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Microgrid Market Operations with Distribution System Operators

Mohammad Shahidehpour, IEEE FellowGalvin Center for Electricity Innovation

Illinois Institute of Technology

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n SmartGrid

n Advancedmonitoringandsensingdevices,sophisticatedmeters,andreal-timecommunicationandcontrolinfrastructures.

n Selfgeneration,Controllableloads,Communitystorage

n Microgridswithdistributedgenerationandstoragedevices

n Aggregationofsmallcustomerswithshiftable/curtailableloads

n Largecustomerswithon-sitegenerationandstoragesystemsandcurtailableandshiftable/deferrableloads

Changing Energy LandscapeGoal:EnhancethePowerSystemReliability,Resilience,Economics,Security,andSustainability

n Energy:n LoadShiftingn PeakShavingn Load

Reduction

n DeferredGenerationInvestment

n DeferredT&DInvestment

n ReducedO&MCosts

n DistributionReliability:n LowerSAIFIn LowerCAIDI

n PowerQualityn SystemReliability

n Capacityn AncillaryServicesn LoadFollowingn BalancingEnergy

Economic Social

Benefits of Microgrids/ Active Distribution Systems

Reliability Environmental

§ GreenHouseGasReduction§ HigherRenewablePortfolio

StandardCompliance§ RenewableEnergyCredits

§ EnhancedEnergyIndependence

§ EnhancedEconomicDevelopment

§ ImprovedCustomerSatisfaction

§ ImprovedCustomerChoice

Presumer Values

n Seams between Wholesale and Retail Marketsn Operational

n Scheduling Practices and Protocols n Retail and Wholesale Coordinationn Impact of Voltage Level on Load Aggregation/Demand Responsen Distribution Congestion Management

n Pricing Mechanismn Optimal Scheduling Practicesn Bus LMPs versus Distribution LMPsn Rate-Setting Process/Retail Tariffsn Distribution Charges

Microgrid Market Challenges

Bulk Power Products

• Day-Ahead Energy• Real-Time Energy• Balancing Energy• Non Spinning Reserves• Spinning Reserves• Regulation

Capability Data/Telemetry

DispatchInstructions

DSO Data

• Generation/Load Data• Time of Use• Critical Peak Price• Dynamic Pricing• Commercial/Industrial Curtailment

Contracts• Direct Load Control Options• Etc

Bulk Power Limits

• Pmax , Pmin• Ramp Rate• Min/Max Up & Down Time• Incremental Cost Curve

DSO :Closing the Gap with ISO (Retail and Wholesale Operations)

BulkPowerMarkets

DSODispatch&Operations

Microgrid

Substation

TransmissionOperator

LargeGenerators

Substation

PCC

MicrogridSubstation

DSO as a Partner to Microgrids / Presumers

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CommunityMicrogridInChicago

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DSO’s Decision Making Model

ISO’s Operation Model

DSO Model

Microgrids/Load Aggregators with DR Flexibility

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DSO’s Decision Making Model

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ISO’s Day-Ahead Operation with DSO

n GenerationCapacityCostSavingsn AnnualSavings perMWofDR:$40K- $120Kn NPV:$300K- $900KperMWofDR

Note:NPVCost ofaCT~$600KperMW

n EnergyCost Savingsn AfewthousanddollarsperMWofDRperyearn NPV Range:$50K - $200K perMWofDR

n T&D CostSavingsn Samplequotes (differentamongRegions)

n HighAnnual SavingsNPV:$1.5MperMWofDRn LowAnnual SavingsNPV:$200KperMWofDR

n Savings/Revenues fromAncillaryServicesn AfewthousanddollarsperMWofDRperyearn NPVRange:$50K- $200KperMWofDR

n TotalCostSavings perMWofDRn NPV:$600K- $2.8MperMWofDR

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

Generation T&D EnergyCost AncillaryServices

$K

DR Benefits Offered by DSO

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

$90.00

$100.00

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LMP($/M

Wh)

HouroftheDay

AverageSummerDayRTLMP(Anaheim;June-September)

AverageofHoursEnding 1through8:$20.50AverageofHoursEnding14through21:$47.71

Potential Impact of Summer DR : • Fixed DR Schedule: $26,000/MW DR• Optimal DR Schedule: $49,000/MW DR

Load Shifting Benefits