ERCOTWholesale Market Basics
Module 2Market Operations
2 ERCOT Wholesale Market Basics
Topics
Essential Concepts
Ancillary Services
Congestion Management
Module 2
3 ERCOT Wholesale Market Basics
Topic 1: Essential Concepts Module 2
4 ERCOT Wholesale Market Basics
• Market Structure, Wholesale Concepts and Roles
• Day-Ahead and Operating Day Concepts
Essential Concepts Module 2
5 ERCOT Wholesale Market Basics
Wholesale Market: Zonal Congestion Management
Unbundled Transmission
Bilateral Market
Requirements:
QSE Representation
Balanced Schedules
Portfolio & Unit-Specific Dispatch
Module 2Essential ConceptsMarket Structure, Wholesale Concepts and Roles
6 ERCOT Wholesale Market Basics
Qualified Scheduling Entities (QSEs) submit Balanced Schedules, Ancillary Services Bids and a Resource Plan (if applicable) to ERCOT.
Load Serving Entities (LSEs) provide electric service to retail and wholesale customers. LSEs include Retail Electric Providers, Competitive Retailers, and Non-Opt In Entities that serve load.
Resource Entities (REs) own or control a resource.
ERCOT manages any real-time imbalances during the Operating Period between forecasts and actual demands by deploying balancing energy to QSEs qualified to represent Resources.
Module 2Essential ConceptsMarket Structure, Wholesale Concepts and Roles
7 ERCOT Wholesale Market Basics
ERCOT is here to ensure reliability by:
Resource capacity planning
Real-time transmission management
Procure balancing energy
Issue deployment instructions to units, as needed
ERCOT is similar to an Air Traffic Controller
Module 2Essential ConceptsMarket Structure, Wholesale Concepts and Roles
8 ERCOT Wholesale Market Basics
Qualified Schedule Entities functions:
Submit Balanced Schedules
Submit Ancillary Services Bids
Resource Command and Control
Settle with ERCOT
QSE
All Resource Entities and LSEs must be represented by a QSE
Module 2Essential ConceptsMarket Structure, Wholesale Concepts and Roles
9 ERCOT Wholesale Market Basics
Bilateral Transactions:
A trade agreement between two entities
Bilateral transactions are scheduled with ERCOT
Examples:
1.QSE A sells a block of 50 Mwh (North Zone), to QSE B for Hour-Ending 1100-1300
2.QSE A sells 3 Mw of Responsive Reserve to QSE B for Hour-Ending 1400.
Module 2Essential ConceptsMarket Structure, Wholesale Concepts and Roles
10 ERCOT Wholesale Market Basics
Quantity of Resources and Obligations must Balance
Bilateral Transactions must include Qty, QSE, Zone, Matched with
Counterparty.
Resources: Generation or purchasesObligations: Load or sales
Module 2Essential ConceptsMarket Structure, Wholesale Concepts and Roles
Bilateral Transactions cont’
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QSE Balanced Schedule – Portal Display
Module 2Essential ConceptsMarket Structure, Wholesale Concepts and Roles
ERCOT does not require QSEs to be balanced within each Congestion Zone.
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Balanced, but mismatched
Module 2Essential ConceptsMarket Structure, Wholesale Concepts and Roles
13 ERCOT Wholesale Market Basics
A QSE exporting from ERCOT through a DC Tie export schedule will include that DC Tie export schedule as an Obligation in its Balanced Schedule by using the identifier field indicating the appropriate DC Tie.
Imports include the DC Tie import schedule as a Supply in its Balanced Schedule (as shown below).
Direct Current Tie Transactions
Module 2Essential ConceptsMarket Structure, Wholesale Concepts and Roles
14 ERCOT Wholesale Market Basics
Two commercially operational DC-Ties between ERCOT and the Eastern Interconnection
North (DC_N) located near Oklaunion
East (DC_E) located near Monticello
Three DC-Ties between ERCOT and Operating Authority in Mexico Comision Federal de Electricidad (CFE)
Eagle Pass (DC_S) located near Eagle Pass
Railroad (DC_R) located near McAllen
Laredo (DC_L) located near Laredo
Module 2Essential ConceptsMarket Structure, Wholesale Concepts and Roles
15 ERCOT Wholesale Market Basics
QSE may set obligations equal to supply, and/or schedule BES via ERCOT to meet Obligations*
QSE is NOT to schedule ERCOT ISO as an Obligation for Balancing Energy (only used for RMR)
Resources: Generation or purchasesObligations: Load or sales
Module 2
* Limited by QSE’s collateral with ERCOT
Essential ConceptsMarket Structure, Wholesale Concepts and Roles
“Relaxed” Balanced Schedules:
16 ERCOT Wholesale Market Basics
Resource Plans
Each QSE representing a Resource or Load Acting as a Resource must submit a Resource Plan!!
