Implementation of Market

1
Implementation of Market Operational Framework
for Wind Integration

• Stakeholder Information Session
• Monday, March 23, 2009
• Metropolitan Centre, Calgary

2
Agenda

• Welcome and Purpose of Session
• Role of the AESO
• Challenges with Large Scale Wind Integration
• MOF Background
• Recommendation Paper
• WP Forecasting
• WP Management
• Supply Surplus
• Implementation and Key Initiatives
• Transmission Update
• Summary and Next Steps

3
Purpose of todays session

• Provide stakeholders an opportunity to ask
  questions, clarify information in order to submit
  formal comments to MOF Implementation
  Recommendation Paper by April 3 deadline
• Review key recommendations in MOF Implementation
  Paper
• WP Forecasting
• WP Management
• Supply Surplus
• Provide a brief update on key initiatives related
  to wind integration
• Review next steps in process

4
Stakeholder consultation principles

• The AESOs consultation process offers all
  stakeholders an opportunity for meaningful input
• All stakeholders have the right to comment on the
  AESO's plans, decisions and actions
• The experience and expertise offered by
  stakeholders through the consultation process
  improves the quality and implementation of
  decisions
• The AESO's consultation process and rationale for
  decisions are transparent
• All stakeholders have the right to be informed of
  the AESOs direction, plans, the status of
  issues, and decisions in a timely manner
• The AESO measures the effectiveness of its
  consultation process in order to improve future
  performance

5
Albertas electric industry

• 9,806 MW peak and 80 LF
• 12,159 MW total generation
• Over 280 generating units
• Wholesale market with about 200 market
  participants
• gt 21,000 km of transmission
• Interties BC (up to 780 MW) Sask. (up to 150 MW)

(Wind)497 MW
5,893 MW
(Other renewables)214 MW
4,686MW
869 MW
BC
Alta
Sask
Over 12,000 MW of Wind Power Interest
6
AESO - Our core business

• Markets develop and operate Albertas real-time
  wholesale energy market to facilitate fair,
  efficient and open competition
• Transmission System Development plan and develop
  the transmission system to ensure continued
  reliability and facilitate the competitive market
  and investment in new supply
• Transmission System Access provide system access
  for both generation and load customers
• System Operations direct the reliable operation
  of Albertas power grid

7
Grid and Market Operations Key functions

• Operate the AIES in a secure and reliable state
• Forecast and anticipate future operations (1-24
  hours)
• Manage and monitor AIES (flows/volts) within
  limits and standards
• Manage and dispatch transmission must run
  requirements
• Manage congestion on the system
• Manage interchange/transfers on interconnections
• Coordinate TFO operation coordinate maintenance
  (GFO and TFO)
• Integrate new transmission facilities to
  interconnect generation and load
• Manage and direct power system restoration and
  emergency operations
• Conduct short term adequacy assessments
• Operate the Alberta market according to AESO
  Rules and FEOC
• Use merit orders to meet the supply/demand
  balance and ancillary services requirements
• Comply with Rules for reliability and system
  performance (spinning and operating reserves)
• Consider constraints and characteristics of
  individual units
• Ensure fair, efficient and openly competitive
  operation of the electricity markets

8
Operational and market uncertainty

• Load varies by seconds, minutes, hours, by day
  type, and with weather
• Operators are experienced and familiar with load
  patterns and it can be forecasted within
  reasonable accuracy (within few percent)
• Dispatchable generation can vary - typically
  within 1 of dispatch order
• Some uncertainty with conventional supply but
  high capacity factors, outages are coordinated
  and availability is known
• Supply resources may not be available or limited
  in capacity due to outages or de-rates
• Pool price affects supply and demand (price
  sensitive load)
• Significant integration of wind generation can
  alter familiar operational patterns
• Semi-dispatchable resource (only when there is
  fuel)
• More challenging to forecast (may be out by
  several hours and 100 magnitude)
• Capacity factors vary by weather, season and time
  of day
• Operational plans are based on best available
  forecasts of needs and available resources
• There is always error and uncertainty in our
  business - we are good at managing it!

