Download - Capacity Market
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 1
METU
Capacity Market
C
apa
city
Mar
ket
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 2
METU
Capacity Market
Operating Reserves
Main Duty of the System Operator
Main duty of the system operator is to keep
operating the system always in normal andsecure operating state by maintaining supply-demand balance
Basic principle for maintaining supply-demand balance:The system operator must always have asufficient amount ofoperating reserve
against sudden unexpected contingencies
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 3
METU
Capacity Market
Generation System: Operating reserve in terms of demand;
Operating reserve
Units in service
Supply-Demand Balance and Operating Reserves
Operating reserve is measured in terms
of percentage of the overall generatingcapacity in the system
Minimum Limits for Operating Reserve:
In Planning: 10-30 % In Operation: 10 %
300 MW 100 MW
300 MW
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 4
METU
Capacity Market
Generation System: Operating reserve in terms of demand
Operating reserve300 MW
100 MW
300 MW
Units in service
Types of Operating Reserves
Keeping a plant as hot or cold operatingreserve is something that incurs a costto the party who benefits from this
service
In principle operating reserves may be
classified in two groups; Hot operating reserves, those
plants, which is kept ready to put inservice immediately,
Cold operating reserves, thoseplants, which is kept ready, but canbe put in service within 10-60minutes, following the order
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 5
METU
Capacity Market
Ordering of Operating Reserves
Operating Reserve Markets
Plants in Operating Reserve Market are
ordered with respect to their; Full or partial capacity kept in
operating reserve state, Quickness of response: time
duration needed for the plant to getinto service following the order (fueltype and being in hot orcold
states determines quickness), Sureness in availability: Certainity inavailability (price will depend uponthis certainity)
3 x 100 MW 2 x 100 MW
300 MW
Operating reserves
Units in service
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 6
METU
Capacity Market
Cost of Operation ReservesTerms in Operating Reserve Cost
In principle, cost of an operating reserve is the
same as capacity cost, which comprises oftwo components; Fixed Capacity Cost, Variable Capacity Cost
Varible Capacity Cost here, however, unlikethe one that has been described earlier, doesnot include the fuel cost,
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 7
METU
Capacity Market
Cost of Operation ReservesTerms in Operating Reserve Cost
In principle, cost of an operating
reserve is the same as capacity cost,which comprises of two components; Fixed Capacity Cost, Variable Capacity Cost
Varible Capacity Cost here, however,does not include the fuel cost
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 8
METU
Capacity Market
Cost of Operation ReservesVariable Capacity Cost - VCC
Like Fixed Capacity Cost, VCC is measured in
terms of; $ / MWh or $ / kWy
Variable Capacity Cost - VCC of a plant is the
same as the Operation and Maintenance Cost,i.e.
VCC = OPC + MC= OMC
where, VCC is the Variable Capacity Cost,OPC is the Operation Cost,OMC is the total Operation and
maintenance Cost,MC is the Maintenance Cost
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 9
METU
Capacity Market
Average Capacity Cost
Fixed Capacity Cost - FCC and Variable Capacity
Cost - VCC of a plant may be combined to yieldthe average capacity cost of a plant;
ACK= FCC + VCC . c
ory = b + ax
where, ACkis the average capacity cost of the plant in$ / MWh or in $ / kWy,
FCC is the Fixed Capacity Cost,VCC is the Variable Capacity Cost,cf is the combination coefficient, called the
capacity factor
Cost of Operation Reserves
Note that Fuel Cost term -FUC does not exist in VCC
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 10
METU
Capacity Market
The Effect of Operating Reserves on Competition
In that respect, Operating Reserves maybe regarded as available excess capacity
Minimum Operating Reserve Requirement
In principle, a competitive market requires
an environment, where the availablecapacity exceeds demand
It is widely accepted practice that when
the available capacity exceeds demand byonly 10 %, a competitive market will beestablished and it will be possible to keepthe price of the most expensivegeneration at 100 USD / MW, i.e. 10 Cents
/ kWh level
