Using co-optimization to clear energy and ancillary services in MRTU market

Abstract

The CAISO is completing the implementation of it Market Redesign and Technology Upgrade (MRTU). Currently, the Ancillary Services at the CAISO is approximately a $300 million annual market. In conjunction with the Market Redesign, the CAISO is implementing a co-optimization of Energy subject to Transmission Constraints and Ancillary Services subject to resource constraints. Prior to MRTU, the CAISO procured Ancillary Services in the Day-Ahead Market sequentially after allocating transmission using a Ration Buyer approach. In addition the CAISO procures the incremental Ancillary Service needs in the Hour-Ahead market. There are currently three Ancillary Services that the CAISO procures via the market: 1) Regulation, 2) Spinning-Reserve (Available in 10 minutes for synchronized resources), 3) Non-Spinning Reserve (Available in 10 minutes). After MRTU is implemented, 100% of forecasted required reserves will be procured simultaneously in Day-Ahead Market with Energy. Any additional Ancillary Service required in Real-Time will be procured on a 15 minute interval basis simultaneously when making unit commitment decisions. Energy from regulation will be dispatched by Automated Generation Control (AGC) on a 4 second basis. Energy from procured Spinning and Non-Spinning reserves may be dispatched on a 5 minute basis if they are available if they are flagged as non-contingent. Spinning and Non-Spinning reserves that are flagged as contingency only are available to energy dispatch in case of a contingency event. Regional Ancillary Service constraints will be enforced to assure a minimum or maximum regional requirements are satisfied. In addition the import of Ancillary Services will compete with Energy for import intertie capacity. In order to assure that the highest quality service is procured if economic appropriate, the Regulation reserves can substitute for Spinning or Non-Spinning reserves. Spinning reserve can substitute for Non-Spinning reserves. As a result of this ability to substitute, the higher quality service in a region should be greater than or equal to the lower quality services in the same region. As result of the simultaneous optimization of the Energy and Ancillary Services, the Ancillary Price will reflect the marginal cost of the services as well as any lost opportunity cost as a result of having to not dispatching otherwise economic energy to meet the Ancillary Service requirements. The CAISO is considering introducing a 30 minute reserve product in the future to address the need to respond to contingency overloads. Other services such as Reactive Support and Black-Start capability are not currently procured via spot market mechanisms but rather procured as a result of Reliability Must Run agreements. The presentation we will provide a status update of implementation of the Energy and Ancillary Service co-optimization. We intend to present high level information how the Ancillary Service constraint is formulated. In addition, we will provide a summary of experience with the new Ancillary Service procurement methodology during Market Simulation. Lastly, we will provide insight into areas in which Ancillary Service procurement can be further enhanced in the future better ensure deliverability of such reserves from both a transmission constraint and resource ramping constraint perspective.