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Performance-based Regulation Market in PJM

www.pjm.com

based Regulation Market in PJM

PJM©2014

Eric Hsia

Manager, Performance Compliance

NJ Energy Storage Working Group

July 29, 2014

• October 2011 – FERC Order 755 issued

• March 2012 – PJM Original filing w/ Benefits Factor

• May 2012 – Acceptance Order, subject to additional compliance filing

• October 2012 – PJM “go live” of PBR, but without incentive payment structure

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• October 2012 – PJM “go live” of PBR, but without incentive payment structure

• November 2012 – Acceptance Order, subject to additional compliance filing

• January 2013 – PJM Compliance Filing w/ Mileage Ratio

• July 2013 – Acceptance Order, subject to additional compliance filing

• October 2013 – Final Acceptance Order

www.pjm.com

FERC Process

FERC Order 755 issued

PJM Original filing w/ Benefits Factor

Acceptance Order, subject to additional compliance filing

PJM “go live” of PBR, but without incentive payment structure

PJM©20142

PJM “go live” of PBR, but without incentive payment structure

Acceptance Order, subject to additional compliance filing

PJM Compliance Filing w/ Mileage Ratio

Acceptance Order, subject to additional compliance filing

Final Acceptance Order

5 MAJOR COMPONENTS OF

PERFORMANCE-BASED REGULATION

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PERFORMANCE-BASED REGULATION

5 MAJOR COMPONENTS OF

BASED REGULATION

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BASED REGULATION

1. TWO REGULATION SIGNALS

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1. TWO REGULATION SIGNALS

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Dynamic Signal (RegD):More ‘zero’ crossings“Energy neutral” over operating hourStrong correlation with system frequency

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Traditional Signal (RegA):Greater time constant, more staying power

Slower rampingStrong correlation with system ACE

Sample RegA Test Signal (MW)

Dynamic Signal (RegD):More ‘zero’ crossings“Energy neutral” over operating hourStrong correlation with system frequency

Two Signals, Complimentary to System Control

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-1.100

-0.600

-0.100

0.400

0.900

00:00 07:12 14:24 21:36 28:48 36:00

No

rma

lize

d R

eg

A S

ign

al

Time (MM:SS)

Sample RegA Test Signal (MW)

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Two Signals, Complimentary to System Control:5 Hour sample of production signal

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• What is the relative impact on

system control with fast vs.

traditional resources?

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• What is an optimal mix of fast vs.

traditional resources, and how does

that impact the Regulation

Requirement?

www.pjm.com

KEMA Report (2011)

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2. CALCULATING MILEAGE

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. CALCULATING MILEAGE

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• Mileage is the absolute sum of movement of the regulation signal in a given

time period (∆MW/MW)

• Resources following the dynamic signal will move much more than those on

traditional signal

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Historical Jan-Jun 2012 Signal Mileage

Traditional

Mileage

Mileage is the absolute sum of movement of the regulation signal in a given

Resources following the dynamic signal will move much more than those on

March 7, 2014

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15 16 17 18 19 20 21 22 23 24 25 26 27 28

Jun 2012 Signal Mileage

Traditional Dynamic

March 7, 2014Dynamic Mileage = 16.5Traditional Mileage = 6.4

3. CALCULATING PERFORMANCE

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. CALCULATING PERFORMANCE

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Accuracy – the correlation or degree of relationship between control signal and regulating unit’s response

Delay – the time delay between control signal and point of highest correlation (from A).

Precision – Difference between the areas under the curve for the control signal and the regulating unit’s response.

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Composite Performance Score = A [ScoreC] + B [ScoreD] + C [Score

– A, B, C are scalars from [0..1], total to 1 – Produces a weighted average of component scores

Performance Score – 3 pieces

the correlation or degree of relationship between control signal and regulating unit’s response

the time delay between control signal and point of highest correlation (from A).

Difference between the areas under the curve for the control signal and the regulating unit’s response.

