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Congestion Management Settlement Credits. December, 2002. Market Design Principles. The price of energy at each time and place should reflect the marginal cost of producing or not consuming one more unit of energy (at that time and place) - PowerPoint PPT Presentation
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Congestion Management Settlement Credits
December, 2002
22
Market Design Principles
• The price of energy at each time and place should reflect the marginal cost of producing or not consuming one more unit of energy (at that time and place)
• Dispatchable market participants should be compensated for the effects of constraints
33
Congestion
Occurs when physical capability of the transmission system cannot meet market
requirements
Operating Profit
55
Operating Profit
• Operating Profit is the difference between operating cost and revenue
• Market Rules written assuming participants bid and offer based on marginal benefit/cost
• Marginal Cost - Cost of producing next MW• Marginal Benefit - Benefit of consuming next
MW
66
OP = Revenue - Cost
Quantity (MW)Quantity (MW)
MCP = 20MCP = 20
Price ($/MWh)Price ($/MWh)
MQSI=60MQSI=60100100
1515
1010
55
2525
3030
808060604040202000
OP+OP+OP+OP+
OP+OP+
77
Skill Check
88
Skill Check• Generator A offer:
• 0-20 MW $15• 21-30 MW $25• 31 - 40 MW $100
Dispatched to 30 MW
• Load B bid:• 0-10 MW $1,000• 11-20 MW $500• 21-30 MW $20
Dispatched to 20 MW
If MCP is $30, what is the OP for A and B?
Congestion Management Settlement Credits
1010
Congestion Management Settlement Credit
• CMSC payments are based on the difference between the Operating Profit that would result from the Market Schedule and Operating Profit resulting from the Dispatch Instruction
OP (MQSI) - OP (DQSI)Where MQSI = Market Quantity Scheduled for Injection
DQSI = Dispatch Quantity Scheduled for Injection
1111
Market Schedule
Requirement is Requirement is 190 MW190 MW• Gen 1: 100 MWGen 1: 100 MW• Gen 2: 90 MWGen 2: 90 MW• MCP $20MCP $20• GEN 3: does not runGEN 3: does not run
Region 2Region 2Region 1Region 1
nonotransmissiontransmission
line limitline limit
Generator 3Generator 3
100 MW100 MW$25$25
LoadLoad
190 MW190 MW
Generator 1Generator 1
100 MW100 MW$15$15
Generator 2Generator 2
100 MW100 MW$20$20
1212
Transmission Congestion
Requirement is Requirement is 190 MW190 MW• Gen 1: 100 MWGen 1: 100 MW• Gen 2: 50 MWGen 2: 50 MW• Gen 3: 40 MWGen 3: 40 MW• MCP $20MCP $20
Generator 1Generator 1
100 MW100 MW$15$15
Generator 2Generator 2
100 MW100 MW$20$20
Generator 3Generator 3
100 MW100 MW$25$25
LoadLoad
190 MW190 MW
Region 2Region 2Region 1Region 1
150 MW150 MWtransmissiontransmission
line limitline limit
1313
CMSCFor Generator 2 in this case:MQSI = 90 Offer = $20DQSI = 50 MCP = $20
CMSC = OP(MQSI) - OP(DQSI) = (MCP-Offer) x MQSI - (MCP-Offer) x DQSI
= (20-20) x90 - (20-20) x 50= 0 - 0= $0
1414
CMSCFor Generator 3 in this case:MQSI = 0 Offer = $25DQSI = 40 MCP = $20
CMSC = OP(MQSI) - OP(DQSI) = (MCP-Offer) x MQSI - (MCP-Offer) x DQSI
= (20-25) x 0 - (20-25) x 40= 0 - (-$200)= $200
1515
Gen 1- Constrained Off
Requirement is Requirement is 190 MW190 MW• Gen 1: 95 MWGen 1: 95 MW• Gen 2: 55 MWGen 2: 55 MW• Gen 3: 40 MWGen 3: 40 MW• MCP $20MCP $20
