5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
1/42
Opportunities for Cogeneration in theAlberta Electricity Market
Biju Gopi
Manager, Commercial Services
Alberta Electric System Operator (AESO)
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
2/42
Scope of Presentation
AESO Overview 2011 Annual Market Statistics
Ancillary Services Market in Alberta
2012 Long-term Outlook (Forecast)
2
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
3/42
AESO Overview
3
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
4/424
Albertas Electricity System
26,000 km of transmission lines
Single control area of 660,000 km
B.C. & Saskatchewan interties
164 market participants
Over 258 generating units
13,939 MW installed capacity
6263 coal MW
5538 gas MW
879 hydro MW
861 wind MW
10,609 MW system peak (January
16, 2012) and 82% average load
factor
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
5/425
Electr ic Uti l i t ies A ct
Minister of Energy
Appoints Board members & MSA
MarketSurveillance
Administrator
BalancingPool
Wholesale
Energy
Market
Transmission
Planning
Alberta ElectricSystem Operator
Real-time
Operation of
Electric System
AUC
Load
Settlement
Alberta Industry Structure
Alber ta Uti l i ties Comm iss ionAct
CabinetAppoints Commission
Members and Chair of AUC
ComplianceSurveillance
Consumer
Financial accts
PPA Obligations
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
6/42
Long-term Objectives of ourWholesale Market
Long-term stability and competitively priced electricity to Albertans
Signals that are predictable and understandable; supportinvestment in the electricity sector and provide a foundation foreconomic growth
Suppliers need confidence they can move their product tomarket and have the opportunity to compete
Load must be assured it will have access to needed electricsupply in a predictable fashion and at a price reflective ofmarket fundamentals
A competitive wholesale market for energy coupled with anunconstrained transmission system deliver a long-term supply ofneeded electricity without government contracts or public debt
No central planning of generation; investors make decisions and
take risk on type, timing and location of investment6
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
7/42
Alberta Energy Market Overview
Energy-only market design
Founded on the premise of a congestion freetransmission system
ISO Rules govern market activity
Generator participation is mandatorymustoffer, must comply
164 market participants
High industrial load
Small market with limited interconnections
~$8 billion (2011) in annual energytransactions
$1,000/MWh price cap and $0/MWh price floor
Load is passive participant
Cost of operating market recovered through
energy trading charge
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
8/42
0
20
40
60
80
100
0 2000 4000 6000 8000 10000 12000
Price($/M
Wh)
pp
Hourly Power (MW)
Energy Only Real-time Market
Price is set where supply = demand, in real time
6,000 MW7,000 MW offer in at $0
cogeneration, hydro, baseload coal, wind8
Supply
Demand(peak)Demand
(off-peak)
Peak Price =$50
Off-peak Price =$35
8
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
9/42
Offers and Bids
AESO accepts offers to sell power and bids to buy power throughthe Energy Trading System (ETS)
Generators Must Offer, Must Comply
The merit order is created by ordering the least priced offers to thehighest priced ($0 - $999.99/MWh)
The merit order is dispatched by the system operator as often as isnecessary to maintain supply demand balance on the Alberta grid
SettlementInterval
T-2 to TGate Close (Noon of the previous day) to T-27 Days ahead
Enter Offers (Price-
quantity pairs, available
capacity)
Able to change price-
quantity pairs, can
change available capacity
with an acceptable reason
Cannot change prices, can change
quantity offered at the prices in the
offer with an acceptable reason, can
change available capacity with and
acceptable reason.
