Markets committee mark karl iso ne danielle powers iso ne january 14 15 2004
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Markets Committee Mark Karl, ISO-NE Danielle Powers, ISO-NE January 14-15, 2004 PowerPoint PPT Presentation


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Locational ICAP: Two-Area Market Clearing Examples. Markets Committee Mark Karl, ISO-NE Danielle Powers, ISO-NE January 14-15, 2004. Proposed Capacity Demand Curve. X-axis shows capacity as ratio of 1 in 10 criterion requirement

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Markets Committee Mark Karl, ISO-NE Danielle Powers, ISO-NE January 14-15, 2004

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Markets committee mark karl iso ne danielle powers iso ne january 14 15 2004

Locational ICAP: Two-Area Market Clearing Examples

Markets Committee

Mark Karl, ISO-NE

Danielle Powers, ISO-NE

January 14-15, 2004


Proposed capacity demand curve

Proposed Capacity Demand Curve

  • X-axis shows capacity as ratio of 1 in 10 criterion requirement

  • This curve would be starting point for the demand curve to be applied to all ICAP regions


Example 1 hypothetical two region pool

Example 1 - Hypothetical Two Region Pool

Import

Constrained

Region

1000 MW CTR

Rest of Pool

Region

6,000 MW Total Capacity Requirement

8,700 MW Supply Available

4,000 MW Total Capacity Requirement

3,000 MW Local Capacity Requirement

3,200 MW Supply Available


Calculation of regional requirements and transfer limits for hypothetical two region pool

Calculation of Regional Requirements and Transfer Limits for Hypothetical Two Region Pool


Capacity demand curve for each icap region

Capacity Demand Curve for Each ICAP Region

Rest of Pool

ICAP Region

1 in 10 Level (Demand Curve Scaling Factor = 1)

Import

Constrained

ICAP Region

1 in 10 Level (Demand Curve Scaling Factor = 1)


Example 1 clearing solution for two regions

Example 1 - Clearing Solution for TwoRegions

  • Clearing engine seeks to minimize the total value of accepted offers, subject to the obligation-price relationship specified by each regional demand curve

  • Up to 1,000 MW in Rest of Pool transferred to Import Constrained Region. (More would be economic, but would violate limit)

  • ALL capacity and ALL obligations cleared in region in which they are located.

    • Strictly speaking, it is not possible to construct a demand curve reflecting transfers because clearing engine does not identify which offers “transfer”

    • “Shifting” of supply to reflect transfers as shown on following chart can be used to illustrate impact of transfers on regional prices and obligations, however


Supply curve for each icap region with transfer

Supply Curve for Each ICAP Region – with Transfer

Actual MW

Cleared

Rest of Pool

ICAP Region

8,700 - 1,000 MW

(7,700 MW)

Available

Resulting Clearing Price

1,000 MW “Shift”

Import

Constrained

ICAP Region

3,200 + 1,000 MW

(4,200 MW)

Available

Actual MW

Cleared

Resulting Clearing Price

1,000 MW “Shift”


Example 1 resulting regional clearing prices

Example 1 - Resulting Regional Clearing Prices

  • With transfers:

    • About 6,700 MW clears in Rest of Pool, at a price of just over $2/kw-month. (Scaling Factor = 6,700/6,000 = 1.12)

    • About 4,200 MW available to the Import Constrained region clears at a price just over $6/kw-month. (Scaling Factor = 4,200/4,000 = 1.05)

  • All capacity and obligations settled at prices in the ICAP Region in which they are located.

    • Load in Import Constrained Region pays the Import Constrained Region price for the total purchase requirement

    • Because 1,000 MW can be imported, the result is load pays the zonal clearing price for 1,000 MW that is located in Rest of Pool

    • Result is over collection equal to $4 price difference times 1,000 MW transfer capability. Over collection is paid to holders of 1,000 MW of Capacity Transfer Rights


Example 2 hypothetical two region pool

Example 2 - Hypothetical Two Region Pool

Import

Constrained

Region

2000 MW CTR

Rest of Pool

Region

6,000 MW Total Capacity Requirement

8,700 MW Supply Available

4,000 MW Total Capacity Requirement

2,000 MW Local Capacity Requirement

3,200 MW Supply Available


Example 2 decreased local purchase requirement additional transfer capability

Example 2: Decreased Local Purchase Requirement/ Additional Transfer Capability

  • If modeling had shown that only 2,000 MW (down from 3,000 MW previously) of capacity was needed in the Import Constrained Region

    • The capacity transfer limit would increase to 2,000 MW (up from 1,000 MW)

    • Increased levels of transfer between regions would clear market

    • Total level of transfer will depend on offers in each region


Supply curve for each icap region with transfer1

Supply Curve for Each ICAP Region – with Transfer

MW

Cleared

Rest of Pool

ICAP Region

8,700 - 1,600 MW

(7,100 MW)

“Available”

Resulting Clearing Price

1,600 MW “Shift”

Import

Constrained

ICAP Region

3,200 + 1,600 MW

(4,800 MW)

“Available”

MW

Cleared

1,600 MW “Shift”

Resulting Clearing Price


Example 2 resulting regional clearing prices

Example 2: Resulting Regional Clearing Prices

  • With transfers:

    • About 6,600 MW clears in Rest of Pool, at a price of just under $3/kw-month. (Scaling Factor = 6,600/6,000 = 1.10)

    • About 4,400 MW clear in the Import Constrained Region, at a price just under $3/kw-month. (Scaling Factor = 4,400/4,000 = 1.10)

  • Only 1,600 MW of 2,000 MW of transfer capability is utilized

    • Remaining 400 MW of transfer capability is available, but no additional opportunity exists for economic transfers across the interface

    • Constraint is not binding between regions

    • Prices in two regions are equal, at a bit less than $3/kw-month

  • No over collection

    • All capacity is transferred at the same value

    • CTRs have no value


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