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  • SPP.org 11

    MOPC Workshop Series on

    Future Markets: Session I

    August 24, 2010

  • SPP.org 2

    Agenda

    Introduction

    The Day Ahead Market

    Reliability Unit Commitment (RUC)

    The Real-Time Balancing Market

    Financial Schedules

    Virtual Transactions

    Co-optimization

    Scarcity Pricing

  • SPP.org 3

    Objectives

    Describe high level overview of the relationships between the DA

    Market, RUC, and RTBM.

    Define Demand Bids and Resource Offers in the Day-Ahead Market

    Provide examples for Demand Bids and Resource Offers cleared in

    the DA Market.

    Define virtual transactions and financial schedules

    Explain examples for virtuals transactions and financial schedules.

    Define co-optimization of Energy and Operating Reserves

    Understand example of a co-optimized, least-cost solution.

    Define scarcity pricing of Operating Reserves

    Identify examples of scarcity pricing in the Future Market design

  • SPP.org 4

    INTRODUCTION

  • SPP.org 5

    Future Markets Motivation

    Increase Market Participant savings by moving from self-

    commitment to centralized unit commitment

    Create a Day-Ahead Market so members can get price

    assurance capability prior to real-time

    Market-based Operating Reserves to support the

    Consolidated Balancing Authority (CBA)

  • SPP.org 6

    Future Market Products

    Energy

    Operating Reserve

    Regulation

    o Regulation Up

    o Regulation Down

    Spinning

    Supplemental

  • SPP.org 7

    SPP Regulation Reserve Definition

    Regulation Deployment

    The utilization of Regulation-Up and Regulation-Down through Automatic

    Generation Control (AGC) equipment to automatically and continuously

    adjust Resource output to balance the SPP Balancing Authority Area in

    accordance with NERC control performance criteria.

    Regulation-Down

    Resource capacity that is available for the purpose of providing Regulation

    Deployment between zero Regulation Deployment and the down direction.

    Regulation-Up

    Resource capacity held in reserve for the purpose of providing Regulation

    Deployment between zero Regulation Deployment and the up direction.

  • SPP.org 8

    SPP Spinning Reserve Definition

    The portion of Contingency Reserve consisting of

    Resources synchronized to the system and fully available to

    serve load within the Contingency Reserve Deployment

    Period following a contingency event.

    SPP defines contingency deployment period as 10 minute

    interval

  • SPP.org 9

    SPP Supplemental Reserve Definition

    The portion of Operating Reserve consisting of on-line or

    off-line Resources capable of being synchronized to the

    system that is fully available to serve load within the

    Contingency Reserve Deployment Period following a

    contingency event.

    SPP defines contingency deployment period as 10 minute

    interval

  • SPP.org 10

    Future Energy and Operating Reserve Market Functions

    Day -Ahead Market

    (DA Market)

    Real -Time Balancing

    Market(RTBM)

    Reliability Unit Commitment

    (RUC)

    DA Market & Net RTBM Settlements

    DA Market Offers (Energy and Operating Reserve), Bids, Operating Reserve

    Requirements

    DA Market Commitment, Cleared Energy and Operating

    Reserve (MW and Price) (hourly)

    Resource and Load

    Meter Data

    Dispatch Instruction, cleared Operating Reserve

    (MW) (5 minute)

    DA Market Commitment

    RUC Commitment

    EMS

    RTBM Offers, Load Forecast, Operating

    Reserve Requirements

    TCR Markets

    RTBM Offers, Load Forecast, Operating

    Reserve Requirements

    Dispatch Instruction, cleared Operating Reserve

    (MW and Price) (5 minute)

    Day -Ahead Market

    (DA Market)

    Real -Time Balancing

    Market(RTBM)

    Reliability Unit Commitment

    (RUC)

    DA Market & Net RTBM Settlements

    DA Market Offers (Energy and Operating Bids, Operating Reserve

    Requirements

    DA Market Commitment, Cleared Energy and Operating

    Reserve (MW and Price) (hourly)

    Resource and Load

    Meter Data

    Dispatch Instruction, cleared Operating Reserve

    (MW) (5 minute)

    rCommitm

    RUC Commitment

    EMS

    RTBM Offers, Load Forecast, Operating

    Reserve Requirements

    TCR Markets

    RTBM Offers, Load Forecast, Operating

    Reserve Requirements

    Dispatch

    Operating R(MW and Price)

    (5 minute)