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
10/42
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011YTD
MW
Installed Generation 1998-2011
WindOther
Hydro
Cogen
Gas
Coal
Peak Load
Average Load
10
Growth in Supply
861 MW of wind(6.3% of installedcapacity) andexpected to bearound 1100 MW byend of 2012
Over 6,400 MW of newgeneration have been added
since 1998 financial risk taken
by the generation builders
supporting more than 2,400 MW
of average load growth
10
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
11/42
Energy Consumption is Separated IntoCustomer Sectors for Analysis
Customer Sector Electricity Consumption
2011 Total Consumption = 69,495 GWh
Oilsands
17%
Commercial
20%
Residential
13%
Industrial (without
Oilsands)
47%
Farm
3%
Source: ERCB, AESO 11
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
12/4212
Brattle ReportSustainability of Albertas Electricity Market
Generation retirements and anticipated growth (annualized growth)will require investment in new capacity equivalent to what we haveseen since 1998 (over 5,000 MW capacity added) in the next 9years
Installed capacity is expected to increase from approximately
13,000 MW today to over 19,000 MW by 2020 Current market design is well-functioning and can support the
higher rate of generation additions, as long as large simultaneousretirements can be avoided
Projected market prices strongly favor a shift in the resourcemix from coal generation to natural gas-fired power plants,which are more flexible and have lower capital costs. As a result,we current ly see no compel ling need fo r major changes
in Albertas electricity market design
12
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
13/42
2011 Annual Market Statistic Report
13
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
14/42
2011 Annual Market Statistics
Released February 16, 2012
Summary of key market information
Describes historic trends inAlbertas wholesale electricity
market
14
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
15/42
Pool Prices Increase in 2011
2011 annual average pool price was $76.22/MWh Gas prices stable
Market heat rate rose from 13.6 in 2010 to 22.4 GJ/MWh in 2011
15
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
16/42
Revenue by Pool Price Range
16
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
17/42
Continued Growth in Load
Total Alberta Internal Load grew 2.6% in 2011
17
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
18/42
Imports Serve 5% of Total Load in 2011
Alberta has two interties: B.C. and Saskatchewan
Imports vary depending on intertie limitations, marketprices in other jurisdictions, and other factors
Total net imports increased 107% on the B.C. Intertie
and 60% on the Saskatchewan Intertie Alberta remains a net importer for the tenth year in a row
18
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
19/42
Ancillary Services Market in Alberta
19
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
20/42
What are Ancillary Services?
Electric Utilities Act definition
those services required to ensure that the interconnected
electric system is operated in a manner that provides a
satisfactory level of service with acceptable levels of voltage
and frequency
Includes Operating Reserve, Transmission Must-RunServices, Load Shed Services and Black Start Services
Cost recovered from loads through the ISO Tariff
Market participants sell ancillary services to the AESO Total annual cost of ancillary services ~ $371 million (2011)
projected 2012 costs are ~$333 million
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
21/42
Contracted Ancillary Services
Black Start Services AESO procures through bi-lateral agreements
Currently there are 2 providers of this service (investigating ifmore are required)
Fixed price and call price
Load Shed Services
New LSSi service for importsto support higher electricity
import levels on AlbertaB.C. intertie Fixed Price for offering ($5/MWh)availability payment
Contract Price for armingarming payment
Trip Payment ($1000/MWh)trip payment
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
22/42
Transmission Must-Run (TMR)
The AESO procures TMR services through bi-lateralagreements with generators
Where we can we run a competitive process for foreseen TMR,we will
Section 11 of the AESO tariff sets out the payment forconscripted TMR (unforeseen TMR)
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
23/42
Operating Reserve Market
Market operated by a third party, Watt-Ex