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 11
METU
Capacity Market
The Effect of Operating Reserves on Price
In that respect, Operating Reserves may be
regarded as available excess capacity
Minimum Operating Reserve Requirement
In principle, a competitive market requires an
environment, where the available capacityexceeds demand so that the customer has achance for choice
It is widely accepted practice that when theavailable capacity exceeds demand by only10 %, a competitive market will beestablished and it will be possible to keep
the prices of the most expensive generationsat 100 USD / MW, i.e. 10 Cents / kWh level
Karakaya HPP, 188 MW
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 12
METU
Capacity Market
The Effect of Operating Reserves on Price
Price Spikes
As consumption increases with respect todaily load curve, supply becomes tighter
System operator then finds himself in adifficult situation that the operating
reserves run short and he can no longermaintain 10 % operating reserves
Off-Peaklevel
Peaklevel
TotalDemand(M
W)
Time (Hours)
Summer
Winter
The system operator then starts offering
higher prices for both the committedplants and reserves, driving up the prices
In other words, prices follow a trajectory(not exactly but) similar to the daily
loading curve
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 13
METU
Capacity Market
The Effect of Operating Reserves on Price
Price Spikes
Off-Peaklevel
Peaklevel
PowerDemand
(MW)
Time (Hours)
Summer
Winter
The last alternative is rather severe, andmay induce some legal consequencesagainst the customer (utility)Hence the utility must compare the legal
consequences and penalties to bearised and the price of electricityBefore deciding on load shedding
Price paid by the system operator to
operating reserves committed real-timesets an upper limit on price in the market
High prices in Forward Agreements
(Hedging) induce investment
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 14
METU
Capacity Market
The Effect of Operating Reserves on Price
Price Spikes
Off-Peaklevel
Peaklevel
PowerDemand
(MW)
Time (Hours)
Summer
WinterIn case the operating reserves run shortand prices drive up, customers (utilities)confront with three alternatives;
Letting the system operator purchase
power for them in real-time in terms ofreal-time spot prices,
Making Forward Agreements (Hedging)with suppliers and purchase powerfrom those suppliers, in order not to beinfluenced by price spikes,
Shedding the load within the period the
price is high
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 15
METU
Capacity Market
Trakya Natural Gas Plant 477 MWWhat is Self-Provision ?Self-Provision of Operating Reserves
There are two types of operating reservesin terms of their sources; Independent plants exclusively kept,
committed and operated as operatingreserves. In this case, commercialoperating reserve service is providedonly by these plants,
Self-providing plants with a certainpercantage of their capacity kept andsold as operating reserve to systemoperator (not to costumers !).
Self-provision is condition of providingboth energy and operating reserve
services by the same plant
Each self-providing plant participates inoperating reserve service by its own percentage
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 16
METU
Capacity Market
Why self-provision is preferred ?The need for Self-Provision
Plants may not be fully convinced
that a commercial operatingreserve service will work properly,when needed,
They may not be satisfied with the
some aspects of the service, suchas; quality, price, quickness andreadiness,
Plants may be in difficulty in
selling some part of theirproduction within some operatingperiods, so that they may prefer tooffer the capacity corresponding
to this part as operating reserve
Kdz. Ereli Natural Gas Plant
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 17
METU
Capacity Market
Criterion
A Simple Criterion for Self-Provision
Self provision is to be preferred, when;
There is a surplus capacity that can be
sold in terms of either;a) energy
orb) capacity
KemerkyP = 630 MW,Capacity = 2392 GWh (1999), 2922 GWh (2000)
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 18
METU
Capacity Market
Criterion
A Simple Criterion for Self-Provision
Self provision is to be preferred, when;Profite < Profitc
where,Profite =Pe (Pc+ Penergy+ PO&M)
Profitc=Pnl (Pc + PO&M)
or
Pe (Pc+ Penergy+ PO&M) < Pnl (Pc+ PO&M)or
Pe Penergy < Pnl
where,
Profite and Profitcare profits to be earned byelectricity an capacity trading,
