Transcript Forward Capacity Market

Results and Implications of the First
Forward Capacity Market Auction
National Town Meeting on Demand Response
June 3, 2008
Henry Yoshimura
Director, Demand Resource Strategy
ISO New England Inc.
Forward Capacity Market
• Procure enough capacity to meet New England’s forecasted
Installed Capacity Requirement (ICR) three years in the future.
• Promote new investment by providing a long-term (up to 5
year) commitment to New Supply and Demand Resources.
• Allow new capacity projects to compete in the market and set
the price:
– Select a portfolio of Supply and Demand Resources through a
competitive Forward Capacity Auction (FCA) process:
• Proposed resources must be pre-qualified to participate in the
auction.
• Proposed resources must participate and clear in the auction to be
paid for capacity.
© 2008 ISO New England Inc.
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Summary of FCA #1
• The first FCA was held February 4-6, 2008 as
scheduled:
– 39,155 MW of qualified new and existing demand- and supplyside resources competed.
– Procurement met regional ICR (i.e., 32,305 MW) for 2010-2011
Commitment Period.
• Capacity market clearing price
– FCA starting price was $15.00/kW-mo.
– FCA ending price was $4.50/kW-mo.
• Floor price negotiated as part of Settlement Agreement.
• Over 1,800 MW of new resources cleared the
auction, including both Supply and Demand
Resources.
© 2008 ISO New England Inc.
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New Resources Cleared in FCA-1: Markets
Have Shown Demand Resources to be a CostEffective Resource
New Demand Resources
(1,188 MW)
NH
64
5%
VT
71
6% RI
78
7%
ME
170
14%
CT
238
20%
New Supply Resources
(626 MW)
RI
21
3%
MA
190
30%
VT
50
8%
NH
10
2%
ME
0
0%
CT
354
57%
MA
567
48%
Values represent MW and percent
© 2008 ISO New England Inc.
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FCA#1 Demand Resource Cleared MW by
Measure Type and Load Zone – TOTAL
(Existing and New)
LOAD ZONE
Distributed
Generation
Fossil Fuel
Distributed
Generation
Renewable
Energy
Efficiency
RTDR & Load
Management
RTEG
Total Cleared MW
CT
17.426
0.000
200.101
287.995
342.126
847.648
ME
0.000
0.000
26.071
210.493
36.622
273.186
North East MA (NEMA)
0.169
0.000
133.970
179.715
162.581
476.435
NH
8.641
0.000
35.186
30.474
44.178
118.479
RI
0.000
0.000
45.591
46.784
72.998
165.373
South East MA (SEMA)
5.590
0.168
81.598
70.127
86.209
243.692
VT
0.000
0.000
57.692
23.609
20.346
101.647
West/Central MA (WCMA)
14.483
0.000
74.334
128.521
109.764
327.102
Grand Total
46.309
0.168
654.543
977.718
874.824
2553.562
Notes:
• RTDR = Real-Time Demand Response
• RTEG = Real-Time Emergency Generation. All RTEG is treated as existing resources in the auction. Use of
RTEG resources to meet the Installed Capacity Requirement is limited to 600 MW – the 600 MW cap has not
been applied on this table.
• 2,279 MW counting towards ICR = 2,554 MW less 275 MW of excess RTEG that cleared in FCA#1.
© 2008 ISO New England Inc.
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Observations
• FCM worked as designed.
– Attracted significant investment in new resources while
maintaining needed existing resources.
– Allowed Demand Resources to compete with generation
resources.
•
Demand Resources are a significant and growing
proportion of New England’s total capacity.
– Almost twice as many New Demand Resources cleared (1,188
MW) compared to New Supply Resources (626 MW) in FCA #1.
– Including Existing Demand Resources, a substantial amount of
Demand Resource capacity cleared in FCA #1: 2,554 MW.
– Interest in participating in FCA #2 among New Demand
Resource projects continues to be substantial: 1,781 MW.
•
FCA #2 to be held in Dec ’08.
© 2008 ISO New England Inc.
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Challenges for the Future
• Demand Resources are now replacing a significant
amount of Supply Resources.
– Indicates that FCM was successful.
• More Demand Resources sooner than expected:
• The total of Demand Resources in FCA #1 and those
showing interest in FCA#2 is over 4,200 MW
– This would represent approximately 12% of ICR in the 2011/12
commitment period.
– Active DR would represent approximately 9% of the ICR in the
2011/12 commitment period.
• The large amount of Active DR – i.e., Real-Time Demand
Response – clearing in FCA #1 and expressing interest
in FCA #2 raises operations and planning questions.
© 2008 ISO New England Inc.
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Operable Capacity Analysis – Observation #1
•
As the quantity of Active DR increases, the dispatch frequency
increases.
© 2008 ISO New England Inc.
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Operable Capacity Analysis – Observation #2
•
Active DR Will Be needed during Off Peak months.
– Increasing amounts of DR displace generation.
– DR needed when generators are unavailable.
© 2008 ISO New England Inc.
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Operable Capacity Analysis – Observation #3
•
There Are Few Hours When 100% Of Active DR Is Needed.
© 2008 ISO New England Inc.
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Operable Capacity Analysis – Observation #4
• In Extreme Load Conditions, More Active DR Will Be
Called Upon For More Hours.
Comparison of 50/50 and 90/10 Forecasts
August 2011 (Intermediate Case)
# of Hours Load & Operating
Reserve exceeds Available
Generation
Corresponding # of Days in
August
Maximum # of Consecutive
Days in August
Average MW that Load and
Operating Reserve exceeds
Available Generation
Maximum MW that Load and
Operating Reserve exceeds
Available Generation
50/50 Forecast
90/10 Forecast
39
86
8
9
5
5
835
2,843
2,384
4,504
© 2008 ISO New England Inc.
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Next Steps
• As Active DR grows, the frequency of dispatch increases.
– If the performance of Active DR diminishes in
response to a higher frequency of dispatch, system
reliability will diminish.
– Active DR resources have not been tested under the
FCM performance requirements and the frequency of
dispatch expected in 2011/12.
• A strategy is needed to balance the goal of allowing
Active DR to freely participate in the FCM with the risk
that higher participation of Active DR in the FCM may
impact system reliability.
• Continue stakeholder process to these issues.
© 2008 ISO New England Inc.
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