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ECONOMICSONOMICS OFF ENERGYERGY STORAGEORAGE TECHNOLOGIESCHNOLOGIES
ESA Annual Meeting 2008May 21 st 2008
INN NYISOYISO ANDND PJMJM
Rahul S. WalawalkarRahul S. Walawalkar PhD, CEM, CDSMPhD, CEM, CDSM
OUTLINE
Economics of EES in New York ISO and PJM
Regulation
Other Ancillary Services
Capacity resource
Net Present Value analysis for different applications
Potential impact of large penetration renewableresources
Conclusions
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OVERVIEW OFNYISO & PJM
3Source: PJM,NYISO & FERC
OPPORTUNITIESProfits from Location Based Marginal Price (LBMP)differential between On Peak and Off Peak
nc ary erv cesRegulation and Frequency Response Service10 Min Spinning or Non Spinning ReservesOperating Reserve (30 Mins)
Demand Response RevenuesInstalled Capacity (ICAP) Revenues
GenerationTransmission & Distribution
Supporting Renewable Energy Sources
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ANALYSIS METHODOLOGY
Grouped various zones in the NYISO and PJM marketsbased on statistical analysis of LMPs and geographicalconsiderations
11 NYISO zones were grouped into 3 regions17 PJM zones were grouped into 4 regions
Developed analytic framework to quantify the revenuepotential for different applications such as energyarbitrage, regulation, spinning reserve and capacityresourceConducted Net Present Value (NPV) analysis using2001-07 market data for NYISO and 2005-07 marketdata for PJM analysis
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GROUPING OF ZONES INTO REGIONS
NYISO PJM
NY WestNY
EastWest
Central
East
South
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NYC
PJM East: AECO, DPL, JCPL, METED,PECO, PPL, PSEG, RECO
PJM Central: PENELEC, APS PJM South: DOM, BGE, PEPCO PJM West: COMED, AEP, DAY, DUQ
NYC: NYC, Long Island NY East: Capital, Hudson Valley, Millwood,
Dunwoodie NY West: West, Genesee, Central, Mohawk
Valley, North
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PJM NYISO LMP P ROFILES
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EFFECT OF ROUND-TRIP EFFICIENCY ONENERGYARBITRAGENET REVENUE(NYISO - NYC REGION)
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CAPACITYCREDIT
EES capable of offering 4 successive hours of energycan receive ICAP creditsNYISO has a locational ICAP requirement
80% for NYC and 99% for Long IslandNYISO Annual Capacity revenues (2004-2007)
NYC region : $90,000 - $140,000 / MW-YearRest of NY State: $20,000 - $40,000 / MW-Year
PJM had sin le ca acit market till 2007 which wasreplaced by locational market under RPM
Historical value : $2,000 - $6,500 / MW-yearUnder RPM: $15,000 - $86,500 / MW-year
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ANCILLARYSERVICE REVENUE
Flywheels can be used for providing regulationservices in both PJM and NYISO
Although regulation is net energy zero service,flywheel will need to pay 15% in energy cost tocover losses.
NAS Batteries can earn additional revenue byproviding synchronized reserves when not used
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Thus when used with 4 hour energy arbitrage, NASbattery can provide 15 hours of synchronizedreserves
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NYISO AVERAGEPRICE CURVES
11 Based on NYISO Market data 2001-07
REGULATIONMARKETCLEARINGPRICE PROFILENYISO (2001-07)
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REGULATIONMARKETCLEARINGPRICE PROFILEPJM (2005-07)
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ISSUES : REGULATIONMARKETPARTICIPATION
Traditional generators receive additional opportunity costpayments, which are not available to flywheel
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PJMs sample regulation signal indicates that flywheelmay be idle for up to 40% of the time
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SYNCHRONOUSRESERVE MARKETRESULTSPJM (2005-07)
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SUMMARY RESULTS:ANNUALNET REVENUES (THOUSAND $/MW)
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COMPARING NPV FOR FLYWHEEL(REGULATION) AND NAS(ENERGY ARBITRAGE& SYNCHRESERVE)IN NYISOAND PJM
Inputs:
Capital Cost ($1.5M forflywheel and $2.0 M forNAS)
(75% for NAS and85% for flywheel)
Other Benefits($150k/year for NASand $100k/year forflywheel)
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Triangular Distributionfor Net Revenue foreach region
IMPACT OFRENEWABLES
NYISO is anticipating more than 3000 MW ofwind being added on the grid in next 3-4 yearsRepresents around 10% of peak load for NYISO
20-30% of off peak loadWill result in increased regulation and ancillaryservice requirementsCan improve the case for energy arbitrage bylowering off peak prices
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NYISO NET LOAD - 2006
30000
35000
NYISO - Net Load - Yr 2006
Summer Months
- J a n
J a n
a n
e b b r
0
5000
10000
15000
20000
25000
MW
1 1 3 -
2 5 -
6 - F
1 8 - F
1 - M a
1 3 - M a r
2 5 - M a r
6 - A p r
1 8 - A p r
3 0 - A p r
1 2 - M a y
2 4 - M a y
5 - J u n
1 7 - J u n
2 9 - J u n
1 1 - J u l
2 3 - J u l
4 - A u g
1 6 - A u g
2 8 - A u g
9 - S e p
2 1 - S e p
3 - O c t
1 5 - O c t
2 7 - O c t
8 - N o v
2 0 - N o v
2 - D e c
1 4 - D e c
2 6 - D e c
S1S5S9
S13S17S21
Days in YearHrs in
Day
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NYISO SRMC CURVE
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CONCLUSIONS
Changes in current market rules and reliability criteria arerequired toPermit EES in synchronous spinning reserve marketEliminate uncertainty in market rules & valuation of regulation
The analysis indicates that EES R&D efforts should includefocus on reducing capital costs and improving efficiency of theEES
Due to higher capital costs of NAS batteries it is important toselect a location for EES installation b evaluatin the T&D upgrade deferral potentialGreater penetration of renewables could improve theeconomics for both energy arbitrage and ancillary services
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ACKNOWLEDGEMENTS
I would like to acknowledge contributions of Dr. Jay Apt, Rick Manciniand Netra Thakur (Customized Energy Solutions) and Haresh Kamath
.
I would like to thank Dr. Lester Lave, Dr. Granger Morgan, Dr. RahulTongia (Carnegie Mellon University), Stephen Fernands (CustomizedEnergy Solutions), Joseph Sayer (NYSERDA) and Dr. Peter Balash(NETL) for guidance throughout this research.
This research was supported in parts by NYSERDA, NETL, CEIC, EPRIre oan oun a on an
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QUESTIONS ?
QUESTIONS ?