Pe, Pc, Penergy, Po&m, Pnl,are electricity, capacity, energy, operating andmaintenance, and the no-load operating prices,
respectively
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 19
METU
Capacity Market
Factors Determining Price of Operating Reserve
Pricing of Operating Reserves
Factors determining price of operating reserve
service are; Capacity factor (percentage of rated power x
duration of allocation),
Quickness of response, Certainity of availability, Certainity of order, Early ordering,
Start-stop expenditures of the plantUnits of operating reserve service is the same asthat of energy, i.e. kWh or MWh, as it depends bothon capacity allocated (MW) and duration (h)
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 20
METU
Capacity Market
Allocation FactorDefininiton
Allocation Factoris a measure of the
percentage of capacity service allocatedto customer
Allocation Factor is expressed as;
= ( P / Pr) * ( t / T ) (unitless)
where, is the allocation factor,P is the power allocated to customer,Pris the total rated power of theplant,t is the total duration of service(hours),T is the overall duration of theavailability of plant (hours)
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 21
METU
Capacity Market
Capacity FactorDefininiton
Capacity Factoris the ratio of the total
energy supplied to the total capacityallocated
Capacity Factor may be expressed as;
c = total energy supplied/total capacity
allocated(a.f. x rated power)= P(t) dt / (a.f. x rated power)= Area under the curve / overall
rectangular area
= Area under the curve / 4000 x 24where, energy supplied is the total energy
supplied during the allocated serviceperiod,total capacity allocated = a.f.xrated power
TotalDemandP(t)(MW)
500
1000
1500
2000
2500
3000
3500
4000
0 2 4 6 8 10 12 14 16 18 20 22 24
Time (Hours)
0
Energy supplied
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 22
METU
Capacity Market
Capacity FactorDefininiton
Capacity factor is not a concern for the
producer at all.The producer simply allocates the orderedand committed portion of the plant and doesnot concern whether this portion is properly
utilized by the consumer or not. Properutilization of this portion is merely aproblem of the consumer.
In other words, capacity factor is a problemof the customer, allocation factor is aproblem of the supplier.
500
1000
1500
2000
2500
3000
3500
4000
0 2 4 6 8 10 12 14 16 18 20 22 24
Time (Hours)
0
Energy supplied
TotalDemandP(t)(MW)
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 23
METU
Capacity Market
Capacity FactorExample
Capacity Factor of the load shown on the
right hand side may be expressed as;c = total energy supplied / total capacity
allocated(a.f. x rated power)= P(t) dt / (a.f. x rated power)
= Area under the curve / overallrectangular area
= Area under the curve / 4000 x 24= 65 000 MWh / 96 000 MWh = 0.94
500
1000
1500
2000
2500
3000
3500
4000
0 2 4 6 8 10 12 14 16 18 20 22 24
Time (Hours)
0
Energy supplied
TotalDemandP(
t)(MW)
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 24
METU
Capacity Market
The Effect of Capacity Factor on Price
The Effect of Allocated Capacity
Percentage price(*) of operating reserve
per MW decreases as the allocatedcapacity increases--------------------------------(*) (Price / Nominal Price) . 100 (%)
Plant owner prefers higher allocatedcapacities, since fixed and variablecosts of service decrease with therating (size) of the plant
Principle of Economies of Scale
90
110
120
130
140
150
160
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
100
Allocated Capacity (%)
PercentagePrice
(Cent/kWh)
80
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 25
METU
Capacity Market
The Effect of Quickness of Response
The Effect of Quickness of Response
Quickness of response requires high
flexibility and readiness of the plantwhich increases the price
Log (Response Time)(minutes)
0.8 1.2 1.6 2.0 2.4 2.8 3.2
70
80
90
110
120
130
140
150
100PercentagePrice
(Cent/kWh)
T = 3.16 103.16minutes = 1 day
T = 1.6 101.6= 40 minutes
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 26
METU
Capacity Market
The Effect of Certainity of Availability
The Effect of Certainity of Availability
Certainity of availability (Sureness) is
a parameter influencing the price ofservice
Price of an operating reserveincreases with the certainity ofavailability
PercentagePr
ice(Cent/kWh)
Certainity of Availability (%)
70
75
80
85
90
100
0.80 0.90 1.000.75 0.85 0.95
95
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 27
METU
Capacity Market
Certainity of Availability
What is Certainity of Availability ?