Let’s Check
Under the Hood!
Module 2Essential ConceptsMarket Structure, Wholesale Concepts and Roles
Plan of how Generation Resources will operate
Due to ERCOT by 4:00 pm of the day-ahead period
Used by ERCOT to determine resource adequacy
Validated against scheduled Portfolio Generation
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Market Structure, Wholesale Concepts and Roles
Day-ahead and Operating Day Concepts
Essential Concepts Module 2
18 ERCOT Wholesale Market Basics
ERCOT Market Timeline
Market Operations
AdjustmentPeriod:Precedes Operating Period
Operating Period: Balancing Energy Clearing Occurs every 15 minutes
Power
Operations
Day-AheadPeriod: 6:00am to 6:00pm prior to Operating Day.
Commercial Operations
Initial Settlement10 days afterOperating Day
FinalSettlement59 days afterOperating Day
True-upSettlement:180 days afterOperating DayAnd/or specificProtocolCriteria is met
Module 2Essential ConceptsDay-ahead and Operating Day Concepts
19 ERCOT Wholesale Market Basics
Day-Ahead Period
6:00AM to 6:00PM on the day prior to the Operating Day (“flow” date)
QSEs submit balanced schedules and ancillary services bids
ERCOT clears Ancillary Services Markets, and publishes results
Adjustment Period
Time between the close of the Day-Ahead Market and the start of the Operating Period
QSEs may modify their schedules and/or bids during this time
Operating Period
Includes the Operating hour (“flow hour”) and the hour prior to Operating hour (look-ahead studies)
Module 2Essential ConceptsDay-ahead and Operating Day Concepts
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Market Timeline & When QSE Schedules Become Binding
DAY AHEAD ADJUSTMENT PERIOD OPERATING PERIOD
1300: A/S Schedules and
A/S Bids LOCKED
1600: Bilateral Energy and Resource Plan
snapshot
End of Adjustment Period snapshot:
Replacement Reserve, Resource Plan, Bilateral Energy
At each ExecutionOf SPD Balancing
Energy Market,Snapshot of QSE
Resource Plan is taken.
1800: End of Day Ahead
Period
Adjustment period begins at 1800 the day before the operating period and ends one hour prior to operating hour
HOUR 1: The operating period begins one hour
prior to the operating hour
HOUR 2: Operating hour
Two hour time period
Resource Plans may be Updated at any time during the
Balancing Energy Market
Essential ConceptsDay-ahead and Operating Day Concepts Module 2
21 ERCOT Wholesale Market Basics
Midnight
Module 2Essential ConceptsDay-ahead and Operating Day Concepts
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Day-Ahead Period Key Times06:00 Forecast and A/S Obligations Information Published11:00 Deadline for Day-Ahead Scheduling (Bilateral, A/S)11:15 Deadline to resolve Day-Ahead Mismatches13:00 Deadline for A/S Capacity Market Bids
Deadline for Adjusted Day-Ahead Schedules13:15 Deadline to resubmit corrected updated schedules13:30 A/S Capacity results & MCPC15:00 Submit updated AS schedule including Self-Arranged and
AS bids selected by ERCOT16:00 Deadline for Resource Plan submittal
Replacement Reserve BidsSystem Lockdown for Day-Ahead Analysis
18:00 Day-Ahead Period complete; start of Adjustment Period
Module 2Essential ConceptsDay-ahead and Operating Day Concepts
23 ERCOT Wholesale Market Basics
Adjustment Period
On the Operating Day, the Adjustment Period is anytime up to one hour prior to Operating (“flow”) Hour when QSEs can alter or remove existing schedules, or submit new schedules for the Operating Hour.
Deadline for QSEs to submit schedules & changes is one hour prior to the “flow” hour. (i.e., deadline for HE1300 is 1100, because HE 1300 begins at 1200).
Module 2Essential ConceptsDay-ahead and Operating Day Concepts
24 ERCOT Wholesale Market Basics
Operating Period is 2 Hours
It starts immediately after the Adjustment Period.
