Udi Helman

Dispatchable transmission in RTO markets

We consider transmission owners that bid capacity, under appropriate Regional Transmission Organization (RTO) market rules, at a positive price into forward and spot (dispatch) auctions to derive congestion revenues. This can encompass daily, monthly, or multimonthly auctions, allowing for commitment of transmission to reflect market needs in different time periods, e.g., seasons. We provide two and three node examples and a general formulation of the auction model.

Design of Efficient Generation Markets

The design of spot markets for generation services, such as energy, regulation,and operating reserves, and longer term markets for capacity, remain in evolution in many countries. Market design includes definition of the service, bid, or offer requirements, and rules for pricing and financial settlement. In the United States, most organized regional markets have converged on similar elements of spot market design. The design of capacity markets remains influx. Market power mitigation is currently a regulatory requirement in the United States, and experience with different methods shows that it must be carefully aligned with market design to ensure both efficient pricing and efficient investment. This paper surveys these topics and their relationships to each other and identifies researchable issues.

Artificial neural networks for short-term energy forecasting: Accuracy and economic value

Abstract Sixteen electric utilities surveyed state that use of ANNs significantly reduced errors in daily electric load forecasts, while only three found otherwise. Data for five gas utilities reinforces this result: the mean absolute percentage error (MAPE) for ANN daily gas demand forecasts was 6.4%, a 1.9% improvement over previous methods. Yet ANNs were not always best, implying opportunities for further improvement. The economic value of error reduction for electric utilities was assessed by examining operating decisions. For 19 utilities surveyed, an average of

Contingent transmission rights in the standard market design

800 000/year per utility is estimated to be saved from use of ANN-based forecasts. Most benefits resulted from improved generating unit scheduling; the utilities estimated such benefits to be up to

Equilibrium market power modeling for large scale power systems

143 annually per peak MW of demand for each 1% improvement in MAPE. This estimated worth of accuracy improvement (roughly 0.1% of annual generation O&M costs) is confirmed by solving generation scheduling and dispatch models under various levels of forecast accuracy.

Large-Scale Market Power Modeling: Analysis of the U.S. Eastern Interconnection and Regulatory Applications

We define transmission rights that are compatible with the Federal Energy Regulatory Commissions proposed standard market design (SMD) and that provide flexibility in the points of receipt or delivery of energy contracts. The contingent transmission rights introduced here provide a viable, flexible method for defining SMD-compatible rights for transmission customers having current (pre-SMD) transmission rights that cover multiple points. These contingent rights can be bought and sold in the transmission rights auctions under SMD.

The Design of US Wholesale Energy and Ancillary Service Auction Markets: Theory and Practice

A review of economic equilibrium models for simulating imperfect competition among electricity producers is presented in this paper. The presentation emphasizes the application of a model using a linearized DC grid is formulated using the concept of Cournot and supply-function games, and the resulting models are solved as a linear complementarity program (LCP). Both POOLCO and bilateral-type markets can be simulated. Properties of the solutions are to these models are analyzed. The paper includes applications to the Eastern Interconnection that explore how transmission limitations and possible mergers might affect the equilibrium prices and market shares calculated by the model.

Regulatory Evolution, Market Design and Unit Commitment

This paper presents results from a large-scale Cournot model of the U.S. Eastern Interconnection using a DC load flow network. There are 100 network locations (at the level of control areas) along with 2725 generators owned by 99 Cournot firms and 200 competitive fringe suppliers. These results demonstrate that this modeling approach can analyze potential generation market power with a reasonable approximation of the actual transmission network over a large integrated region. While such models have been used to analyze market design alternatives, their application to regulatory decision-making concerning generation market power mitigation has been more controversial. We suggest that such large-scale market price simulations could improve upon aspects of the existing generation market power screening methods used in the United States for mergers and market-based rates, illustrating such applications using this model.

Integration of wind and solar under a 20% RPS: Stochastic simulation methods and results from California ISO studies

Publisher Summary This chapter focuses on the design of the daily energy, regulation, and operating reserves markets. In the United States, after about a decade of experience with market design, wholesale spot markets operated by Independent System Operators (ISOs) around the country have largely converged on core design elements. It provides a detailed description of how these markets operate. Most of these markets have day-ahead and real-time auction markets for energy and certain ancillary services, typically regulation and operating reserves. The energy auctions can accommodate both physical and virtual supply offers and demand bids. In the regulation and reserve auctions, only physical offers are currently allowed, including those from dispatchable demand. With the submitted day-ahead offers, bids, and non-price schedules, the ISO conducts a security-constrained unit commitment auction, which selects the generation units that will run for every hour of the day subject to all relevant unit and transmission network constraints. For the energy markets, the auction outcome is two sets of prices that together clear the market: locational marginal prices (LMPs) for energy, which include congestion and loss components, and separate payments to ensure revenue sufficiency for any offer or bid costs, such as generation start-up costs, not recovered through LMPs. As with energy, revenue sufficiency is guaranteed through additional payments. To provide insight into each stage of the market and into the principles of locational marginal pricing, the chapter provides a simple numerical example of an energy auction on an electricity network.

Integration of renewable resources: Updated analysis of operational requirements and assessment of generation fleet capability under a 20% RPS requirement

In the context of competitive wholesale electricity markets, the unit commitment problem has shifted from a firm level optimization problem to a market level problem. Some centralized market designs use it to ensure reliability and determine day-ahead market prices. This chapter reviews the recent history of short-term electricity markets in the United States to evaluate the experience with alternative market designs and the implications for unit commitment modeling. It presents principles for the design of the next generation of unit commitment-based markets.