9
Challenges to integrating large scale wind

• Supply-demand balancing is more challenging with
  wind power wind can be unpredictable, increase
  or decrease rapidly and patterns can be
  correlated or counter to load
• Limits to how much wind a system can accommodate
  need access to flexible resources considering
  physical limits (ramping and start up times)
• Reliability issues gt 900 MW need mitigating
  measures, resources and the scale/costs can
  escalate
• Market Impacts can increase variability and
  uncertainty
• Need Transmission upgrades in southern part of
  the province and recognizing diversity

Supply
Demand
10
Need dispatchable resources to accommodate wind
Amount of dispatchable generation varies
according to market conditions
Market Capability Above Baseload
Baseload Generation 0 Offers
11
Wind power diversity and ramps
In Alberta there are times when there is
diversity amongst wind power facilities
There are times when there is little to no
diversity amongst wind power facilities
12
Correlation between pool price and wind power

• Wind generation offers into the market at zero
  dollars
• Pool price tends to be lower when there is a
  significant amount of wind generation
• Three factors influencing wind project
  development
• Pool price
• Federal incentives
• Environmental attributes

2007 Data
13
Wind power capacity factors

• Over 1,400 GWh of electric energy and annual
  capacity factor of about 35 in 2007
• Capacity factors of wind power
• exceed 50 during some periods or
• minimal capacity on some days (summer and winter
  peaks) due to prevailing weather conditions
• AESO and Market participants
• Must become familiar with characteristics and
• Factor it into day-day operating practices,
  decision making processes and offer strategies

Spain Wind Power Distribution(2001 2005)
14
AESOs wind integration journey
2003
2004
2005
2006
2007
2008
2009
AESO-CANWEA collaboration Initiate Wind Power
Forecasting Pilot
Phase 1 Study Study up to 2000 MW Confirms need
for Mitigating Measures
Implement MOF Recommendations Workgroup findings
incorporated into paper
Workgroups on Supply Surplus and Wind Power
Management Finalize Forecasting Pilot
Study 1200 MW of Wind Power
PH II Study and Temporary Threshold Confirm
effectiveness of Mitigating Measures
New Standard specific for Wind Power Facilities
Market and Operational Framework (MOF) introduced
CanWEA Award UWIG Award
15
The AESOs commitment
Our ultimate objective is to refocus the
dialogue with industry to integrate as much wind
into the Alberta system as feasible without
compromising system reliability or the fair,
efficient, and openly competitive operation of
the market.
16
How to add more wind?

• To integrate more wind the operator needs to
  know what to do and have the necessary
  resources/tools
• Current resources/tools
• The energy merit order
• Regulating reserves
• New resources/tools
• Wind power forecasting
• Additional regulating reserves
• Supply / load following service, (i.e. the
  service would accommodate pumped storage,
  batteries, others)
• Power and/or ramp-rate limiting of wind power
  facilities

17
Challenges and solutions
18
Wind power development (2009-2010)
Additional Regulating Reserves
Wind Power Forecasting, Wind Power
Management Supply Surplus, DDST
19
MOF Recommendation Paper

• Next major step in the implementation of the
  Market and Operational Framework (MOF)
• Represents the culmination of valuable work done
  through industry work groups.
• Provides an overview of the MOF
• Describes current system resources and mechanisms
  used to manage variability and ramps (load and
  supply) on the power system and challenges with
  large scale integration
• Provides a set of recommendations regarding
  enhancements to rules, practices and procedures
  and requirements needed to implement the MOF
• Wind power forecasting requirements
• Wind power curtailment protocol
• Supply surplus protocol

20
Wind Power Forecasting

• John Kehler

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Wind Forecasting is a Foundation

