ercot market education basic training program · ptp obligation awards. ancillary service awards....

ERCOT MARKET EDUCATIONBasic Training Program

Module 3

Day-Ahead Market

3

Module Overview

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• Identify the timeline and define the purpose of the Day-Ahead Market.

• List the ERCOT inputs into the Day-Ahead Market.

• Identify the submittal requirements for the Day-Ahead Market offers and bids.

• Identify the submittal requirements for the three types of trades and their impact on Market processes.

• Illustrate the Day-Ahead Market clearing process.

• List the Day-Ahead Market outputs.

• Identify the charges and payments associated with the Day-Ahead Market.

Upon completion of this module, you will be able to:

Module Objectives

5

Bids vs. Offers

A Bid is a proposal to buy:

• A Product• At a Location• For a Price

An Offer is a proposal to sell:

• A product• At a Location• For a PriceEnergy

LoadZone 4$40

6

Products bought and sold in the DAM:

Day-Ahead Market

Energy Awards

PTP Obligation Awards

Ancillary Service Awards

Energy Bids & Offers

PTP Obligation Bids

Ancillary Service Offers

Co-Optimization

Engine

7

What is “co-optimization”?

Day-Ahead Market

Energy Awards



Co-Optimization

Engine


PTP Obligation Bids


8


Day-Ahead Market

Energy Awards



Co-Optimization

Engine


PTP Obligation Bids


Cleared Offers = Costs

Cleared Bids = Revenues

9


Day-Ahead Market

MaximizeThe Gap

Bid-based Revenues

Offer-based Costs

10


Day-Ahead Market

Bid-based Revenues

Energy Costs &Ancillary Service Costs

MaximizeThe Gap

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Results of Co-optimization:

Day-Ahead Market

Energy Awards




PTP Obligation Bids


Co-Optimization

Engine

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Participation in the DAM is Voluntary & Financially Binding

Day-Ahead Market

Energy Awards



Co-Optimization

Engine


PTP Obligation Bids


Some exceptions:

• QSEs with load are always financially obligated for Ancillary Services

• Awarded Ancillary Services physically binding

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In the Day-Ahead Market, the actions of one Market Participant have a financial impact on the other.

Day-Ahead Market: Impacts

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Day-Ahead Market: Impacts

Financial Impacts:

• Energy & Congestion Revenue Rights (CRRs)• Ancillary Service Awards

Reliability Impacts:

• Ancillary Services

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Day-Ahead Market Activities Overview

Submit:• Availability of

RMR and Black Start Resources

Submit:• Bids for PTP Obligations• Bids & Offers for Energy• Self-Arranged AS Quantities• AS Offers

Update & Submit:• COP

16

Activity Timeline – 0600





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• ERCOT must publish Ancillary Service Obligations

ERCOT Activities that occur by 6 a.m.

ERCOT Activities – Ancillary Services

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The required quantity in MW of each Ancillary Service for each hour of the Operating Day ERCOT-wide

• Developed by ERCOT

• Posted to MIS Public Area by 0600

Ancillary Service (AS) Plan

Ancillary Service Plan

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• AS Plan quantities are assigned to LSEs based on Load Ratio Shares

• Assignments are made by service, by hour

Ancillary Service (AS) Plan


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• AS quantities are then aggregated to the QSE Level by service, by hour

• Posted to MIS Certified Area by 0600 of the Operating Day

Ancillary Service (AS) Obligation


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• Self-Arrange to have Resources provide AS

• Allow ERCOT to purchase AS in the Day-Ahead Market

How can a QSE meet Ancillary Service (AS) Obligations?

Ancillary Service Obligations

ERCOTSelf-Arrange

DAM

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The net amount of Ancillary Service capacity that the QSE is obligated to deliver to ERCOT, by hour and service type, from Resources represented by the QSE.

Ancillary Service (AS) Supply Responsibility

Ancillary Service Supply Responsibility

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Ancillary Service (AS) Supply Responsibility

Ancillary Service Supply Responsibility

Self-Arranged AS Quantities+ AS Trades in which the QSE is the Seller+ Awarded AS Offers– AS Trades where the QSE is the Buyer

= Ancillary Service Supply Responsibility

Calculation

26

The AS Resource Responsibility indicates which of the QSE’s Resources will be obligated to provide the AS Supply Responsibility in Real-Time.

Ancillary Service (AS) Resource Responsibility

Ancillary Service Resource Responsibility

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• Communicated through Current Operating Plan (COP)

Identifies:

• Hour(s) Resource will be providing AS• Type of AS• Amount (MW) of AS

Ancillary Service (AS) Resource Responsibility

Ancillary Service Resource Responsibility

QSE’s AS Resource Responsibility must be arranged by 1430 Day-Ahead:

• After DAM• Before DRUC

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Ancillary Service – Scenario

• ERCOT assigns part of the AS Plan quantity, by service, by hour, to each LSE based on its Load Ratio Share of seven days ago.

• The ERCOT load for the hour we are using in our example is 50,000 MW.

ERCOT Load

50,000 MW

Scenario

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• ERCOT uses each LSE’s Adjusted Metered Load to determine Load Ratio Share

Two LSEs:

Ancillary Service

Adjusted Metered Load

LSE “Lazy P” Load= 1000 MW

LSE “Diamond Bar” Load = 1500 MW

P

Scenario

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Load Ratio Share Calculation:

Ancillary Service

Load Ratio Share =

(LSE ) 1000 MW / 50,000 MW = 2%

(LSE ) 1500 MW / 50,000 MW = 3%

P

Adjusted Metered Load

LSE “Lazy P” 2%

LSE “Diamond Bar” 3%

P

Scenario

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• QSE 1 Load Ratio Share is sum of both LSEs Load Ratio Shares

• ERCOT will use QSE 1’s Load Ratio Share to determine

Ancillary Service Obligation for each service, each hour of Operating Day

QSE 1 represents both LSEs

Ancillary Service

Load Ratio Share of QSE 1:

(LSE ) 2% + (LSE ) 3% = 5%P

Scenario

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• Publish system conditions

Other ERCOT activities by 6 a.m.