Generator 3Generator 3
100 MW100 MW$25$25
LoadLoad
190 MW190 MW
Region 2Region 2Region 1Region 1
150 MW150 MWtransmissiontransmission
line limitline limit
95 MW limit95 MW limitGenerator 1Generator 1
100 MW100 MW$15$15
Generator 2Generator 2
100 MW100 MW$20$20
1616
Constrained Off PaymentGenerator 1
• Market Schedule: 100 MW• Dispatch : 95 MW• Offer: $15 /MWh• MCP: $20 /MWh
CMSC= OP(MQSI) - OP(DQSI) = (MCP-Offer) x MQSI - (MCP-Offer) x DQSI = (20-15) x 100 - (20-15) x 95 = $25
1717
Gen 2 - Constrained Off
Requirement is Requirement is 190 MW190 MW• Gen 1: 95 MWGen 1: 95 MW• Gen 2: 55 MWGen 2: 55 MW• Gen 3: 40 MWGen 3: 40 MW• MCP $20MCP $20
Generator 3Generator 3
100 MW100 MW$25$25
LoadLoad
190 MW190 MW
Region 2Region 2Region 1Region 1
150 MW150 MWtransmissiontransmission
line limitline limit
9595MWMW
100100MWMW
Generator 1Generator 1
100 MW100 MW$15$15
Generator 2Generator 2
100 MW100 MW$20$20
1818
Constrained Off PaymentGenerator 2
• Market Schedule: 90 MW• Dispatch : 55 MW• Offer: $20 /MWh• MCP: $20 /MWh
CMSC= OP(MQSI) - OP(DQSI) = (MCP-Offer) x MQSI - (MCP-Offer) x DQSI
= (20-20) x 90 - (20-20) x 55 = $0
1919
Constrained On PaymentGenerator 3
• Market Schedule: 0• Dispatch : 40 MW• Offer: $25• MCP: $20 /MWh
CMSC= OP(MQSI) - OP(DQSI) = (MCP-Offer) x MQSI - (MCP-Offer) x DQSI
= ($20-$25) x 0 - ($20-$25) x 40 MW = $200
Constraint Payments
When Actual Quantity Different than Dispatch Quantity
2121
Gen 1- Constrained Off
Requirement is Requirement is 190 MW190 MW• Gen 1: 95 MWGen 1: 95 MW• Gen 2: 55 MWGen 2: 55 MW• Gen 3: 40 MWGen 3: 40 MW• MCP $20MCP $20
Generator 3Generator 3
100 MW100 MW$25$25
LoadLoad
190 MW190 MW
Region 2Region 2Region 1Region 1
150 MW150 MWtransmissiontransmission
line limitline limit
95 MW limit95 MW limitGenerator 1Generator 1
100 MW100 MW$15$15
Generator 2Generator 2
100 MW100 MW$20$20
Actually produces 50 MW
2222
Constraint Payments
MQSI = 0 MW, DQSI=40 MW, AQEI =50MWMCP = $20 Offer = $25
CMSC = OP (MQSI) - MAX [OP (DQSI), OP (AQEI)]= (20-25) x 0 - MAX [(20-25) x 40, (20-25) x 50]= $0 - MAX [$-200, $-250]= $-(-200)= $200
2323
CMSC for a Dispatchable Load
• Load may be dispatched off or on• Any time constrained and unconstrained are
different, possibility exists for CMSC
2424
CMSC for a Dispatchable LoadE.G.• Load A bids for 100 MW at $2,000• Market Clearing Price = $100• Load A is dispatched to only 75 MW• At a bid price of $2,000 Load A will be scheduled by the unconstrained algorithm for all 100
MW
2525
CMSC for a Dispatchable Load• Bid = $2,000 MCP = $100• MQSI = 100 MW, DQSI = 75 MW• CMSC = OP(MQSI) - OP(DQSI)
= ($2,000 - $100) x 100 - ($2,000 - $100) x 75)
= $1900 x 100 - $1900 x 75 = $47,500
• The lost Operating Profit is $47,500
2626
Negative CMSC
• CMSC payments bring the participant back to the market schedule operating profit
• Generally CMSC payments will be a top-up to restore operating profit
• Sometimes the schedule would lead to lower profit than dispatch instructions
2727
CMSC
• CMSC payments bring the participant back to the market schedule operating profit
• While CMSC can be negative, it is more often a payment to participants
• The cost of CMSC is recovered from loads based on their activity in the market
