1. Point by @TommyVitolo re the Day-Ahead (DA) market v. the Real-Time (RT) market taken: despite the difference in pricing in the RT market from 1/17 to 1/18, prices in the DA market remained consistent.
It might be worth taking the time to ...
It might be worth taking the time to ...
2. ...talk though about the DA & RT markets for the benefit of those who aren’t familiar with them, and to talk about what occasional dramatic variations in RT market pricing day-to-day (See 👇🏻) reveal about the variability of renewable resources.
Here we go...
Here we go...
3. Let’s begin w/@isonewengland’s description of the DA & RT markets. Per ISO-NE (bit.ly/2TFOjSK p 1) the DA market “allows market participants to secure prices for electric energy the day before the operating day and hedge against price fluctuations that can occur...
4. ... in real time.” It’s worth noting that even though the DA market is described as a “hedge”—a way to moderate the volatility of the RT market—the DA market can be volatile too, albeit seasonally. I know, because the City of Boston buys ...
5. ... its annual electricity requirement (~144k MWh/yr) in the DA market. In NE the DA market is most volatile in winter when natural gas generating plants compete with property owners using natural gas for heating. The heating load is served first, and the gas generators ...
6. ... may experience scarcity pricing for the remainder of the gas. Those higher scarcity prices are passed on by gas generators to DA market participants in the price they pay for electricity. As a result, during a cold snap, DA prices can go *stratospherically* high, ...
7. ... but in summer, when there’s ample gas because it isn’t being used for heating, DA market electricity is comparatively inexpensive. Notwithstanding occasional expensive winter pricing, the City of Boston consistently saves a significant sum of money buying electricity in...
8. ... the DA market, compared to what it would have paid to Eversource for default electric service.
But what about the RT market? Per ISO-NE (bit.ly/30CbVc9 p 1-1) the RT market is administered to: “[s]atisfy Operating Reserve and Replacement Reserve requirements ...
But what about the RT market? Per ISO-NE (bit.ly/30CbVc9 p 1-1) the RT market is administered to: “[s]atisfy Operating Reserve and Replacement Reserve requirements ...
9. ...above what was scheduled in the Day-Ahead Energy Market, if required.” On days like 1/17, when there is brilliant sunshine & the wind is blowing, very few additional non-renewable resources are required to meet reserve requirements. Because ISO-NE ranks those additional...
10. ...resources in ascending order based on cost, only the least expensive non-renewable resources are needed to make up the difference. So on 1/17, even though it was a cold winter’s day, ISO-NE didn’t have to go deep into its bench of ascending cost non-renewable resources,...
11. ... so LMP prices were only $3.50-$4.16. The following day, a cloudy day with far less wind, ISO-NE had to go much deeper into its bench of ascending cost non-renewable resources, and LMP prices were *much* higher as a result: $74.93-$78.17.
12. But RT market prices were not only more expensive on 1/18, the portfolio of RT generating resources that day were also “dirtier,” with increased amounts of GHG emissions. This highlights the variable nature of renewable resources: they can contribute a large amount of ...
13. ... generation one day (1/17), & a small fraction of generation the next. We shouldn’t just consider the variability of renewable resources, though: we should consider the variability in the carbon content of the grid. Currently, variability in the carbon content ...
14. ... of the grid correlates to the variability of renewable resources: decreased production from renewables means increased levels of emissions; increased production from renewables means decreased emissions. (No surprise there.)
15. ISO-NE is fond of pointing out that system CO2 emissions declined 2007-17, the decade covered in its most recent emissions report. (bit.ly/2mdPrOW) But as you can see from the figures below, those declines were achieved by driving coal off the NE grid with ... 
16. ... incremental amounts of renewables and a lot more gas generation. (Aside: ISO-NE measures CO2 emissions from natural gas at the power plant stack—it does not take emissions associated with producing and transporting natural gas into account. If it did, ...
17. ... reductions in system CO2 emissions would undoubtedly be substantially less.) Reducing CO2 emissions at the same rate as 2010-17 now means driving gas generation off the grid, and right now gas is needed to maintain the reliability of the NE grid. How then ...
18. ... will that be accomplished? In five-minute increments in the RT market, by increasing the system’s ability to dispatch greater amounts of load, with additional GWs of solar and wind (particularly the 5.94 GWs of off-shore wind that ME, MA, RI, & CT have committed ...
19. ... to build), and with greater amounts of storage and hydro. A recent report by @TheBrattleGroup (bit.ly/30EZwo1) described, among other things, how those resources could work, season-by-season, to reduce system emissions over time.
20. That future state would minimize use of gas generation, and that is the key to reducing system emissions going forward: by increasing the grid’s capacity to compensate in real-time (i.e. the RT market’s five-minute increments) to the variability of renewable resources, ...
21. ... fewer non-variable FF resources will be needed to guarantee system reliability. That is, going forward the bench of resources used to meet load requirements throughout any given day must include a much broader array of resources, and the ability of the system to ...
22. ... mix and match those resources to satisfy load (and reserve) requirements every five minutes will have to be enhanced. But configuring the grid to account for variability won’t just change the RT market—it will mean that the DA resource mix will have changed as well. ###
Perhaps we could figure in greater dispersion of resources geographically so that increased import/export of power with NYISO, PJM, & Hydro Quebec would help balance RE variability across our little corner of the continent?
