a cps1-driven market for the frequency control contribution of inadvertent interchange presented to...
TRANSCRIPT
A CPS1-Driven Market for the Frequency Control Contribution
of Inadvertent Interchange
presented to
Inadvertent Interchange Payback Taskforce
North American Energy Standards Board
by Robert Blohm
Austin
September 15/16, 2003
From The New York Times, August 19, 2003
Managing
Inadvertent
or
Tie-Line Error:
Primary Response Stabilizes Frequency
Secondary Response Restores Frequency
Hz
15
6059.925
1
Hz
59.925
60
10
Seconds
Minutes
Secondary Response (should be made by the BA who caused the disturbance)
(Shared)Primary Response
Generator slows down while governor opens steam-control valve to stop the slow-down. Interconnection’s Overall Primary Response offsets Intcrconn.’s Overall Scheduling Error.
Operator raises steam-control valve set-point to increase the steam flow to speed up generator.
As generator speeds back up to normal, the governor closes-back steam-control valve. Balancing Authority’s Secondary Response to his own error
replaces Interconnection’s Shared Primary Response to that error.
A BA has Inadvertent* whenever the BA’s share of the Interconnection’s overall Scheduling Error doesn’t match the BA’s required share of the Interconnection’s overall Primary Response to that Scheduling Error
Numbers in 10s Mw
100 100
75 75
100
100
75 25 50 50
25 5075 50
75 25
5050 50
BalancingAuthority A
BalancingAuthority B
B’s Inadvertentof -25
Outage of 50 inBalancing Authority B
Replacement by 50 from Balancing Authority A
PRIMARY RESPONSE of50 in load reduction,25 each in A and B
Load
Generation
SECONDARY RESPONSE of50 in generationincrease in A
A’s Inadvertentof 50
A’s Inadvertentof 25
B’s Inadvertentof -50
Inadvertent always
sums to zero
between intercon-
nected entities.
* or tie-line error
Ancillary Service Dispatch Decision• Three 500 MW Units with 5% Droop.
5 % Droop means
- 100 % of capacity needed to arrest freq. drop of 5 % of 60 Hz = 3 Hz - Response Requirement of 10 % of capacity (= 150 MW = 50MW per gen.) to
arrest .3 Hz freq. drop (= 0.5% of 60 Hz).
• Each Loaded to 425 MW
• Unit 1 – Incremental Price = $30/MWh
• Unit 2 – Incremental Price = $40/MWh
• Unit 3 – Incremental Price = $50/MWh
• How should a 75 MW increase in balancing energy be delivered?
Marginal-Energy-Cost May Not be the Most Economic Basis for Reliability
• Alternative 1: Variable-cost Based Decision - load Unit 1 an additional 75 MW.– Cost $ 2,250– Remaining resp. to next .3Hz drop: 100 MW
only 2 available generators left @ 50 MW per generator = 1/3rd shortfall from response needed to arrest next frequency drop. Need to have bought 500 MW of new excess capacity to get the extra 50 MW of response
• Alternative 2: Capacity-cost Reliability Based Decision - load each unit an additional 25 MW.– Cost $ 3,000– Remaining resp. to next .3Hz drop 150 MW
all 3 generators available @ 50 MW per generator = No shortfall from the response needed to arrest next frequency drop
energy
transmission loading component
frequency control contribution
Inadvertent is a vector in a state space
FCCTLC,energy,
Dual pricing of unscheduled energyAmbiguity along the diagonal
Revenue/Expense
Unscheduled
part 0 good bad receive
energy part 0U sold pUpe
pUpe pay
bought pUpe pUpe
Animation of the Mechanism for
Determining and Settling
Frequency Control Contribution:
iI
1 4
4
8
4 F
2
1FF
4
1F
4
1tt
4
9II
4
1I i
4
1tt,ii
2
9
F
Ii
Slope is "2-dimensional average"of Inadvertent & Frequency-error
Average Frequency-error
i's Average Inadvertent
A Balancing Authority i's Frequency Control Contribution is a frequency-error-weighted"2-dimensional average" of Inadvertent and Frequency-error.
A "2-dimensional average" is the slope of a line from the origin through the intersection ofthe lines intercepting the two averages.