ERCOT Activities – Publishing

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System Conditions posted by ERCOT to MIS:

Publishing

ERCOT Posts… For

Weather assumptions Forecasting system conditions and Dynamic Ratings Processor

ERCOT System, Weather Zone, and Load Zone forecasts Next seven days, by hour

Load forecast distribution factors MPs to estimate Load at the Bus level

Settlement Points List and Electrical Buses Mapping

Current list of Settlement Points that may be used in market processes and transactions

List of active Transmission constraints Indication of likely binding constraints

Forecasted Load Profiles Non-IDR metered customers

Forecasted Distribution Loss Factors and Transmission Loss Factors Each Settlement Interval

Network Operations Model topology* Each hour of the Operating Day

*Available on MIS Secure

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Next, let’s discuss QSE Activities:

QSE Activities Overview

Report Trades • Submit DC Tie Schedules





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QSE Activities Overview



Submit:• Bids for PTP Obligations• Bids & Offers for Energy • Self-Arranged AS Quantities• AS Offers


QSE

Act

ivity

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QSE Activities: Report Availability of RMR & Black Start Resources

Availability of RMR and Black Start Resources





QSE

Act

ivity

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QSE Activities: Submit Bids for PTP Obligations

QSE Activities – PTP Obligations





QSE

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ivity

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• Financial instruments

Hedge against congestion costs Financial Investment

• Purchased at DAM price spread

• Settled at Real-Time price spread

Day-Ahead Market PTP Obligations

PTP Obligations

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QSE Activities: Submit Three-Part Supply Offers

QSE Activities – Energy Bids and Offers





QSE

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ivity

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An offer to sell energy for a specific Generation Resource that a QSE represents.

It is used in

• The Day-Ahead Market• The Reliability Unit Commitment process• Real-Time

Three-Part Supply Offer


1 2 3

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Cost of starting up a resource and reaching Low Sustained Limit (LSL) in dollars per start

What is a Startup Offer?


1 2 3

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Costs incurred by a Resource in producing energy at Low Sustained Limit (LSL).

What is a Minimum-Energy Offer?


1 2 3

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These two offers can only be submitted as part of a Three-Part Supply Offer.

Startup & Minimum-Energy Offers


1 2 3

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A QSE’s offer to sell energy at, or above a certain price and at a certain quantity (above Low Sustained Limit)

What is an Energy Offer Curve?


1 2 3

A QSE may submit just an Energy Offer Curve, independent of

Startup & Minimum Energy Offers

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• Operating Day

• Resource name

• The expiration time and date of the offer

• Inclusive or exclusive designation relative to DAM Ancillary Service offers from the same Resource

• A monotonically increasing offer curve

• Percentage of Fuel Index Price (FIP) and Fuel Oil Price (FOP) for generation above LSL

To submit an Energy Offer Curve, include:


3

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• Operating Day

• Resource name







3

Energy Offer Curve is..

• Submitted using price/quantity pairs• Monotonically increasing offer curve• Limited to no more than 10 price/quantity pairs

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• Operating Day

• Resource name







3

Energy Offer Curve range:

• Prices must be between -$250/ MWh and System-Wide Offer Cap

• Minimum quantity of offer is one MW

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• Must submit all the same criteria as Energy Offer Curve

• Add information that relates to:

Startup Offer & Minimum Energy Offer

Submitting a Three-Part Supply Offer:


1 2 3

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• Operating Day

• Resource name





• Hot, intermediate, and cold Startup Offers ($)

To submit a Three-Part Supply Offer, include:


1

2

3

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• Operating Day

• Resource name





• Hot, intermediate, and cold Startup Offers ($)

• Minimum-Energy Offer ($/MWh)

To submit a Three-Part Supply Offer, include:


1

2

3

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• Offers must be ≤ 200% of Generic Costs

• QSE must submit percentages of Fuel Index Price (FIP) and Fuel Oil Price (FOP) at LSL to determine Generic Minimum Energy Cost

Start Up and Minimum Energy Offers Caps:


1 2 3

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• QSE may submit verifiable cost data for actual Startup & Minimum-Energy cost

• Then, offers must be ≤ 200% of approved Verifiable Costs

Start Up and Minimum Energy Offers Caps:


1 2 3

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How are the Three Parts used?



StartupOffer

MinimumEnergyOffer

EnergyOfferCurve

Day-Ahead Market

RUC-Commitment

Real-Time Dispatch

1 2 3

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QSE Activities: Submit Energy Bids & Energy-Only Offers

QSE Activities – Energy Bids and Offers





QSE

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ivity

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What’s the difference?

Energy Bids & Energy-Only Offers

DAM Energy Bid:

Is a QSE’s willingness to buy energy:

At or below a certain price

At a certain quantity

At a specific Settlement Point in the DAM.

DAM Energy-Only Offer:

• Is a QSE’s willingness to sell energy:

At or above a certain price

At a certain quantity

At a specific Settlement Point in the DAM.