• To integrate more wind the operator needs to
  know what to do and have the necessary
  resources/tools over all timeframes
• An wind power forecast (including uncertainty)
  enhances AESO ability to maintain system
  reliability
• In order to maintain reliability we must learn
  how to deal with
• Forecast errors timing and magnitude
• Forecast uncertainty
• Forecasting enables the efficient use of
  resources

22
Forecasting

• The biggest challenge to forecasting is to
  predict when ramping starts and ends
• The benefit, if done well, will allow us to make
  efficient use of resources to manage the ramps

2 hour ahead forecast
23
Ramp Statistics

• In the pilot project the AESO applied a 20 per
  hour wind capacity criteria to define a wind
  power ramping event
• Pilot Project Results - 234 ramp up/down events
• This metric is not a concern at 545 MW of wind
  generation
• At higher levels of wind penetration (i.e. 2000
  MW ) an event where 20 of installed wind
  capacity/hour is ramping will become a
  significant event depending on when it occurs
• A 400 MW/hour in opposition to a typical load
  ramp will be a significant event

24
Wind forecasting

• Pilot project
• 3 vendors AWS Truewind (USA), WEPROG
  (Denmark) and energy and meteo (Germany)
  contracted to study wind characteristics and
  develop methodologies that work for Alberta
• Ramping how to detect large ramps
• Uncertainty how to determine level of
  uncertainty in forecast
• Facility Owner define requirements for wind
  power facility operators
• Regulating Reserves how to use forecasts to
  support AS procurement
• Information to Industry how to provide
  forecasts to market participants
• Plan to have wind power forecasting operational
  by December 2009

25
What we learned from the pilot Learning
Opportunity

• Alberta difficult to forecast wind with the
  forecast errors higher than other jurisdictions
• Mountains plus Pacific Ocean to west add
  complexity and limit upwind data density
• Complex weather Chinooks
• Forecasts need to be tuned for system operator
  needs
• Ramping events some significant ramp events
  missed. Of missed events, the down ramps were the
  most challenging

26
Wind power forecasting recommendations

• Recommendation 1
• Centralized forecasting approach
• Recommendation 2
• RFP forecasting service provider should proceed
  as soon as practicable
• Recommendation 3
• Commence consultation on rules, procedures,
  standards and technical requirements regarding
  submission of wind generator forecast
  data/information including
• data requirement such as turbine availability and
  on-site meteorological data as described above,
• communication protocols, and
• data quality required from wind generation
  facilities (or individual forecasters) to deliver
  forecasts to the AESO

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Wind power forecasting recommendations (cont)

• Recommendation 4
• Determine the capability, resources, systems and
  time required to perform the data management
  function.
• In parallel, the AESO will include data
  management as an optional requirement in the wind
  forecasting RFP
• Recommendation 5
• Monitor forecasting, market and operational
  results and develop measures of forecasting
  accuracy.
• The AESO intends to leverage available data and
  forecasting resources toward this end
• Recommendation 6
• Aggregate wind forecasts should be transparent
  and made available to all market participants,
  particularly near term to real time.

28
Recommendation for centralized forecasting
Centralized meaning one wind power forecasting
service provider for all WPFs
Wind Power Forecast data and information to the
AESO
Data from Numerical Weather Prediction models
(i.e. from Environment Canada)
Wind Power Forecast Service Provider
WPF
AESO
Meteorological data, MW output and turbine
availability from each WPF
WPF
WPF
WPF
WPF
29
WPF forecast data and information

• Options discussed for WPF data are
• WPF data to Third Party then to Forecaster then
  to AESO
• WPF data to AESO then to Forecaster
• WPF data to Forecaster then to AESO
• Preferred options are 2) and 3)

Power Curve for each WPF
30
Possible cost and allocation to WPF owners

• Based on cost experience during the wind power
  forecasting pilot project, provision of a
  forecasting services and data management could be
  less than 500k annually.
• Costs borne at a WPF for met towers, data loggers
  and communication are not considered in this
  cost.
• With 1000 MW of wind power this would be less
  than 0.20 per MWh of wind power generators

