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ERCOT WHOLESALE MARKET OPERATIONS PowerPoint Presentation
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ERCOT WHOLESALE MARKET OPERATIONS

ERCOT WHOLESALE MARKET OPERATIONS

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ERCOT WHOLESALE MARKET OPERATIONS

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  1. ERCOT WHOLESALE MARKET OPERATIONS MODULE 2

  2. Topics • Essential Concepts • Ancillary Services • Congestion Management

  3. Topic 1: Essential Concepts

  4. Essential Concepts • Market Structure • Wholesale Concepts and Roles • Introduction to the Day-Ahead and Operating Day process

  5. TOPIC 1: Essential Concepts ERCOT Structure • Wholesale Market: • Zonal Design • Bilateral Market • Requirements: • QSE Representation • Balanced Schedules

  6. TOPIC 1: Essential Concepts Qualified Scheduling Entity (QSE) • Market Participants qualified by ERCOT to: • Submit Balanced Schedules • Submit Ancillary Services Bids • Settle with ERCOT QSE All Resources and LSEs must be represented by a QSE

  7. TOPIC 1: Essential Concepts Bilateral Transactions • Definition / Summary • A trade agreement between two entities • Bilateral transactions are scheduled with ERCOT • Examples: • QSE A sells a block of 50 Mwh (North Zone), to QSE B for Hour-Ending 1100-1300 • QSE A sells 3 Mw of Responsive Reserve to QSE B for Hour-Ending 1400.

  8. TOPIC 1: Essential Concepts Balanced Schedules • For each Interval of a QSE schedule: • Qty of Resources and Obligations must Balance • Bilateral Transactions must Match (Qty, QSE, Zone) Resources: Generation or purchases Obligations: Load or sales

  9. TOPIC 1: Essential Concepts “Relaxed” Balanced Schedules • For each Interval of a QSE schedule: • Qty of Resources and Obligations must Balance • Bilateral Transactions must Match (Qty, QSE, Zone) • QSE may set obligations equal to supply, and/or schedule BES via ERCOT to meet Obligations* Resources: Generation or purchases Obligations: Load or sales * Limited by QSE’s collateral with ERCOT

  10. SQSE SQSE TOPIC 1: Essential Concepts Balanced Schedules • ERCOT does not require QSEs to be balanced within each Congestion Zone. However, not being balanced within each zone may result in congestion charges (or payments).

  11. TOPIC 1: Essential Concepts QSE Balanced Schedule – Portal Display

  12. TOPIC 1: Essential Concepts Balanced, but mismatched

  13. Let’s Check Under the Hood! TOPIC 1: Essential Concepts Resource Plan • What is the Resource Plan? • Each QSE representing a Resource or Load Acting as a Resource must submit a Resource Plan!! • Plan of how Generation Resources will operate • Due to ERCOT by 4:00 pm of the day-ahead period • Used by ERCOT to determine resource adequacy • Validated against balanced schedules

  14. TOPIC 1: Essential Concepts ERCOT Roles: Reliability SYSTEM RELIABILITY ERCOT is here to ensure reliability by: • Resource capacity planning. • Real-time transmission management. • Procure balancing energy. • Issue deployment instructions to units, as needed. ERCOT is similar to an Air Traffic Controller

  15. TOPIC 1: Essential Concepts Wholesale Process: From Scheduling to Power Flow • Energy Buyers and Sellers submit their bilateral transactions (trades) to a Qualified Scheduling Entity (QSE). • QSEs submit Balanced Schedules, Ancillary Services Bids and a Resource Plan (if applicable) to ERCOT. • ERCOT manages any real-time imbalances during the Operating Period between forecasts and actual demands by deploying balancing energy.

  16. ERCOT Market Timeline Market Operations Power Operations TOPIC 1: Essential Concepts Wholesale Market Timeline Commercial Operations True-up Settlement: 180 days after Operating Day And/or specific Protocol Criteria is met Day-Ahead Period:6:00am to 6:00pm prior to Operating Day. Adjustment Period: Precedes Operating Period Operating Period:Balancing Energy ClearingOccurs every 15 minutes Initial Settlement 10 days after Operating Day Final Settlement 59 days after Operating Day

  17. TOPIC 1: Essential Concepts Wholesale Market Timeline • Day-Ahead Period • 6:00AM to 6:00PM on the day prior to the Operating Day (“flow” date) • QSEs submit balanced schedules and ancillary services bids • ERCOT clears Ancillary Services Markets, and publishes results. • Adjustment Period • Time between the close of the Day-Ahead Market and the start of the Operating Period. • QSEs may modify their schedules and/or bids during this time. • Operating Period • Includes the Operating hour (“flow hour”) and the hour prior to Operating hour (look-ahead studies).

