© 2013 McNees Wallace & Nurick LLC October 17, 2013 Robert A. Weishaar, Jr. ON SITE ENERGY –...
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Transcript of © 2013 McNees Wallace & Nurick LLC October 17, 2013 Robert A. Weishaar, Jr. ON SITE ENERGY –...
© 2013 McNees Wallace & Nurick LLC
October 17, 2013
Robert A. Weishaar, Jr.
ON SITE ENERGY – INTERPLAY WITH PJM DEMAND RESPONSE PROGRAMS
Harrisburg, PA – Columbus, OH – State College, PA
Lancaster, PA – Washington, DC – Scranton, PA
© 2013 McNees Wallace & Nurick LLC 2
PJM DEMAND SIDE RESPONSE The purpose of PJM Demand Response is to enable
Demand Resources under the direction and control of Curtailment Service Providers to respond to economic prices and/or emergency conditions
Demand Response can participate within the various PJM markets:
• Energy Day Ahead Market Real Time Market
• Ancillary Services Synchronized Reserve Regulation Day Ahead Scheduling Reserve
• Capacity Offer into auction up to 3 years in advance
© 2013 McNees Wallace & Nurick LLC
ENERGY MARKETS - PJM ECONOMIC LOAD RESPONSE PROGRAM ("ELRP") All ELRP participation defined as:
• Clearing in the Day-Ahead ("DA") Market• Dispatched by PJM in the Real-Time Market
ELRP participant or CSP must submit load reduction bid offer to PJM
Curtailment must clear in the DA market or be dispatched by PJM in real-time to be eligible for settlement revenue
Load reductions eligible to be paid full LMP if LMP is at or above the Net Benefits Price (a.k.a. threshold price)
Net Benefits Price expected to correlate to energy cost of an efficient combined cycle natural gas plant
oAdjusts monthlyoPrice has ranged from approximately $23.00-$30.00/MWh
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© 2013 McNees Wallace & Nurick LLC
ENERGY MARKETS - PJM DEFAULT CUSTOMER BASELINE
A Customer Baseline ("CBL") is a proxy for what the load would have been absent the load reduction
All ELRP registrations require Customer Base Line ("CBL") certification
All customers must use a CBL with an error (relative root mean square error – "RRMSE") no greater than 20%
CBLs for customers with on-site generation are being determined mostly on a case-by-case basis
ELRP reduction is determined by the CBL minus the meter readings during PJM dispatched curtailment hours
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© 2013 McNees Wallace & Nurick LLC
ENERGY MARKETS - ELRP SUMMARY AND CAUTION
ELRP Revenue is determined by CBL Calculation CBL Calculation represents a moving target
• Presents some risk to curtailment amount• Could be manipulated to inflate ELRP revenue
Baseline manipulation viewed by FERC as manipulation of electric energy markets
• Potential penalties of $1 million per day per violation
Daily decisions when/if to participate in the ELRP program must not consider impact to future CBLs
No payment for load reduction if LMP is less than Net Benefits Price
• Historically, LMP has been greater than the Net Benefits Price about 50% of the time
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© 2013 McNees Wallace & Nurick LLC
ANCILLARY SERVICES MARKETS Synchronous Reserve Market
• Paid for standby service Emergency reserve that PJM can call quickly after a large
generator suddenly trips off-line Hourly payment just for being available to respond 25 – 40 events typically occur annually Total performance requirement of about 6 hours per year
• Must reduce load/increase generation within 10 minutes when ordered by PJM
• Requires 1-minute scan rate metering• Data submission within 24 hours • Consequences for non-performance
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© 2013 McNees Wallace & Nurick LLC
ANCILLARY SERVICES MARKETS
Synchronous Reserve Market• Hourly market participation
Hourly synchronous reserve offer must clear the market to receive payment
