Efficient operation of power systems increasingly requires accurate forecasting of load and variable energy resources (VER) production, along with flexible resources and markets, capable of adapting to changing conditions in the intraday horizon. It is of utmost importance to reflect these needs in price signals, to align the incentives of market agents with the new challenges. The two-settlement system used by U.S. ISOs falls short to provide efficient intraday economic signals and a cost reflective allocation of intraday rescheduling costs. This paper advocates for a multi-settlement system, which entails calculating intraday prices as forecasts are updated and re-schedules are executed. This approach incorporates more granular prices, as in European intraday markets, while keeping the efficient centralized dispatch logic of the ISO model. A stylized case example illustrates the virtues of a multi-settlement system, which sends cost reflective signals, and consequently facilitates VER integration.
ACER-CEER (2015). “Joint ACER-CEER response to the European Commission’s Consultation on a new Energy Market Design.” October7, 2015.
2.
BatlleC.Perez-ArriagaI.J.Zambrano-BarraganP. (2012). “Regulatory design for RES-E support mechanisms: Learning curves, market structure, and burden-sharing.” Energy Policy41: 212-220. https://doi.org/10.10167j.enpol.2011.10.039.
3.
BorggrefeF.NeuhoffK. (2011). “Balancing and Intraday Market Design: Options for Wind Integration” (SSRN Scholarly Paper No. ID 1945724). Social Science Research Network, Rochester, NY
4.
CAISO (2013). “FERC Order No. 764 Final Draft Tariff Language.” Published November 20, 2013. Accessed February2016. Available at: www.caiso.com.
5.
CAISO (2015a). “Business Practice Manual for Market Operations, version 43.” February19, 2015.
6.
CAISO (2015b). “CAISO Fifth Replacement Tariff.” Version of June12, 2015.
ERCOT (2015). “ERCOT Nodal Protocols.” Version of December31, 2015.
9.
Eurelectric (2010). “Integrating intermittent renewables sources into the EU electricity system by 2020: Challenges and solutions.” May2010. Available at: www.eurelectric.org.
10.
European Commission (2015a). “Commission Regulation (EU) 2015/1222. Establishing a guideline on capacity allocation and congestion management.” Official Journal of the European Union: L 197/24. July24, 2015.
11.
European Commission (2015b). “Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions launching the public consultation process on a new energy market design.” COM(2015) 340 final, SWD(2015) 142 final. July15, 2015.
12.
FERC (2012). “Integration of Variable Energy Resources.” 18 CFR Part 35, Order No. 764, Docket No. RM10-11-000, June22, 2012.
13.
FERC (2014). “Operator-Initiated Commitments in RTO and ISO markets.” Staff Analysis: Docket No. AD14-14-000, December2014
14.
FERC (2016). “Fast-Start Pricing in Markets Operated by Regional Transmission Organizations and Independent System Operators.” Docket No. RM17-3-000, 157 FERC ^ 61,213. December15, 2016.
15.
GE Energy Consulting (2014). “PJM Renewable Integration Study. Tasks 3B & 4. Market Analysis and Mitigation.” March31, 2014. Available at: www.pjm.com.
16.
HelmanU.HobbsB.F.O’NeillR.P. (2008). “Chapter 5 - The Design of US Wholesale Energy and Ancillary Service Auction Markets: Theory and Practice.” In: SioshansiF.P., Competitive Electricity Markets, Elsevier Global Energy Policy and Economics Series. Elsevier, Oxford, pp. 179-243. https://doi.org/10.1016/B978-008047172-3.50009-X.
17.
HenriotA. (2014). “Market design with centralized wind power management: Handling low-predictability in intraday markets.” The Energy Journal35, 99-117. https://doi.org/10.5547/01956574.35.L6.
18.
IEA (2016). “Re-powering markets: Market design and regulation during the transition to low-carbon power systems.” Available at: www.iea.org
ISO-NE (2014). “Overview of New England’s Wholesale Electricity Markets and Market Oversight.” May 6, 2014. Available at: www.iso-ne.com.
21.
ISO-NE (2015). “ISO-NE Transmission, Markets and Services Tariff, Section III - Market Rule 1.” Version of November2015.
22.
KaranfilF.LiY. (2017). “The Role of Continuous Intraday Electricity Markets: The Integration of Large-Share Wind Power Generation in Denmark.” The Energy Journal38 (2): 107-30. https://doi.org/10.5547/01956574.38.2.fkar.
23.
KlessmannC.NabeC.BurgesK. (2008). “Pros and cons of exposing renewables to electricity market risks—A comparison of the market integration approaches in Germany, Spain, and the UK.” Energy Policy36, 3646-3661. https://doi.org/10.1016/j.enpol.2008.06.022.
24.
LiberopoulosG.AndrianesisP. (2016). “Critical Review of Pricing Schemes in Markets with Non-Convex Costs.” Operations Research. https://doi.org/10.1287/opre.2015.1451.
25.
McGarrigleE.VLeahyPG. (2015). “Quantifying the value of improved wind energy forecasts in a pool-based electricity market.” Renewable Energy80, 517-524. https://doi.org/10.1016Zj.renene.2015.02.023.
26.
MISO (2015a). “MISO Tariff Module C - Energy and Operating Reserve Market.” Version of May2015.
27.
MISO (2015b). “Business Practices Manual No. 002 - Energy and Operating Reserve Markets.” Revision 14. March2015.
Monitoring Analytics, LLC (2016). “Energy Uplift (Operating Reserves) Recommendations.” State of the Market Report for PJM, pp 173-214. November10, 2016.
30.
NeuhoffK.BatlleC.BrunekreeftG.KonstantinidisC. VasilakosNabeC.OggioniG.RodillaP.SchwenenS.Siew-ierskiT.StrbacG. (2015). “Flexible short-term power trading: Gathering experience in EU countries.” Discussion Papers, Deutsches Institut fur Wirtschaftsforschung. https://doi.org/10.2139/ssrn.2639088.
NYISO (2015). “Market Administration and Control Area Services Tariff (MST).” Version of May2015.
33.
NYISO (2014). “NYISO Accounting and Billing Manual.” Version 3.3. Effective December29, 2014.
34.
ParsonsJ.E.ColbertC.LarrieuJ.MartinT.MastrangeloE. (2015). “Financial Arbitrage and Efficient Dispatch in Wholesale Electricity Markets.” MIT Center for Energy and Environmental Policy Research No. 15-002. https://doi.org/10.2139/ssrn.2574397.
35.
PCR (2016). “Euphemia Public Description: PCR Market Coupling Algorithm.” Version 1.3. January25, 2016. Available at: www.epexspot.com.
36.
PJM (2013a). “Commitment Decision Making.” (Presentation). August 20, 2013. Available at www.pjm.com.
PJM (2017). “Order on proposed tariff revisions.” Docket No. ER16-372-002, 158 FERC H 61,133. February3, 2017.
41.
PopeS.L. (2014). “Price formation in ISOs and RTOs, principles and improvements.” October2014. FTI Consulting. Available at www.epsa.or
Supplementary Material
Please find the following supplemental material available below.
For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.
For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.
