Wholesale Energy Markets Overview. Jeff Klarer Market Strategist

Transcription

1 Wholesale Energy Markets Overview Jeff Klarer Market Strategist

2 Wisconsin Electric Utility Fuel Rules (PSC-116) Fuel Cost Components Fuel for generation (coal, natural gas, uranium, etc.) Energy market purchases Energy market sales (less than 3-years duration) Renewable resource credits Emission allowances/chemicals Risk management costs Financial transmission rights Fuel Cost Plan Approved forecasted fuel cost (filed annually) Tolerance band of +/- 2% of approved fuel cost 1

3 Wholesale Market Risks Commodity price risk Coal Natural Gas Electric Price (both capacity and energy) Basis price risk Natural Gas Electric Price Locational (transmission related) Temporal (time related) Forced outage risk Counterparty default risk 2

4 Wholesale Markets Bilateral Markets (Financial and Physical) Electric capacity and energy Natural gas Coal Fuel oil Commodity Exchanges (Financial) CME (NYMEX) Intercontinental Exchange (ICE) Organized Electric Markets MISO, PJM, NEPOOL, NYISO, etc. 3

5 Bilateral Markets Prior to MISO market start Used for both long term and short term (day-ahead and hourly) electric transactions Required the purchase of transmission service Long-term firm service to non-firm hourly service Transactions were entered into the NERC tagging system Transmission congestion managed via TLR Used for fuel commodity purchases Natural gas Coal Fuel oil 4

6 Bilateral Markets Post MISO market start Used for long term electric transactions Day-ahead and hourly transactions predominately occur through the MISO market Transactions within the MISO market footprint may not require additional transmission service Cross border transactions do require transmission Transmission congestion managed via generation redispatch Used for fuel commodity purchases Natural gas Coal Fuel oil 5

7 MISO Capacity and Energy Markets Planning Resource Auction ( PRA ) Annual auction that provides a way for Market Participants to meet their resource adequacy requirements Day-Ahead and Real-Time Energy and Ancillary Services Market ( DART ) Provides a platform for matching the supply and demand of energy Auction Revenue Rights and Financial Transmission Rights Market ( ARR/FTR ) Provides a mechanism to hedge against transmission congestion charges 6

8 MISO Planning Resource Auction Annual auction to ensure that enough capacity resources are secured to ensure that a Loss of Load Expectation of 0.1 is met Expectation that 1 day every ten years that firm load curtailments will be required Splits the MISO footprint into 10 Local Resource Zones to ensure resource adequacy Resources that clear the PRA have a must offer requirement in the DART 7

9 2018/2019 Planning Resource Auction Results (Select Slides) 8

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14 MISO Day-Ahead and Real-Time Markets What are the MISO Markets? The MISO markets are two separate energy and ancillary services markets, the Day-Ahead ( DA ) Market and the Real-Time ( RT ) Market Both markets use the concept of Locational Marginal Pricing ( LMP ) for determining payments to generators and charges to load based upon generator offers and load bids 13

15 MISO Level 100 Energy and Operating Reserves Markets Training (Select Slides) 14

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20 MISO Day-Ahead and Real-Time Markets 19

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26 MISO Day-Ahead Market Objective function is to produce a lowest production cost result, not lowest LMP Model solves with a perfect solution because topology, supply, and demand are known precisely PRA cleared resources MUST be offered All forecasted load NOT NECESSARILY bid FTR values are determined based on the DA results 25

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31 MISO Day-Ahead and Real-Time Markets Financially Binding Generation/load cleared in the DA market will be paid/pay the market clearing price for the number of MW dispatched/cleared If the RT output/load is less than the DA cleared level, the unit pays/load is paid the RT price for the variance from the DA schedule If the unit is committed by MISO, the unit is guaranteed revenues to cover the costs stated by the unit s offer ( make whole provision ) 30

32 Offering Generation 31

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35 Resource Offer Commitment Status Unavailable: designates that the unit is not available for consideration in market commitment or dispatch Emergency: designates the unit is available for commitment and dispatch in emergency situations only Economic: designates the unit is available for commitment and dispatch by MISO. The default status for a unit is the Economic status Must Run (self-commit): designates the unit as committed per Market Participant request and is available for dispatch by MISO (does not qualify for a make-whole payment) 34

36 Three Part Price Offer Start-up Offer Revenue requested to support a start of the unit. This offer should be based on the marginal cost of a unit start. That is, what additional costs are created from a offline state to an online state. No-Load Offer Revenue requested each hour that the unit is online. This offer should be based on the hourly marginal cost of a unit being online. That is, what additional hourly costs are created from a offline state to an online state. Energy Offer Curve Revenue requested for varying levels of output. This offer should be based on the per MWh marginal cost of a unit at varying output levels. That is, what additional costs are created from an increase of 1MW of output at varying output levels. This curve must be monotonically increasing. 35

37 Bidding Load 36

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39 Bilateral Transactions 38

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42 Virtual Transactions 41

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44 Questions? 43