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• Energy-Only Offers are NOT resource-specific

• QSE does not have to own Resources to offer energy

Energy-Only Offers


In the Day-Ahead Market, the QSE is paid for the energy at DAM Settlement

Point Prices

In Real-Time, the QSE is charged for the energy at Real-

Time Settlement Point Prices

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• Proposal to buy energy

• At a specified settlement point

• At or below a specified price

Energy Bids


QSEs with Awarded Energy Bids are

charged the DAM Settlement Point

Price

In Real-Time, the QSE is paid the Real-TimeSettlement Point Price

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QSE must indicate:

• Operating Day

• The Settlement Point

• The expiration time and date of the offer or bid

• Price and quantity for each hour of the offer or bid

• Whether Offer or Bid is fixed quantity, variable quantity, or curve

DAM Energy-Only Offer or Energy Bid

Submittal Criteria

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QSE must indicate:

• Operating Day

• The Settlement Point

• The expiration time and date of the offer or bid

• Price and quantity for each hour of the offer or bid

• Whether Offer or Bid is fixed quantity, variable quantity, or curve

DAM Energy-Only Offer or Energy Bid

Submittal Criteria

Day-Ahead Market Energy-Only Offers:

• Price range must be between -$250.00 and System Wide Offer Cap

• Minimum offer = 1 MW

Day-Ahead Market Energy Bids

• Minimum bid = 1 MW

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• Fixed Quantity

• Variable Quantity

Single Price/Quantity Pair

Energy-Only Offer and Bid Types

Fixed Quantity Variable Quantity

$ / M

Wh

MW

$ / M

Wh

MW

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• Offers - Monotonically increasing

• Bids - Monotonically decreasing

Curve with up to 10 Price/Quantity Pairs

Energy-Only Offer and Bid Types

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• Optionally, a QSE may structure the bid or offer as a multi-hour block

Multi-hour Block Indicator

Energy-Only Offer and Bid Multi-hour Block

Fixed Quantity Block Variable Quantity Block

Multi-hour block is not an option for Curve type

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• Fixed Quantity Multi-hour Block:

Bids 10 MW at $50/MWh for HE 0700-2200.

Single price, single quantity for all hours in the block

Scenario:

Fixed vs. Variable Multi-hour Blocks

Fixed Variable

Hours: 0700-2200 0700-2200

MW: 10 Up to 10

$/MWh: $50.00 $50.00

Fixed – Must clear all MWs for all hours or none Variable – Must clear all hours or none

Scenario

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• Variable Quantity Multi-hour Block:

Bids 10 MW at $50/MWh for HE 0700-2200.

Single price, single “up to” quantity contingent on the purchase of all hours in the block

Scenario:

Fixed vs. Variable Multi-hour Blocks

Fixed Variable

Hours: 0700-2200 0700-2200

MW: 10 Up to 10

$/MWh: $50.00 $50.00

Fixed – Must clear all MWs for all hours or none Variable – Must clear all hours or none

Scenario

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• ERCOT will notify the QSE submitting via the Messaging System

• The QSE can then resubmit the offer or bid within appropriate market timeline

If an offer or bid is rejected or invalid:

Validation

If an offer or bid is accepted:

ERCOT will continuously validate offers and bids and continuously display on the MIS Certified Area information that allows any QSE to view its valid offers and bids.

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QSE Activities: Submit Self-Arranged AS

QSE Activities – Self-Arranged Ancillary Services





QSE

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• All or part by Ancillary Service by hour• Must submit Self-Arranged AS Quantities by 10:00

Impact:

Reduces the amount of each Ancillary Service that ERCOT procures on behalf of the QSE

A QSE may self-arrange its AS Obligations:

Self-Arranged AS Overview

This provision applies to both DAM and SASMs.

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Options for self-arranged Ancillary Services


Using own Resources

Through AS trades

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• Limited to -500 MW for each Ancillary Service• Limited in magnitude to net Ancillary Service Trades

Impact:

ERCOT procures extra AS Quantities in DAM on behalf of the QSE.

A QSE may submit negative Self-Arranged AS Quantities:


This provision applies only to DAM; not allowed

in SASMs.

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• Up to100 MW for Responsive and Non-Spin Reserve• Up to 25 MW for Regulation Up and Down• Self-arranged quantity from QSE’s own Resources may not

exceed AS Obligation

Impact:

QSEs are paid for the extra Ancillary Services they provide

A QSE may self-arrange more than its AS Obligations:


This provision applies to both DAM and SASMs.

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• QSE self-arranges portion of AS• ERCOT must procure AS in DAM

For Hour Ending 7:

Self-Arranged AS

Type of AS QSE 1 Obligations

Self-Arranged Hour = 6

Self-ArrangedHour = 7

ERCOT Must Procure in

DAM Hour = 7

Reg Up 50 MW 50 MW 50 MW 0 MW

Reg Down 25 MW 25 MW 15 MW 10 MW

Responsive Reserve 115 MW 115 MW 75 MW 40 MW

Non-Spin 60 MW 60 MW 60 MW 0 MW

Scenario

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• Supplied using own Resources

Update Current Operating Plan

• Supplied through AS Trades

Submit trades through the MIS

By 1430, QSE must notify ERCOT how Self-Arranged Ancillary Service quantities will be supplied


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QSE Activities: Submit Ancillary Service Offers

QSE Activities – Ancillary Service Offers





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• Offers into the Day-Ahead Market to provide Ancillary Service capacity, made by QSEs

What are Ancillary Service Offers?


