ERCOT panel to seek real-time market guidance
OREANDA-NEWS. A Texas grid committee will seek policy guidance before the staff attempts to draft rules designed to make delivery of energy and ancillary services in real-time as efficient as possible.
Early discussion at the Electric Reliability Council of Texas' (ERCOT) supply analysis working group has left members divided on what traits a real-time co-optimized market must have.
Late last year, the grid's wholesale market subcommittee directed ERCOT staff to start work on two draft protocols: one to co-optimize energy and ancillary services in real time and a second rule to create a multi-interval real-time market.
Co-optimization is the process of simultaneously procuring two products from available resources at the lowest production cost to meet real-time system demand.
Installation of millions of smart meters across Texas has increased interest in creating ways for load to respond to high demand or high prices in real-time through a multi-interval market. Other US power markets likewise have moved from one-hour intervals to more granular schedules.
A need to study co-optimization emerged in the mid-2000s as ERCOT struggled to implement nodal pricing. The issue resurfaced in 2010 during a debate over ERCOT generation adequacy, prompted by tightening summer supply and ERCOT warnings of the risk of more frequent rolling outages. But the long-lead time for rule-making and implementation put off the discussion.
Some market participants remain skeptical that pursuing co-optimization will add benefits beyond those provided by ERCOT's scarcity pricing mechanism introduced in 2014.
Answering policy issues should help staff draft protocol changes that can be subjected to a cost-benefit analysis.
The issues include if, and how, ancillary services should be priced so that one product can be substituted for another in real-time; whether the price of certain ancillary products should fall to zero if converted to energy in real-time; and how to set up demand curves for ancillary services based on the current scarcity pricing mechanism.
Another thorny issue is under what conditions, if any, make-whole payments should be granted to parties that are harmed when a resource buys out its day-ahead ancillary service responsibility.