REBA, Level Ten Energy and NERC Balancing Authorities: A New Supply Chain
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- Apr 8, 2019 8:03 pm GMT
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The EIA provides us with a concise overview of the role Balancing Authorities (BA) play in keeping the lights on for everyone across the vast array of interconnections in the United States:
“Balancing authorities maintain appropriate operating conditions for the electric system by ensuring that a sufficient supply of electricity is available to serve expected demand, which includes managing transfers of electricity with other balancing authorities.”
A more complete set of documentation regarding the BA role and responsibilities is available from NERC.
I recently read an article about an exciting, new marketplace for Renewable Energy Buyers called Level Ten Energy. By itself, the Level Ten marketplace concept should expect to have some traction in attracting renewable energy buyers, but when combined with the “Renewable Energy Buyers Alliance” (REBA), this combination sends a strong signal to the energy industry that things are changing fast. This is indeed a landmark change for the energy industry and promises to make “Capacity Markets”, in their current form, a distant memory.
The Supply Chain for energy, which was once an orderly, finely controlled process, is being bombarded with market forces emanating from green energy buyers, State Energy Programs, Fuel Security challenges and other powerful forces. Regulators at the State and Federal levels are being called upon to provide guidance in the form of policies that will help manage these changes, to prevent unintended consequences. There is still a lot of work to do.
This article looks at the “new supply chain” through the lens of a Balancing Authority, like my former employer. Therefore, you will find more questions than answers in this piece. Also note, my knowledge of how Level Ten creates PPA’s and then arranges for these to be part of the BA’s “dispatch plan” is virtually nil, but I suspect there may be some form of bilateral arrangements with retail level Load Serving Entities (LSE), which notify the BA of their “Self-Supply” plans. Alternatively, Some Green Buyers may be able to secure their own bilateral transactions through wholesale markets which enter the BA’s Unit Commitment (SCUC) and Dispatch (SCED) processes via a wholesale market operator. It’s unclear to me if the Level Ten process can accommodate both the Wholesale and Retail options mentioned above.
One thing you can count on, generating resource owners need approval to generate electricity from a Balancing Authority, directly or indirectly. Which brings me to my first question:
How do online marketplaces that form PPA’s ensure that the generating supply resources in those contracts will be given approval to operate/generate electricity from a Balancing Authority?
What is the saturation point for PPA backed resources before they pose reliability risks which BA’s will have to resolve?
If BA’s prevent a PPA backed resource from producing power, which directly impacts the amount of Renewable Energy Certificates (REC) awarded, how will Green Buyers substitute for the lost REC’s – will they buy REC’s in the open market in order to retain their 100% Renewable Status?
It would appear to me that a more direct “seamless” interface is needed between these online “capacity” marketplaces, like Level Ten, and the process that ISO’s use to secure capacity (i.e. Capacity Supply Obligations), whose Generating Resources will ultimately make their way into the SCUC and SCED processes that determine if they run, when they run and how much energy they are able to produce.
Disruptive, but positive changes, like those seen with REBA and the Level Ten marketplace, should be given priority consideration by regulators tasked with fixing capacity markets at both State and Federal levels. The Level Ten marketplace provides a market-based approach that frees buyers and sellers to transact and properly value capacity, defining the new “supply chain” for electric supply capacity. Seams issues will need to be addressed at both regulatory and operational levels in order to ensure a smooth transition, that considers the constraints imposed on Balancing Authorities to ensure a reliable supply of electricity nationwide and the desires of Green Energy Buyers to improve our environment through a commitment to clean energy and online marketplaces that encourage the acquisition of generating capacity by consumers. We’re in uncharted waters now, embrace the future.