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Considerations of EIM Modeling in WECC PCM PCM Modeling Workgroup Meeting November 19, 2019 Salt Lake City, UT Xiaobo Wang, PhD Senior Advisor Market Engineering California ISO

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Page 1: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

Considerations

of EIM Modeling

in WECC PCM

PCM Modeling Workgroup Meeting

November 19, 2019

Salt Lake City, UT

Xiaobo Wang, PhD

Senior AdvisorMarket Engineering

California ISO

Page 2: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

Foreword 1 slide

What is EIM in the real world? 4

Table of contents

What is EIM technically? 5

What does the WECC PCM represent? 3

Is there anything we should model? 2

Summary 1

Page 3: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

Foreword

This presentation is intended to

open up the discussion on

how or if to model EIM in

the 2030 WECC ADS PCM

Acronyms:

ADS = Anchor Data Set

PCM = Production Cost Model

Page 4: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

Foreword 1

slidesWhat is EIM in the real world? 4

Table of contents

What is EIM technically? 5

What does the WECC PCM represent? 3

Is there anything we should model? 2

Summary 1

Page 5: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

Online56%

Committed21%

77%

Note: The EIM size is measured by Net Energy for Load (NEL) according to WECC 2018 historical load data

Growth of the Western EIM

2014

2015

2016

2017

20182019

2020

2021

2022

1998

We are here

Currently, total 19 participants. Including 1 ISO, 8 EIM Entities online and 10 EIM Entities under implementation

Page 6: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

Benefits of the Western EIMEconomic and environmental benefits

Data source: Western EIM Quarterly Reports

This amount of reduced CO2 emissions is the equivalent of removing annual emissions of

87,889 passenger cars

403,546

tons

Less GHG emissions due to displaced thermal generation

Acc

umul

ated

num

bers

sin

ce 2

015

976,896

MWh

More renewable output due to avoided curtailmentThis amount of energy is the equivalent of annual electricity consumption of

140,000 households in California

Acc

umul

ated

ben

efits

sin

ce E

IM la

unch

in N

ov 2

014

Reduced operational costs due to optimized dispatch

Economic benefit

Environmental benefit

This amount of money is enough to build a major 500 kV transmission line in the West

$801.07M

US dollars

Costs→ See “Appendix. EIM economic benefit” for more details

Page 7: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

Beyond EIM: Extended Day-Ahead Market (EDAM)Benefit study completed. EIM entities suggest to move forward

The EDAM FA was

a joint study of

14 EIM entities and CAISO

Four other EIM entities

did not participate in the study

because they newly joined

Based off the EDAM Feasibility Study,

on 9/16/2019 EIM entities wrote a letter to

the EIM Governing Body and ISO Board of Governors

in support of expanding the current EIM to day-ahead market

Increased $ benefitsEIM EDAM

Reduced GHG emissions

The study found EDAM to be beneficial

From January to September 2019,

EIM entities conducted study named

“EDAM Feasibility Assessment (FA)”

Page 8: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

Currently, EDAM is being discussed and designedUnder an open and transparent stakeholder process

Each participating BAA needs to maintain its own system reliability

Shall self-provide enough resources without leaning on neighbors

GHGGHG emission obligations across different jurisdictions

Emissions accounting for import

Under existing framework of OATT rates

Free and not-free transmission capacities

RS

TAC

Resource Sufficiency

Transmission Access Charge

Greenhouse Gas emissions

A few market designs will be worked out during the stakeholder process

Page 9: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

Foreword 1

slides

What is EIM in the real world? 4

Table of contents

What is EIM technically? 5

What does the WECC PCM represent? 3

Is there anything we should model? 2

Summary 1

Page 10: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

Energy Imbalance Market (EIM)What is “Energy Imbalance”?

ActualGeneration and load

ScheduledGeneration and load

Energy ImbalanceDeviation from schedules

“Actual” refers to 5-minutes

schedules optimized in the

Real-Time Market

“Scheduled” refers to

pre-determined schedules

in absence of an advanced

Day-Ahead Market

Currently, EIM operates only in Real-Time Market

EIM runs “last-minute” dispatch to achieve economic efficiencies across a regional footprint

EIM involves a small fraction of trading volume in the wholesale market

If the EIM expands to

Day-Ahead Market (i.e. “EDAM”),

then the word “Scheduled” would

lose its meaning, because

“Scheduled” becomes “Optimized”

Page 11: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

What is EIM not?Neither EIM nor EDAM means joining the ISO

Not participating members of the ISO!Participating BAs are still sovereign control areas

ISO/RTO membersHighest degree of regional coordination in dispatch

EIMReal-time market

EDAMDay-ahead market

RTOSingle control &

planning area

The EDAM cover the dispatch of

complete wholesale market

The EIM achieves efficient “last minute”

trading across participating regions

The regional market is a

multi-state ISO

Page 12: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

EIM

BAAISO

EIM

BAA1

EIM

BAA2

EIM

BAA3

BAAISO

BAA2

BAA3

BAA1

Why is EIM beneficial?(1) Improved dispatch within BAAs, (2) Enhanced sales & purchases across BAAs

