Demand Side Working Group Economic Demand Repsonse in SCED

1. Demand Side Working GroupEconomic Demand Repsonse in SCED Angelo Marcino Real-Time Market Operations – PJM April 14, 2014

2. Agenda Overview of FERC Order 745 Overview of the PJM SCED Engines Integration of Demand Response into IT SCED Integration of Demand Response into RT SCED

3. Overview of FERC Order 745 • One of the major key wholesale market competition strategies proposed by FERC is to promote demand response (DR) resources as a source of energy and ancillary services (AS) • On March 15 2011, FERC issued order 745: • Demand Response Compensation in Organized Wholesale Energy Markets • The rule is to ensure that when a DR is dispatched for power balance as an alternative to a generation resource, and is cost effective, that DR must be compensated for full locational marginal price (LMP) • This will lead to improvement to the competitiveness of wholesale energy markets, market efficiency and system operation reliability

4. Overview of FERC Order 745 • Economic DR is required to become price setting • Economic DR will be considered in the power balance equation • Economic DR will be compensated at full LMP • Economic DR will not be required to have telemetry • In PJM • Changes required to implement Order 745 were applied on April 1, 2012 • Economic DR are modeled and settled at a zonal pnode

5. What is SCED? SCED = Security Constrained Economic Dispatch • Provides PJM Dispatch with a time coupled, optimized least cost dispatch solution • Recognizes system constraint conditions and dispatches generation to control for multiple constraints • Performs joint optimization of energy and reserves • PJM has 2 SCED engines • RT SCED produces a Real-Time dispatch solution • IT SCED produces an Intermediate term dispatch solution (Look Ahead)

6. Intermediate Term Security Constrained Economic Dispatch (IT SCED) • Security Constrained Economic Dispatch and Resource Commitment • Multi-interval solution • Provides 4 solution intervals per IT SCED Case • Solves 15-45 minute intervals over the 2 hour look-ahead period • Solution intervals are time coupled • IT SCED cases solution intervals are synchronized with the clock ¼ hours • i.e. 00, 15, 30 and 45. • IT SCED Functions • Performs real time resource commitment for energy and constraint control • Performs the Three Pivotal Supplier Test • Commits Demand Resources for energy (Economic DR) • Recommends real time resources for reserves

7. IT SCED Case Timeline • 3 IT SCED Cases are run for each look ahead period • Each case is executed 5 minutes apart • For the target interval of 2:00 PM • The first case is executed at 1:20 PM and approved at 1:25 PM • The second case is executed at 1:25 PM and approved at 1:30 PM • The third case is executed at 1:30 PM and approved at 1:35 PM

8. Inputs to the IT SCED Engine

9. Real-Time Security Constrained Economic Dispatch(RT SCED) • Security Constrained Economic Dispatch • RT SCED cases are auto executed every 5 minutes or upon demand • Single interval solution • 15 minute look-ahead period • Dispatches energy and reserves - only on online, dispatchable resources • Does not assign Regulation or Inflexible Tier2 • Calculates the energy basepoints and reserve quantities that are sent to generators • Provides basis for LPC Pricing engine

10. Inputs to the RT SCED Engine

11. Integration Of Demand Response in IT SCED • IT SCED (look ahead) solution data is used for commitment and dispatch decisions • Economic DR are evaluated on an individual basis • IT SCED considers Economic DR “Time to Reduce (Notification Time)” and ‘Min Reduction Time” parameters • No dispatcher interaction required for Economic DR Fully automated commit, de-commit, and re-dispatch logic • Specialized Market Database (MDB) logic was created to efficiently dispatch Economic DR • Call On and Call Off Economic DR based on multiple IT SCED cases • Prevent a Economic DR from being called on too early • Re-dispatch Economic DR based off IT SCED case solutions

12. Market Database (MDB) Call On Logic • Economic DR can be called on by the IT SCED case • Any IT SCED case in the batch of three in any interval can call on an economic DSR • The decision to call on a Economic DR is made based on the count of DSPD commitment of that Economic DR in the previous batch of three IT SCED cases • Call On controlled by database options • Additional MDB Logic to ensure Economic DR is not called on too early (Notification Time Check) or too late

13. DSR Option 1 – DSR Previous Batch Commit Count The DSR should be committed for the target interval# “X” by the current IT-SCED, AND The DSR should be also committed for either target interval# “X” OR target interval “X+1” in at least “N” number of the IT-SCED cases in the previous IT-SCED batch (where N <= 3). “N” is an option setting. This condition makes sure that the DSR has been consistently committed for multiple consecutive time periods by the past “N” IT-SCED cases.

14. DSR Option 2 – DSR Same Interval Commitment • “DSR Same Interval Commitment” set to 0. Since DSR1 is committed in those intervals, the DSR will be considered as a call-on candidate for interval 12:15. That is, with the DSR being committed for two consecutive intervals, i.e., 12:00 and 12:15 across two cases from the previous batch; it’s safe to believe that the DSR should be committed. • “DSR Same Interval Commitment” is set to 1, DSR will no longer be called on for 12:15 interval, although it is committed for interval #1 of case 4. This is because the two intervals in the previous batch for which the DSR has been committed do not belong to the same interval# (case 1 commits the DSR for 12:00 which is interval #1 and case 2 commits the DSR for 12:15 which is interval #2).

15. Market Database (MDB) Call Off and Re-dispatch Logic • Market Database (MDB) Call Off Logic • Similar to DSR Call On Logic with separate MDB options • DSR can be called off only in the first interval of IT SCED case. Any IT SCED case in the batch of three can call off a DSR. • Economic DR Re-dispatch Logic • DSR can be re-dispatched only in target interval X (MDB Option either 1 or 2) and only by the first IT SCED case in the batch of three. • Target interval of the current IT SCED case must be greater than time T when this DSR was last time dispatched or re-dispatched. • DSR should have been committed by the engine in first three intervals of this case.

16. Integration Of Demand Response in RT SCED • Economic DR are not committed/decommited or re-dispatched by the RT SCED Engine • Economic DR are included in power balance and have the ability to set price • Economic DR Aggregation Logic Implemented in RT SCED to improve performance • The aggregated Economic DR will be made up of currently reduced Economic DRs in the dispatch zone • The aggregated Economic DR energy MW is the sum of the reduced MWs of the individual DSRs in the zone • The aggregated Economic DR offer price is the highest price at the dispatch MW point of the individual DSRs in the zone