellers unutilised after DAM (Jan’2013)
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Rs.
/kW
h
Vo
lum
e (
MW
h)
Purchase Bid (MWh) Sell Bid (MWh) Constrained MCV (MWh) Unconstrained MCP (Rs/KWh)
In this presentation
• Introduction
• Proposed Market
• Market Design Parameters
Proposed Market process
DAM Final Solution by 3:30 PM
Qualified generators submit bid for ancillary service
Results Bids arranged in Merit Order stack and sent to NLDC /RLDCs
Sellers on the TSO’s list to remain available for the day
NLDC/RLDCs to direct seller to operate plant as required
Payments released on the basis of Schedule
Salient features
Qualified generators only participate
Non-performance by Enabled generators to be penalised
Selected generators (in stack) to receive small availability fee
Schedules issued to Generators for some minimum periods irrespective of system normalisation
Eligibility for Qualified Generators(QGs)
Minimum quantity to be specified (say 50MW or 0.1% of system size)
Minimum period of operation specified (say 6 time blocks)
Minimum Ramp rate (say 10MW/min) Ramp constraints to be indicated at the time of registration
No. of start/stops and period between two start/stops
In this presentation
• Introduction
• Proposed Market
• Market Design Parameters
Should there be qualifification criteria ?
Qualified Generators only
• Participation by generators with high ramp/down, fast start capability
• Selected resources should perform to meet TSO’s requirement
All Resources
• All unutilised generation can participate
• Performance may not match TSO’s requirement
Auction Type
DAM Auctions
• Leftover Sellers
• Confidentiality of DAM results may be hampered
Re-auction
• PXs can arrange bidding
• Allow qualified generator to post different bid based on Average cost and not Marginal cost
• Balance capacity can bid
Merit Order Stack Basis
Synchronous interconnections
• Bids stacked on the basis of common frequency area
• Area may/may not be interconnected due to congestion
Congestion area specific
• Bids stacked on the basis of congestion area
• Allow to select generators on the basis of area suffering most congestion to least congestion
Regulation Type
Upward Only
• Allow generators to bid for increasing gen or demand to bring down demand (Demand Response)
• Only valleys are handled
Downward and Upward Regulation
• Generators to increase/decrease generation
• Loads to decrease
• Peaks and valleys are handled
Price Discovery
Pay-as-you-bid
• Resources to be paid price quoted by them
• Sellers to strategise bidding
Uniform Price
• All utilised resources to be paid price of highest enabled generators
• Generator may quote near marginal cost to be a part of the ‘stack’
Uniform Price Discovery Mechanism
Balancing power -sorted in merit order
Price
Downward Regulation
Upward Regulation
MW
Highest up regulation Price = Sales price
Lowest down regulation Price = Purchase price,
Market design parameters
Residual from DAM auctions
Re-auction
All Resources Qualified
Generators
Synchronous interconnections
(common frequency areas)
Congestion area specific
Upward only Downward &
Upward
Pay as you bid Uniform Price
Auction /Re-auction
Participation by Resources
Merit Order Stack basis
Regulation Type
Price Discovery
• NLDC (in consultation with CERC) to ascertain rules for selection of Qualified Generators who then register with NLDC/RLDC
Selection of Generators
• Those who appear in TSO’s list for the day should receive a nominal Availability Fee to remain available for the day
Incentive for availability
• Non-adherence should be subjected to UI Penalty
• Re-bids may have ceiling price = UI (max) rate Price Fixation
• Counter-party is a POOL and therefore payment to be made by the TSO
• Those who create such situation to pay TSO
Commercial Settlement
Features of the proposed market design
Demand Response
• Direct Load Control – Load Shedding by utilities
– Involve the remote interruption of customers' energy usage during peak hours
– Value of lost load high, resort to DG sets which is costly
• Pricing Incentive – Variable electricity rates to encourage customers'
voluntary curtailment during demand response events
– Utilities use a variety of pricing schemes including peak time rebates, critical peak pricing, and time of use rates to curtail usage
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