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Hour Ahead Market Focus on Demand Response

Hour Ahead Market Focus on Demand Response. Adjustment Period. DRUC. Operating Hour. DAM. Hour-Ahead. Financial Market (Just like DAM) Energy Only No physical obligation, No ERCOT deployments Customers/LSEs strategies: Buy their supply at an “up to price”

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Hour Ahead Market Focus on Demand Response

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  1. Hour Ahead MarketFocus on Demand Response Adjustment Period DRUC Operating Hour DAM Hour-Ahead • Financial Market (Just like DAM) • Energy Only • No physical obligation, No ERCOT deployments • Customers/LSEs strategies: • Buy their supply at an “up to price” • Sell back supply “at or above price” Day-Ahead Operations Operating Period Submit bid/offers Run Hour Ahead Mkt Notice to Participants Known Price Adjustment Period Hour-Ahead Operating Hour Operating Period

  2. A Few Details • HAM is a market solution for demand response. It is in addition to It allows the demand response to extract value from the market. Provides Load what they have asked for: • Notice Period to curtail • Known Price • No ERCOT performance criteria • The HAM is another market run by ERCOT for each hour, one hour ahead of each hour. • Closer to real-time, the better information • HAM is in addition to DAM • Requires a three settlement system • DAM settlement • HAM settlement (DAM awards settle at HAM price) • RT settlement (HAM awards settle at RT price. • Requires two steps of PTP Obligations • DAM to HAM • HAM to RT • PTP Obligation award in DAM should cover your collateral in the PTP in the HAM. Allowing carrying CRR hedge to RT.

  3. Load Example OneCustomer Arranges for supply in the forward marketOffers to Sell Back Supply at VOLL

  4. Base TransactionsExplanation via Follow the Energy and $ $ $ Transacting QSEs LSE energy energy energy $ Load QSE imbalance Customer ERCOT imbalance

  5. Energy Trade Transaction10 MW customer withEnergy price at $30/MWH $300 $300 Transacting QSEs LSE 10 MWH 10 MWH 10 MWH $300 Load QSE $0 Customer ERCOT 0 MWH

  6. HAM Transactions Customer offers to sell 4 MW @ $1000 @ zoneHAM clears $1200 @ zone $300 $4500 Transacting QSEs LSE 10 MWH 6 MWH Load QSE $ MW Net 6 MWH $4800 $300 $4800 ERCOT 4 MWH Customer

  7. RT Transactions Customer reduces Consumption to 6 MW No imbalance $300 $4500 Transacting QSEs LSE 10 MWH 6 MWH Load QSE 4 MWH short in HAM @ $4800 $ MW 6 MWH $4500 $0 ERCOT 0 MWH Customer

  8. RT Transactions Customer Consumes 7 MW creating an imbalance Zonal clearing price is $3000 $300 $1500 Transacting QSEs LSE 10 MWH 7 MWH Load QSE 4 MWH short in HAM @ $4800 $ MW 7 MWH $4500 $3000 $3000 ERCOT 1 MWH Customer

  9. Exchange of $ between LSE and Customer • $ exchange could be exact, as shown • Fits large industrial • $ exchange could be a flat payment to customer for curtailment • Fits residential • REPs and Customers may structure the transaction that best fits their needs.

  10. Load Example TwoCustomer Buys from the Spot MarketBids in the HAM at an Up to Price

  11. Energy Trade Transaction $0 $0 Transacting QSEs LSE 0 MWH 0 MWH ?? MWH $?? Load QSE $0 Customer ERCOT 0 MWH

  12. HAM Transactions Customer bids to buy 10 MW @ $35 @ zoneHAM clears $30 @ zone $0 $300 Transacting QSEs LSE 0 MWH 10 MWH Load QSE $ MW 10 MWH $300 $300 ERCOT 10 MWH Customer

  13. RT Transactions Customer Consumes 10 MW, no imbalance RT Zonal Price is $100 $0 $300 Transacting QSEs LSE 0 MWH 10 MWH Load QSE 10 MWH long in HAM $ MW 10 MWH $300 $0 ERCOT 0 MWH Customer

  14. RT Transactions Customer Consumes 11 MW RT Zonal Price is $100 $0 $400 Transacting QSEs LSE 0 MWH 11 MWH Load QSE 10 MWH long in HAM $ MW 11 MWH $300 $100 $100 ERCOT 1 MWH Customer

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