Transcript PowerPoint template draft - Alberta Electric System Operator

Reliable Power
Demand Response in Alberta’s
Wholesale Electricity Market
Demand Response Working Group
Kick Off Meeting- September 3, 2008
Reliable Markets
Reliable People
Laura Letourneau
Director; Market Services
Agenda
• Meeting Objectives
– Introductions (interests & experience)
– Terms of Reference - structure, transparency, scope, rules for
engagement
– Industry/Business Model for Demand Response in Alberta
• Presentation
– Background and Context
– Demand Response Overview
– Alberta Facts
– Challenges & Opportunities
• Next Steps
– Finalize Terms of Reference
– Evaluate Alberta Demand Response programs and results
– Assess other market’s programs and results
– Assess Demand Response challenges/limitations/barriers to
success
– Industry/Business Model – current, options, proposed
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Reliable Power
Background & Context
Reliable Markets
Reliable People
Laura Letourneau
Director; Market Services
Electric Industry Evolution
May
1995
Electric
Utilities
Act
passed
June
1995
Jan.
1996
May
1998
June
1998
Aug.
2000
Nov.
2000
Jan.
2001
June
2003
Independent
Balancing
AESO
Transmission
Pool
formed
Administrator
Phase I
EUA
appointed
supply
takes
Independent
Gov’t auction
effect
PPC & Market
auctions
Power Power
Retail
Surveillance
rights to
Pool
Pool
competition
Administrator
generator
Council begins
output
formed operation appointed
4
Industry Model Post-Restructuring
Vertically Integrated
Utility
competitive
forces
Functional
Separation
natural
monopoly
natural
monopoly
competitive
forces
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Industry Structure
Electric Utilities Act
Minister of Energy
Appoints AESO Board members , MSA & AUC Chair
Balancing
Pool
Wholesale
Energy
Market
Alberta Electric
System Operator
Alberta Utilities
Commission (AUC)
Regulates AESO
Market
Surveillance
Administrator
(MSA)
Load
Settlement
Transmission
Real-time
Alberta Electric
System Operator
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Alberta Electric System Operator
• Independent
– Not-for-profit with a public interest mandate
– Holds no commercial interests – independent of the market
– Impartial: no affiliation with industry
– Governed by independent board
• Regulated by Alberta Utilities Commission
– Transmission Tariff
– ISO Rules & OPPs
• Revenue
– energy trading charge
– transmission tariff (load settlement)
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Key Agencies Roles
• Alberta Utilities Commission (AUC)
–
–
–
–
–
Independent, quasi-judicial agency of Alberta Government
Approves ISO Rules & Operating Policies and Procedures
Regulates transmission reinforcements/upgrades and tariffs
Approves environmental and siting for generation projects
Approves the distribution and regulated rate option tariffs
• Market Surveillance Administrator (MSA)
– Performs on-going monitoring of Alberta’s electricity markets to ensure fair,
efficient and openly-competitive operation of the markets
– Monitors compliance with all rules, laws and regulations and manages noncompliance and penalties (resolves issues before complaints)
• Balancing Pool
– Markets unsold Power Purchase Arrangement (PPA) capacity
– Manages the unsold PPAs and ultimately returns profits to Alberta
consumers
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AESO Mandate
• Reliability of the Electric System
– coordinated operation of the power grid and make sure that the
supply and demand are in constant balance
• Open, non-discriminatory access to the Transmission system
• Plans Transmission System - ensure important infrastructure
keeps pace with growing demand and supply
– supports reliability
– enable fair, efficient and open competition
– facilitates investment in both load and generation
• Fair, efficient and openly competitive (FEOC)
– operate the market ensuring a fair, efficient and openly competitive
wholesale market for all participants
