CONSTRAINT RELAXATION PROCEDURE CONSULTATION PAPER

Transcription

1 CONSTRAINT RELAXATION PROCEDURE CONSULTATION PAPER PREPARED BY: Electricity Market Performance VERSION: 1.0 DATE: 16 June 2011 FINAL Australian Energy Market Operator Ltd ABN NEW SOUTH WALES QUEENSLAND SOUTH AUSTRALIA VICTORIA AUSTRALIAN CAPITAL TERRITORY TASMANIA

2 Contents 1 Introduction Background Matter under Consultation Consultation Process Closing Date for Submissions Responding to this Consultation Paper June 2011 Page 2 of 7

3 Abbreviations AEMO CVP DPRG NEM NEMDE NEMMCO NER OCD Australian Energy Market Operator Constraint Violation Penalty Dispatch and Pricing Reference Group National Electricity Market National Electricity Market dispatch engine National Electricity Market Management Company National Electricity Rules Over Constrained Dispatch 16 June 2011 Page 3 of 7

4 1 Introduction National Electricity Market (NEM) central dispatch aims to maximum the value of spot market trading. It does this by maximising the value of dispatched load less the combined cost of dispatched generation, network services and market ancillary services. The value and costs of these are based on dispatch bids for loads and dispatch offers for generation, network services and market ancillary services. Central dispatch must also take into account a number of physical constraints on the operation of the electrical power system. These constraints include the availability of generation, load requirements in each region, power system security requirements, network constraints, and losses. A full list of the constraints considered by AEMO is in clause 3.8.1(b) of the National Electricity Rules (NER). The NEM dispatch engine (NEMDE) is the software developed and used by AEMO to ensure the central dispatch process is optimal 1. Under some circumstances, the constraints to be considered may not be able to be satisfied in a given dispatch interval DI). Under these circumstances, the solution is infeasible and would, if not catered for, cause NEMDE to fail to solve. Such a failure is not acceptable, so AEMO has procedures in place to ensure dispatch and pricing continue. The two procedures are: For dispatch, constraint violation penalty (CVP) prices (also call CVP factors) are applied to all constraint equations. CVP factors allow dispatch to select the next-best feasible solution. CVP factors are generally in multiples of the market price cap, and are selected to control which constrains are violated without interfering with central dispatch when the solution is feasible. For pricing, an over-constrained dispatch (OCD) rerun process relaxes any violated constraints by the amount by which they are violated. NEMDE will then produce a price that is consistent with the next-best dispatch solution. The objective of this consultation is to consolidate the existing procedures into a set of constraint relaxation documents. The schedule of CVP factors and the details of the OCD process would be separated from the proposed procedure. AEMO intends that this will streamline the process of making operational changes to OCD rerun process and CVP factors in the future. Section 2 of this paper summarises changes to the constraint relaxation since commencement of the NEM. Sections 3-6 provide information relating to this consultation process. Appendix 1 provides the proposed constraint relaxation procedure, which consolidates the principles of the CVP and OCD rerun processes and is to be finalised on completion of this consultation. Appendix 2 provides a draft schedule of CVP factors and Appendix 3 provides the OCD rerun process. Clause 3.8.1(b) of the National Electricity Rules (NER) details the objective of central dispatch process and clause 3.8.1(c) describes the constraint relaxation procedure. The current OCD rerun process and CVP factors are available on AEMO s website 2. While clause 3.8.1(b) requires AEMO to consult on these procedures, it does not require use of the Rules consultation procedures. 2 Background The constraint relaxation procedure was established prior to commencement of the NEM. While the CVP factors have always been incorporated into constraint equations, the OCD rerun process was initially a manual process that was carried out on the business day following the infeasibility. AEMO has progressively automated the process. Table 1 summarises changes to the constraint relaxation procedures since commencement of the NEM. 1 That is, it maximises value of trade subject to the various constraints. 2 OCD rerun process (known as OCD rerun procedure) is available at and CVP factors (also known as CVP procedure) is available at 16 June 2011 Page 4 of 7