QSE schedules cannot be altered or removed.
−First Hour – system lockdown – allows for system studies for the upcoming flow hour based on QSE schedules
−Second Hour - is the Operating (“Flow”) Hour – real-time monitoring and security analysis
Module 2Essential ConceptsDay-ahead and Operating Day Concepts
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Topic 2: Ancillary Services Module 2
Essential Concepts
Ancillary Services
Congestion Management
26 ERCOT Wholesale Market Basics
Definitions and Requirements
LSE Obligations and Supply Options
Services Exclusively Arranged By ERCOT
Merit-Order vs. Out of Merit
Module 2Ancillary Services
27 ERCOT Wholesale Market Basics
What are Ancillary Services, and why does ERCOT need them?
Generation that is intentionally reserved, in the event it is needed (i.e., a plant that generates 50 Mw of its maximum of 100 Mw has 50 Mw of reserve capacity available)
Reserve capacity can be utilized (converted to energy) to keep the lights on in the event of an unforeseen system disturbance
“Energy Insurance”
Module 2Ancillary ServicesDefinitions and Requirements
28 ERCOT Wholesale Market Basics
As a QSE that schedules load, why do I need to know about A/S?
Market Participants serving load have an A/S Obligation as a “cost of doing business”.
Similar to Auto Insurance: If you own a vehicle in Texas, Liability Insurance is a mandated cost that goes along with owning the vehicle.
Ancillary ServicesDefinitions and Requirements Module 2
29 ERCOT Wholesale Market Basics
Capacity Reserve Services that can be selfarranged by QSEs:
Regulation – provision of Resource capacity to ERCOT for continuous frequency control
Responsive Reserve – unloaded Generation, or Load Resources capable of controlling consumption, which can be deployed
within 15 seconds Non-Spinning Reserve – Off-line or reserved
capacity, or Loads acting as a Resource, capable of deploying within 30 minutes for
at least one hour
Ancillary ServicesDefinitions and Requirements Module 2
30 ERCOT Wholesale Market Basics
Balancing Energy Service:
Awarded by ERCOT to bidding QSEs
Used to balance system wide Load variations with generation
Used to resolve transmission constraints and congestion
Ancillary ServicesDefinitions and Requirements Module 2
31 ERCOT Wholesale Market Basics
System Requirements Annual ProcedureERCOT establishes the methodology for determining A/S system requirements. It is reviewed and approved in the stakeholder process (TAC).
Monthly CalculationSystem-wide requirement is calculated, based on statistical calculations and historical deployments.
“2008-2009 ERCOT Methodologies for Determining Ancillary Service” posted under Key Documents.
Module 2Ancillary ServicesDefinitions and Requirements
32 ERCOT Wholesale Market Basics
OK, what is my share of the ERCOT System Requirements?
It is based on your load relative to total ERCOT load, or Load Ratio Share (LRS).
If you have 10 Mw of Load, and ERCOT has 100 Mw of total load, your LRS is 10%. Your obligation will be 10% of each service that ERCOT requires.
QSE Day-Ahead LRS Obligations are posted each morning by 6AM
Ancillary ServicesDefinitions and Requirements Module 2
33 ERCOT Wholesale Market Basics
Do I have a requirement if I am a QSE that has no load?
No. If you only have bilateral transactions and no load, you will not incur any A/S Obligations, UNLESS……
…you have an EXPORT on the DC Tie. An export is considered load, so if you schedule an export, you can expect to see an A/S Obligation 14 days later.
Ancillary ServicesDefinitions and Requirements Module 2
34 ERCOT Wholesale Market Basics
Definitions and Requirements
LSE Obligations and Supply Options
Services Exclusively Arranged By ERCOT
Merit-Order vs. Out of Merit
Module 2Ancillary Services
35 ERCOT Wholesale Market Basics
A/S Obligation – Load Ratio Share
ERCOT calculates the “load-ratio share” (LRS) of each Load Serving Entity (LSE).
QSE’s Load Ratio Share is the aggregate total of the LSE LRS that it represents.
QSE’s A/S Obligation is its LRS of the Total ERCOT-wide requirement.
Module 2Ancillary ServicesLSE Obligations and Supply Options
36 ERCOT Wholesale Market Basics
Day-Ahead Obligation:
Based on the Load Ratio Share of the Load from the Initial Settlement data, for the Operating Day that is 14 days before the day in which the Obligation is being calculated.