Assume that the operating reservegroup shown in the figure has made
an agreement with Customer-A onthe basis of definite availability, i.e.100 % availability
Operating reserve service with 100 % availability
Assume that the contingency risk of
this customer needing thisoperating reserve service is only 2%, i.e. the probability of not needingthis operating service is 98 %
Hence, it is possible to make asimultaneous (cascade) agreementwith Customer-B on the basis of 98% availability, at a reduced price
Transmission
System
Customer-B
R-2Op. Reserve Market - 2
Operating Reserve Group
Customer-A
R-1Op. Reserve Market - 1
(Please note that, Customer-Bmay not receive full operatingreserve service when Customer-A is serviced)
Transmission
System
Supplier
Cascade operating reserveservice with 98 % availability
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 28
METU
Capacity Market
The Effect of Certainity of Order
The Effect of Certainity of Order
Certainity of order (probability of
ordering) is a parameter influencingthe price of service
Price of an operating reservedecreses as the uncertainity of orderis reduced Per
centagePrice(Ce
nt/kWh)
Certainity of Order (%)
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
80
90
110
120
130
140
100
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 29
METU
Capacity Market
T = 3.25 103.25minutes = 29 Hours
T = 1.0 101 = 10 minutes
The Effect of Early Ordering
PercentagePrice(Ce
nt/kWh)
The Effect of Early Ordering
Early ordering provides plant
operator chance to make a schedulefor plant allocation which reducesthe price
1.0
70
80
90
110
120
130
140
150
100
Log (early ordering period)(minutes)
1.5 2.0 2.5 3.0 3.5
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 30
METU
Capacity Market
Superposition of Capacity Services
Capacity services supplied totwo or more customers maybe joined together gainingeconomy in the installed
capacity of the operatingreserve
TotalD
emandP(t)(MW)
0 2 4 6 8 10 12 14 16 18 20 22 24
5
10
15
20
25
30
35
40
2 4Time (Hours)
Demand (Capacity) requested by thefirst customer
Demand (Capacity) requested by thesecond customer
Total Demand = 40 + 40 = 80 MW
Superposition of CapacityServices
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 31
METU
Capacity Market
Superposition of Capacity Services
Please note that, the loads are
diversived, hence their total doesnot make 80 MW, i.e. To
talD
emandP(t)(MW)
-
10
20
30
40
50
60
70
80
90
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Total Demand (Capacity) 76 MW < 80 MW
(P1 + P2) (t)max< P1 (t)max+ P2(t)max
Implying that the supplier does notneed to supply the sum of themaximum demands, but maximum
of sum of demands, which is moreeconomical in terms of investments
P1 (t)
P2 (t)
P1 (t) + P2 (t)
Superposition of Capacity Services
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 32
METU
Capacity Market
Linkage among Operating Reserve Markets
If no linkage is establishedamong operating reserve
markets, they will functionsimultaneously, butseparately
This type of architectureresults in higher prices,since unsold services inone market can not flowinto the others
An unsold operatingreserve service is nothingbut keeping the plant idle,i.e. just waste of resource
Operating Reserve
Group -3
Operating Reserve
Group -2
Customer-2 Customer-3
Operating ReserveGroup -1
Customer-1
Transmission
System
Supplier - 3Supplier - 2Supplier - 1
R-2
Op. ReserveMarket - 2
R-3
Op. ReserveMarket - 3
R-1
Op. ReserveMarket - 1
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 33
METU
Capacity Market
Forward Cascading
Cascade Linkaging of Operating Reserve Markets
If linkage is establishedamong operating reserve
markets, then will functionsimultaneously, and unsoldservices will flow from onemarket to the others, thus
lowering the pricesIn this case, markets arecleared in sequence,starting from the one with
the highest quality (price)Any surplus service in onemarket will flow to the othermarkets at a reduced price
in a sequence
Operating Reserve
Group -3
Regions
Surplus
Service Flow
Linkage
Operating Reserve
Group -2
Transmission
System
Customer-2 Customer-3
Regions
Surplus
Service Flow
Linkage
Operating ReserveGroup -1
Transmission
System
Customer-1
R-1Op. ReserveMarket - 1
Transmission
System
Supplier - 1 Supplier - 2 Supplier - 3
R-2Op. ReserveMarket - 2
R-3Op. ReserveMarket - 3
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 34