Not all hours require PJM to procure Synchronous Reserves from Demand Resources or result in a clearing price greater than $0
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© 2013 McNees Wallace & Nurick LLC
ANCILLARY SERVICES MARKETS
Regulation Market• Hourly market correcting for constantly occurring
small load changes• Requires 5-minute response time• Requires both load reduction and load increase• Sub-metering permitted
Performance not measured based on change to AEP pull
• Consequences for non-performance• Cannot simultaneously be participating in the
Synchronized Reserves Market
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© 2013 McNees Wallace & Nurick LLC 9
ANCILLARY SERVICES MARKETS
Day Ahead Scheduling Reserve Market ("DASR")• Reserves are additional capacity above the expected load• The purpose of the DASR market is to encourage and incent
generation and demand resources to provide the flexible capability to provide 30-minute reserves
• If a Resource is called-on in Real-Time, it must respond in 30 minutes
• Reserves are scheduled on a day-ahead basis in order to ensure that differences in forecasted loads and forced generator outages do not negatively impact system reliability
• The Day-Ahead Scheduling Reserve Requirement is calculated on an annual basis and is set at 6.91% for 2013
• The DASR market clears simultaneously with the DA Energy Market
• Limited revenue potential
© 2013 McNees Wallace & Nurick LLC 10
INTERACTION OF RESERVE MARKET PRODUCTS
Resources can be capable of providing all three products:
• Synchronized Reserve, Regulation, and Day-Ahead Scheduling Reserve
All three cannot be provided simultaneously, only two products, at most
© 2013 McNees Wallace & Nurick LLC 11
DEMAND RESOURCES IN THE CAPACITY MARKET
Demand Resources can offer curtailment capability as a forward capacity resource three years in advance of delivery year
• DR providers are required to provide the cleared demand response amount as capacity during the delivery year and will receive the capacity resource clearing price for this service
Must reduce load when requested by PJM All Call system within 2 hours of notification
Must provide customer-specific compliance and verification information within 45 days after the end of the month in which Load Management event occurred
Can participate in both ELRP and Capacity DR Programs
Note: Many aspects of RPM rules are being proposed to change, particularly those relating to DR
© 2013 McNees Wallace & Nurick LLC 12
DEMAND RESOURCES
© 2013 McNees Wallace & Nurick LLC 13
DR REGISTRATIONS
© 2013 McNees Wallace & Nurick LLC 14
EMERGENCY DR EVENTS
Delivery Year # of PJM Events
2005/2006 2
2006/2007 2
2007/2008 1
2008/2009 No Events
2009/2010 1
2010/2011 7
2011/2012 1
2012/2013 2
2013/2014 7
2014/2015 Est. 5 to 9
2015/2016 Est. 5 to 9
© 2013 McNees Wallace & Nurick LLC 15
RPM AUCTION CLEARING PRICES (ANNUAL PRODUCT)
© 2013 McNees Wallace & Nurick LLC 16
RPM AUCTION CLEARING PRICES (ANNUAL PRODUCT)
© 2013 McNees Wallace & Nurick LLC 17
DR PERFORMANCE ASSESSMENTS (PENALTIES)
Three penalties are applicable to customers participating in RPM as Demand Resources ("DR")
1. RPM Commitment Compliance
2. Load Management Event Compliance
3. Load Management Test Compliance
PJM penalties applied on pro-rata basis and may result in forfeiture of expected revenue or the forfeiture of expected revenue plus a penalty
DR performance for on-site generation typically measured using Guaranteed Load Drop ("GLD") method
© 2013 McNees Wallace & Nurick LLC 18
RPM TIMETABLE
A complete listing of RPM activities and dates can be found at:
http://pjm.com/~/media/markets-ops/rpm/rpm-auction-info/rpm-auction-schedule.ashx
© 2013 McNees Wallace & Nurick LLC 19
AnyQuestions?
Robert A. Weishaar, Jr.McNees Wallace & Nurick LLC
Suite 401777 N. Capitol Street, NE
Washington, DC 20002-4292202-898-5700
717-260-1765 (fax)[email protected]