After the Operating Day:
The AS Obligation calculations are adjusted (trued-up) based on the most up-to-date Load Data for each settlement run.
Module 2
Determination of LRS for Settlement
Ancillary ServicesLSE Obligations and Supply Options
37 ERCOT Wholesale Market Basics
A FULL SERVICE QSE
Markets and Schedules WATTSco power generation
Wholesale Supplier and Scheduler for POWERMART and EZWatts, retailers
Qualified to provide Ancillary Services
Provide Power Marketing Services
INTRODUCING!!
Module 2Ancillary ServicesExample – Load Ratio Share
38 ERCOT Wholesale Market Basics
Example: Day-Ahead A/S Obligation for 4/26/08 represents POWERMART [88] and EZWatts [55], LSEs. On April 12, 2008 (14-days ago) the aggregated load for these two LSEs came to:
April 12 Load LRS
Module 2Ancillary ServicesExample – Load Ratio Share
39 ERCOT Wholesale Market Basics
A/S Obligation – For Example!For intervals “hour-ending” 1000 through 1200 the A/S obligations are determined by taking the LRS times each ERCOT-wide obligation, rounded to a whole MW.
Module 2Ancillary ServicesExample – Load Ratio Share
40 ERCOT Wholesale Market Basics
A/S Obligation – For Example!- represents LSE_88 and LSE_55- A/S Obligation = sum of the obligations of LSE_88 and LSE_55:
26-Apr-0426-Apr-04
Module 2Ancillary ServicesExample – Load Ratio Share
41 ERCOT Wholesale Market Basics
Posted by 6 AM one day prior to the Operating Day
Obligation is under “Required MW” column
Legend:DRS: Down Regulation ServiceNSRS: Non Spin Reserve ServiceRRS: Responsive Reserve ServiceURS: Up Regulation Service
Module 2
Portal View of Day-Ahead Obligations
Ancillary ServicesLSE Obligations and Supply Options
42 ERCOT Wholesale Market Basics
What are my options for buying and scheduling Ancillary Services to fulfill my obligation?
QSEs can Self-Arrange: a. Using its own resource b. Purchase from another QSE (A/S Bilateral Trade)
QSEs can purchase from ERCOT at the Day-Ahead MCP for Capacity (MCPC)
Note: Per Protocol Section 4.3.1: QSEs that intend to purchase their obligation from ERCOT MUST schedule a bilateral PURCHASE from ERCOT.
Module 2Ancillary ServicesLSE Obligations and Supply Options
43 ERCOT Wholesale Market Basics
Ancillary Services Sellers
A/S providers must be qualified by ERCOT to provide each A/S
Must keep awarded capacity in reserve
Must meet performance metrics (perform when called upon)
A/SA/S
Module 2Ancillary ServicesLSE Obligations and Supply Options
44 ERCOT Wholesale Market Basics
Ancillary Service Status Deployment ReasonRegulation Up On-Line Immediate Small changes in Frequency
Regulation Down On-Line Immediate Small changes in Frequency
Responsive Reserve On-Line Within a few minutes
Significant deviation in Frequency
Non-Spinning Reserve
Off-LineOrOn-Line
Within 30 Minutes >92 degrees, < 30 degrees, or contingency of resource loss
Target Frequency: 60 Hz
Other Attributes:Day-Ahead Capacity MarketSelected in Merit Order
Module 2
Option to Self-Arrange
Ancillary ServicesLSE Obligations and Supply Options
45 ERCOT Wholesale Market Basics
QSE A ERCOT
Day-Ahead Capacity ResultAward * $ Hourly MCPC
“I will reserve X Mw (awarded qty) of
generation”
QSE A ERCOTMw * $ MCPE (BES)
Deployment on Operating Day
ERCOT-instructed Mw
Module 2
A/S Cash Flows
Ancillary ServicesLSE Obligations and Supply Options
46 ERCOT Wholesale Market Basics
If NO Deployments are issued by ERCOT QSE “A” KEEPS the capacity payment
Also similar to paying auto insurance premium, but not having a claim before the policy expires
QSE A ERCOT
Day-Ahead Capacity ResultAward * $ Hourly MCPC
“I will reserve X Mw (awarded qty) of
generation”
Module 2Ancillary ServicesLSE Obligations and Supply Options
47 ERCOT Wholesale Market Basics
ERCOT charges load QSEs for non-self-arranged obligations
ERCOT remains revenue-neutral!