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AESO Roles & Responsibilities
• Ensure safe, reliable and economic operation of the power system by
dispatching merit order (generators & price-responsive bids)
• Connects customers (supply & load) – designs and administers tariff for
system access
• Contracts with TFOs for service & provide direction to transmission
facility owners to coordinate operation of the transmission system
• Schedules generation and loads to provide system services (AS) procured through service contracts or tariff
• Dispatches merit order for reserves (reg/spin/supplemental)
– procured from independent third party market or
– over-the-counter arrangements and used to maintain required reserves
• Calculates and communicates the pool price
• Settlement – load, energy market and transmission
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Hourly Real-Time Market
Power Purchase Arrangements
Hourly AESO
Pool Price
AESO
Transmission
Imports
Retailers
Other generation
Exports
Self
Retailers
Customers
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Reliable Power
Demand Response Overview
Reliable Markets
Reliable People
Laura Letourneau
Director; Market Services
Demand Response Drivers
• Aging industry infrastructure and the pace of Generation,
Transmission or Distribution investment may contribute to
– shrinking reserve margins and
– increasing congestion and reliability events
• Increasing prices and price volatility – super peaks
– associated with congestion,
– load characteristics and
– concentration of supply resources
• Increasing overall demand coupled with reduction of
incentives for efficiency
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Benefits
• More Resource Options
– reliable and efficient operation of the system and market,
– increases liquidity and mitigates potential market power
• Shift and Reduce
– Flattens load & dampens price spikes
– Shifting peak use to off-peak use flattens load profile and reduces
price spikes during scarcity/high prices
• Conservation and efficiency
– Reduced use/demand
– Shifting resources to lower cost resources increases market
efficiency
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DR Program Categories
Incentive Programs:
• Induce customers to reduce during periods of system need or stress with payments
rather than direct price signals
– Direct load control
– Interruptible/curtailable rates
– Demand bidding/buyback programs
– Emergency demand response programs
– Capacity market programs
– Ancillary services market programs
Time/Price Programs:
• Promote DR based on price - move away from flat or average pricing and promote
more efficient markets that reflect underlying costs
– Time-of-use prices (day, week, season)=> differentiate by peak/off-peak or shoulders
– Critical peak/scarcity pricing=> use real-time prices during extreme peaks
– Real-time pricing => links hourly prices to cost of power
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Demand Response Continuum
Varied demand response products/services suited to varied needs
Load Shifting
Conservation
Load Shed
Energy Efficiency
Distributed
Generation
Multi-year
Year
Month
Day-Ahead
Real-Time
Timeframe
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Reliable Power
Alberta Facts
Reliable Markets
Reliable People
Laura Letourneau
Director; Market Services
Alberta at a Glance
Alberta
BC
Sask.
DC
•9,710 MW peak and 80% LF
•12,072 MW total generation
(Wind)
5,893 MW
523 MW
(Other renewables)
4,635 MW
178 MW
869 MW
Western
System
7%
4% 1%
49%
38%
Coal
Intertie limitations, high load factor
and growing variable resources
increase risk of reliability events
and reduces options to manage it.
Gas
Hydro
Wind
Other
Interties Max Capability
• BC (up to 780 MW)
• Sask. (up to 150 MW)
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Alberta’s Demand Response
AESO has implemented a combination of market and out-of-market
DR programs, some are incentive based and others are time/priced
based.