(1) Intra-BAA dispatch: Optimized

(2) Inter-BAA transfer: Not optimized

Without EIM With EIM

(1) Intra-BAA dispatch: Less optimized (1) Intra-BAA dispatch: More optimized

In a security-constrained UC and ED,

the EIM uses the most economic resources

across the whole dispatch footprint

by taking advantages of

load diversity and resource diversity

(2) Inter-BAA transfer: Globally optimized

&

Scale

Diversity

Benefits through

Page 13: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

Market modelTwo layers

WECC-wide

full network model

The current

WECC ADS PCM

falls short in modeling

this trading layer

The current

WECC ADS PCM

very well models this

physical layer

Page 14: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

Today’s EIMFuture EIM if EDAM is implemented

EIM’s position in the market phasesCurrently, the Western EIM operates only in real-time market

Today’s EIM operates only in the Real-Time Market:

Inter-BAA hurdles are infinite if without EIM

Inter-BAA hurdles are zero with EIM

Today’s EIM does not operate in Day-Ahead Market:

Inter-BAA hurdles remains regardless of the EIM

Day-Ahead Market

IFMIntegrated Forward Market

Day-ahead forecasted load and renewables

Commit and dispatch generation to meet net load

for the next day’s 24 hours

Real-Time Market

FMM15-Minutes Market

RTD5-Minutes Market

Hour-ahead forecast

Commit and dispatch

for the next hour

Near-real-time forecast

Dispatch

for the next 5 minute

Question to the WECC 2030 ADS PCM:

What do we want to model? The current EIM, or the future EIM that also runs in Day-Ahead?

What market assumption would you like to make for the future?

Page 15: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

Foreword 1

slides

What is EIM in the real world? 4

Table of contents

What is EIM technically? 5

What does the WECC PCM represent? 3

Is there anything we should model? 2

Summary 1

Page 16: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

The WECC ADS PCMProduction simulation database

0 1 2 3 4 5 6 8,760 hours… …

January 1 December 31

The WECC ADS PCM simulates a whole year in hourly intervals

Using actual profiles for load and renewables.

Commit and dispatch generation to meet net load

Day-Ahead Market

IFMIntegrated Forward Market

Day-ahead forecasted load and renewables

Commit and dispatch generation to meet net load

for the next day’s 24 hours

Real-Time Market

FMM15-Minutes Market

RTD5-Minutes Market

Hour-ahead forecast

Commit and dispatch

for the next hour

Near-real-time forecast

Dispatch

for the next 5 minute

Which of the following dispatch phase is the WECC ADS PCM trying to mimic? Neither or all?

Economically more important, because of larger $ volume Physically more important, because of closer to actual MW

Page 17: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

Things to keep in mind…Capabilities and limitations

If we claim that the WECC ADS PCM simulates Day-Ahead Market,

then we need to keep in mind about the following:

EIM does not exist in Day-Ahead Market

It is practically impossible to simulate the real-time-only EIM there. Then, don’t do it. Or?

LMP’s are more volatile in Real-Time Market than in Day-Ahead Market

Fair for simulating storage dispatch?

Inter-BAA flows are more dynamic in the Real-Time Market than in the Day-Ahead Market

Fair for reliability assessment of inter-regional transmission lines?

In future, EIM may be extended to the Day-Ahead Market, i.e. “EDAM”

What market assumption to make for 2030? Model EDAM?

1

2

3

4

Page 18: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

Multi-phase market processesWith hourly and sub-hourly dispatch

Contract networkInter-BAA trading

with or without hurdles

Transmission networkPhysical constraints

A “pure” ISO model

What does it take to simulate the wholesale market fully?Keep in mind about the limitations of the WECC ADS PCM

WECC ADS PCM

Page 19: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

Foreword 1

slides

What is EIM in the real world? 4

Table of contents

What is EIM technically? 5

What does the WECC PCM represent? 3

Is there anything we should model? 2

Summary 1

Page 20: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

Modeling inter-BAA hurdles for EIMModel EIM in Real-Time Market only, or model EIM extended to Day-Ahead Market?

Model EIM?

Impossible with a day-ahead-like model of hourly dispatch

Hard to justify approximate method of “diluted hurdles”

Also hard to justify approximate method of “carved-out transmission capacity” for EIM

Model EDAM?

