5/22/20151 Northwest Power & Conservation Council Power Committee Over-generation and Negative Energy Prices – a work in progress Jeff King September 21,

NorthwestPower andConservation

Council


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04/18/23 1

Northwest Power & Conservation Council Power Committee

Over-generation and Negative Energy Prices – a work in progress

Jeff King

September 21, 2010


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04/18/23 2

Six episodes of low prices in recent years

-50-40-30-20-10

0102030405060708090

1001/

1/20

00

1/1/

2001

1/1/

2002

1/1/

2003

1/1/

2004

1/1/

2005

1/1/

2006

1/1/

2007

1/1/

2008

1/1/

2009

1/1/

2010

MId

-C (

$/M

wh

)

Minimum for day Spurious data (green) Valid data

(red)


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Causative factors:

• Development of economic must-run generating capacity in advance of need.

• Exacerbated by California RPS delivery requirements not mandating within-hour delivery of energy with renewable energy credits.


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Resulting operational problem:

• Simultaneous high output from two variable resources, Hydropower and Windpower, during periods of low load Wind generation economically displaces hydro because of negative variable

operating costs from federal production tax credits and renewable energy credits)

Water is held back to the extent possible, but spill is necessary because of lack of load, or because all hydro units are operating at full capacity.

Spill is constrained by dissolved gas (nitrogen saturation) limits.Contributing factors include southbound intertie congestion and operating

slow-response thermal resources.

• Because wind could be curtailed, an economic solution is possible, but would involve owners of carbon-free hydro generation paying the owners of carbon-free wind generation to curtail

04/18/23 5

June 2010 (Through 6/15)

-40

-30

-20

-10

0

10

20

30

6/1 6/3 6/5 6/7 6/9 6/11 6/13 6/15

$/M

Wh

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

MW

BPA BA Hydro generation (MW) BPA BA Wind generation (MW)

Mid-C hourly low ($/MWh) BPA BA Thermal generation (MW)

PNWE native load (MW)


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Related issues

• Some negative:Increased cost of renewable resources to meet PNW RPS needsIncreased cost of balancing reservesSub-optimal resource dispatch (?)Lower surplus revenues for resource-long utilitiesIncreased capacity revenues may be needed to justify construction of new thermal

resources

• Some positive:Development of more cost-effective resources, overallReduced need for transmission developmentLocal economic benefitsInvestment benefitsReduced cost for resource-short utilitiesGenerally lower carbon production


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We are attempting to forecast the possible frequency and magnitude of over-generation/low-price events

0

2000

4000

6000

8000

10000

12000

14000

2010 2015 2020

Inst

alle

d w

ind

capa

city

(MW

) 6th Plan Wind +6000 MW OR/WA Wind

6th Plan Wind +3000 MW OR/WA Wind

6th Plan Wind

04/18/23 7


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Preliminary results: Q2 hrs <$5/MWh (Indicative, not absolute)

11

0 0

117

18

11

35

43

0

5

10

15

20

25

30

35

40

45

50

2010 2015 2020

Occ

ura

nce

s

6th Plan

6th Plan +3000

6th Plan +6000


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Preliminary results: Effect on Q2 average Mid-C prices

32.12

52.99

62.97

32.12

52.36

62.18

32.12

50.18

58.30

$0

$10

$20

$30

$40

$50

$60

$70

2010 2015 2020

$/M

Wh 6th Plan

6th Plan +3000

6th Plan +6000


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04/18/23 10

Brainstorm remedies I• Reduce rate of variable generating capacity development

Encourage development of firm low-carbon resourcesCurtail demand

• Increase loads during critical periodsLoad shifting

• Water heaters• Electric vehicles

Expand export capacity• More responsive intertie capacity release market• Upgrade intertie capacity• Reduce impact of CAISO congestion pricing

• Augment spill capabilityImprove dissolved gas controlsRelax dissolved gas standardsDevelop alternative energy dump devices


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04/18/23 11

Brainstorm remedies II• Expand curtailment of wind generation during critical

periods• Increase system storage

Additional in-river storage (e.g., raise reservoir elevations)Distributed storage (e.g., batteries)Develop central storage (e.g., pumped hydro storage)

• Reduce slow response thermal unit outputRetrofits to lower minimum operating levelsSeasonal shutdowns (may requires complementary fast response resources)

• Reduce negative price signalRevised variable resource incentive structure (e.g., fixed incentives)Expand RPS credit to resources used to balance variable RPS resources


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04/18/23 12

Where do we go from here?

1. Complete analysis of future frequency and magnitude of over-generation/low price events under various assumptions1. Extent of wind development2. Export capability3. Hydro conditions4. Native load

2. Describe issues and possible consequences3. Lay out possible remedies4. #3 & 4 to address policymaker audience5. Participate in Bonneville’s proposed series of workshops

to follow last week’s report on the June 2010 over-generation episode

Documents

5/22/20151 Northwest Power & Conservation Council Power Committee Over-generation and Negative Energy Prices – a work in progress Jeff King September 21,