Todd Levin

Survey of U.S. Ancillary Services Markets

In addition to providing energy to end-consumers, power system operators are also responsible for ensuring system reliability. To this end, power markets maintain an array of ancillary services to ensure it is always possible to balance the supply and demand for energy in real-time. A subset of these ancillary services are commonly procured through market-based mechanisms: namely, Regulation, Spinning, and Non-spinning Reserves.

Capacity Adequacy and Revenue Sufficiency in Electricity Markets With Wind Power

Summary form only given. We present a computationally efficient mixed-integer program (MIP) that determines optimal generator expansion decisions, as well as periodic unit commitment and dispatch. The model is applied to analyze the impact of increasing wind power capacity on the optimal generation mix and the profitability of thermal generators. In a case study, we find that increasing wind penetration reduces energy prices while the prices for operating reserves increase. Moreover, scarcity pricing for operating reserves through reserve shortfall penalties significantly impacts the prices and profitability of thermal generators. Without scarcity pricing, no thermal units are profitable, however scarcity pricing can ensure profitability for peaking units at high wind penetration levels. Capacity payments can also ensure profitability, but the payments required for baseload units to break even increase with the amount of wind power. The results indicate that baseload units are most likely to experience revenue sufficiency problems when wind penetration increases and new baseload units are only developed when natural gas prices are high and wind penetration is low.

Estimates of the cost of new electricity generation in the South

Future demand for electricity can be met with a range of technologies, with fuels including coal, nuclear, natural gas, biomass and other renewables, as well as with energy efficiency and demand management approaches. Choices among options will depend on factors including capital cost, fuel cost, market and regulatory uncertainty, greenhouse gas emissions, and other environmental impacts. This paper estimates the costs of new electricity generation. The approach taken here is to provide a transparent and verifiable analysis based mainly on recent data provided to public utility commissions by electric utilities. As new data become available, this analysis can be readily updated.

Impacts of Variable Renewable Energy on Bulk Power System Assets, Pricing, and Costs

We synthesize available literature, data, and analysis on the degree to which growth in variable renewable energy (VRE) has impacted to date or might in the future impact bulk power system assets, pricing, and costs. We do not analyze impacts on specific power plants, instead focusing on national and regional system-level trends. The issues addressed are highly context dependent—affected by the underlying generation mix of the system, the amount of wind and solar penetration, and the design and structure of the bulk power system in each region. Moreover, analyzing the impacts of VRE on the bulk power system is a complex area of research and there is much more to be done to increase understanding of how VRE impacts the dynamics of current and future electricity markets. While more analysis is warranted, including additional location-specific assessments, several high-level findings emerge from this synthesis: -VRE Is Already Impacting the Bulk Power Market -VRE Impacts on Average Wholesale Prices Have Been Modest -VRE Impacts on Power Plant Retirements Have So Far Been Limited -VRE Impacts on the Bulk Power Market will Grow with Penetration -The ’System Value’ of VRE will Decline with Penetration -Power System Flexibility Can Reduce the Rate of VRE Value Decline All generation types are unique in some respect—bringing benefits and challenges to the power system—and wholesale markets, industry investments, and operational procedures have evolved over time to manage the characteristics of a changing generation fleet. With increased VRE penetrations, power system planners, operators, regulators, and policymakers will continue to be challenged to develop methods to smoothly and cost-effectively manage the reliable integration of these new and growing sources of electricity supply.

Electricity End Uses, Energy Efficiency, and Distributed Energy Resources Baseline

Author(s): Schwartz, Lisa; Wei, Max; Morrow, William; Deason, Jeff; Schiller, Steven R.; Leventis, Greg; Smith, Sarah; Leow, Woei Ling; Levin, Todd; Plotkin, Steven; Zhou, Yan

A MARKAL model of state electricity generation

We present a least-cost linear-optimization model of electricity generation using MARKAL that can be applied at the level of an individual state. Our methodology is applied to a case study of the state of Georgia and used to analyze the evolution of its electricity generation portfolio under different efficiency scenarios.