QSE A(e.g. Resource) ERCOT
How does ERCOT get the money to pay for Capacity?
$$$$
Capacity (MW)
QSE Z(Load)
Capacity (MW)
Module 2Ancillary ServicesLSE Obligations and Supply Options
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Definitions and Requirements
LSE Obligations and Supply Options
Services Exclusively Arranged By ERCOT
Merit-Order vs. Out of Merit
Module 2Ancillary Services
49 ERCOT Wholesale Market Basics
Replacement Reserve Resources planned to be off-line, but available
Deployed for Capacity Insufficiency, Local Congestion
Black Start Widespread black out event
Started without support of the power grid
Contracted by ERCOT annually
Module 2Ancillary ServicesExclusively Arranged By ERCOT
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Reliability Must-Run (RMR)
Resolves local system reliability
Contracted by ERCOT
Otherwise would not be an active resource
Module 2Ancillary ServicesExclusively Arranged By ERCOT
51 ERCOT Wholesale Market Basics
Emergency Interruptible Load Service (EILS)Protocol Section 6.1.13
Special emergency service used as part of a Level 2 Energy Emergency Alert (EEA) to reduce Load and assist in maintaining or restoring system frequency (with the intention to prevent or shorten duration of conditions requiring the EEA)
Provided by Loads capable of reducing their electricity consumption during an EEA
For deployment, all QSEs providing EILS are instructed via a single Verbal Dispatch Instruction (VDI)
Module 2Ancillary ServicesExclusively Arranged By ERCOT
52 ERCOT Wholesale Market Basics
Standing Contract Periods
– February through May
– June through September
– October through January
QSEs representing Load may elect to self-provide part or all of their EILS obligation
ERCOT contracts for EILS capacity through EILS bids and self-provision offers
– Paid as-bid (no clearing price)
The amount of MW procured for an EILS contract period not to exceed 1,000 MW
EILS Procurement
Module 2Ancillary ServicesExclusively Arranged By ERCOT
53 ERCOT Wholesale Market Basics
Definitions and Requirements
LSE Obligations and Supply Options
Services Exclusively Arranged By ERCOT
Merit-Order vs. Out of Merit
Module 2Ancillary Services
54 ERCOT Wholesale Market Basics
Ancillary Services can be awarded in one of two ways:
Merit-Order Based on bids, “stacked” from least to most expensive Market Price for Capacity and Energy is produced
Out-of-Merit Without respect to cost Needed for reliability, regardless of economics Also utilized when no market solution exists
ERCOT NEEDS YOU!
Module 2Ancillary ServicesMerit-Order vs. Out of Merit
55 ERCOT Wholesale Market Basics
System Requirement – 2300 Mw
23002300
1380
Self-Arranged Qty(from A/S schedules)
ERCOT to procure 920 Mw via A/S Capacity Market
Module 2
Day-Ahead A/S Capacity Market Selection Example
Ancillary ServicesMerit-Order vs. Out of Merit
56 ERCOT Wholesale Market Basics
920920
ERCOT moves “up the bid stack” until it reaches the necessary qty. The price associated with that qty set the MCPC. ($2.10 in this example)
Module 2Ancillary ServicesMerit-Order vs. Out of Merit
57 ERCOT Wholesale Market Basics
Out-of-Merit Capacity (OOMC)
Capability of providing additional Balancing Energy Service-more Resources on-line.
Otherwise not selected because of the place (or absence) in the Merit Order bid stack
Out-of-Merit Energy (OOME)
Provision of balancing energy to solve local congestion, or when no market solution exists
Module 2Ancillary ServicesMerit-Order vs. Out of Merit
58 ERCOT Wholesale Market Basics
Balancing Energy (Merit Order)Energy deployed by ERCOT every 15 minutes
Deployed when load forecast is higher or lower than scheduled OR
Also deployed to resolve Congestion
Market Clearing Price for Energy (MCPE)
Module 2Ancillary ServicesMerit-Order vs. Out of Merit
59 ERCOT Wholesale Market Basics
Option to Self Arrange OR Purchase from ERCOT
No Option to Self Arrange: Exclusively provided by ERCOT
Module 2
Summary
Ancillary ServicesMerit-Order vs. Out of Merit
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Who determines daily Ancillary Service requirements?ERCOT
Who schedules Ancillary Services?QSE
What entity does ERCOT allocate Ancillary Services obligations to?