Reliability Impact

• Additional capacity offered into the DAM allows ERCOT to cover all of its AS Plan

Financial Impact

• QSE receives payment for awarded Offer

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Ancillary Service Offers can be entered as inclusive or exclusive of Energy Offers

Ancillary Service Offers – Inclusive / Exclusive

AND/OR

Type of AS Offer

Reg Up MW

Reg Down MW

Responsive Reserve MW

Non-Spin MW

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• Inclusive offers

Ancillary Services and/or Energy Offer can be awarded

• Exclusive offers

Either Energy or Ancillary Services can be awarded, but not both

Inclusive and Exclusive offers for Energy and AS


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• 100 MW of either energy or AS

Inclusive and Exclusive offers for Energy and AS:


RESULT:

• QSE’s Reg Up and Responsive Reserve offers are awarded – 30 MW

• The DAM will not award the Resource’s Energy Offer Curve for the same hour

ExclusiveOffer

Resource Total Available Capacity

100 MW

Reg Up 10 MW

Reg Down 15 MW

Responsive Reserve 20 MW

Non-Spin(On-Line) 60 MW

Non-Spin(Off-Line) 100 MW

OR

Scenario

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• Total of 100 MW available

Inclusive and Exclusive offers for Energy and AS


RESULT:

• QSE’s Reg Up and Responsive Reserve offers are awarded – 30 MW

• The DAM may award up to 70 MWs of the Resource’s Energy Offer Curve for the same hour

ExclusiveOffer

Inclusive Offer

Resource Total Available Capacity

100 MW 100 MW

Reg Up 10 MW 10 MW

Reg Down 15 MW 15 MW

Responsive Reserve 20 MW 20 MW

Non-Spin(On-Line) 60 MW 60 MW

Non-Spin(Off-Line) 100 MW 100 MW

ANDOR

Scenario

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• DAM assumes the Resource is Off-Line

• Resource can only be awarded AS if the Three-Part Supply Offer is also awarded

• The total capacity awarded must be within the Resource’s total capacity limits as specified in the COP

AS Offer linked to a Three-Part Supply Offer:

Linked Ancillary Service Offers

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• DAM assumes the Resource is Off-Line

• Resource can only be awarded AS if the Three-Part Supply Offer is also awarded


AS Offer linked to a Three-Part Supply Offer:


If an Exclusive Energy Offer is part of a Three-Part Supply Offer, the DAM must award energy up to LSL in order to award on-line

Ancillary Services.

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• DAM assumes the Resource is On-Line


AS Offer linked to other AS Offers or Energy Offer Curve:


82

• Operating Day

To submit an AS Offer, a QSE must include:

Submittal Criteria for AS Offers

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• Operating Day

• The Resource



84

• Operating Day

• The Resource

• Quantity of MWs offered, and price for each AS type being offered from this same capacity



Type of AS Offer

Reg Up MW

Reg Down MW

Responsive Reserve MW

Non-Spin MW

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• Operating Day

• The Resource





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• Operating Day

• The Resource



• Fixed or variable quantity indicator



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• Can be offered only by a Load Resource

• Single price ($/MW) and single quantity (MW)

• Cannot exceed 150 MW

Fixed Quantity Ancillary Service Offer:


Fixed Variable

Hours: 0700-2200 0700-2200

MW: 10 Up to 10

$/MW: $15.00 $15.00

Can be multi-hour block

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• Can be offered by Generation or Load Resource

• Single price ($/MW) and single “up to” quantity (MW)

Variable Quantity Ancillary Service Offer:


Fixed Variable

Hours: 0700-2200 0700-2200

MW: 10 Up to 10

$/MW: $15.00 $15.00

Can be multi-hour block

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• Price must be between $0 and the System Wide Offer Cap

• The minimum offer amount for each AS product is 0.1 MW

• A single Resource may submit offers for more than one AS

Ancillary Service Offer Limits:


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• ERCOT will notify the QSE submitting an AS Offer

• The QSE can then resubmit the offer within the appropriate market timeline

If an offer is accepted:

• ERCOT will continuously validate AS Offers and continuously display on the MIS Certified Area information that allows any QSE named in an AS Offer to view its confirmed AS Offers.

If an offer is rejected or invalid:

Validation

91

QSE Activities: Update & Submit Current Operating Plan

QSE Activities – Current Operating Plan





QSE

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• A plan by a QSE reflecting anticipated operating conditions

• Provides accurate information about Resources from a planning perspective

What is a Current Operating Plan (COP)?

Current Operating Plan Overview

COP Business Practice Manual:

http://www.ercot.com/mktrules/bpm/index.html

93

• Day-Ahead Market

• Reliability Unit Commitment

The COP Provides Input into:


The COP is not used in Real-Time Operations.

94

• COPs include operating conditions for each Resource, for each hour in the next seven Operating Days

Timeframe Criteria:


• COPs may be modified up to the end of the Adjustment Period for each Resource

• A QSE has 60 minutes after an event to modify or update its COP to reflect changes in availability of a Resource

95

Any QSE representing a Resource is obligated to submit a Current Operating Plan (COP) for each Resource.

To submit a COP, a QSE must include:

• The Name of the Resource

• Expected Resource Status

• Low/High Sustained Limit (LSL / HSL)

• Low/High Emergency Limit

• Capacity for Ancillary Service Types

Submittal Criteria for COP

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• Combined Cycle Generation Resources (CCGRs)

• Wind-Powered Generation Resources (WGRs)

• Photovoltaic Generation Resources (PVGRs)

Three types of Resources have special submittal criteria


97

• A registered configuration of a Combined Cycle Train

• Offered as a single Resource

Combined Cycle Generation Resource (CCGR):


CCGR 1

Combined Cycle Train

ST1 GT1 GT2 GT3

CCGR 2

CCGR 3

QSE must submit a COP for each registered CCGR

98

COP HSL must be less than or equal to the Short-Term Wind Power Forecast for that Resource provided by ERCOT.