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] + C [ScoreP]

Produces a weighted average of component scores

Performance Score

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Performance Score – Example, Combine Cycle

Accuracy = 0.95

Delay = 0.66

Precision = 0.74

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Total Score = 0.78

1/6 1/11 1/16 1/21 1/26 1/31

Steam

Average Performance Scores by Resource Type (Jan ‘13)

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Pe

rfo

rma

nce

Sco

re

1/6 1/11 1/16 1/21 1/26 1/31

Battery

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1/1 1/6 1/11 1/16 1/21 1/26

Pe

rfo

rma

nce

Sco

re

Hydro

Average Performance Scores by Resource Type (Jan ‘13)

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0.4

0.5

0.6

0.7

0.8

0.9

1.0

1/1 1/6 1/11 1/16 1/21 1/26

Pe

rfo

rma

nce

Sco

re

Demand-side Resources

4. EFFECTIVE MEGAWATTS (THE BENEFITS FACTOR)

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. EFFECTIVE MEGAWATTS (THE BENEFITS FACTOR)

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• Benefits factor provides a sliding scale that makes dynamic resources more

desirable until the optimal resource mix of dynamic and traditional resources is

reached.

Benefits Factor of First Resource

Benefits Factor of Second Resource

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Benefits Factor of Second Resource

Point when RegD resource is equivalent to RegA resource

Benefits Factor

Benefits factor provides a sliding scale that makes dynamic resources more

desirable until the optimal resource mix of dynamic and traditional resources is

Benefits Factor of Second Resource

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Benefits Factor of Second Resource

Point when RegD resource is equivalent to RegA resource

Point of Diminished Returns

5. TWO PART OFFER, TWO PART SETTLEMENT

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5. TWO PART OFFER, TWO PART SETTLEMENT - EFFECTED BY 1-4

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Regulation Offer

CostUp to limits described in as

described in M11, Section 3.2.1 and Manual 15,Section 2.8

Performance

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• The $/∆MW will be multiplied by the ratio of ∆convert to ($/MW)

Capability ($/MW)

Reservation Cost for MW which

includes the Fuel Cost increase and $12 Margin Adder

Performance ($/∆MW)

Is the incremental cost of MW movement

which includes Cost Increase due to Heat Rate Increase during

non-steady state operation and Cost Increase in VOM

Regulation Offer

PriceUp to 100 $/MWH As described in

M11, Section 3.2.1

Regulation Offers – Cost and Price

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MW will be multiplied by the ratio of ∆MW/MW for the signal that resource follows to

Capability ($/MW)

the price to reserve MWs for regulation

Performance ($/∆MW)

the price to provide regulation movement

The Capability Offer is adjusted as follows:

Resource owner’s Offer for reserving MW’s

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Benefits factor translates a Dynamic resource’s MWs into traditional MWs to estimate Effective MWs. For Traditional

resources, this value is “1”.

The Capability Offer is adjusted as follows:

Qualified Regulation MW’s

Resource owner’s Offer for

Adjusted Capability Offer

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Average of last 100 hours of performance scores

Benefits factor translates a Dynamic resource’s MWs into traditional MWs to estimate Effective MWs. For Traditional

resources, this value is “1”.

30 day average of historical

The Performance Offer is adjusted as follows:

Resource owner’s Offer for MW’s movement

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Benefits factor translates a Dynamic resource’s MWs into traditional MWs to estimate Effective MWs. For Traditional

resources, this value is “1”.

30 day average of historical mileage

The Performance Offer is adjusted as follows:

Qualified Regulation MW’s

Adjusted Performance Offer

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Average of last 100 hours of performance scores

1 YEAR+ --

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-- RESULTS

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Pricing

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Milford Control Center:

Solar + Storage

Milford Control Center:

Solar + Storage

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Laurel Mountain, West Virginia (AES Energy Storage)

Largest Li-ion battery in the world

32 MW, 8 MWh

Provides fast-response Frequency Regulation in PJM’s Wholesale Markets

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Laurel Mountain, West Virginia (AES Energy Storage)

response Frequency Regulation in PJM’s Wholesale Markets

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Ecoult and Deka Ultrabattery ®

3 MW (<3 MWh)

Regulation Service, from behind the meter

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Viridity Energy and Axion PowerCube™

500 kW

Regulation Service, from behind the meter

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Viridity Energy and Axion PowerCube™

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VCharge, Inc

4-5 kW (aggregated to >100 kW)

Regulation Service, from behind the meter at multiple locations

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from behind the meter at multiple locations

Market Test

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Credit: Tim Shaffer for The New York Times

Market Test – Electric Vehicles and Ancillary Services

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