5 Table 1 Constraint Relaxation Procedures Changes since NEM Commencement YEAR CHANGES Before NEM Initial consultation on CVP factors & establishment of a manual OCD rerun process Commencement November 1998 Consultation and establishment of OCD rerun process and CVP factors Implementation of automated OCD rerun processes July 2001 New market ancillary services and mandatory restriction of CVP factors added December 2001 Revised CVP factors for interconnector flow, satisfactory network limits, unit direction fixed load, and ancillary services profiles. March 2002 Minor amendments to CVP reporting rules May 2002 OCD reruns automated so that most reruns are undertaken in real time Review OCD process to consider issues identified with fast-start unit commitment 2005 Review OCD process to consider issues with treatment of FCAS prices January 2011 Consolidated OCD rerun process document published Revisions to the CVP factors have been made in consultation with the Dispatch and Pricing Reference Group (DPRG) 3. 3 Matter under Consultation The matter under consultation is identified in clause 3.8.1(c)(1) of the Rules. Clause 3.8.1(c) provides: AEMO must establish procedures to allow relaxation of power system constraints listed in clause 3.8.1(b) in order to resolve infeasible dispatch solutions, subject to the following principles: (1) the procedures are developed in consultation with Registered Participants to achieve a reasonable dispatch outcome while maintaining consistency with AEMO s obligations to maintain power system security and the pricing principles listed in clause 3.9.1; and (2) AEMO must report to Registered Participants any events requiring the relaxation of these constraints. AEMO publishes the information described in paragraph (2) through its electricity market management systems and is not part of this consultation. In this consultation, AEMO is consulting on: 1. Consolidating the principles of the CVP application and OCD rerun processes into a single constraint relaxation procedure (see Appendix 1) 2. Proposing a process for making changes to the constraint relaxation documents. AEMO proposes to continue consultation with the DPRG for operational changes to the schedule of CVP factors and the OCD rerun process, and more broadly for more significant changes. Under the AEMO s proposal, three documents will be produced: one procedure, one schedule of CVP factors and one OCD rerun process document. The procedure (Appendix 1) is to be finalised at the conclusion of this consultation. Any changes to the procedure will be subject to NER clause (c). The schedule of CVP factors 4 (see Appendix 2 for the format of the document) and the OCD rerun process 5 (see Appendix 3) will be developed and updated in consultation with the DPRG, and consulted more broadly if required. Figure 1 shows the proposed document structure and matters for consultation. 3 Information about the DPRG is available on AEMO s website at 4 Recreated from the current CVP Factors document and is not part of this consultation 5 Rebranded from the current OCD Rerun Procedure and is not part of this consultation 16 June 2011 Page 5 of 7

6 Figure 1: Matters under consultation Matters under Consultation Matter #1 Proposed Procedure Matter #2 - Proposed Document Change Process ` Proposed ` Constraint Relaxation Procedure (Appendix 1 of the Consultation Paper) Existing documents published on AEMO s website Any change to the procedure required? Yes Dispatch constraint violation penalty factors Recreate as a Schedule Document Draft Schedule of Constraint Violation Penalty Factors (Appendix 2 of the Consultation Paper) No Any change to the process documents required? Yes ` Consult DPRG about process document changes No Over-Constrained Dispatch Rerun Process (known as OCD Procedure) Rebrand as a Process Document Over-Constrained Dispatch Rerun Process Document (Appendix 3 of the Consultation Paper) No Is change significant? Yes Consult DPRG Public consultation End The NER does not require use of the Rules consultation procedure. Accordingly, AEMO proposes to undertake a single round of consultation on the procedure and the process for making changes to the documents. 16 June 2011 Page 6 of 7

7 4 Consultation Process Please refer to relevant section in the Notice of Consultation. 5 Closing Date for Submissions Please refer to relevant section in the Notice of Consultation. 6 Responding to this Consultation Paper Please refer to relevant section in the Notice of Consultation. 16 June 2011 Page 7 of 7