Photovoltaic Generation Resource (PVGR):

COP HSL must be less than or equal to the Short-Term Photovoltaic Power Forecast (STPPF) for that Resource provided by ERCOT.

Wind-Powered Generation Resource (WGR):


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• ERCOT will notify the QSE submitting the COP

• The QSE must then resubmit the COP as soon as possible

If a COP is found to be invalid:

Validation

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• The COP must identify sufficient Resource capacity to fulfill Ancillary Service Supply Responsibility.

• ERCOT will notify a QSE if the sum of the AS capacity designated in the COP for each hour, by service type is less than the QSE's AS Supply Responsibility for each service type for that hour.

COPs and Ancillary Services (AS):

Validation

QSEs must correct deficiencies in their COP within one hour after

being notified by ERCOT

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QSE Activities: Report Trades

QSE Activities – Trade Reporting





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• Transactions between QSEs

Types of Trades:

• Energy Trades

• Capacity Trades

• Ancillary Service Trades

What are Trades?

Trade Reporting Overview

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A QSE-to-QSE transaction that transfers financial responsibility for energy at a Settlement Point between a buyer and a seller.

An Energy Trade is …


104

A QSE-to-QSE transaction that transfers financial responsibility for capacity between a buyer and a seller.

A Capacity Trade is …


105

A QSE-to-QSE transaction that transfers an obligation to provide Ancillary Service capacity between a buyer and a seller.

An Ancillary Service Trade is …


106

Submittal Criteria by Trade

Submittal Criteria - Trades

Information Needed Energy Trade Capacity Trade AS Trade

Buying QSE

Selling QSE

Type of AS:

Settlement Point:

MW quantity for each Settlement Interval 15 minute Hourly Hourly

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• A Trade must be confirmed by both the buyer and the seller through the MIS Certified Area before it can be validated by ERCOT.

• ERCOT validates the trade by

Reviewing the submitted information and ensuring that all the necessary criteria are indicated

Checking to see if both the buyer and seller confirmed the trade

Trade Validation:

Validation

108

• The QSE that reports the Trade to ERCOT is considered to have confirmed the Trade

• The QSE that reports a Trade may reject, edit, or delete it if the Trade has not been confirmed by its counterparty.

• After both the buyer and seller have confirmed a Trade, either party may reject it if the deadline for doing so has not passed.

QSE Responsibilities:

Validation (continued)

109

• ERCOT will notify the QSE submitting a Trade

• The QSE can then resubmit the trade within the appropriate market timeline

If a Trade is rejected or invalid:


110

• ERCOT will continuously validate Trades

• ERCOT will continuously display on the MIS Certified Area information that allows any QSE named in a Trade to view confirmed and unconfirmed Trades.

If a Trade is accepted:


111

Submittal Criteria – Deadlines

Submitted prior to 1430

Capacity & Energy Trades:

• Create a supply for the buyer in the Day-Ahead Reliability Unit Commitment (DRUC) process

• Create an obligation for the seller in the DRUC process

Submitted after 1430

Capacity & Energy Trades:

• Create a supply for the buyer in subsequent Hourly Reliability Unit Commitment (HRUC) processes

• Create an obligation for the seller in subsequent HRUC processes

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QSE Activities: Submit DC Tie Schedules

QSE Activities – Trade Reporting





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Any non-synchronous transmission interconnection between ERCOT and a non-ERCOT electric power system

A DC Tie is…

DC Tie Scheduling

ERCOT

Non-ERCOT

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• An energy schedule between ERCOT and a non-ERCOT Control Area

• Submitted by a QSE through OATI*

• Represented by an e-Tag

A DC Tie Schedule is…

DC Tie Scheduling

* Open Access Technology International, Inc.

DC Tie Schedules must follow guidelines

established by NERC, CFE and the ERCOT Protocols.

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• QSE or non-ERCOT Control Area buying the energy

• QSE or non-ERCOT Control Area selling the energy

Each DC Tie Schedule e-Tag must include:

Submittal Criteria

• DC Tie Settlement Point

• MW for each 15-minute Settlement Interval

• First and Last 15-minute Settlement Interval

• The e-Tag name

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• All entities with approval rights approve the e-Tag

• No entities with approval rights deny the e-Tag within the approval time window.

An e-tag for a DC Tie Schedule is approved if:

Approval

117

• If a QSE is an Importer into ERCOT through a DC Tie in a Settlement Interval, the DC Tie schedule is settled as a Resource at the DC-Tie Settlement Point

Importing:

DC Tie Settlement

118

• If a QSE is an Exporter out of ERCOT through a DC Tie in a Settlement Interval, the DC Tie schedule is settled as a Load at the DC-Tie Settlement Point

Exporting:

DC Tie Settlement

When the QSE exports through a DC Tie, the QSE is responsible for all load

related charges.

119

• Net Energy Schedule is an Import

• COP updated for net Import

ERCOT maintains a COP for all DC Ties

Importing

Import ExportQSE 1 50QSE 2 35QSE 3 15

North = 220 MW

Net Total: +70

Scenario

120

• Net Energy Schedule is an Export

• COP updated to show DC Tie Resource as an Off-Line Resource

ERCOT maintains a COP for all DC Ties

Exporting

Import ExportQSE 1 5QSE 2 20QSE 3 35

Eagle Pass = 36 MW

Net Total: -10

Scenario

121

DC Tie Schedule Deadlines

Submitted prior to 1430

Import

• Creates a capacity supply for the QSE in the Day-Ahead Reliability Unit Commitment (DRUC) process

Export

• Creates a capacity obligation for the QSE in the DRUC process

Submitted after 1430

Import

• Creates a capacity supply for the QSE in any subsequent Hourly Reliability Unit Commitment (HRUC) process