METU
Capacity Market
Some Practical Problems in Cascade Linkaging
If there is a shortage in thelast reserve market R-3, but
not in the others, then pricein R-3 may rise to a levelabove the prices in R-1 andR-2
Markets R-1 and R-2 on theother hand are alreadycleared at a lower price
Inefficient utilization of operatingreserves
Operating Reserve
Group -3
Regions
Surplus
Service Flow
Linkage
Operating Reserve
Group -2
Transmission
System
Customer-2 Customer-3
Regions
Surplus
Service Flow
Linkage
Operating ReserveGroup -1
Transmission
System
Customer-1
R-1Op. Reserve
Market - 1
Transmission
System
Supplier - 1 Supplier - 2 Supplier - 3
R-2Op. Reserve
Market - 2
R-3Op. Reserve
Market - 3
C
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 35
METU
Capacity Market
Merger of Op. Reserve Markets
Solution: Merger of Operating Reserve Markets
The ideal solution is to: increse the strength of
internal linkages, merge all operating reserve
markets in a single market
More efficient, but morecomplicated and difficult tooperate
The extreme model is tomerge the resulting operatingreserve market with theenergy market forming a
single complicated market
Operating Reserve
Group -3
Regions
Operating Reserve
Group -2
Customer-3
Regions
Operating ReserveGroup -1
R-1Op. Reserve
Market - 1
Supplier - 1 Supplier - 2 Supplier - 3
R-2Op. Reserve
Market - 2
R-3Op. Reserve
Market - 3
Transmission
System
Customer-2Customer-1
C it M k t
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 36
METU
Capacity Market
Answer
Can Balancing and Settlement Service be used as
Operating Reserves ?
The answer is No
In principle, operating reserveservices; extend longer-terms, such as few
months to few tears, are relatively cheaper, are received on the basis of
contracts
are short term services, are relatively much more
expensive, are received from the spot market
without any contract
while, balancing and settlement
services;
Transmission
System
Transmission
SystemDistribution
System
Load
PgenPload
TETAS
P = Pgen - P load
Operating ReserveGroup -3
Regions
SurplusService Flow
Linkage
Operating ReserveGroup -2
Transmission
System
Customer-2
R-2Op. Reserve
Market - 2
R-3Op. Reserve
Market - 3
Customer-3
Regions
SurplusService Flow
Linkage
Operating ReserveGroup -1
Customer-1
R-1Op. Reserve
Market - 1
Transmission
System
Supplier -1 Supplier -2 Supplier -3
Wholes
ale
Compa
ny
EUAS
C it M k t
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 37
METU
Capacity Market
The Effect of Operating Reserves on Price
Price Spikes (NYISO) (15.01.2005)
As consumption increases with respect todaily load curve, supply becomes tighter
System operator then finds himself in adifficult situation that the operating
reserves run short and he can no longermaintain 10 % operating reserves
The system operator then starts offeringhigher prices for both the committed
plants and reserves, driving up the prices
In other words, prices follow a trajectory(not exactly but) similar to the load
duration curve
Average Real-Time Priceswithin one-year Period
Hours
200320022001
Please note that; Price curves follow a pattern similar to those of the load
duration curves, i.e. Prices are lower during night periodsand higher during evening periods
Prices were higher in 2003 due primarily to higher fuelcosts,
C it M k t
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EE 710 Electricity Trading, Electrical and Electronics Eng. Dept., METU, Spring 2005, Prof. Dr. Osman SEVAOLU, Page 38
METU
Capacity Market
The Effect of Operating Reserves on CompetitionMinimum Operating Reserve
In principle, a competitive market requires
a an environment, where the availablecapacity exceeds demand
Birecik HPP, 630 MW
Excess capacity is provided in terms of
operating reserves
Spillway
C it M k t
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EE 710 Electricity Trading Electrical and Electronics Eng Dept METU Spring 2005 Prof Dr Osman SEVAOLU Page 39
METU
Capacity Market
The Effect of Operating Reserves on Competition
In that respect, operating reserves may be
regarded as available excess capacity
Minimum Operating Reserve
It is a widely accepted practice that when
the available capacity exceeds demand byonly 10 -15 %, a competitive market will beestablished and it becomes possible tokeep the price of the most expensivegeneration at 100 USD / MW, i.e. 10 Cents /kWh level
Birecik HPP, 630 MW