31
Wind Power Management

• John Kehler

32
The operational issues

• There may be times that the system cannot absorb
  all the wind generation
• The AESO would first consider the forecast
  demand, the wind power conditions, forecast wind
  power and what is available in the energy market
  for dispatch before resorting to wind power
  management
• To help the system controllers recognize and
  manage these situations, the AESO is developing a
  Dispatch Decision Support Tool
• The following conditions could trigger the use of
  wind power management
• Forecast loss of wind and insufficient ancillary
  services or ramping services
• Supply surplus conditions
• Insufficient ancillary services
• Unforeseen (i.e. not forecasted) wind conditions
• Disturbance and emergency conditions
• During over frequency conditions wind power
  facilities will need to participate in frequency
  control

33
Wind power managementSystem Operation
There may be times when wind power is forecast to
ramp down and dispatching EMMO up may require
pre-curtailment of wind generation to ensure
supply-demand balance
There may be times when wind power is forecast or
is ramping up and limiting wind generation may be
required until such time the EMMO can catch up
34
The operational issue
System Operator would determine how much wind MW
the system can accommodate. Then issue a power
limit
Unforeseen Wind Power Event
Actual MW Forecast MW
2 hour ahead forecast miss the event
Day ahead forecasts miss the event
35
WPM recommendations

• Pro-rata allocation of system wide wind
  curtailments
• Use of Potential MW Capability to allocate wind
  power curtailments and,
• Curtailments should be re-assessed and
  re-allocated
• every 20 minutes if the limit for any one WPF has
  changed by greater than 5 MW

36
Description of potential MW capability
Measured wind speed and direction
Local computer calculates Potential MW from the
turbine
Utility SCADA system sends data to the AESO
WPF SCADA System collects and sums the Potential
MW from all turbines at the WPF
37
Illustrative Example of WPM
Start of System Wind Limit event WPF limits
based on current wind power conditions at the
time limit is issued
End of System Wind Limit event
WPF limits re-allocated as Potential MW
Capability changes
Potential MW Capability
Wind Power generated
38
Supply and Surplus

• Anita Lee, P. Eng.
• Manager, Operating Policies and Procedures

39
Supply and surplus

• Wind generators and co-generation are currently
  exempt from OPP 103 (Dispatching Multiple 0
  Offers) for managing supply surplus conditions
• The MOF clearly indicated that, with higher
  levels of wind generation, the existing supply
  surplus management protocol needed to be reviewed

40
Supply and surplus

• WG recommendation Market be first given an
  opportunity to take voluntary actions when 0 SMP
  is anticipated or is occurring
• Required changes
• Provide market indication of potential supply
  surplus conditions, similar to Short Term
  Adequacy (STA) assessments for supply shortfall

41
Supply and surplus

• WG recommendation all supply facilities should
  participate in reducing MW generation during
  supply surplus conditions subject to a new
  Minimum Operating Level (MOL)
• Required changes
• Define MOL as
• A physical, not an economic constraint, and is
• The lowest generation level for a generator as
  limited by the following requirements
  legal/regulatory, environmental, health and
  safety, equipment reliability, operating level
  required to serve dispatched ancillary services,
  or operating level required to prevent damages to
  third party equipment

42
Supply and surplus

• Required changes (cont)
• Define a mechanism/process for pool participants
  to declare and submit the MOL
• Revise the "inflexible block" current definition
  to permit partial dispatch of a 0 inflexible
  offer
• Wind generators MOL 0 MW and is flexible

43
Supply and surplus

• WG recommendation 0 SMP Management Protocol
• 1. Curtail import transactions
• 2. Considering transmission system operating and
  reliability constraints (area TMR requirements,
  etc), apply the following, if effective
• Curtail flexible 0 blocks, by pro-rata
• Curtail one or more inflexible 0 blocks to the
  assets MOL
• 3. Curtail one or more assets to 0 MW (go off
  line), considering the assets minimum off time

44
Supply and surplus

• Consideration for effectiveness
• If curtailment allocation by pro-rata results in
  small volumes of curtailment to a large number of
  generating assets, it may not be effective.
• This issue will be explored in the development of
  the related OPP.