LSE
What is the only instance a QSE may schedule ERCOT as an bilateral energy obligation?
RMR
ERCOT Wholesale Market Operations: Review Module 2
61 ERCOT Wholesale Market Basics
Topic 3: Congestion Management Module 2
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Definitions and Key Concepts
Zonal vs. Local Congestion
Transmission Congestion Rights
Congestion Management Module 2
63 ERCOT Wholesale Market Basics
Managing traffic on the electric grid
When safe operating limits on the transmission system are projected to be exceeded.
ERCOT will take action as the physical flow approaches transfer limits.
– Resources are re-dispatched
QSEs may take actions to mitigate cost impact of congestion.
Module 2Congestion Management Definitions and Key Concepts
64 ERCOT Wholesale Market Basics
Four Congestion Zones
Five CSCs1. South to North
2. North to South
3. North to Houston
4. West to North
5. North to West
Zones and CSCs
NorthWest
SouthHouston
Module 2Congestion Management Definitions and Key Concepts
65 ERCOT Wholesale Market Basics
Constraint:A transmission element or group of elements that limit the free flow of energy. Constraints are typically thermal, voltage stability, and angular stability limitations. These constraints are the result of defined contingencies such as the trip of a generating unit or transmission circuit.
Module 2Congestion ManagementDefinitions and Key Concepts
66 ERCOT Wholesale Market Basics
Commercially Significant Constraint (CSC):A constraint in the ERCOT Transmission Grid that is found to limit the free flow of energy a commercially significant degree.
Module 2Congestion ManagementDefinitions and Key Concepts
Closely Related Element (CRE):Those transmission facilities that have shift factor impacts similar to those associated with a particular Commercially Significant Constraint (CSC), and for which there exists a limited amount of Boundary Generation Resources between it and the particular CSC, so that the zonal deployment of Balancing Energy Service is effective in mitigating Zonal Congestion.
67 ERCOT Wholesale Market Basics
Congestion:The situation that exists when scheduled power flows, when netted, are projected to exceed the capability of a Transmission element or set of elements.
Congestion Zone:A grouping of busses that create a similar Shift Factor on CSCs.
CSC Limit:Maximum flow allowed across a CSC to maintain reliable operation
Module 2Congestion ManagementDefinitions and Key Concepts
68 ERCOT Wholesale Market Basics
Shift Factor (SF):Measure of power flow impact on a transmission element
Schedule Impact (SI):The MW impact that bilateral energy schedules have on a CSC.
Shadow Price (SP):The marginal price of the constraint ~ it indicates the change in the overall cost, in $/MW.
TCR’s:Transmission Congestion Rights are a financial instrument that enables QSEs to hedge against the risk of incurring congestion charges.
Module 2Congestion ManagementDefinitions and Key Concepts
69 ERCOT Wholesale Market Basics
Definitions and Key Concepts
Zonal vs. Local Congestion
Transmission Congestion Rights
Congestion Management Module 2
70 ERCOT Wholesale Market Basics
Congestion must be managed, and it costs Dollars!
Even when the flow on the constraint is brought down below the limit by redispatch, we are in a
congestion situation
Keep line flows under the limits, or
System may become unstable
Equipment may be damaged
Module 2Congestion ManagementZonal vs. Local Congestion
71 ERCOT Wholesale Market Basics
Zonal Congestion
a.k.a. INTER-zonal congestion
Occurs between congestion zones
Resolved using Zonal Balancing Energy (in Merit Order)
Types of Congestion
North
West
SouthHouston
Module 2Congestion ManagementZonal Congestion
72 ERCOT Wholesale Market Basics
Zone B
Zone A
10MW
2 MW Zonal Shift Factor B-A
Zone
0.2South-0.3North
10MW
3 MW
Aggregate Generation B-A CSC
Zonal shift factor is the average effect that changing generation in a zone has on a particular CSC constraint
Module 2Congestion ManagementZonal Congestion
73 ERCOT Wholesale Market Basics
Local Congestion
a.k.a. INTRA-zonal congestion
Occurs within a congestion zone
Cannot be resolved with Zonal
balancing energy
Must be resolved with Unit-specific
deployments
Types of Congestion
NorthWest
SouthHouston
Module 2Congestion ManagementLocal Congestion
74 ERCOT Wholesale Market Basics
ZONE10MW
5 MW Resource Shift Factor
bus-0.2 Unit 1
0.1Unit 2
Specific Resource Intra-Zonal
Resource specific shift factor is used with Bid Premiums to resolve Local Congestion
Module 2Congestion ManagementLocal Congestion
Unit 1
Unit 2
Bid Premium is Generic Cost determined for Specific Resource Type (CC, CT, WGR)
1MW
1MW
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Zonal Congestion Direct Assignment to ALL QSEs with schedules impacting congested CSCs
Cost = Schedule Impact on each CSC * Shadow Price
Local Congestion Total ERCOT cost Uplifted at Load Ratio Share
All QSEs with load pay for local congestion if it exists anywhere
Module 2Congestion ManagementZonal vs. Local Congestion
Who pays for Congestion?
