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Evolution of Electricity Trading & System Reliability in Energy Sector

Explore NERC's shift from transmission to local generation, market evolution, rules on reliability, and challenges faced in system operations. Learn about entity registration, peer pressure for compliance, and implications for the energy market.

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Evolution of Electricity Trading & System Reliability in Energy Sector

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  1. NERC

  2. Then Integrated Transmission to get local generation to local loads Generation to meet fixed reliability targets Long pay backs Expenditure ‘smoothing’ Generation expansion process slow Now Fractured Transmission to connect new generators Generation planned to maximize profits Short paybacks Loss of fuel diversity Lots of generators being built quickly System Planning

  3. New Gas-Fired Capacity Added During 1998 to 2007 as a Percent of 1998 Total Capacity

  4. Then Bundled High degree of coordination Few wholesale transactions Limited entities Now Illegal to discuss transmission with generators (unless in public forum) Many, many transactions Numerous entities System Operations

  5. Then Economy sales used ‘split savings’ Emergency transactions were generally capped at a fixed rate Number of and distance of transactions generally small Typically two parties Now Charge what the market is willing to pay Lots and lots of transactions Distance not an issue (contractually) As many as 17 parties How is Electricity Traded?

  6. Electricity Transactions • Must define and register all entities and their roles • All transactions must be electronically ‘tagged’ • Reliability Coordinators formed to oversee wide area transactions

  7. Then Fixed number of entities Peer pressure, voluntary compliance to rules Reliability chosen over commerce Now More players almost daily Need for mandatory compliance – legislation pending Reliability important to all (but big $ sure is tempting to some….) NERC

  8. Reliability Implications of the ‘New World’ • Mixed results • Breakdowns in California, Pacific Northwest, Desert Southwest • Smooth transition in PJM and Texas • Lots of generators being built

  9. Maintaining System Reliability • Peer pressure no longer sufficient • Reliability rules must be mandatory • But must not limit market response • NERC continually assesses current and future system reliability

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