  18. TOPIC 1: Essential Concepts Wholesale Market Timeline Midnight

  19. TOPIC 1: Essential Concepts Wholesale Market Timeline – Day Ahead Period • Day-Ahead Period Key Times 06:00 Forecast Information Published 11:00 Deadline for Day-Ahead Scheduling (Bilateral, A/S) 11:15 Deadline to resolve Day-Ahead Mismatches 13:00 Deadline for A/S Capacity Market Bids Deadline for Adjusted Day-Ahead Schedules 13:30 A/S Capacity results & MCPC 16:00 Deadline for Resource Plan submittal Replacement Reserve Bids System Lockdown for Day-Ahead Analysis 18:00 Day-Ahead Period complete; start of Adjustment Period

  20. TOPIC 1: Essential Concepts Wholesale Market Timeline – Adjustment Period • Adjustment Period – ERCOT does not have an “Hour-Ahead” period, as in some ISOs – it is referred to as the Adjustment Period. • On the Operating Day, the Adjustment Period is anytime up to one hr prior to Operating (“flow”) Hour when QSEs can alter or remove existing schedules, or submit new schedules for the Operating Hour. • Deadline for QSEs to submit schedules & changes is one hour prior to the “flow” hour. (i.e., deadline for HE1300 is 1100, because HE 1300 begins at 1200).

  21. TOPIC 1: Essential Concepts Wholesale Market Timeline – Operating Period • Operating Period is 2 Hours. It starts immediately after the Adjustment Period, when all QSE schedules have been submitted and cannot be altered or removed. • First Hour – system lockdown – allows for system studies for the upcoming flow hour based on QSE schedules • Second Hour is the Operating (“Flow”) Hour

  22. Topic 2: Ancillary Services

  23. TOPIC 2: Ancillary Services Ancillary Services (Reserves) • Definitions and Requirements (and why we need them) • LSE Obligations and Supply Options • Descriptions of Services • Merit-Order vs. Out of Merit

  24. TOPIC 2: Ancillary Services • What are Ancillary Services, and why does ERCOT need them? • Generation that is intentionally reserved, in the event it is needed. (i.e., a plant that generates 50 Mw of its maximum of 100 Mw has 50 Mw of reserve capacity available) • Reservecapacity can be utilized (converted to energy) to keep the lights on in the event of an unforeseen system disturbance. “Energy Insurance”

  25. TOPIC 2: Ancillary Services • As a QSE that schedules load, why do I need to know about A/S? • Market Participants serving load have an A/S Obligation as a “cost of doing business.” • Similar to Auto Insurance: If you own a vehicle in Texas, Liability Insurance is a mandated cost that goes along with owning the vehicle.

  26. TOPIC 2: Ancillary Services ERCOT System Requirements • Annual Procedure • ERCOT establishes the procedure for determining A/S system requirements. It is reviewed and approved in the stakeholder process. • Monthly Calculation • System-wide requirement is calculated, based on statistical calculations and historical deployments. “ERCOT Methodologies for Determining Ancillary Service Requirements” posted under Key Documents.

  27. TOPIC 2: Ancillary Services • OK, what is my share of the ERCOT System Requirement? • It is based on your load relative to total ERCOT load, or Load Ratio Share (LRS). • If you have 10 Mw of Load, and ERCOT has 100 Mw of total load, your LRS is 10%. Your obligation will be 10% of each service that ERCOT requires. QSE Day-Ahead LRS Obligations are posted each morning by 6AM

  28. TOPIC 2: Ancillary Services • Do I have a requirement if I am a QSE that has no load? • No. If you only have bilateral transactions and no load, you will not incur any A/S Obligations, UNLESS…… • …you have an EXPORT on the DC Tie. An export is considered load, so if you schedule an export, you can expect to see an A/S Obligation 14 days later. QSE Day-Ahead LRS Obligations are posted each morning by 6AM

  29. TOPIC 2: Ancillary Services Ancillary Service Supply Options • Where can I get Ancillary Services to fulfill my obligation? • QSEs can Self-Arrange: • a. Using its own resource • b. Purchase from another entity (A/S Bilateral Trade) • QSEs can purchase from ERCOT at the Day-Ahead MCP for Capacity (MCPC). • Note: Per Protocol Section 4.3.1: QSEs that intend to purchase their obligation from ERCOT MUST schedule a bilateral PURCHASE from ERCOT.

  30. TOPIC 2: Ancillary Services Ancillary Services Sellers A/S • A/S providers must be qualified by ERCOT to provide each A/S • Must keep awarded capacity in reserve • Must meet performance metrics (perform when called upon)

  31. TOPIC 2: Ancillary Services Out-of-Merit vs. Merit-Order Selection Scenarios • Merit-Order • Based on bids, “stacked” from least to most expensive • Market Price for Capacity and Energy is produced. • Out-of-Merit: • Without respect to cost • Needed for reliability, regardless of economics. • Also utilized when no market solution exists. ERCOT NEEDS YOU!