AESO is a market participant, unlike the energy market
Participation is voluntary, unlike the energy market
Contracts govern market activity, not rules
OR prices are indexed to energy market pool price
Cost of OR are recovered from load through the ISO Tariff
Energy market participants supply OR
Total annual cost of OR ~ $ 329 million (2011)projected2012 costs at ~$253 million
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
24/42
Types of Operating Reserve
Operating Reserve
RegulatingReserve
Generators
with AGC
Contingency Reserve
Spinning
Generatorssynchronized to the
grid
Supplemental
Generators orLoads
24
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
25/42
OR Market Participation by CogenerationUnits
23 qualified participants in the OR market
59 units qualified to participate in 3 OR products (RR, SR,SUP)
10 cogeneration units qualified to provide reserves (17% of
qualified units) Of the qualified cogeneration units:
2 do not appear to be participating
1 only participates in Standby
1 only participates in Active
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
26/42
Location of Cogeneration Units in Alberta
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
27/42
Market Share
Cogeneration units are a substantial provider of StandbyReserve:
Regulating: 23%; Spinning: 31%; Supplemental: 14%
Cogen, Active RR, 20.6%Cogen, Active SR, 31.1%
Cogen, Active SUP, 6.8%
Cogen, Standby RR, 22.6% Cogen, Standby SR, 37.1%
Cogen, Standby SUP, 14.2%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
RR SR SUP RR SR SUP
Active Standby
Operating Reserves Market Shares - 2011
Tie
Load
Hydro
GasCogen
Coal
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
28/42
Behavior
Active Standby
RR SR SUP RR SR SUP
On PeakParticipates inSuper Peak Primary No on/off
differentiationPrimary Primary
Off Peak Primary Primary
Cogeneration units vary their type of participation in the ORmarket based on time of day, though there is no period inwhich cogeneration units do not provide OR
During Off Peak hours (HE 1-7, &4) cogeneration unitsprovide more Regulating Reserve than during On Peak (HE8-23)
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
29/42
Observed OR Market Prices
RR is typically the premium product, with SR and the SUPfollowing in the order of price
Active prices are indexed to pool price, hence the strongassociation to the annual average price
ActiveStandby
premiumsStandby activation Total OR Cost
($ millions)
Average hourlypool price
($/MWh)RR SR SUP RR SR SUP RR SR SUP2007 $34 $29 $26 $5 $4 $4 $101 $101 $96 $185 $66.95
2008 $51 $43 $38 $7 $5 $5 $163 $151 $133 $270 $89.95
2009 $23 $16 $11 $5 $4 $3 $96 $85 $69 $104 $47.81
2010 $27 $21 $16 $7 $4 $4 $141 $115 $91 $137 $50.88
2011 $55 $57 $51 $6 $8 $7 $98 $121 $95 $328 $76.22
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
30/42
2012 Long-term Outlook (Forecast)
30
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
31/42
2012 Long-term Outlook
Updated forecast is a key input tothe Long-term Transmission Plan
Forecasts input into various AESOfunctions
Validated and improved ourprocess, models and inputs thiscycle
31
Alb t F t t G F t th
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
32/42
Canadian Forecast Economic Growth 2011-2030
2.1%
1.9%
2.5% 2.4%
2.1%
2.2%
1.5%1.3%
0.7%
1.4%
0.9%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
Canada BC AB SK MB ON QC NB NS PEI NL
AverageA
nnualGDPGrow
th(%)
Alberta Forecast to Grow Faster thanAnywhere Else in Canada
Source: Conference Board of Canada 32
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
33/42
Alberta Crude Oil Production Forecast
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
Prod
uction(thousand
bbl/d)
Non Oilsands Production Oilsands Production
Soaring Oilsands Production
Oilsands production is expected todouble over the next 10 years
Source: CAPP, Conference Board of Canada, AESO 33
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
34/42
343434
Regional ResultsFocus on Northeast
Fastest growing region in the province
Load driven by oilsands, increased loadintensity as sites mature, new reservoirsand technology
Cogeneration development driven byoilsands projects
Long-term potential for hydro & geothermal
2012 LTO (MW) Load Generation2011 actual 2,557 3,001
2022 forecast 4,506 5,188
A G th R t O N t 20 Y
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
35/42
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
PeakDemand(MW)
Alberta Internal Load (AIL) Peak Demand
Forecast
2012 LTO Historical35
