Alberta Electricity Markets

Transcription

1 Alberta Electricity Markets Tyler Drever Nov 9, 2009

2 Alberta Electricity Market - History Prior to 2000: Alberta market centrally controlled by the provincial government and a handful of vertically-integrated companies TransAlta, ATCO Power and EPCOR August 2000: PPA Auctions Preparing for Deregulation Companies were required to sell the right to commercially market large generators built during regulation (Coal / Hydro) Done to prevent market power and encourage private development Auctions called Power Purchase Agreements (PPAs) Contracts lasted for a maximum of 20 years Jan 2001: Deregulated market begins All generators compete in order of least cost to provide power to the Alberta grid

3 Electricity is a unique commodity Power cannot be effectively stored Natural Gas, Oil, Precious metals, etc can all be physically purchased and resold or consumed at a later date. Power is created and consumed instantaneously Supply = Demand. Always! The entire grid is electromagnetically synchronized. From Alberta to California, the same line frequency is required. Problems will impact large areas if not corrected quickly North East blackouts of 2003

4 Alberta Power Markets - Overview Generators offer any electricity they can generate to the grid at a specified price Price can vary from $0 to $1000/MW Ordered by least cost (Merit Order) Alberta System Operator dispatches enough supply to equal system demand at that time. Dispatched in order of least cost Any generator that is dispatched is paid equal to the marginal unit. Any generator not dispatched is not paid. Example: The last generator s offer is $45.00/MW. All energy flowing to the grid at that moment is paid $45.00/MW, regardless of if it was offered for $0 or $44.99.

5 Price Available MW $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ - 1 $1,000 Price ($) $900 $800 $700 $600 $500 $400 $300 $200 $100 Merit Order - Snapshot Offered Energy Energy Merit Order - Sept 1-14:00 System Demand $ System Load (MW) Intersection of Offered Energy (Supply) and System Demand = Price of Power in Alberta

6 Alberta System Load - Daily

7 What does that look like?

8 Our Market Can Be Volatile

9 Market Participants What I Did Real Time Desk 24 Hour Desk Commercial monitoring Market Analysis How are other companies offered? Why? Are our assets offered in an optimal market position? Remote operational plant control of smaller assets

10 Market Participants What I Did Real Time Desk Required to be the daily market expert on what is happening on the grid Coal Derates Wind Forecast System Load Forecast ATCO Offer Strategy Where are we within the merit order? Have other competitors altered their offers? Why? Should we respond? Remote Dispatch - Operations Can start/stop peaker turbines, respond to system requests for emergency energy, interface with our cogeneration stations

11 Market Participants What I Do Ancillary Services Derivatives of electricity Contracts to provide fast ramping emergency energy to the grid Contracts are sold on a open trading system Watt-Exchange (watt-ex) Usually mutually exclusive to energy You can t flow energy and withhold it to flow in emergency

12 Market Participants What I Do Ancillary Services Since AS and Energy are mutually exclusive the market requires contracts that pay for 24/7 service Even if we only provide the emergency power for a fraction of that time, we re still paid to hold the energy in reserve on demand Otherwise we d face a high opportunity cost of not flowing the energy to the grid for pool price Ancillary Service contracts are sold at an index to power price Example: A contract worth -20 pays $40/MW if Pool Price is $60. Contracts cannot be worth negative amounts Detailed Pool Price forecasts are required to transact effectively What will Pool Price be tomorrow? How volatile is the market likely to be? Lots of sporadic wind generation? Hot summer day could mean a spike in air conditioning load, do we have enough base load power to service it?

13 Market Participants Continued Energy Marketing Responsible for overall energy offer strategy Co-optimal strategy of Ancillary Services and Electricity Asset Optimization Maintains price forecasts, monitors natural gas developments

14 Market Participants North America Physical Power Market

15 Market Participants: Financial Power Markets

16 Questions? Sites of Interest: Alberta Electric System Operator Market Surveillance Administrator (Market watchdog ) Click Reports for lots of public reports and data My Contact Information: Tyler.Drever@atcopower.com Ancillary Services Marketer Asset Optimization