Integrating Renewable Generation into Grid Operations: Four International Experiences

....................................................................................................................................................... iii Executive Summary ..................................................................................................................................... iv Background .......................................................................................................................................... iv Grid Systems Managed Penetration of Renewables ............................................................................. v Long-Term Generation Resource Adequacy ........................................................................................ v Short-Term Operational Requirements ................................................................................................ vi Lessons Learned and Implications for the United States .................................................................... vii Acknowledgments ........................................................................................................................................ ix Acronyms and Abbreviations ....................................................................................................................... x 1.0 Introduction ....................................................................................................................................... 1.1 1.1 Purpose of Study ....................................................................................................................... 1.1 1.2 Approach ................................................................................................................................... 1.1 1.3 Summary of the Selected Study Countries ................................................................................ 1.2 1.4 Background of Restructuring and Climate Change Policy........................................................ 1.4 1.4.1 Definition of Restructuring ............................................................................................ 1.4 1.4.2 Drivers for Restructuring and Resource Change ............................................................ 1.5 2.0 Australia Electric Power Case Study ................................................................................................. 2.1 2.1 Key Findings ............................................................................................................................. 2.1 2.2 Regulatory and Policy Background ........................................................................................... 2.3 2.2.1 Overview of Industry Structure Prior to Restructuring .................................................. 2.3 2.2.2 Evolution of Resource Mix ............................................................................................ 2.3 2.2.3 Key Restructuring Policies Affecting Power Grid Operations, Planning and Generation Mix ................................................................................................................................. 2.5 2.2.4 Electric Power Sector Market Structure ......................................................................... 2.7 2.3 Grid Operations and Planning: Challenges, Responses, and Proposed Solutions ..................... 2.9 2.3.1 Challenges to the Bulk Power System due to Changes in Resource Mix over Time ..... 2.9 2.3.2 Responses or Proposed Solutions to the Power System Impacts ................................. 2.11 2.3.3 How Industry Structure Exacerbated/Mitigated Bulk Power System Impacts ............. 2.14 2.4 Lessons Learned for Maintaining Reliability and Cost-Effectiveness with a Changing Resource Mix .......................................................................................................................................... 2.16 2.4.1 Implications of Changing Resource Mix on Grid Operations and Planning ................ 2.16 2.4.2 Implications of Industry Structure on Handling Resource Changes ............................ 2.16 2.4.3 Implications for the United States ................................................................................ 2.16 3.0 Germany Electric Power Case Study ................................................................................................. 3.1 3.1 Key Findings ............................................................................................................................. 3.1 3.2 Regulatory and Policy Background ........................................................................................... 3.3 3.2.1 Overview of Industry Structure and Policies prior to Restructuring .............................. 3.3 xii 3.2.2 Evolution of Resource Mix ............................................................................................ 3.4 3.2.3 Key Restructuring Policies Affecting Power Grid Operations, Planning, and Generation Mix ................................................................................................................................. 3.6 3.2.4 Key Drivers of Restructuring ......................................................................................... 3.7 3.2.5 Electric Power Sector Market Structure ......................................................................... 3.8 3.3 Grid Operations and Planning: Challenges, Responses, and Proposed Solutions ................... 3.11 3.3.1 Challenges to the Bulk Power System due to Changes in Resource Mix over Time ... 3.11 3.3.2 Responses and/or Proposed Solutions to the Power System Impacts .......................... 3.13 3.3.3 How Industry Structure Exacerbated/Mitigated Bulk Power System Impacts ............. 3.17 3.4 Lessons Learned for Maintaining Reliability and Cost-Effectiveness with a Changing Resource Mix .......................................................................................................................................... 3.18 3.4.1 Implications of Changing Resource Mix on Grid Operations and Planning ................ 3.18 3.4.2 Implications of Industry Structure on Handling Resource Changes ............................ 3.18 3.4.3 Implications for the United States ................................................................................ 3.19 4.0 Japan Electric Power Case Study ...................................................................................................... 4.1 4.1 Key Findings ............................................................................................................................. 4.1 4.2 Regulatory and Policy Background ........................................................................................... 4.4 4.2.1 Overview of Industry Structure and Policies prior to Restructuring .............................. 4.4 4.2.2 Evolution of Resource Mix ............................................................................................ 4.5 4.2.3 Key Restructuring Policies Affecting Power Grid Operations, Planning and Generation Mix ................................................................................................................................. 4.7 4.2.4 Key Drivers of Restructuring ......................................................................................... 4.9 4.2.5 Electric Power Sector Market Structure ......................................................................... 4.9 4.3 Grid Operations and Planning: Challenges, Responses, and Proposed Solutions ................... 4.10 4.3.1 Challenges to the Bulk Power System due to Changes in Resource Mix over Time ... 4.10 4.3.2 Responses and/or Proposed Solutions to the Power System Impacts .......................... 4.11 4.3.3 How Industry Structure Exacerbated/Mitigated Bulk Power System Impacts ............. 4.11 4.4 Lessons Learned for Maintaining Reliability and Cost-Effectiveness with a Changing Resource Mix .......................................................................................................................................... 4.12 4.4.1 Implications of Changing Resource Mix on Grid Operations and Planning ................ 4.12 4.4.2 Implications of Industry Structure on Handling Resource Changes ............................ 4.12 4.4.3 Implications for the United States ................................................................................ 4.12 5.0 United Kingdom Electric Power Case Study ..................................................................................... 5.1 5.1 Key Findings ............................................................................................................................. 5.1 5.2 Regulatory and Policy Background ........................................................................................... 5.3 5.2.1 Evolution of Resource Mix ............................................................................................ 5.3 5.2.2 Key Restructuring Policies Affecting Power Grid Operations, Planning and Generation Mix ................................................................................................................................. 5.5 5.2.3 Key Drivers of Restructuring ......................................................................................... 5.8 5.2.4 Electric Power Sector Market Structure ......................................................................... 5.8 xiii 5.3 Grid Operations and Planning: Challenges, Responses, and Proposed Solutions ..................... 5.9 5.3.1 Challenges to the Bulk Power System due to Changes in Resource Mix over Time ..... 5.9 5.3.2 Responses and/or Proposed Solutions to the Power System Impacts .......................... 5.11 5.3.3 How Industry Structure Exacerbated/Mitigated Bulk Power System Impacts ............. 5.12 5.4 Lessons Learned for Maintaining Reliability and Cost-Effectiveness with a Changing Resource Mix ..............................

