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ASM Phase II LFRM Requirements. NEPOOL Markets Committee 24 May 2005 Marc D. Montalvo ISO-NE Markets Development. LFRM Requirements Outline. Summary of System Requirements Summary of Locational Requirements Derivation of System Requirements Derivation of Locational Requirements Questions.
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ASM Phase IILFRM Requirements NEPOOL Markets Committee 24 May 2005 Marc D. Montalvo ISO-NE Markets Development
LFRM Requirements Outline • Summary of System Requirements • Summary of Locational Requirements • Derivation of System Requirements • Derivation of Locational Requirements • Questions
Summary of LFRM System Requirements • 10 Minute Non-Spinning Reserve -- 50% of first contingency loss (~600MW) • 30 Minute Operating Reserve -- 50% of second contingency loss (~600MW) • Rest-of-Pool ~600MW total operating reserve minimum purchase requirement
Derivation of System Requirements • The LFRM system requirements are established consistent with ISO New England Operating Procedure No. 8 (OP#8) and operational practice. • Operations generally maintains sufficient non-spinning 10 and 30-minute reserve to protect against half of the largest and half of the second largest supply losses (typically around 1,200 MW total). • As is the case with the existing Forward Reserve Market, the 10 and 30-minute non-spinning system operating reserve requirements will be procured through the LFRM.
Need for the LFRM Rest-of-Pool Requirement • OP#8 requires that operating reserve be distributed throughout the ISO-NE Control Area. • Recall that a resource in an import constrained zone can meet the local requirement and a requirement at the system level. • The requirements (see discussion below) in the import-constrained locations are large relative to the System requirements. • It is possible that a large fraction of the supply clearing against the local requirements would also meet the system requirements. • System operations will not operate the system in real-time with most of the system non-spinning reserve resources located in the import constrained zones.
EXAMPLE: Need for the LFRM Rest-of-Pool Requirement SYSTEM Requirement = 600 MW TMNSR + 600 MW TMOR LFRM RoP Offers: 2,000 MW TMNSR 1,000 MW TMOR LFRM RoP Clear: 300 MW TMNSR 0 MW TMOR NEMA/BOS CONN Requirement = 750 MW TMOR Requirement = 1,155 MW TMOR Offers: 100 MW TMNSR 250 MW TMOR Offers: 200 MW TMNSR 400 MW TMOR Clear: 100 MW TMNSR 250 MW TMOR Clear: 200 MW TMNSR 400 MW TMOR System Summary TMNSRTMOR RoP 300 MW 0 MW CONN 200 400 NEMA/BOS 100 200 TOTAL 600 MW 600 MW
LFRM Rest-of-Pool Requirement Proposal • To address this problem, we propose a minimum purchase requirement for “Rest-of-Pool” (LFRM RoP). • The minimum purchase requirement is an auction clearing rule that will ensure that resources physically located outside of the import constrained locations clear. • This rule will guarantee that LFRM resources are reasonably well distributed throughout the Control Area. • We propose a LFRM RoP requirement that is a total reserve requirement of 600 MW. That is, at least 600 MW of reserve of either type must clear in LFRM RoP.
Derivation of Locational Requirements: Overview • Locational reserve requirements reflect the need for additional 30 minute Operating Reserves to provide 2nd contingency coverage in import constrained zones. • The requirements will be derived from an analysis of historical requirements data. • The requirements will be established on a seasonal on-peak and off-peak basis. • The requirements will be modified, as required, to reflect changes in the configuration of the transmission system or disposition of major generating resources. • The off-peak LFRM locational requirements will initially be set to zero.
LFRM Locational Requirements (LRR) • The ISO proposes to procure through the LFRM the amount of 30-minute reserves that is needed to provide local second contingency protection under normal operating conditions -- all but extreme system conditions and planned outages of key interface elements. • The requirements are a function of local 2nd contingency and the amount of reserve support that can be imported across the interfaces into the import constrained locations (External Reserve Support or ERS).
Local Second Contingencies • The Local Second Contingency will be either a line or a generator. • The Local Second Contingency depends on system conditions • The configuration of the interface • The interface limits pre and post second contingency • The largest generator on-line • In NEMA/Boston, the 2nd contingency is most often a line • In Connecticut 2nd contingency is most often a generator • In Southwest Connecticut, the 2nd contingency is a line or a generator with almost equal frequency.
Calculation of Historical Local 2nd Contingencies • The daily peak 2nd contingency values will be calculated from historical weekday peak hour data. • The Second Contingency (2nd gen or 2nd line) in each reserve zone is calculated as follows • 2nd Gen = LimitN-1 – LimitN-2, Gen + CONTG – 30ACT; • 2nd Line = LimitN-1 – LimitN-2, Line – 30ACT. • LimitN-1 = First contingency interface limit • N-2GEN = Second generation contingency interface limit; • N-2LIN = Second line contingency interface limit; • CONTG = Largest generator on-line in the Zone; • 30ACT = Non-generation based 30 minute actions, e.g., certain OP4 actions, load swap, TO authorized load shedding.