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Power Flow Analysis
Procurement of services
Dispatch resources
Post information
What ERCOT does to control traffic
Module 2Congestion ManagementZonal vs. Local Congestion
77 ERCOT Wholesale Market Basics
Known transmission conditions
Expected transmission conditions for the next day
Resource Plans for next day
Bilateral Schedules for next day
Congestion Studies – Day-Ahead
Module 2Congestion ManagementZonal vs. Local Congestion
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Procurement of RPRS and OOMC (Capacity and Local Congestion)
Deployment of LBES and OOME
Congestion Studies – Day Ahead and before each Operating Hour
The Studies Result in:
Module 2Congestion ManagementZonal vs. Local Congestion
79 ERCOT Wholesale Market Basics
Real-time Are created by Simultaneous Feasibility Test (SFT) software
LocalOC3
NOT USED Limit may be changed in adjustment or operating period based on impending congestion conditions
LocalOC2
Real-time Limit may be changed in adjustment or operating period based on impending congestion conditions
Setting of 9999 indicates constraint not active
ZonalCSC / CRE
OC1
Monthly Based on planning studies taking into account planned outages, flow patterns
Basis of TCRs and CSC congestion notifications Suppressed in favor of OC1 in Real-time
Balancing
ZonalCSC
OC0
FrequencyDescriptionApplicabilityLimit
Module 2
Types of Constraints
Congestion ManagementZonal vs. Local Congestion
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Module 2
What the ERCOT Operator Sees:
Congestion ManagementZonal Congestion
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Module 2
What the Operator Does
Congestion ManagementZonal Congestion
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When zonal transmission constraints are NOT in effect:
The BES bid curves submitted by QSEs are used to establish a single bid stack.
The ERCOT EMS uses this stack to competitively select up or down balancing energy, whichever
is needed in the next interval for zonal balancing.
Stack’mUP!
Module 2
Balancing Energy Deployments (BES)
Congestion ManagementZonal vs. Local Congestion
83 ERCOT Wholesale Market Basics
North
South
MW
$
MW
$MW
$
One consolidated bid stack for Balancing Energy
MCPE
Module 2
MCPE - No Congestion
Congestion ManagementZonal vs. Local Congestion
84 ERCOT Wholesale Market Basics
When zonal transmission constraints ARE in effect:
The BES bid curves are separated out into prospective zonal bid stacks for the EMS to competitively select up or down balancing energy to unload the inter-zonal congestion.
The resulting zonal BES deployment is the incremental MW increase (UBES) or decrease (DBES) each QSE awarded BES needs to move their portfolio of resources as deviation from their planned schedule. Nort
hZone
South
Zone
Module 2
Balancing Energy Deployments (BES)
Congestion ManagementZonal vs. Local Congestion
85 ERCOT Wholesale Market Basics
North
South
MW
$
MW
$
MCPENorth
MCPESouthMCPESPCS-N
Note – MCPEs and MCPESPCs are capped at offer cap ($2,250)
Module 2
MCPE – Zonal Congestion
Congestion ManagementZonal vs. Local Congestion
86 ERCOT Wholesale Market Basics
Limit = 500 MW200 MW
300 MW
100 MWOVERLOAD
“Generate at 200”200 MW
Question: How does ERCOT select the unit?
Module 2
Congestion Management - Local
Congestion ManagementZonal vs. Local Congestion
87 ERCOT Wholesale Market Basics
In real time, ERCOT manages Local Congestion using unit-specific deployments.
Units selected are based on Operator Directed or by Step 2 of SPD Solution.