  32. TOPIC 2: Ancillary Services Ancillary Services: Option to Self-Arrange • Other Attributes: • Day-Ahead Capacity Market • Selected in Merit Order

  33. TOPIC 2: Ancillary Services Day-Ahead A/S Capacity Market: Selection Process System Requirement – 2300 Mw 2300 ERCOT to procure 920 Mw via A/S Capacity Market 1380 Self-Arranged Qty (from A/S schedules)

  34. TOPIC 2: Ancillary Services 920 ERCOT moves “up the bid stack” until it reaches the necessary qty. The price associated with that qty sets the MCPC. ($2.10 in this example)

  35. TOPIC 2: Ancillary Services A/S Cash Flows Day-Ahead Capacity Result Award * $ Hourly MCPC QSE A ERCOT “I will reserve X Mw (awarded qty) of generation” Deployment on Operating Day Mw * $ MCPE (BES) QSE A ERCOT ERCOT-instructed Mw

  36. TOPIC 2: Ancillary Services A/S Cash Flows Day-Ahead Capacity Result Award * $ Hourly MCPC QSE A ERCOT “I will reserve X Mw (awarded qty) of generation” • If NO Deployments are issued by ERCOT: • QSE A KEEPS the capacity payment • Also similar to paying auto insurance premium, but not having a claim before the policy expires

  37. TOPIC 2: Ancillary Services A/S Cash Flows How does ERCOT get the money to pay for Capacity? $$ $$ Net Obligation QSE A ERCOT Capacity Capacity • ERCOT charges load QSEs for non-self-arranged obligations • ERCOT remains revenue-neutral!

  38. TOPIC 2: Ancillary Services Exclusively Arranged by ERCOT • Replacement Reserve • Resources planned to be off-line, but available • Deployed for Capacity Insufficiency, Zonal Congestion or Local Congestion • Black Start • Widespread black out event • Started without support of the power grid • Contracted by ERCOT annually

  39. TOPIC 2: Ancillary Services Exclusively Arranged by ERCOT Reliability Must-Run • Resolves local system reliability • Contracted by ERCOT • Otherwise would not be an active resource

  40. TOPIC 2: Ancillary Services Exclusively Arranged by ERCOT / Out of Merit • Out-of-Merit Capacity (OOMC) • Capability of providing additional Balancing Energy Service • Otherwise not selected because of the place (or absence) in the Merit Order bid stack • Out-of-Merit Energy (OOME) • Provisionof balancing energy to solve local congestion, or when no market solution exists

  41. TOPIC 2: Ancillary Services Exclusively Arranged by ERCOT • Balancing Energy (Merit Order) • Energy deployed by ERCOT every 15 minutes • Deployed when load forecast is higher or lower than scheduled OR • Also deployed to resolve Congestion • Market Clearing Price for Energy (MCPE) • Example: • Load Imbalance (LI) settles at BES MCP • LI: Difference between scheduled and metered load

  42. TOPIC 2: Ancillary Services Ancillary Services Summary Option to Self Arrange OR Purchase from ERCOT No Option to Self Arrange: Exclusively provided by ERCOT

  43. SQSE TOPIC 2: Ancillary Services INTRODUCING!! SUPER QSE • A FULL SERVICE QSE • Markets and Schedules WATTSco power generation. • Wholesale Supplier and Scheduler for POWERMART and EZWatts, retailers. • Qualified to provide Ancillary Services. • Provide Power Marketing Services.

  44. SQSE TOPIC 2: Ancillary Services A/S Obligation – Load Ratio Share • ERCOT calculates the “load-ratio share” (LRS) of each Load Serving Entity (LSE). • QSE’s Load Ratio Share is the aggregate total of the LSE LRS that it represents. • QSE’s A/S Obligation is its LRS of the Total ERCOT-wide requirement.

  45. SQSE TOPIC 2: Ancillary Services Example: Day-Ahead A/S Obligation for 4/26/04 SQSErepresents POWERMART [88]and EZWatts [55], LSEs. On April 12, 2004 (14-days ago) the aggregated load for these two LSEs came to: April 12 Load LRS

  46. SQSE TOPIC 2: Ancillary Services A/S Obligation – For Example! For intervals “hour-ending” 1000 through 1200 the A/S obligations are determined by taking the LRS times each ERCOT-wide obligation, rounded to a whole MW.

  47. SQSE TOPIC 2: Ancillary Services A/S Obligation – For Example! - SQSE represents LSE_88 and LSE_55 -SQSE A/S Obligation = sum of the obligations of LSE_88 and LSE_55: 26-Apr-04

  48. SQSE TOPIC 2: Ancillary Services A/S Obligations: Recent Change! Day-Ahead Obligation: Based on the Load Ratio Share of the Load from the Initial Settlement data, for the Operating Day that is 14 days before the day in which the Obligation is being calculated. After the Operating Day: (PRR 451) The AS Obligation calculations are adjusted (trued-up) based on the most up-to-date Load Data for each settlement run.

  49. TOPIC 2: Ancillary Services Ancillary Service Obligations – Portal View • Posted by 6 AM one day prior to the Operating Day • Obligation is under “Required Mw” column • Legend: • DRS: Down Regulation Service • NSRS: Non Spin Reserve Service • RRS: Responsive Reserve Service • URS: Up Regulation Service

  50. TOPIC 2: Ancillary Services Ancillary Service Scheduling: Keep in Mind… • A/S Scheduling Options • Self-Arrangement • Bilateral purchase from another QSE • If QSE is using its own resource, purchase from self • Purchase from ERCOT • Bilateral purchase from ERCOT