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NYISO adjusting power market design to add more granular operating reserves

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Needed to meet challenge of rapid renewable energy increase

Will create market-based system for procuring needed reserves

New York — The New York Independent System Operator is evaluating market design elements as part of its More Granular Operating Reserves project, which seeks to ensure effective pricing of energy and ancillary services products to reflect system conditions as more renewable generation is built.

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"As the penetration of weather-dependent generation technologies increases, the grid will need responsive and flexible resources that provide Ancillary Services, such as reserves, to address expected and unexpected changes in net load," Ashley Ferrer, a NYISO market design specialist, said in a presentation given Wednesday at a Market Issues Working Group meeting that was posted on the grid operator's website.

Reserve prices fall when and where grid reliability service is not needed or when there is ample supply, which in addition to fostering competition, allows prices to help maintain grid reliability at the lowest cost, according to the presentation.

Under the Climate Leadership and Community Protection Act, also referred to as New York State's Green New Deal, 70% of the state's power supply must be produced by renewable power generation by 2030, and the electric power sector must be 100% greenhouse gas emissions free by 2040.

More Granular Operating Reserves is one of several current projects evaluating components of the ancillary services market such as shortage pricing values and quantity of reserves procured, NYISO said.

Load pockets are constrained areas in New York City which are impacted by load levels and generation capability within the pocket, as well as transmission-supported import levels into the pocket.

The increasing reliance on weather-dependent renewable energy resources can potentially lead to more dynamic net load and greater load variability/uncertainty within load pockets, which will require that sufficient resources are available to respond to potentially rapid and unanticipated load changes, according to the presentation.

New York's 2018 peak load day occurred on August 29 and while wind and solar power reached maximum output of 1,100 MW and 780 MW respectively around noon, peak demand was not reached until 4 pm, according to NYISO's 2019 Power Trends report.

By that time, transmission constraints required that wind production be curtailed to about 445 MW while solar energy production declined by nearly 48%, contributing only 410 MW, which NYISO said demonstrates the challenge of reliably integrating intermittent resources under high-demand conditions.

LOCAL RELIABILITY REQUIREMENTS

The NYISO is exploring the possibility of establishing load pocket reserve requirements to address certain New York City load pocket Local Reliability Requirements, according to the presentation.

The NYISO proposes targeting certain load pockets within the city where units are commonly committed out of economic merit for local reliability, the NYISO said.

The expected benefits include:

  • Generators providing local reliability needs would be scheduled economically through a market-based mechanism
  • Aligning reserve regions with load pockets provides a clear signal as to the additional value that may be attributable to resources in certain areas
  • Incentive for investment in resources that can supply 10-minute and 30-minute reserve products

"In the absence of a market mechanism, economic incentives for investment in resources in load pockets capable of providing the required reserves are muted," the NYISO said.

Moving forward, the grid operator will identify load pockets to target for potential reserve regions within New York City, determine appropriate quantity of reserves to be procured in each identified load pocket and determine appropriate reserve demand curve values for load pocket reserve requirements.

The goal is to present a completed market design at stakeholder meetings in September.

-- Jared Anderson, jared.anderson@spglobal.com

-- Edited by Rocco Canonica, newsdesk@spglobal.com