Export

• Creates a capacity obligation for the QSE in any subsequent HRUC process

122

At 10:00, ERCOT executes the DAM clearing process

ERCOT Activities – DAM Clearing Process

123

Economically & simultaneously clears Offers and Bids

At 1000, ERCOT executes the DAM clearing process:

DAM Clearing Process

Energy Offers & Bids

Ancillary Service Offers & Self-Arranged Qtys

PTP Obligation Bids

Awarded Energy Offers & Bids

Awarded PTP Obligation Bids

Awarded Ancillary Service

Offers

Day-AheadMarket

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• Transmission constraints

• Resource constraints

• Linked Offer constraints

• Block Offer and Bid constraints

Security constraints include:


125

• Map out the location of load • Indicate where power flows in

the system

During DAM, ERCOT will:

• Allocate bids and offers at a Load Zone to Electrical Buses based on Load Distribution Factors

Impact

• LMPs• Congestion Costs

Load Distribution Factors


126

DAM Bids: 10,000 MW


Bus C0%

Bus A2500 MW

25%

Bus B6000 MW

60%

Bus D1500 MW

15%

Load Distribution Factors for DAM are chosen based on “cold,” “mild,” or “hot”

proxy days.

Scenario

127

• Provided in the ERCOT Protocols • Specified for each Hub

During DAM ERCOT will:

• Allocate bids and offers at a Hub to Electrical Buses based on Hub Distribution Factors

Impact

• LMPs• Congestion Costs

Distribution Factors for Hubs


Hub

Hub

Hub

Hub

128

The Day-Ahead Market produces a Co-optimized solution




PTP Obligation Bids




Offers

Day-AheadMarket

Scenario

129

• 1 MW of Regulation Up (RegUp) and;

• 1 MW of Responsive Reserves (RRS)

For HE 1300 ERCOT needs to procure:

DAM Co-optimization

Bids OffersMW Energy MW Energy RegUp RRS

QSE A 2 $25.00 $10.00 $5.00QSE B 2 $30.00 $11.00 $9.00QSE C 1 $50.00

Three QSEs submitted Offers and Bids as follows:

Scenario

130

Day-Ahead Market Objective:

DAM Co-optimization

Bid-based Revenues Offer-based Costs

Offer-based Costs: Sum [Offer Price * Cleared Offer Quantity]

Bid-based Revenues: Sum [Bid Price * Cleared Bid Quantity]

Maximize [Bid-based Revenues - Offer-based Costs]

In this step, DAM uses Bid Prices and Offer Prices, not clearing prices

Scenario

131

DAM Co-optimization

Energy RegUp RRS

QSE A $25.00 $10.00QSE B $9.00

Energy RegUp RRS

QSE A $25.00 $5.00QSE B $11.00

Energy RegUp RRS

QSE A $10.00 $5.00QSE B $30.00

Bid-based Revenues – Offer-based

Costs

$50 – $25 – $10 – $9 = $6

Case 1

Case 2

Case 3


Costs

$50 – $25 – $11 – $5 = $9


Costs

$50 – $30 – $10 – $5 = $5

Scenario

132

• Cost of additional increment of Demand

• How would Day-Ahead Market clear additional MW?

Energy Price

DAM Co-optimization

Energy RegUp RRS

QSE A $25.00 $5.00QSE B $11.00

Offers AwardedOffers ProvidedMW Energy RegUp RRS

QSE A 2 $25.00 $10.00 $5.00QSE B 2 $30.00 $11.00 $9.00

Scenario

133

DAM Co-optimization

Energy RegUp RRS

QSE A 1MW @$25.00 $5.00QSE B 1MW @$30.00 $11.00

Clearing Additional MW of Energy

Offers MW Energy RegUp RRS

QSE A 2 $25.00 $10.00 $5.00QSE B 2 $30.00 $11.00 $9.00

Increases cost by $30

Energy RegUp RRS

QSE A 2MW @$25.00QSE B $11.00 $9.00

Increases cost by $29

Energy Price is $29

Scenario

134

DAM Co-optimization

Clearing Additional Ancillary Services

Offers MW Energy RegUp RRS

QSE A 2 $25.00 $10.00 $5.00QSE B 2 $30.00 $11.00 $9.00

Energy RegUp RRS

QSE A $25.00 1 MW @ $5.00QSE B $11.00 1 MW @ $9.00

Responsive Reserve Price is $9

Energy RegUp RRS

QSE A $25.00 $5.00QSE B 2 MW @ $11.00

Regulation Up Price is $11

Scenario

135

Three QSEs submitted Offers and Bids as follows:

In summary . . .

DAM Co-optimization

QSE A sells 1MW of Energy @ LMP of $29 and 1MW of RRS @ MCPC of $9

QSE B sells 1MW of RegUp @ MCPC of $11

QSE C buys 1MW of Energy @ LMP of $29

Bids OffersMW Energy MW Energy RegUp RRS

QSE A 2 $25.00 $10.00 $5.00QSE B 2 $30.00 $11.00 $9.00QSE C 1 $50.00

Scenario

136

After DAM solves, ERCOT communicates Awards




PTP Obligation Bids




Offers

Day-AheadMarket

137

• DAM and AS Capacity awards

ERCOT Activities that occur by 1:30 p.m.

