clean restructuring: design elements for low carbon wholesale markets
TRANSCRIPT
![Page 1: Clean Restructuring: design elements for low carbon wholesale markets](https://reader031.vdocument.in/reader031/viewer/2022022202/58804e6f1a28ab22088b5421/html5/thumbnails/1.jpg)
Clean RestructuringDesign Elements for Low-Carbon Wholesale
Markets and Beyond
Monisha Shah, NREL
José María Valenzuela, WWF Mexico
Héctor Alejandro Beltrán, CRE
![Page 2: Clean Restructuring: design elements for low carbon wholesale markets](https://reader031.vdocument.in/reader031/viewer/2022022202/58804e6f1a28ab22088b5421/html5/thumbnails/2.jpg)
Webinar Overview
Clean Restructuring:Design Elements for Low-Carbon Wholesale Markets and Beyond
• Overview of 21 CPP
• Overview of Clean Restructuring Report
• Procurement and Planning
• Market Rules and Operations
• Grid Expansion, Interconnection and Codes
• Mexico Case Study
• Q&A
![Page 3: Clean Restructuring: design elements for low carbon wholesale markets](https://reader031.vdocument.in/reader031/viewer/2022022202/58804e6f1a28ab22088b5421/html5/thumbnails/3.jpg)
Speakers
Monisha Shah
National Renewable
Energy LaboratoryJosé María
Valenzuela
World Wildlife Fund –
Mexico
Héctor Alejandro
Beltrán
Energy Regulatory
Commission of Mexico
Other Authors include:
• Danish Case Study: Kim Møller Porst, Anders Hasselager, Sandra Friis-Jensen, Mette
Vingaard, Danish Energy Agency
• German Case Study: Fabian Wigand, Silvana Tiedemann, Ecofys
• Main Report: Lori Bird, Owen Zinaman, and Jeffrey Logan, National Renewable Energy
Laboratory
![Page 4: Clean Restructuring: design elements for low carbon wholesale markets](https://reader031.vdocument.in/reader031/viewer/2022022202/58804e6f1a28ab22088b5421/html5/thumbnails/4.jpg)
India (co-lead)
United States(co-lead)
Denmark Finland Mexico South Africa Spain
21ST CENTURY POWER PARTNERSHIP
A MULTILATERAL CEM EFFORT
![Page 5: Clean Restructuring: design elements for low carbon wholesale markets](https://reader031.vdocument.in/reader031/viewer/2022022202/58804e6f1a28ab22088b5421/html5/thumbnails/5.jpg)
Report Overview
Clean Restructuring:
Design Elements for Low-Carbon
Wholesale Markets and Beyond
• Builds on Power
Systems of the Future
• An end vision for the
design of competitive
wholesale markets that
rely increasingly on VRE,
DR, and other flexible,
clean energy options
• Three case studies: Mexico, Denmark and Germany
![Page 6: Clean Restructuring: design elements for low carbon wholesale markets](https://reader031.vdocument.in/reader031/viewer/2022022202/58804e6f1a28ab22088b5421/html5/thumbnails/6.jpg)
Restructuring and Clean Energy
Increasing levels of clean energy can introduce new phenomenon
into the electricity system
![Page 7: Clean Restructuring: design elements for low carbon wholesale markets](https://reader031.vdocument.in/reader031/viewer/2022022202/58804e6f1a28ab22088b5421/html5/thumbnails/7.jpg)
Flexibility Options
Range of options for increasing the flexibility of a power system
![Page 8: Clean Restructuring: design elements for low carbon wholesale markets](https://reader031.vdocument.in/reader031/viewer/2022022202/58804e6f1a28ab22088b5421/html5/thumbnails/8.jpg)
Planning and Procurement
How might planning and procurement become more complex in clean
restructured markets?
• A more dispersed and
diverse set of clean and
variable energy resources
and market actors.
• Different interests between
system planners and
individual investors in
generation
• Revenue sufficiency
concerns can occur
• Allocating cost and risk while retiring fully or partially amortized
conventional generators in a market—in order to “make room” for new
clean energy capacity- can be tricky
Source: Energinet.dk, 2011
Danish power generation
![Page 9: Clean Restructuring: design elements for low carbon wholesale markets](https://reader031.vdocument.in/reader031/viewer/2022022202/58804e6f1a28ab22088b5421/html5/thumbnails/9.jpg)
Planning and Procurement
Strategies to Improve Planning and Procurement Processes with High Levels of Clean Energy
Enhancing Foundational Planning Data
• Conduct system flexibility assessments and potential studies, e.g.