Lowest cost path to meeting electricity demand at the state level: Implications of carbon cap-and-trade

We develop a linear optimization model at the state level, and use this model to investigate how policy constraints on greenhouse gas emissions may affect the lowest-cost choices for electricity generation over the next twenty years. The state-level model provides local and regional decision-makers with a basis for understanding the potential impacts of policy changes, and provides a basis for planning and policy analysis.

Long-Term Resource Adequacy, Long-Term Flexibility Requirements, and Revenue Sufficiency

Variable generation (VG) can reduce market prices over time and also the energy that other suppliers can sell in the market. The suppliers that are needed to provide capacity and flexibility to meet the long-term reliability requirements may, therefore, earn less revenue. This chapter discusses the topics of resource adequacy and revenue sufficiency—that is, determining and acquiring the quantity of capacity that will be needed at some future date and ensuring that those suppliers that offer the capacity receive sufficient revenue to recover their costs. The focus is on the investment time horizon and the installation of sufficient generation capability. First, the chapter discusses resource adequacy, including newer methods of determining adequacy metrics. The chapter then focuses on revenue sufficiency and how suppliers have sufficient opportunity to recover their total costs. The chapter closes with a description of the mechanisms traditionally adopted by electricity markets to mitigate the issues of resource adequacy and revenue sufficiency and discusses the most recent market design changes to address these issues.

Overview of Wholesale Electricity Markets

This chapter provides a comprehensive review of four key electricity markets: Energy markets (day-ahead and real-time markets). Ancillary service markets. Financial transmission rights markets. Capacity markets.