ERCOT Activities – DAM Clearing Process

Awards communicated

by 1330

138

DAM Awards

By 1330, ERCOT Awards… From …

Energy Sales Three-Part Supply Offers & Energy Offer Curves

Energy Sales DAM Energy-Only Offers

Energy Purchases DAM Energy Bids

PTP Obligations PTP Obligation Bids

Ancillary Services Ancillary Service Offers

139

• Day-Ahead Settlement Point Prices by Settlement Point

• Day-Ahead LMPs for each Electrical Bus

• Energy bought and sold in DAM by Settlement Point

• PTP Obligations cleared in DAM by Settlement Point

• Ancillary Services

Day-Ahead MCPC for each type of AS

Quantity of AS Offers received in DAM (MW)

Aggregated AS Offer Curve of all AS Offersfor each type of AS

ERCOT postings for each hour:

DAM Results - Postings

140

• ERCOT monitors Market for errors:

Day-Ahead MCPCs Hourly LMPs

• ERCOT “Flags” questionable prices before posting

Finalized Day-Ahead Market Prices

Postings – Finalized Market Prices

DAM Prices are final at 10:00 on the second

Business Day after the Operating Day.

141

Summary of DAM Activities





Day-Ahead Market Financial Impacts

143

Let’s discuss the settlement of Day-Ahead awards

Day-Ahead Settlements

Energy Awards




PTP Obligation Bids


Co-Optimization

Engine

144

Overview


Energy Awards



Settlements for purchase of PTP Obligation Bids

• Settled hourly• Settled at Day-Ahead Obligation Price

Based on Day-Ahead Settlement Point Prices

Settlements for Energy Offers and Bids

• Settled hourly• Settled at Day-Ahead Settlement Point Prices

Settlements for Ancillary Service Offers

• Settled hourly• Settled at DAM Clearing Price for Capacity (MCPC)

145

Overview


Energy Awards



Price * Quantity = PTP Obligation AwardsPrice is the difference between the Day-Ahead Settlement Point Prices at sink and source of the Bid

Price * Quantity = Energy Awards

Price * Quantity = Ancillary Service AwardsPrice is the Market Clearing Price for Capacity (MCPC) for each Ancillary Service

146

• Simple, two Node system• Two Settlement Points Prices • Bids and Offers for energy from QSEs• Hourly settlements

Assumptions


Offer B

Offer A Offer

C

Bid X

Node Node Bid Y

1 2 Bid Z

Scenario

147

Scenario: Day-Ahead Settlements

Offer B

Offer A Offer

C

Bid X

Node Node Bid Y

1 2 Bid Z

Limit = 2 MW

Offers

MW @

Offer A 10 MW $8

Offer B 15 MW fixed $8

Offer C 10 MW $9

Bids

MW @

Bid X 5 MW $10

Bid Y 5 MW $ 5

Bid Z 5 MW $10

148


Offer B

Offer A Offer

C

Bid X

Node Node Bid Y

1 2 Bid Z

Limit = 2 MWSPP =

$8 / MWhSPP =

$9 / MWh

Bids Awards Charged Total Charged

MW @ MWCalculation(MW * SPP) =

FinalBid X Charged + Bid Z Charged =

Bid X 5 MW $10 5 MW 5 MW * $8 = $40

$85Bid Z 5 MW $10 5 MW 5 MW * $9 =

$45

149


Offer B

Offer A Offer

C

Bid X

Node Node Bid Y

1 2 Bid Z

SPP = $8 / MWh

SPP = $9 / MWh

Offers Awards Paid Total Paid

MW @ MWCalculation

-1 * (MW * SPP) Final

Offer A Paid + Offer C Paid =

Offer A 10 MW $8 7 MW -7 MW * $8 = -$56-$83

Offer C 10 MW $9 3 MW -3 MW * $9 = -$27

150

Energy Awards Settlements – Congestion Rent

- = $2

• Difference is called Congestion Rent• Funds Congestion Revenue Rights

Total Charged

Bid X Charged + Bid Z Charged =

$85

Total Paid

Offer A Paid + Offer C Paid =

$83

151

What is it:

• Payment to a QSE whose revenues from the DAM are less than the costs of starting their resource and producing energy in Real-Time

• Charge to QSEs who have bids cleared in the DAM to collect all funds needed for the Make Whole Payment

Make Whole Settlement

Day-Ahead Make-Whole Settlements

152

Who is involved:

• All QSEs who submit a Three-Part Supply Offer in the DAM and are committed in the DAM

Make Whole Payment


153

Why it Exists:

• To guarantee that a DAM-committed Resource with a Three-Part Supply Offer recovers its allowable cost to start and run.

Make Whole Payment


???

154

Why it Exists:

Make Whole Payment


MaximizeThe Gap

Start-up costs and Minimum Energy costs are considered during

co-optimization

Day Ahead LMPs and MCPCs are derived from Energy Offer

Curves and Ancillary Service Offers.

155

Why it Exists:

Make Whole Payment


Revenues from selling Energy and Ancillary Services at DAM prices alone may not be sufficient

to recover Start-up and Minimum Energy costs.

156

When it’s applied:

• Statements issued 2 days after Operating Day

Make Whole Payment


Eligible Resources must run in Real-Time to

receive the DAM Make-Whole payment

157

• QSE 1 submits Three-Part Supply Offer for a Resource

Activities prior to the DAM:

Make-Whole Payments

Scenario

158

• Awarded 20 MW for Hour Ending 5

• DAM Settlement Point Price = $8/MWh

• No AS awarded in DAM

Activities during DAM:

Make-Whole Payments

Scenario

159

• Only assessed when the sum of a QSE’s revenues from the Day-Ahead are less than the guaranteed amount of running its Resource in Real-Time

Day-Ahead Make-Whole Payment

Make-Whole Payments

DAM Guaranteed Amount( ) ( )<Σ DAM

Revenues

Scenario

160

• Add Revenues for Energy to Revenues for Ancillary Services

To calculate DAM Revenues:

