Regulation & Load Following Costs

1. Regulation &Load Following Costs Brendan Kirby Oak Ridge National Laboratory

2. Analysis Philosophy • Strong advocate of defining ancillary services, quantifying consumption and provision, and allocating costs • Prior experience evaluating regulation and load following impacts for other control areas • Individual loads and generators • Allocating total system requirements • Not Advocating • Specific technologies or outcomes • An Advocate For • Allocation of total system regulation and load following requirements based upon individual impacts • Provision of ancillary services should be reasonably profitable for a control area • Proposed method previously used for analysis of AEP, CSW, NIPSCO, BPA, ComEd, PJM, Alberta, New Brunswick, Ontario, Xcel, Great River, …

3. Under Normal Conditions, Both Short-Term and Long-Term Aggregate System Fluctuations Have To Be Balanced

4. Balancing the Electrical System • Regulation & load following (or supplemental energy) balance the system under normal conditions. • Both address the time varying characteristic of balancing generation and load under normal operations. • The “system” only has to compensate for the aggregation. • The aggregation is composed of individual loads and generators with diverse characteristics. • Aggregation greatly reduces the total amount of regulation and load following. • Dynamic scheduling can move the balancing burden of a load or generator from one control area to another

5. Decomposition of Control Area Loads • Control area load & generation can be decomposed into three parts: • Base Energy • Regulation • Load Following

6. Regulation & Load Following Differ

7. Aggregation Greatly Benefits Regulation And Uncorrelated Load Following Unlike energy, individual load intrahour fluctuations are generally uncorrelated • Energy requirement • Fluctuations

8. Aggregation of Two Entities

9. Allocation Choices • A & B share requirements equally • Reserve A = 42 • Reserve B = 42 • B “joins” A and provides “full compensation” (incremental impact) • Reserve A = 60 • Reserve B = 25 Our method allocates regulation requirements based upon use (first method), not the order the individual is added to the system (second method)

10. Allocation Method ShouldMeet Key Objectives • Recognize positive and negative correlations (pay loads that reduce total regulation, charge generators that increase total regulation) • Independent of subaggregations • Independent of order in which loads are added to system • We developed a Regulation Vector Allocation Method that meets these objectives

11. Allocation Simple WhenBurdens Are Correlated

12. Allocation Also Simple WhenBurdens Completely Uncorrelated If you charge A 8 and B 6 you collect 14. Expenses are only 10. What do you do with the extra 4? If you had a 8MW and 6 MVar load would you buy a 14MVA transformer?

13. Vector Allocation Method GeneralizesTo Any Correlation

14. Method Treats Positive OrNegative Correlations

15. Numerical Implementation Of Vector Allocation Method Straightforward • Handles correlated and uncorrelated components • Independent of sub-aggregation • Independent of order • Disaggregate as many (few) components as desired

16. Individual Regulation Burden Can Be Measured And Allocated The allocation method should: • Recognize positive and negative correlations • Be independent of subaggregations • Be independent of order in which loads added to system

17. The Standard Deviation of the 1 Minute Meter Readings Provides A Good Regulation Metric • Handles correlated and uncorrelated components • Credits resources that help reduce overall regulation requirements • Independent of sub-aggregation • Independent of order • Disaggregate as many (few) components as desired

18. Method Requires Minimal Data • 1 minute total system load data • 1 minute renewable resource generation data • Hourly system regulation purchase • Hourly system regulation price Method can be run for a day, a week, a month, or a year

19. Method Fairly Allocates Regulation ImpactIdentifies High Impact Individuals Method used to study 2 arc furnaces at a Midwestern utility that significantly impact the control area regulation requirement

20. Allocating Regulation Cost to Individuals • Determine hourly system regulation requirement • 1 minute data for total system load • Separate regulation from load following • Hourly standard deviations • Determine hourly individual regulation requirements • Allocate individual hourly regulation requirements • Obtain hourly system regulation purchase amount • Allocate total regulation purchase to individuals • Obtain hourly regulation price • Determine hourly individual regulation cost