45
Supply and surplus

• Consideration for fairness
• Flexible blocks and inflexible blocks should be
  used in the protocol in a fair manner (i.e. one
  type should not be treated preferentially than
  the other)

46
Supply and surplus

• Consideration for impact to a co-gens DTS
  contract
• If the generation at a co-gen facility is
  curtailed (e.g. to its MOL), the co-gen facility
  may have to import more supply from the AIES
  causing ratcheting of its contracted DTS level
• This requires further evaluation and if there are
  inappropriate consequences, the AESO may consider
  amendments to the AESO tariff

47
Technical Requirements/Standards

• John Kehler

48
Technical requirement standards

• Interconnection Standards
• In Nov 2004, AESO developed and implemented an
  interconnection standard specific for wind power
  facilities
• Standard includes voltage ride through (low and
  high voltage), static and dynamic reactive power
  and voltage regulation
• Standards will be updated to include
• Wind Power Management (ramp rate limiting, power
  limiting and over frequency governing)
• SCADA and Communication requirements for Wind
  Power Management
• Requirements for Wind Power Forecasting

49
Over frequency control

• Over frequency conditions can occur in Alberta
  when
• Our interconnections trip during a heavy export
• Disturbances within WECC
• Arresting the over frequency condition requires
  governor control systems on the generator units
• To ensure that wind power facilities contribute
  to arresting an over frequency condition, a
  virtual governor (over frequency control) is to
  be added to the wind power facilities.
• Significant over frequency conditions (greater
  than 60.1 Hz) can occur a couple times per year
• This requirement was identified in the 2004
  standard

50
Over frequency control

• Reduce the MW output to over frequency
  conditions

51
Over frequency control

• System frequency can momentarily go above 60.036
  Hz
• 2008 data suggests
• 5 probability between 60.036 Hz and 60.1 Hz
• 0.01 above 60.1 Hz
• Based on the proposed droop characteristic for
  WPFs this would have been less than 0.02
  production in 2008.

52
System Operator Tools

• John Kehler

53
Supply-demand balancing inputWhat is changing?
How good is the load forecast today?
What are the Interconnection schedules?
What is the load forecast change? What is the
ramp rate?
What generators are still ramping from the last
dispatch? How much energy is still to come?
Is the merit order changing?
How good is the wind power forecast today?
What is the wind power forecast? What is the ramp
rate?
Net Change Ramp rate requirement
54
Supply-demand balancingDispatch decision
What is the ramp rate capability in the merit
order over the next 10, 20, 30 minutes?
What are the Regulating Reserve units doing?
How much capacity to dispatch to get the required
ramp rate?
Do I need to dispatch more ancillary services?
Will I need to activate any Wind Power Management
procedures?
Will I need to activate Supply Surplus /
Shortfall procedures?
Dispatch Decision
55
Repeat when necessary
56
System operator tools

• Dispatch Decision Support Tool (NEW)
• Provide visibility of capacity and ramping
  capability of the energy market
• Incorporate wind power forecasting
• Provide hourly and 6 hour outlook on market
  conditions (including wind)
• Prototyping/testing with operators
• Wind Power Forecasting Tool (NEW)
• Incorporate requirements from the wind power
  forecasting pilot project
• Wind Power Management Tool (NEW)
• Automate the wind power management protocol and
  procedures (limits or ramp rate limiting)
• Supply Surplus Tool (update existing tools)
• Automate the supply surplus protocol and
  procedures
• Short Term Adequacy Tool (update existing tools)

57
Functionality of DDST

• Resources
• Energy Market Merit Order
• Generator ramping characteristics
• Regulating reserve merit order
• Load Supply Following (future)
• Wind Power Management (new)