EE and DR
• Utilization of high-fidelity wind and solar data
Enhancing System Planning Practices
• More integrative generation and transmission planning
• Utilization of advanced flexibility metrics and constraints in planning
exercises
Enhancing Market Structures and Procurement Practices
• Perform scenario analyses that explore transitions in market
structure
• Provide clear guidance on grid expansion plans for renewable
developers
• Include reasonable “right-to-curtail” provisions for new VRE
contracts;
• Formulate clear guidance on cost/risk allocation strategies for
retiring existing
![Page 10: Clean Restructuring: design elements for low carbon wholesale markets](https://reader031.vdocument.in/reader031/viewer/2022022202/58804e6f1a28ab22088b5421/html5/thumbnails/10.jpg)
Design of Market Rules and Operations
• Design and implementation of dispatch rules, e.g. shorter dispatch increments and
ability to revise bids based on forecasts
• By enlarging balancing areas, the relative variability and uncertainty in both the load
and system-wide renewable energy generation can be lowered.
• Rules and procedures for implementing curtailments, particularly for system
balancing
Wholesale market rules and operations can be designed for VRE and
flexibility
![Page 11: Clean Restructuring: design elements for low carbon wholesale markets](https://reader031.vdocument.in/reader031/viewer/2022022202/58804e6f1a28ab22088b5421/html5/thumbnails/11.jpg)
Design of Market Rules and Operations
Forecasting, Ancillary Services and New Market Products:
• Integration of forecasting into
market operations
• System operators need
adequate data from
generators to ensure accuracy
of system level forecasts.
• Imbalance penalties for
deviations from scheduled
generation can be effective
tools
• Market can be designed to change
the way ancillary services are
provided to the system including
Source: Greening the Grid: FORECASTING WIND AND SOLAR
GENERATION: IMPROVING SYSTEM OPERATIONS
load following, frequency responsive, inertial response, and reactive power support.
• New market products, such as ramping products, e.g. CAISO’s Flexiramp, may be
helpful for increasing system flexibility.
• Demand response can also be a cost-effective component of system flexibility for
energy, ancillary services, and capacity markets if certain barriers are addressed
![Page 12: Clean Restructuring: design elements for low carbon wholesale markets](https://reader031.vdocument.in/reader031/viewer/2022022202/58804e6f1a28ab22088b5421/html5/thumbnails/12.jpg)
Grid Expansion, Interconnection and Codes
For network expansion and
investment:
• Expand infrastructure investment to
accommodate clean energy
resources and appropriately
allocate costs and risks among
developers and ratepayers.
• Integrated generation and
transmission planning, e.g. CREZ
Interconnection:
• Streamline the interconnection
process to allow for new entrants
Grid Codes:
• Updated grid codes to better
accommodate VRE and other
resources
• And better connect to surrounding
grids and enable larger balancing
areas
![Page 13: Clean Restructuring: design elements for low carbon wholesale markets](https://reader031.vdocument.in/reader031/viewer/2022022202/58804e6f1a28ab22088b5421/html5/thumbnails/13.jpg)
Country Case Studies: Clean Restructuring in Action
• Mexico – rapid restructuring designed
specifically for the integration of clean
energy
• Germany – electricity market 2.0
debate on how to update their
restructured market to better
accommodate clean energy and
enable flexibility
• Denmark – regional cooperation
enabling a larger balancing area with
Nordic neighborsBidding areas in the Nordic
regionSource: NordREG
![Page 14: Clean Restructuring: design elements for low carbon wholesale markets](https://reader031.vdocument.in/reader031/viewer/2022022202/58804e6f1a28ab22088b5421/html5/thumbnails/14.jpg)
Mexico Case Study
Mexico’s Clean Restructuring
Mexico’s power market reform evolves in parallel to
an opening of all energy makers. Key drivers:
- Reduce cost of supply through market efficiencies.
- Reduce cost of supply through change in the
structure of energy production away from heavy-
fuel oil.
- Comply with climate and energy transition
mandates and policies: 35% clean energy by 2024
from 18-20%.