SPD selects using generic Bid Premiums and Real-Time Shift Factor.
Units selected are paid as OOM Energy if Operator Directed or Local Balancing Energy if SPD Solution.
Charge uplifted to QSEs on a Load Ratio Share Basis.
Module 2
Recap Congestion Management - Local
Congestion ManagementZonal vs. Local Congestion
88 ERCOT Wholesale Market Basics
Scheduling, Pricing and Dispatch = SPDExecutes every 15 minutes to deploy Balancing Energy
Calculated CSC flows and Shadow PricesCalculated flow for OC3 constraintsPortfolio Balancing Awards and resource specific instructionsZonal MCPEs
Inputs OutputsTelemetered Generator MW outputShift factorsBalancing Energy BidsForecasted loadQSE Energy SchedulesQSE Resource Plan dataOC1 and OC3 constraint limits
ERCOT Market Operating System
* Note: Real time (Physical) line limits are not inputs to SPD
I’mSPUD
Module 2Congestion ManagementZonal vs. Local Congestion
89 ERCOT Wholesale Market Basics
1. Solve for CSC Constrained System Imbalance with zonal BES
2. Solve for Local Congestion with local BES
3. Resolve for System Imbalance with BES *
SPD Solution STEPS
ERCOT Market Operating System
* Note: Final Market Clearing Price of Energy is published after Step 3
Module 2Congestion ManagementZonal vs. Local Congestion
90 ERCOT Wholesale Market Basics
Portfolio vs. Unit-Specific Deployment QSEs shall first meet the specific resource
deployment and then meet the BES deployment instruction.
In the event that a QSE is unable to provide the BES due to a specific resource
deployment then the QSE will follow the notification procedures established in Section 5, Dispatch.
Module 2Congestion ManagementZonal vs. Local Congestion
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Definitions and Key Concepts
Zonal vs. Local Congestion
Transmission Congestion Rights
Congestion Management Module 2
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Transmission Congestion Rights (TCRs)Financial instruments– Can be a hedge against congestion charges
To participate in auctions requires TCR registration and qualification.
TCR Holders are not represented by QSEs
Revenues from TCR auctions go to QSEs representing load.
Module 2Congestion ManagementTransmission Congestion Rights
93 ERCOT Wholesale Market Basics
The maximum power that may be transferred across a transmission corridor while maintaining reliability
Calculated on an annual basis
Updated monthly
TTC for each CSC establishes the number of Transmission Congestion Rights
(TCRs) to be auctioned
Module 2
Total Transfer Capability
Congestion ManagementTransmission Congestion Rights
94 ERCOT Wholesale Market Basics
Certain TCR Holders are eligible for Pre- assigned Congestion Rights (PCRs)
TCR Auction Allocation
– Annual: (40% of TTCs) minus PCRs
– Monthly: (60% of TTCs) minus PCRs
Module 2Congestion ManagementTransmission Congestion Rights
TCR Auction
95 ERCOT Wholesale Market Basics
ERCOT sells TCRs
TCR auction revenues to QSEs with
load
Winning TCR bidder pays ERCOT and
receives TCR.
TCR Price = Clearing price X Number of Hours in period
Module 2
TCR Auction Settlement
Congestion ManagementTransmission Congestion Rights
TCR Holders are Limited to 25%
Ownership per CSC
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Total Transfer Capability MW
SI * SP = Amount Collected from CSC Congestion charges
Amount Paid to clear congestion
Amount Paid to TCR Holders
Scheduled Qty MW
Module 2
Real-time Congestion Settlement
Congestion ManagementTransmission Congestion Rights
97 ERCOT Wholesale Market Basics
Total Transfer Capability MW
SI * SP = Amount Collected from CSC Congestion charges
Amount Charged to clear congestion
Amount Paid to TCR Holders
Scheduled Qty MW
Module 2
Real-time Congestion Settlement
Congestion ManagementTransmission Congestion Rights
98 ERCOT Wholesale Market Basics
Who pays for Local Congestion? QSEs at LRSWho pays for Zonal Congestion?
QSEs with impacted schedules
What is a TCR?Transmission Congestion Right
What are the three steps to awarding Balancing Energy?1) System Load Balance; Inter-zonal Congestion2) Local Congestion3) Re-balance Load and Inter-zonal Congestion
ERCOT Wholesale Market Operations: Review Module 2
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Questions Module 2