Relatively straightforward if assuming EIM will be expanded to Day-Ahead Market

Remove inter-BAA hurdles among EDAM participants

Approximation by ignoring the fact the some transmission is not free under EDAM

WECC ADS PCM

Page 21: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

Modeling load following requirements for EIMAn EIM region shall have a combined load following requirement

# BAA name BAA ID Op. Year

1 California ISO CISO 1988, 2014

2 PacifiCorp PACE & PACW 2014

3 NV Energy NVEP 2015

4 Puget Sound Energy PSEI 2016

5 Arizona Public Service AZPS 2016

6 Portland General Electric PGE 2017

7 Idaho Power Company IPC 2018

8 Powerex BCHA 2018

9 Balancing Authority Northern Cal. BANC 2019, 2021

10 Seattle City Light SCL 2020

11 Salt River Project SRP 2020

12 Los Angeles Dept of Water & Power LADWP 2021

13 Northwestern Energy MWMT 2021

14 Public Service Co. New Mexico PNM 2021

15 Turlock Irrigation District TIDC 2021

16 Avista Corporation AVA 2022

17 Tucson Electric Power Company TEPC 2022

18 Tacoma Power TPWR 2022

19 Bonneville Power Administration BPAT 2022

# BAA name BAA ID Op. Year

1 Southwest Power Pool SPP 2014, 2021

2 WAPA Colorado-Missouri WACM 2021

3 WAPA Upper Great Plains West WAUW 2021

# BAA name BAA ID

1 Alberta E. System Operator AESO

2 Chelan County PUD CHPD

3 Douglas County PUD DOPD

4 Grant County PUD GOPD

5 Public Service Colorado PSCO

6 WAPA Lower Colorado WALC

7 El Paso Electric EPE

8 Imperial Irrigation District IID

10 CENACE CFE

CAISO’s Western EIM region SPP’s WEIS region None EIM areas

One combined LF requirement

One combined LF requirement

Individual LF requirements

WECC ADS PCM

Surely, this is something can be done.

It is simplified!

Page 22: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

Foreword 1

slide

What is EIM in the real world? 4

Table of contents

What is EIM technically? 5

What does the WECC PCM represent? 3

Is there anything we should model? 2

Summary 1

Page 23: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

SummaryDiscussions of EIM modeling in WECC ADS PCM

The WECC ADS PCM is an hourly and day-ahead-like production simulation

It is hard or impossible to represent the current real-time-only EIM in that PCM

Assumption is needed for future market structure in the Western Interconnection

If the assumption is EDAM proliferation, then the extended EIM can be modeled

Thanks to EIM, modeling load following requirement gets simpler

For EIM regions, load following requirements are combined rather than individual

EIM

EIM

EIM

Page 24: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

slides

Table of contents

Appendix. EIM economic benefit 4

Page 25: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

The Western EIMSince launch, economic benefit has accumulated to $801 million

Page 26: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

190

224

82

38

123

63

49

1913

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

All time (5 years 2 months)

Total $801M as of 2019-Q3

Total Benefits ($Millions)

113

28 37

68

42

5

26

4537

62

48

1

1624

26

162

10

14

13

6

35

45

373

28

32

27

22

8

11

13

$0

$50

$100

$150

$200

$250

$300

2014 2015 2016 2017 2018 2019

Till Q3

Yearly Benefits ($Millions)

1 1 2 3 5 6 8 59 10

158 5

15

2821

4

13

24

65 48 9 6

11 11 15 911

9

10

7

11

1218

22

24

15

101

25

6

34

6

9

6

4

511

5

6 5

62

1

33

3

3

2

4

4

7 3

36

5

8 11

10

6

9

21

10

89

203

4

5

9

9

1211

9

8

13

6

8

8

5

2

3

3

7

3

1

9

4

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

$110

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2014 2015 2016 2017 2018 2019

Quarterly Benefits ($Millions)

BANC

PWRX

IPCO

PGE

AZPS

PSEI

NEVP

PAC

CISO

Details of the EIM economic benefitMonthly benefits are calculated, and reports are published quarterly

Data source: Western EIM Quarterly Reports

As of Q3

Since launch, the EIM benefit has accumulated to $801 million US dollars

The economic benefits are calculated by comparison of actual market clearing results with a “counter factual dispatch” case if without EIM

The economic benefit is the result of operational cost reduction

Page 27: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

Information from the website

Through our

participation in the

EIM, we’ve saved

our customers over

$200 million so far,

and the savings get

bigger every year.

November, 2019

Page 28: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

News on the internet

Low natural-gas prices and

strong interstate business are

allowing Arizona Public Service

Co. to drop customer bills by $3

a month on average starting

Friday.

Another major reason the

company is able to reduce bills

is its participation in the Energy

Imbalance Market run by the

California Independent System

Operator.

January 31, 2019

Page 29: Considerations of EIM Modeling in WECC PCM - EIM Modeling.pdf · slide What is EIM in the real world? 4 Table of contents What is EIM technically? 5 What does the WECC PCM represent?

Contact:

Xiaobo Wang

California ISO

[email protected]

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