4-period scatter of Balancing Authority i's<Frequency-error, Inadvertent>
points
denoted by the 4 red dots t,it I,F
Drawing preparedby Robert Blohm
July 5, 2003
tF t,iIPeriod t 1 4 -2 2 1 -1 3 -4 4 4 1 8 Sum = 2 9
hFhF
iI
iI
redBA ‘s hourly averages during a month
redBA
Scatter is horizontally normally distributed likehF
:i
hFhF
iI
iI
redBA ‘s hourly averages during a month
redBA
hi ,10Closest line estimate of the scatter
:i
hFhF
iI
iI
blueBA ‘s hourly averages during a month
blueBA
Scatter is horizontally normally distributed likehF
:i
hFhF
iI
iI
blueBA ‘s hourly averages during a month
blueBA
Closest line estimate of the scatter
hi ,10
:i
hFhF
iI
iI
blueBA ‘s hourly averages during a month
blueBA:i
hFhF
iI
iI
blueBAredBA
‘s scatter combined with‘s
Combined scatter is horizontally normally distributed like hF
hFhF
iI
iI
blueBAredBA
‘s scatter combined with‘s
Closest line estimate of blueBA ‘sscatter and redBA ‘s scatter
hFhF
iI
iI
blackBA ‘s hourly averages during a month
blackBAi :
Scatter is horizontally normally distributed likehF
hFhF
iI
iI
‘s hourly averages during a month
blackBAi :
blackBA
Closest line estimate of the scatter
hi ,10
hFhF
iI
iI
blackBA ‘s hourly averages during a month
blackBAi :
hFhF
iI
iI
blackBAredBA
‘s scatter combined with‘s
hFhF
iI
iI
scatters combinedblackBA ‘s, redBA ‘s and blueBA ‘s
Combined scatter is horizontally normally distributed like hF
hFhF
iI
iI
scatters combinedblackBA ‘s, redBA ‘s and blueBA ‘s
Closest line estimate of blackBA ‘sscatter , blueBA ‘s scatter , and
redBA ‘s scatter
hFhF
iI
iI
greenBA ‘s hourly averages during a month
greenBAScatter is horizontally normally distributed likehF
:i
hFhF
iI
iI
greenBA ‘s hourly averages during a month
greenBAClosest line estimate of the scatter
hi ,10
:i
hFhF
iI
iI
greenBA ‘s hourly averages during a month
greenBA:i
hFhF
iI
iI
greenBAredBA
‘s scatter combined with‘s
hFhF
iI
iI
scatters combinedgreenBA ‘s, redBA ‘s and blueBA ‘s
hFhF
iI
iI
‘s scatters combinedgreenBA ‘s, redBA ‘s, blueBA ‘s, and
blackBACombined scatter is horizontally normally distributed like hF
hF
iI
iI
‘s scatters combined.‘s, redBA ‘s, blueBA ‘s, and
blackBAgreenBA
hF
Vertical cross-section contains equal weight of points above & below axishF
hFhF
iI
iI
‘s scatters combined.greenBA ‘s, redBA ‘s, blueBA ‘s, and
blackBAVertical cross-section contains equal weight of points above & below axishF
hFhF
iI
iI
‘s scatters combined.greenBA ‘s, redBA ‘s, blueBA ‘s, and
blackBAClosest line estimate of greenBA ‘sscatter , blackBA ‘s scatter ‘sblueBA,scatter, & redBA ‘sscatter
hFhF
iI
iI
‘s scatters combinedgreenBA ‘s, redBA ‘s, blueBA ‘s, and
blackBALine estimate of system’s scatter is horizontal line on
hF axis.Zero systeminadvertent.
010 , hI
hblack ,
hred ,hblue,
hgreen,
hctionInterconne ,
hblack ,
hred ,hblue,
hgreen,
hF
iI
iI
‘s scatters combined.greenBA ‘s, redBA ‘s, blueBA ‘s, and
blackBALine estimate of system’s scatter is horizontal line on
hF axis.Zero system inadvertent.
010 , hI
hF
hFhF
iI
iI
Line estimate of system’s scatter is horizontal line on axis.hFZero system inadvertent.
is horizontally normally distributed
hF
• Real time transactions cannot be done moment-by-moment deterministically/deliberately– Time is too short
• Real time performance must be managed, measured and valued as a statistical distribution– Classical physics versus quantum mechanics
• joint-indeterminacy of position and momentum
– Joint-indeterminacy of time-quantity and reliability-pricing• reliability pricing of a time average
Market price of a distribution of points over time, not of a sharp point in time
“Computational Equivalence” (Wolfram/Mathematica): computational limitations in humans & physical nature
Tiered real-time market
• Three tiered market for frequency control– NERC, Balancing Authorities, local entities.
• Frequency is a public good requiring an authority like NERC to drive the frequency-control markets by the threat of penalty.
– This meets both a reliability and a markets objective
• Balancing Authorities must settle their FCC monthly– Since inadvertents sum to zero by definition, Balancing
Authorities always clear
• Balancing Authorities must also comply with CPS frequency targeting, acting as agents subject to NERC penalty– FCC does not target frequency – NERC CPS penalty will prompt Balancing Authorities to trade
their CPS rights instead of paying the penalty, the way DOE pollution penalties prompted the market for pollution rights.