Additional key elements
- Population without access to electricity: 2%
- Geothermal capacity: 0.9 GW
- Technical and non-technical losses in 2013: 16%
Key desired outcomes
![Page 15: Clean Restructuring: design elements for low carbon wholesale markets](https://reader031.vdocument.in/reader031/viewer/2022022202/58804e6f1a28ab22088b5421/html5/thumbnails/15.jpg)
Mexico Case Study
Mexico’s Clean Restructuring
- Ministry of Energy (SENER)
- Energy Regulatory Commission (CRE)
- Mexican Independent System Operator (CENACE)
- Federal Commission of Electricity (CFE)
Moving from a vertically integrated monopoly to a competitive market
Review of How the Roles of Various Actors Evolved
Industry Model (1995-2012)
Private
generation
Generación
Transmission Distribution
Market-based Industry (2013/2014 - present)
Generation Retail
![Page 16: Clean Restructuring: design elements for low carbon wholesale markets](https://reader031.vdocument.in/reader031/viewer/2022022202/58804e6f1a28ab22088b5421/html5/thumbnails/16.jpg)
Mexico Case Study
Mexico’s Clean Restructuring
- CRE established the set of minimum technical requirements to operate
and plan the Mexican Power System
- Based on the definition of an Adequate Level of Reliability
- Enforces 10 NERC-like standards
- Includes requirements for the development of the Smart Grid
- Creation of the National Reliability Committee
Economic Dispatch and the Ancillary Services Market
- CENACE (ISO) is responsible to perform the economic dispatch
- Based on merit order of variable costs
- LMP computed for more than 2, 000 nodes
- Creation of an ancillary services market
Reliability regulation: The Mexican Grid Code
![Page 17: Clean Restructuring: design elements for low carbon wholesale markets](https://reader031.vdocument.in/reader031/viewer/2022022202/58804e6f1a28ab22088b5421/html5/thumbnails/17.jpg)
Mexico Case Study
Mexico’s Clean Restructuring
- Independent System Operator.
- Robust regulatory and planning system.
- Restructuring and unbundling of the state utility (CFE)
- Clear rules for wholesale competitive market and regulated transmission
and distribution.
Key elements for clean energy deployment
- Clean Energy Certificates system with burden on the consumer side
- Long-term energy auctions
- High Renewable Energy Zones
Key market design instruments
![Page 18: Clean Restructuring: design elements for low carbon wholesale markets](https://reader031.vdocument.in/reader031/viewer/2022022202/58804e6f1a28ab22088b5421/html5/thumbnails/18.jpg)
Mexico Case Study
Mexico’s Clean Restructuring
The transformation of interconnection
- Serious administrative bottlenecks
- High regulatory risk
- Economic burden to the authority
- Cumbersome process for grid planning
(bias in favor of CFE projects)
PRODESEN
Programa de Desarrollo del Sector Eléctrico
- 15-years indicative planning for power
generation
- 5-years investment program for grid
infraestructure
![Page 19: Clean Restructuring: design elements for low carbon wholesale markets](https://reader031.vdocument.in/reader031/viewer/2022022202/58804e6f1a28ab22088b5421/html5/thumbnails/19.jpg)
Mexico Case Study
Mexico’s Clean Restructuring
First long-term auction call
- 6.3 TWh-year of energy and 6.3 million Certificates, based on the 5%
Certificates requirement for 2018.
- 500 MW of capacity.
- Energy to be delivered starting 2018.
Results
- 227 offers from 69 bidders.
- Projects: 18 winning bids from 11 companies.
- Technologies: 7 solar PV companies and 4 wind companies.
- Energy: 74% is going to solar and 26% to wind.
- Prices: lowest price below 40 USD.
- No offers for capacity.
![Page 20: Clean Restructuring: design elements for low carbon wholesale markets](https://reader031.vdocument.in/reader031/viewer/2022022202/58804e6f1a28ab22088b5421/html5/thumbnails/20.jpg)
Mexico Case Study
Mexico’s Clean Restructuring
First long-term auction
![Page 21: Clean Restructuring: design elements for low carbon wholesale markets](https://reader031.vdocument.in/reader031/viewer/2022022202/58804e6f1a28ab22088b5421/html5/thumbnails/21.jpg)
Contact Information
Authors
• Monisha Shah, NREL, [email protected]
• José María Valenzuela, WWF – Mexico, [email protected]
• Héctor Alejandro Beltrán, Energy Regulatory Commission of Mexico,
Report Website and Link
21CPP Website:
www.21stcenturypower.org
Report available at:
http://www.nrel.gov/docs/fy16osti/66105.pdf
Report fact sheet:
http://www.nrel.gov/docs/fy16osti/66479.pdf