Make-Whole Payments

OR

DAM Revenues for energy

DAM Revenues for AS( ) ( )Startup Costs

Operating Energy Costs+ <


Revenues

+

Scenario

161

• Revenue for Energy

• Revenue for Ancillary Services

Formulas for Determining:

Make-Whole Payments

Price Quantity

(DAM SPP) (DAM Energy Sale)

Energy: OR**

Price Quantity

(DAM MCPC) (AS Sale)

AncillaryServices: OR

**

Scenario

162

• DAM Settlement Point Price: $8/MWh

• DAM Energy Sale: 20 MW for Hour Ending 5

Revenue from Energy

Make-Whole Payments

(DAM SPP) (DAM Energy Sale) #Hrs* *($8/MWh) (20 MW) 1 HR* *

Revenue for Energy = $160

Scenario

163

• Resource was not committed for AS, so Revenue from AS is zero

Revenue from AS

Make-Whole Payments

(DAM MCPC) (AS Sale) #Hrs* *($0/MWh) (0 MW) 0 HR* *

Revenue for AS = $0

Scenario

164

• Need Startup Costs

• Need Operating Energy Costs

To calculate Guaranteed Amount

Make-Whole Payments

OR


Revenues



Operating Energy Costs+ < +

Scenario

165

• Look to Three-Part Supply Offer for cost data

• All costs subject to generic caps by Resource technology

Costs to be made whole:

Make-Whole Payments and Caps

1 2 3

166

• Startup and Minimum Energy costs capped at Verifiable Costs

• Energy Offer Curve still subject to generic Make-Whole Cap

Verifiable Costs on file?

Make-Whole Payments and Caps

1 2 3

167

• Startup Costs are $100

• Minimum Energy Costs

$3 per MWh LSL is 16 MW

Resource’s Three-Part Supply Offer:

Make-Whole Payments

$100$3 / MWh

LSL = 16 MW

Scenario

168

Must add Energy costs at and aboveLSL

Determining Operating Energy Costs

Make-Whole Payments

Energy cost at LSL Energy cost above LSL+

Based on Energy Offer Curve

Based on Minimum

Energy Offer

Scenario

169

• Energy Cost at LSL based on Minimum Energy Offer


Make-Whole Payments


Min-energy Cost LSL = Energy cost at LSL*($3/MWh) (16 MW) $48/h* =

Energy cost at LSL = $48/h

Scenario

170

• Energy cost above LSL derived from Energy Offer Curve


Make-Whole Payments


Based on Energy Offer Curve

Scenario

171

• Equals AIEC multiplied by MW above LSL

Calculating Energy Costs above LSL

Make-Whole Payments

Average Incremental Energy Cost

AIEC = $6 per MWh

Scenario

172

Operating Energy Costs

Make-Whole Payments

Energy cost at LSL Energy cost above LSL++

$24/h

Operating Energy Costs= $72

++ $6/MWh 4 MW*

$48/h

$48/h

$48/h

AIEC MW above LSL*

Scenario

173

• Add Startup Costs to Operating Energy Costs

To calculate Guaranteed Amount

Make-Whole Payments

OR


Revenues



Operating Energy Costs+ < +

Scenario

174

• ERCOT will guarantee that resource will recover $172 in costs.

Day-Ahead Market Guarantee

Make-Whole Payments

Day Ahead Market Guarantee = $172

Startup Costs + Operating Energy Costs

$100 + $72

Scenario

175

• Because DAM Revenues are less than DAM Guaranteed Amount, QSE will receive a Make-Whole Payment


Make-Whole Payments


Revenues

Scenario

176

• ERCOT calculates payment to make up the difference.


Make-Whole Payments

Day Ahead Make Whole Payment = $12

Day-Ahead Make-Whole Payment = DAM Guarantee – DAM Revenue

Day-Ahead Make-Whole Payment = $172 - $160

Scenario

177

• Finally, the payment is spread proportionally across the DAM-committed hours

Day-Ahead Make Whole Payment

Make-Whole Payments

DAM Make Whole Payment ( )Energy Sale for hour

Total Energy Sale for all hours*

Scenario

178

• To pay out Make-Whole Payment

Make-Whole Charge used to:

Day-Ahead Make-Whole Charges


Day-Ahead Make-Whole Charge

179

• Charged to each QSE who has at least one cleared DAM Energy Bid or PTP Obligation Bid.

DAM Make-Whole Charge

Make-Whole Charges

*( ) ( )Total DAM Make-Whole Payments ERCOT - Wide

DAM Energy PurchaseRatio Share

OR

*( ) ( )Total DAM Make-Whole Payments ERCOT - Wide

A QSE’s DAM Energy Purchase

Total DAM Energy PurchasesERCOT - Wide

Scenario

180

• Total DAM purchase: 100 MW

• Total Make Whole: $100

Calculate the QSE Day-Ahead Make-Whole Charge

Make-Whole Charges

QSE Name QSE DAM Purchase

QSE DAM EnergyPurchase Ratio

Share

QSE Day-Ahead Make-Whole Charge

QSE 1 20 MW 20 MW / 100 MW $20

QSE 2 40 MW 40 MW / 100 MW $40

QSE 3 10 MW 10 MW / 100 MW $10

QSE 4 30 MW 30 MW / 100 MW $30

Scenario

181

• Impact of inputs into the Day-Ahead Market

• Responsibilities of ERCOT, QSEs, and TSPs in regards to the Day-Ahead Market

• The financial impact of choices made in the Day-Ahead

You have learned about:

Module Summary

Module Conclusion

ercot market education basic training program · ptp obligation awards. ancillary service awards....

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