Incentive programs (out-of-market/real time
emergencies) include:
• Voluntary Load Curtailment Program (VLCP)
• Load Shed Service (LSS) (59.5 Hz freq. response)
• Interruptible Load Remedial Action Scheme (ILRAS)
• Demand Opportunity Service (DOS)
Time/Price (market) Solutions include:
• Operating Reserves (OR)–Supplemental
• Price Responsive Loads (PRL)
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Comparing Alberta’s DR
FERC’s 2007 Assessment of DR:
• estimated demand reductions in RTO/ISO regions with wholesale
markets to be 1.4 - 4.1% of peak
• reductions achieved via a combination of DR programs, retail DR, &
voluntary reductions
Assessment of Alberta’s DR:
• Most significant demand response comes from the approximately 175
- 300 MW of Price Responsive Load - 1.8% to 3.1% of peak (9710
MW ’07/08)
• Additionally, over 400 MW in VLCP, LSS, ILRAS,DOS and OR
supplemental service provide additional options to managing
reliability and ensure a fair, efficient, and openly competitive
electricity market
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Load that Responds to Price (MWs)
450
300
250
$1,500
200
150
0
Total Price Responsive Load
$/MWh
Price Responsive Load in
Alberta
Pool Price and Existing Price Responsive Load
$3,000
400
$2,500
350
$2,000
$1,000
100
$500
50
$0
Pool Price
Price Responsive Load responding to price spikes
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Alberta’s Price Responsive Load
(PRL)
Average Amount of Existing Price Responsive Load w hen Pool Price is in Various Ranges
(July 2007)
Average Amount of Price
Responsive Load (MWs)
350
300
324
96
250
200
228
150
69
159
71
100
88
50
0
$0 to $100
$100 to $250
$250 to $500
$500 to $1000
Pool Price Range ($/MWh)
PRL on-line & average load reduced by Price Range
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Growth in Electricity
Consumption
Alberta's Average Annual Power Use
80.0
megawatt hours (in millions)
70.0
60.0
59.4
50.0
54.1
54.5
2000
2001
62.7
65.3
66.3
2004
2005
69.4
69.7
2006
2007
40.0
30.0
20.0
10.0
0.0
2002
2003
Unprecedented load growth in Alberta could potentially outpace market-driven
generation additions resulting in decreased reserve margins and reduced reliability
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Trends in Alberta System Peak
Seasonal Peak Trends
Winter
Winter Peak
Summer Peak
Summer
Historical Peaks
9800
9600
Alberta’s peak
demand (AIL) and
consumption grew
by an average of
4% and 5% per
year respectively
(2001-2006)
9400
9200
MWs
9000
8800
8600
8400
8200
8000
7800
2004/05
2005
2005/06
2006
2006/07
2007
2007/08
AESO forecasts (20 years) peak demand to grow on average by 3.1%
per year and consumption to grow on average by 3.2% per year
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Price Trends (con’t)
System and market conditions can increased frequency of price spikes
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Price Trends in Alberta
Average Yearly Pool Price
140
$133.22
120
100
$/MWh
Historical
Pool
Prices
80
$80.79
$71.29
60
$70.36
$66.95
$62.99
$54.59
40
20
$43.93
$42.74
$33.03
$20.39
0
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
Year
Year
Price >
Price >
$100/MWh $250/MWh
Price >
$500/MWh
Price >
$750/MWh
2004
1.93%
0.32%
0.05%
0.01%
2005
4.21%
0.84%
0.17%
0.05%
2006
3.68%
1.42%
0.46%
0.21%
2007
2.83%
0.80%
0.34%
0.18%
Historical
Price
Frequency
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Reliable Power
Challenges & Opportunities
Reliable Markets
Reliable People
Laura Letourneau
Director; Market Services
Challenges & Objectives
Generally, Alberta like other markets, may experience:
Increased risk of reliability events
– demand growth
– delays in transmission and distribution infrastructure
– potential misalignment of generation and transmission
– increasing variable resources - need for fast ancillary services
Increasing prices and frequency of scarcity pricing (price spikes)
To capitalize on the benefits of demand response, there is a need
to explore and analyze the physical and financial structures within
Alberta identifying demand response opportunities and options
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The Flow of Power
There will be a need to segment electricity transactions (physical and
financial) in order to appropriately assign roles and responsibilities.
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Next Steps
• Finalize Terms of Reference
• Evaluate Alberta Demand Response programs and results
• Assess other market’s programs and results
• Assess Demand Response
• Challenges, limitations and barriers to success
• Industry/Business Model – current, options, proposed
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Questions
For further information, questions or concerns please contact:
Laura Letourneau
Director; Market Services
Alberta Electric System Operator
2500, 330 – 5th Avenue S.W.
Calgary, Alberta T2P 0L4
[email protected]
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