Energy Markets and Effect of

Renewable Energy Integration

 Vertically Integrated Utility
• One utility handles generation, transmission
and distribution in one geographical area
• Quality power (constant voltage and
frequency) has to be provided.
• Prices were regulated.
• Monopoly franchise
• Regulatory oversight
 Advantage of Vertical Integration
• Risk free investment in energy infrastructure
• Avoidance of exploitation of customers due to
monopoly
• Usually government owned or supported
 Reasons for deregulation
• Technological:
--Increasing efficiency of smaller units
--Computerized controls
--Offsite monitoring of several units
• Economic:
--Infrastructure is built and paid of
--Market based system lead to reduction of cost
--Competition increases focus on customers
 Deregulated market
• Unbundling of activities
• Generators were financially separated from
transmission
• Transmission still usually is a monopoly
• Competition is introduced in the generators
• Deregulation started in early 1990s
 Energy Market
• Power Purchase Agreements
• Day Ahead and Real Time market
• Day ahead market related to unit commitment
and economic dispatch
• Day ahead market prices are fixed in hourly basis.
• Real time market takes care of imbalances in day
ahead schedule and real time demand.
• Prices are fixed few hours ahead
• Power exchange India Limited
 Ancillary services market
• Maintaining reliability
• Forward Reserve Market : e.g. In US New
England ISO there are 30 minute and 10
minute non-spinning reserves.
• Real Time reserves: Operating reserves are
needed when there is a sudden loss of a large
generator or a major transmission line during
all periods
 Renewable Energy Integration
• Wind and Solar resources are intermittent in
nature.
• Requires technological and market changes to
accommodate these in grids.
 Merit order Dispatchable loads
• Nuclear
• Hydro
• Coal
• Natural Gas (CCGT)
• Open cycle gas turbine
• Petroleum
Wind Solar being non-dispatchable pose new
challenges.
California Duck Curve
South Australia Duck Curve
 Solar Thermal, Geothermal and
Biomass
• Geothermal and biomass are dispatchable
renewable sources
• Solar Thermal with thermal storage (cheaper
than batteries) can also be dispatchable.
• Crescent dunes power plant with thermal
storge
 Battery
• Battery prices are going down
• For ancillary services batteries can be quite
competitive as prices are high
• Response time is small.
• South Australia Tesla 100MW/120MWh
battery
• California Tesla 20MW batteries
• May compete with peakers
Maintaining reliability with renewable
• Capacity Markets
• T-4 years reverse auction of capacity services
• T-1 reverse auction for capacity services
• Demand Response and batteries can be part
of capacity markets
• PJM RTO and UK
 Curtailment of Renewable Energy
• Can occur due to transmission congestion
• Or due to excess production at low load periods
• Negative prices reasons:
--Conventional power plants are inflexible
--In case of PPAs thay may be already paid for
--May hae to run for reliability reasons
--Renewables may run for production subsidies
 Energy Imbalance Market (EIM)
• An EIM would pool in electricity generation within a
region and dispatch resources.
• This could moderate the variability of renewable
generation resources and electricity demand on least
cost basis.
• Western Interconnection in US and Canada