EXAMPLE: Local 2nd Contingency NEMA/Boston Reserve Zone 7/21/04 Largest Gen = CONTG = 470 MW Available Non-Gen 30 Minute Actions = 30ACT = 400 MW Interface Limits LineN-1 = 3,700 LineN-2,GEN = 3,700 LineN-2,LINE = 2,304 2nd Gen = 3,700 – 3,700 + 470 – 400 = 70 MW 2nd Line = 3,700 – 2,304 – 400 = 996 MW
External Reserve Support • External Reserve Support or ERS is the amount of reserve support that can be imported across the interfaces into the import constrained locations. • The External Reserve Support (ERS) is calculated as follows • ERS = LimitN-1 – (Load – Gen). • LimitN-1 = First contingency interface limit • LOAD = Forecast daily peak load; • GEN = DA cleared capacity commitments;
EXAMPLE: External Reserve Support NEMA/Boston Reserve Zone 7/21/04 LOAD = 4,809 MW DA Capacity Commitments = GEN = 1,335 MW Apparent Net Flow = 3,474 MW Interface Limits LineN-1 = 3,700 LineN-2,GEN = 3,700 LineN-2,LINE = 2,304 ERS = 3,700 – (4,809 – 1,335) = 1,222 MW
Daily Locational Reserve Requirement • The amount of 30-minute reserves that is needed to provide local second contingency protection across the peak hour of each day of the historical period. • For each day, the locational reserve requirement equals • LocalReserveRequirement = MAX (2nd Gen, 2nd Line) – ERS.
EXAMPLE: Daily LRR Calculation NEMA/Boston Reserve Zone 7/21/04 LOAD = 4,809 MW DA Capacity Commitments = GEN = 1,335 MW Largest Gen = CONTG = 470 MW Available Non-Gen 30 Minute Actions = 30ACT = 400 MW Apparent Net Flow = 3,474 MW Interface Limits LineN-1 = 3,700 LineN-2,GEN = 3,700 LineN-2,LINE = 2,304 2nd Gen = 3,700 – 3,700 + 470 – 400 = 70 MW 2nd Line = 3,700 – 2,304 – 400 = 996 MW ERS = 3,700 – (4,809 – 1,335) = 1,222 MW Daily LRR = MAX (70, 996) – 226 = 770 MW
Analysis of the Historical Data • The proposed methodology will take the historical set of daily LRR values for each reserve zone calculated according to the formulas described above and summarize the data by season and location. • We propose to use a rolling two years worth of historical data. • Two years of data will reflect changes in the system but will not be overly sensitive by conditions during one season or year. • In the event of a change in the configuration of the transmission system or the addition or retirement of a major generating resource, the 2nd contingency or the ERS values will be recalculated using modified assumptions. • The historical requirements data for each season will be percentile ranked for analysis.
Choice of Locational Requirements • The distributions of historical daily Locational Requirements data was analyzed in consultation with ISO System Operations staff. • The chosen requirements levels reflect the amount of 30 minute capability that System Operations deems appropriate to provide local second contingency protection under all but extreme system conditions and planned outages of key interface elements during the delivery period.
Choice of Locational Requirements • NEMA/Boston requirements to be set to the 90th percentile rank level: 750 MW summer and 740 MW winter. • SWCT and CT requirements to be set to the 95th percentile rank level: 650 MW summer and 560 MW winter for SWCT and 1,155 MW summer and winter for CT. • The 90th percentile (rather than the 95the percentile) level was chosen for NEMA/Boston recognizing the expected impact on the interface limit of the 345kV reinforcements that NSTAR will be bringing into service in June 2006.
Representation of Requirements in the LFRM Auction Clearing Engine • The LFRM auction-clearing software uses a transportation model. • Rather than the requirements, the 2nd Contingency and ERS parameters associated with the requirements are input. • In each location, assuming sufficient supply is offered into the market to clear the entire requirement, at least the Requirement (the difference between the 2nd contingency and the ERS) will be purchased through the market. • If local supply is more economic, local resources can be used to meet cover the entire second contingency. • No more than the Requirement (2nd contingency – ERS) must be purchased from resources within the import constrained location.
Adjustments to the Requirements • Current practice in the Forward Reserve Market is to purchase an amount of reserve above the system requirement to account for expected outages. • The multiplier (R-factor) used today is 1.33. • We believe that the market will ultimately reflect the risk and cost of outages and securing replacement resources in the LFRM clearing prices and that its is unnecessary to purchase more than the requirement. • We propose to retain the R-factor, but set it initially to one. • Should experience indicate that it is necessary to purchase more than the requirement to hedge against outages, the parameter will be part of the design and the R-factor would be modified.