Average Growth Rates Over Next 20 Years areIn Line with Historical Rates
3.5%
3.1%
2.4%
Average Annual Historical Growth Rates:
20-year (1991-2011): 3.0%10-year (2002-2011): 2.9%
5-year (2007-2011): 1.9%
L d G th d R ti t D i
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
36/42
0
5,000
10,000
15,000
20,000
25,000
2011/2012
2012/2013
2013/2014
2014/2015
2015/2016
2016/2017
2017/2018
2018/2019
2019/2020
2020/2021
2021/2022
2022/2023
2023/2024
2024/2025
2025/2026
2026/2027
2027/2028
2028/2029
2029/2030
2030/2031
2031/2032
2032/2033
MW
Effective Existing Other
Effective Existing Wind
Existing Effective Hydro
Existing Gas
Existing Coal
Expected Effective Generation Capacity
Forecast Peak Demand (AIL)
5,700 MW 11,200 MW
36
Load Growth and Retirements DriveGeneration Additions
Retirements
Load growthwith margin
6,200 MW
11,900 MW
16 000 MW f G ti P j t
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
37/42
37
16,000 MW of Generation ProjectsAnnounced for Alberta
Substantial generation
development in last ten years
Over 16,000 MW generationcapacity additions announcedfor Alberta
Indication of the strong
interest in developinggeneration in Albertas energy
only market
Forecast considers:
Planned projects
Generation economics
Policy implications
One-on-one consultation
Technology development
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
Generation Capacity (MW)
OtherCoal-fired
Future Hydro
Cogeneration
Wind
Gas-fired
Announced Generation Capacity
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
38/42
3838
Capacity expected to increase from 13,660 MW now to 19,555 MW in 2022
Sustained low gas prices and published coal legislation maintain outlook forgas-fired generation additions
Gas-fired combined cycle and cogeneration 2/3 of additions
2012 Long-term Generation Outlook
Existing Generation Mix 2022 Generation Mix
Coal-fired
(6242 MW)
46%
Cogeneration
(3782 MW)
28%
Combined
Cycle
(750 MW)
6%
Simple Cycle
(827 MW)
6%
Hydro
(879 MW)
6%
Wind
(865 MW)
6%
Other
(314 MW)
2%
Coal-fired
(4832 MW)
25%
Cogeneration
(5770 MW)
29%
Combined
Cycle
(3668 MW)
19%
Simple Cycle
(1176 MW)
6%
Hydro
(979 MW)
5%
Wind
(2544 MW)
13%
Other
(585 MW)
3%
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
39/42
Key Takeaways
Economic growth in Alberta is expected to remain strong
Oilsands remains the economic growth engine for theprovince
Shift from coal-fired generation to gas-fired generation
following federal environmental policy and sustained gasprices
Generation capacity additions announced indicate a stronginterest in developing generation in Albertas energy only
market The Alberta electricity market continues to function effectively
39
5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
40/42
Some Useful AESO Links
Website: www.aeso.ca
AESO Market Policy Implementation:http://www.aeso.ca/market/8836.html
Ancillary Services Webpage:
http://www.aeso.ca/market/5093.html Ancillary Services Participant Manual:
http://www.aeso.ca/downloads/Ancillary_Services_Participant_Manual_Edition_3_January_2012.pdf
Ancillary Services Technical Requirements:http://www.aeso.ca/rulesprocedures/9108.html
2012 Long Term Outlook:http://www.aeso.ca/transmission/8638.html
40
http://www.aeso.ca/http://www.aeso.ca/market/8836.htmlhttp://www.aeso.ca/market/5093.htmlhttp://www.aeso.ca/downloads/Ancillary_Services_Participant_Manual_Edition_3_January_2012.pdfhttp://www.aeso.ca/downloads/Ancillary_Services_Participant_Manual_Edition_3_January_2012.pdfhttp://www.aeso.ca/rulesprocedures/9108.htmlhttp://www.aeso.ca/transmission/8638.htmlhttp://www.aeso.ca/transmission/8638.htmlhttp://www.aeso.ca/transmission/8638.htmlhttp://www.aeso.ca/rulesprocedures/9108.htmlhttp://www.aeso.ca/rulesprocedures/9108.htmlhttp://www.aeso.ca/downloads/Ancillary_Services_Participant_Manual_Edition_3_January_2012.pdfhttp://www.aeso.ca/downloads/Ancillary_Services_Participant_Manual_Edition_3_January_2012.pdfhttp://www.aeso.ca/downloads/Ancillary_Services_Participant_Manual_Edition_3_January_2012.pdfhttp://www.aeso.ca/market/5093.htmlhttp://www.aeso.ca/market/5093.htmlhttp://www.aeso.ca/market/8836.htmlhttp://www.aeso.ca/market/8836.htmlhttp://www.aeso.ca/5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
41/42
Contact Information
Biju Gopi
Commercial Services, AESO
2500, 3335th Ave SW, Calgary, AB, T2P 0L4
T: 403-539-2572
41
mailto:[email protected]:[email protected]:[email protected]5/19/2018 7. Opportunities for Cogeneration in the Alberta Electricity Market - Gopi
42/42
Thank you
Top Related