First of all, thanks to ERCOT for organizing the ISO Lessons Learned meeting – it was very informative.
A few important items that we learned from all the ISOs (PJM answers were not very clear):
- ISOs do not re-procure AS capacity that is deployed to provide that service and provide both capacity payment and energy payment for the deployed energy during the deployment period. They said that NERC does not require re-procurement (which is also ERCOT’s current practice) and that re-procuring would lead to AS price spike that is not justified (there is no scarcity of the reserve just because the energy is being deployed - similar to Regulation Service). This is the same concern that I’ve had as well as the concern about Resources not being paid for an ancillary service while it’s actually providing that service by either a frequency event or ERCOT instruction and thus being exposed to AS imbalance charge if it sold the service in DAM. This is true for batteries, load, and generators responding to frequency or manually being instructed by ERCOT. This really becomes clear when considering batteries. When batteries respond to a frequency event, it provides it’s full AS capacity in the current SCED interval and is paid both the AS capacity payment and the energy for that first interval. But if the battery is not going to be paid the AS capacity payment in subsequent SCED intervals, it makes no sense for the battery to keep providing the services for free especially if the energy price doesn’t justify discharging (there’s no makewhole payment either).
- ISOs substitute higher value AS capacity for lower value AS capacity and maintain the substituted AS capacity as the higher value service. This is exactly the substitution equations that I shared and this results in higher level of reliability, make each ASDC continuous curves so that additional higher value products always has value greater than or equal to lower value AS service, and ensures higher or equal clearing price for higher value AS compared to lower value AS. We were told at earlier meetings that this is not done by other ISOs – which these ISOs said was not the case. ERCOT expressed the concern that this would mean changes to DAM engine – however, we are opening up the DAM engine by using the same ASDCs as in SCED. The other concern about changes to ERCOT Operating Procedures – these changes should be minimal and beneficial to reliable operation as done in these other ISOs. We might actually save money in SCED (RTC) implementation since this seems to be the standard treatment in RTC. This is the more reliable, economic, and theoretically correct treatment – so we should seriously consider this.
Shams Siddiqi, PhD
President, Crescent Power, Inc.
11412 Bee Caves Rd, Suite 202
Austin, Texas 78738
Email: [log in to unmask]