A Balancing Act: Ramping Capabilities in Wholesale Electricity Markets

By Chris Marshall Reliably operating a power system requires grid operators to ensure that electric supply always equals real-time electric demand. In the US, this equates to balancing power at or near 60 Hz in order to avoid a power imbalance, also known as frequency deviation. Historically, this balance has been achieved by attempting to accurately forecast load, and the reliance on controllable – or “dispatchable” generation assets. However, the growing proportion of generation coming from intermittent and variable generation sources has created new challenges for balancing authorities, particularly with regard to ramping capability.

“Ramping” is the ability of a generating facility to start and stop on command, while the “ramp rate” is the rate at which a power plant can increase or decrease output. This type of flexibility in generating units to ramp up or down quickly is paramount in managing variability in electric loads and grid stability. The impacts of variable resources on grid operations can perhaps best be seen in the California Independent System Operator (CAISO) wholesale electricity market, where an innovative “ramp market” is increasing flexible generation to help integrate wind and solar generation.

As power deregulation evolved throughout various states in the US over the last 20 years, the implementation of transparent, competitive wholesale electricity markets followed. Since electricity cannot economically be stored in bulk at the utility-scale level, and since electricity production and consumption is contemporaneous, wholesale electricity markets are uniquely structured to generally include a long-term capacity market (and generator unit commitments) often projecting years in advance, a day-ahead market, an intra-day market, and a real-time market. CAISO, who acts as the impartial grid operator for California’s transmission system and carries out the wholesale power market in the state has witnessed growing renewable energy capacity on its grid.

With California approving a renewable portfolio standard (RPS) of 33 percent by 2020, renewable penetration, particularly solar, has steadily grown. This, in turn, has led to shifting load profiles and forecasts. To illustrate these changes in real time electricity demand, CAISO created the “duck curve” forecast that takes into account “net load” – the difference between forecasted load and forecasted electricity production from variable energy resources, like wind and solar. When considering the operating challenges that accompany this net load scenario, it is clear that CAISO must maintain the ability to meet steep ramping needs in the morning, when variable energy resources begin producing electricity, and in the evening, when their production largely slows down.Duck curve

Due to the load fluctuations that accompany increasing integration of wind and solar generation, CAISO must maintain the ability to quickly ramp up or down resources on its grid in order to avoid disruptions. Because baseload generating units cannot be quickly cycled, and most generators attempt to resist being frequently ramped up or down due to negative impacts on their equipment, another option has been to obtain marginal generation outside of CAISO’s market. This is often more expensive than applying available resources already on its system. Thus, a solution for system ramping capability in the real-time balancing market needed to be designed. CAISO has labeled this their flexible ramping product.

The flexible ramping product includes the creation of a new short-term energy market that serves to shift energy supply or demand within minutes. This type of ramp capability differs from traditional resources found in ancillary services markets such as spinning reserves, which are aimed at minimizing the effects of a generator tripping, or regulation, which is aimed at maintaining frequency. Instead, this ramp market attempts to send generators sufficient price signals and incentivize them to bid their true ramp capability.

Several pay schemes can be considered when designing a ramp services market, such as having generators submit a fixed price for ramp capability along with their energy bid, or providing a ramp offer curve. However, until utility-scale electricity storage becomes commonplace in power systems, CAISO’s flexible ramp product can serve as a valuable example for other wholesale market operators that are bringing online greater variable energy resources.

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