21. Regulation Allocation Method Applied to 15 Loads and 2 Wind Plants

22. Previous Studies Of Regulation and Load Following Using Identical or Similar Methods • PJM – scaling did not account for geographic diversity • $0.70-2.80/MWh for imbalance payments, reduced with improved scheduling • $0.05-0.30/MWh for regulation, load paid $0.60/MWh • Xcel – large imbalance penalties assumed • 5% increased regulation with 3-4% penetration • $1.85/MWh for regulation, imbalance and forecasting • PacifiCorp – preliminary findings • $5-6/MWh with 20% penetration • split between imbalance costs and reserve costs • Nordel – very large penetration simulated, up to 21GW & 63% • No added regulation burden in aggregated Northern Europe • No impact on contingency reserves • 3-8% load following burden (study did not consider geographic diversity or aggregation with system)

23. What About Load Following? • Load following is provided by the short-term energy markets or the economic dispatch of the utilities generators • Regulation comes from dedicated maneuverable capacity where changes are too fast for markets or economic dispatch • Load following is also tied to energy imbalance • Energy imbalance can be treated with market clearing or with penalties • Penalties are useful to motivate changes in behavior, they make little sense when applied to physical characteristics • The cost for load following (or energy imbalance) depends upon the depth of the short-term generation stack: the amount of generation available to move up and down near the current marginal price

24. Restructured Markets Explicitly Recognize Regulation & EnergyBut Not Load Following • A volatile load (or generator) increases the control area need for regulation, CPS measures that need, the amount of regulation purchased increases, so does the cost • An energy consumer increases the control area need for energy, energy meters detect this, the fuel burned increases, and so does the cost • Ramping loads increase the need for load following, ACE detects the change, generators are dispatched, but where is the non-energy cost?

25. Energy Imbalance • Results from mismatches between energy schedules & delivery • Physical power system must be balanced in real time • Volatile but known schedules have no energy imbalance • True costs are tied to the scarcity of ramping capability

26. Determining Available Ramping Capability • Data on available generator ramping capacity is proprietary and difficult to obtain • Data on hourly production is available from EPA for generators that emit air pollutants • Individual generator and partial system ramping capacity for each hour can be determined from the EPA data • Total system load following requirements can be determined from publicly available hourly load data

27. How Much Ramping Capacity Is Needed vs Available? • Available Data • Hourly system load: 42352 MW max • Hourly generator output from emitting generators: 21851 MW max • 52% of max, 35% of average • no hydro, no nucs, no renewables, no imports • Analysis – 8760 hrs of data • Determine each generator’s capability • Min power, max power, max ramp rate • Determine hourly system ramping requirements • Determine hourly emitting generators hourly ramping contribution • Determine hourly emitting generators excess ramping capability

28. Very Preliminary Results for California Indicate Significant Excess Ramping Capacity Is An Inherent Characteristic Of Their Current Generation Mix The important point is that ramping capability, scarcity, and cost impacts are calculable

29. Thought Experiments • “Thought experiments” can be helpful to determine if a methodology is behaving logically • Prescribed conditions are input to a methodology • Results are compared to practical expectations • Quantitative results are not important • General behavior of a methodology may be revealed • Three useful thought experiments: • Block schedules • Equal but opposite resources • AGC units

30. Thought Experiment #1 How does the method treat perfect following of a volatile schedule? Regulation cost Perfect following of block schedules has no energy imbalance and no surprises. Still, fast generation movement is required. $2.26/MWh

31. Thought Experiment #1 Does the method recognize when required generation movement is reduced? Regulation cost Ramping blocks does nothing to reduce imbalances or surprises. Less fast generation movement is required. $0.20/MWh

32. How is equal but opposite behavior treated? No net impact on system requirements Thought Experiment #2

33. Thought Experiment #3 Does the method recognize when a resource reduces system regulation requirements? Simply measuring variability penalizes helpful movement.

34. Conclusions • Regulation & Load Following requirements can be quantified • For the system • For individuals • Aggregation is critical • Individuals’ impact on system $ and MW requirements can not be evaluated in isolation

35. Recommendations • DOE invites WAPA to work jointly with NREL and ORNL to analyze the actual costs of compensating for the variability of wind projects • Use WAPA data on total system load, current regulation and load following requirements, and existing WAPA generation resources • Use WAPA data from the existing wind plants within the WAPA control area • Use NREL data from other wind plants around the country • Develop a regulation and load following cost allocation method and tariff based upon individuals contributions to total system needs