• To meet their monthly CPS scores, Balancing Authorities will trade their frequency control contributions as an alternative to buying options on frequency support
Tiered real-time market (cont.d)
• FCC is open and scalable to a market below Balancing Authorities– Balancing Authorities can apply FCC to their constituent
entities to incent entities’ self-provision and good performance, thereby minimizing the Balancing Authority’s own local intervention
Tiered real-time market (cont.d)
Ancillary services markets
• Ancillary services markets need to be developed as robust options markets– The option price is driven by volatility which is
another way to capture/express Frequency Control Contribution
Possible portfolio of optionsPrice should arbitrage buyer's avoided cost of with supplier's opportunity cost
psupply:
demand:price:
q in order of size of unscheduled
Puts on generation Calls on generation Calls on loads
I n a c o m p l e t e o p t i o n s m a r k e t f o r f r e q u e n c y r e s p o n s et h e o p t i m a l s c h e d u l i n g p o i n t m i n i m i z e s t h e c o s t o f u n s c h e d u l e d B + C
P e r i o d
O v e r s c h e d u l i n g
A C M O p t i m a l l y w S c h e d u l i n g B D
U n d e r s c h e d u l i n g O r d e r o f s i z e o f u n s c h e d u l e d U n s c h e d u l e d
A B C D O v e r s c h e d u l e d O v e r s c h e d u l e d + U n d e r s c h e d u l e d U n d e r s c h e d u l e d d u e t o o v e r s c h e d u l i n g d u e t o o p t i m a l l y s c h e d u l i n g d u e t o u n d e r s c h e d u l i n g
)](),([)( DValueAValueMinCBMinValue
Relation between CPS1
and
Frequency Control Contribution
pFCC
extends to all inadvertent the price of the trading & procurement of
residual inadvertent done to get compliant with .
The tolerance band limits and drives .
pFCC
1CPSp
FCC
1CPS
boils down to
22
,
,,
t
ti
titi FAVGb
b
tib ,where is a least-squares estimator of
bias tiB ,
2,
2
,, tittiti bFAVGb
1CPS
02
, tti FAVG
0)(
)( 2
2
t
t
ti FAVGFAVG
FTAVG
0)( ti FTAVG
With bias , tolerance band and becomes
0, settiB
1CPS02
, tib
monetizes the part
of not being subject to compliance enforcement
because
since
and
p
n h
n hiFCCp
F
FI
102
1CPS
pFCC
0)( ti FTAVG
phi FCCFIAVGk )(
2?
10 hFAVGkp
10,10
10 ppFCChih
Trading/procurement of to get within the tolerance band
drives the price of all in
22
,
,,
t
ti
titi FAVGb
b
).10( ,1010 hih pFCCp
hi ,1CPS
• Marginal price of in terms of . hi , hF
2
• When it takes less response than regulation to avoid violation.
22
tF
ti ,
tib ,
1CPS
hi ,10
p
pFCC
provides a means for s to decentralize frequency control to entities by passing through the cost/benefit of s s’ compliance to the entities necessitating/causing it.
• to alleviate ‘s compliance, and
• to re-decentralize frequency control when
compliance is centralized into fewer and bigger s
pFCC
j
BA i 1CPS
1CPSBA i
BA i1CPS
BA i1CPSj
CPS1
(mHz)+
+
FB i 10
-
MW, or
Control area i's maximum allowed 1-minute average tie-lineerror (plus response obligation) in direction of the frequency error:
:
:
: One-year target probability density of 1-minuteaverages of frequency error, adjusted for deviation of
the mean from 0
FBi 10
F
F
:
: InstantaneousProbability
"No inadvertent allowedin the direction of
Frequency error when"
F :
On average over the past year:Approximate
0iB :
F
FBT
ii
10
1-minute average ofFrequency error
- + F
50-50
Annual standarddeviation of F
Year's Mean of F
Control area i's bias
F 22 TargetRMS:
: in same direction as+ F
CPS1
++
++-
-
-
-
Vertical cut Horizontal band
hF tF
hF tF
goodiI , goodiT ,badiI , badiT ,
Isoquants
2
t
i
ti FB
FTAVG
: buys FCC or response: buys regulation
Isoquants hi FIAVG
pFCC
‘s cut is perpendicular to CPS1's cut/band.Payments for traded s would sum to zero around CPS1's cut/band when .
There is excess demand for traded s outside CPS1's cut/band when whence receipt of reduces CPS1 penalty to incent BAs to get back inside.
tF
tF
pFCC
hFCC
hFCC
pFCC
's vertical cut gets stretched right from the middle into CPS1's horizontal band.BA outside his CPS1 cut/band buys enough from BAs & to get inside his CPS1
cut/band & avoid CPS1 penalty, and thereby helps set the settlement price .
pFCC
hFCChFCC 10
p
Tolerance band makes CPS1 control proactive:
a Balancing Authority becomes non-compliant before
the Interconnection becomes non-compliant.
BAs with different biases have different CPS1 cuts/bands, all pivoting around point . Tolerance band is proactive, enabling BA violations of CPS1 to be caught before
the Interconnection violates CPS1.
Slope of tangent
Slope of asymptote (ray from origin)
1
2
2,
,
1010
t
ti
tiF
BB
1
,10
tiB
tF
badiT ,
tF
goodiT ,
,0
A CPS1 band becomes the cut when bias is .0tblueB
,
tpurpleB,
tredB,
torangeB,
tgreenB,
toliveB,
tblueB,
0
pFCC
tpurpleB,
tredB,
torangeB,
tgreenB,
toliveB,
tblueB,
0
Room for BA violations before Interconnection is in violation
CPS1 makes control economically more efficient by enabling:
•avoidance of expensive “overcontrolling” to too-short deviations
that wears and tears generators.
•natural economic incentive to control just as effectively and compliantly
but more cheaplyto a longer-term sample average.