• What Is Going to Change
• System Change
• Load forecast
• Actual and forecast Interchange Schedules
• 3 Modes for Wind power forecast
• Input External Wind Power Forecast
• Persistence Forecast
• Persistence Ramp Forecast
• System Considerations
• ATC Limits
• Uncertainty Analysis

• Where We Are At
• System Status
• What supply has been dispatched
• What is the Actual generator output

Heart of DDST Provide 1 hr forecast of
supply demand balance and a 6 hr outlook
What If? System Control can toggle up and down
the merit order to see the impact of the dispatch
on the forecast imbalance
58
Update on Key Initiatives and Next Steps

• Warren Frost, P. Eng.
• Vice President, Operations Reliability

59
Transmission is a key enabler

• Transmission and intertie capacity are critical
  enablers for the development of wind generation
  resources in order to
• Interconnect variable energy resources located in
  remote regions of the province
• Deliver ramping and ancillary services from
  inside and outside Alberta to balance supply and
  demand
• Exchange any surplus energy with other
  jurisdictions.
• Direction is consistent with the PES (announced
  in December 2008), which sets the context for
  comprehensive upgrades to the transmission system
  
• Develop transmission to areas of renewable and
  low-emission energy
• Ddevelop additional interties to ensure access to
  adequate electricity supply and to provide great
  export opportunities for producers
• AESO has advanced plans for the south region of
  the province to accommodate the large scale
  development of wind generation

60
Wind capacity and generation scenarios
61
Transmission development to interconnect wind
generation

• SW Facilities Application
• AUC approved AltaLinks application March 10
• 240 kV Pincher Creek to Lethbridge
• Interconnect 1000 MW of wind
• South NID
• AUC filed Notice of Hearing March 9
• 240 kV loop to interconnect up to 2,700 MW of
  wind over next 10 years
• East Central Alberta (Hanna area)
• Consultation on need underway (10 Open Houses
  recently completed)
• Interconnect 1,400 MW of wind
• Interconnection Queue Management
• Strong interest in wind development over 12,000
  MW in the queue
• Queue Management Business Practice and associated
  project milestones ensure that projects are
  progressing

62
Summary and next steps

• Recommendation Paper Comment Matrix posted to
  AESO website March 5
• Stakeholder Consultation Session March 23
• Deadline for stakeholder comments on the paper
  April 3
• AESO publishes stakeholder comments received to
  website April 17
• Final Recommendation Paper posted to AESO website
  (includes stakeholder comments AESO responses)
  Q2 2009
• First Phase of System Operator Tools Operational
  Q2 2009
• Wind Power Forecasting RFP Issued 2Q 2009
• Consultation on proposed ISO and OPP Rule changes
  indicated in the Final Recommendation Paper 
• Forecasting Obligations
• Wind Power Management
• Supply Surplus Protocol
• File with AUC, rules, operating policies and
  procedures that govern the integration of wind
  integration including wind power management,
  forecasting obligations, and supply surplus
  conditions Fall 2009

63
Process

Comments on Recommendation paper
Post Draft rule/OPPs for review
Post comments
Post comments
Post final recommendations
Post final rule/OPPs
Develop Draft rule/OPPs
Approve and file with AUC
64
Next steps
65
Summary

• 543 MW on AIES without operational issues or
  increase in AS
• There has been no requirement to increase
  Regulating Reserves volumes
• System performance is good (CPS2 at 98 and no
  OTC violations)
• This is consistent with our study results from
  2005
• Gaining experience (ISO and industry) and
  learning from events
• Collaborative relationship with CanWEA has been
  invaluable
• Weekly wind reports published and continuous
  learning
• NERC IVGTF
• Continued collaboration with UWIG
• We must be prepared for the large scale
  integration of wind
• This is the next major step in the implementation
  of the Market and Operational Framework (MOF)
• Need your input on the recommendations regarding
  enhancements to rules, practices and procedures
  and requirements needed to implement the MOF
• Wind power forecasting requirements
• Wind power curtailment protocol
• Supply surplus protocol

66
Questions