  • SPP.org 11

    Example Conventions

    To stay consistent with SPP Settlements, all the examples

    throughout the presentation that involve settlement

    calculations follow the convention below:

    l)(Withdrawa Actual

    )(Injection Actual (RT)Amount Actual Settlement

    l)(Withdrawa Award

    )(Injection Award (DA)Amount Cleared Settlement

    SPP

    SPP

  • SPP.org 12

    THE DAY-AHEAD MARKET

    (DA Market)

  • SPP.org 13

    Understanding The Day Ahead Market

    The Day Ahead Market provides Market Participants with

    the ability to submit offers to sell Energy, Regulation-Up,

    Regulation-Down, Spinning Reserve and Supplemental

    Reserve and/or to submit bids to purchase Energy

    SPP goal is to create a financially-binding day-ahead schedule for Energy and Operating Reserves

    SPP will use a Security-Constrained Unit Commitment software to derive the day-ahead schedule, based on resource offers and bids submitted by Market Participant at 11 am on the day prior to Operating Day

  • SPP.org 14

    Understanding The Day Ahead Market

    Generation committed through the Day-Ahead Market is

    selected by SPP in a way that results in the lowest total

    production cost to serve bid in load and to meet Operating

    Reserve requirements in the Day-Ahead Market.

    1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

    Me

    ga

    wa

    tts Generation cleared in DA Market

    Bid in Load and Operating Reserves

    cleared in DA Market

    Hour

    Self Committed Resources

    (Day Ahead Input)

  • SPP.org 15

    Highlights

    Market Participants submit Offers and Bids by 11:00 am

    previous day to Operating Day

    Suppliers submit MW quantity and price offers for each hour of Operating Day including any Operating Reserve Offers

    Loads submit MW requirement bids for each hour of Operating Day including any price sensitive load bids

    Includes offers / bids for virtual supply and virtual load

    Security Constrained Unit Commitment (SCUC) scheduling

    software co-optimizes Energy and Operating Reserves for

    least cost solution

  • SPP.org 16

    Highlights

    Locational Marginal Prices (LMPs) and Operating Reserve

    Market Clearing Prices (MCPs) posted by 4:00 PM previous

    day to Operating Day

    Cleared Energy supply paid at Settlement Location LMP

    Cleared Energy demand charged at Settlement Location LMP

    Cleared Operating Reserves paid at the Reserve Zone MCPs

    SPP guarantees revenue sufficiency of committed resource

    Offers

    Supply-Demand deviations settled in Real-Time Market

  • SPP.org 17

    Cleared Energy &

    OR Offers

    Cleared Energy

    Bids: Virtuals &

    Demand

    Cleared Import,

    Export &

    Interchange

    Transactions

    RTBM Resource

    Offers

    DA Resource

    Commit

    Schedules

    SPP Operating

    Reserve

    Requirements

    RTBM Resource

    Offers

    DA Resource

    Commit

    Schedules

    SPP Operating

    Reserve

    Requirements

    [SCUC]

    RTBM Resource

    Offers

    DA Resource

    Commit

    Schedules

    DA Confirmed

    Import, Export &

    Interchange

    Transactions

    Resource

    Outage

    Notifications

    SPP Operating

    Reserve

    Requirements

    SPP Forecasts

    (Load & Wind)

    DA Market

    Demand Bids

    DA Market

    Resource Offers:

    Energy and OR

    DA Market

    Import, Export &

    Interchange

    Transactions

    Resource

    Outage

    Notifications

    SPP Operating

    Reserve

    Requirements

    Virtual Energy

    Offers and Bids

  • SPP.org 18

    DA Market Timeline

    - SPP Publishes Load and Wind Forecast

    - SPP publishes Operating Reserve requirements

    - Submit DA Demand Bids, Unit Offers (Energy & OR), Virtual bids & offers and physical transactions to SPP

    - SPP runs SCUC in the day-ahead mode

    - Submit revised offers and/or self schedules for units that were not selected in DA run

    - SPP runs SCUC in RUC mode

    - SPP reports DA RUC results to affected market participants

    0600 19001100 1600 1700 2000

    Day Prior to Operating Day

  • SPP.org 19

    What Data Will Market Participants Need to

    Submit to SPP for Resources?

    3-Part Energy Offers

    Energy Offer Curve

    ($/MWh as a function of

    MW)

    Startup Offers ($/Start for

    hot, warm, and cold

    starts)

    No-Load Offers ($/hr)

    Operating Reserve Offers

    Regulation Up ($/MW)

    Regulation Down ($/MW)

    Spin ($/MW)

    Supplemental ($/MW)

  • SPP.org 20

    What Data Will Market Participants Need to

    Submit to SPP for Resources?

    Operating Parameters a

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