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AOCE Scorecard to achieve NESCOE’s Wholesale Market Design Vision

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Richard Brooks's picture
Co-Founder and Lead Software Engineer Reliable Energy Analytics LLC

Inventor of patent 11,374,961: METHODS FOR VERIFICATION OF SOFTWARE OBJECT AUTHENTICITY AND INTEGRITY and the Software Assurance Guardian™ (SAG ™) Point Man™ (SAG-PM™) software and SAGScore™...

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NESCOE’s vision statement specifying State and consumer goals across New England is available here: http://nescoe.com/resource-center/vision-stmt-oct2020/

The vision statement identifies 3 broad areas of focus: Wholesale Electricity Market Design, Transmission System Planning and Governance of ISO New England. Only one of these focus areas, Wholesale Electricity Market Design, is germane to the “Always on Capacity Exchange” (AOCE), which will be covered in this article. The purpose of this article is two-fold: One, provide NESCOE with a scorecard boilerplate format that could be useful in evaluating all of the various market design alternatives and Two, provide an evaluation (scorecard) showing how AOCE performs in addressing each of the goals and principles described in the vision statement, under section 1.Wholesale Electricity Market Design, as shown in the scorecard below.

 

Goal/Principle

AOCE Grade

Comments

Reference

Meet States’ decarbonization mandates and maintain resource adequacy at the lowest cost by using market-based mechanisms

100%

The ISO is directed to acquire capacity for State Energy programs as the top priority, when acquiring resources for reliability. AOCE accommodates each States Energy goals by requiring the ISO to clear each State individually to ensure that consumers within each State are properly charged for that States program. States drive the capacity market clearing process by providing the ISO with specific parameters for each market clearing event, including max price for capacity, type of resources that qualify for a State program, etc.

[1]

 

 

Establish effective mechanisms that accommodate existing and future long-term contracts for clean energy resources executed pursuant to state law

100%

AOCE is modeled after the Renewable Energy Buyers (REBA) marketplace where long term capacity and energy contracts are established. Resource Owners, with ISO qualified resources place supply offers into AOCE, where interested buyers can establish contracts (called Capacity Commitments in AOCE), specifying the duration of the agreement. Buyers must provide sufficient financial assurance to participate in AOCE. States specify the type, quantity and max price for resources to clear each States Energy program. States also have the “final word” on which Resources are allowed to clear the market, before the market clearing results are announced by the ISO.

[1]

 

Integrate distribution-level resources effectively and efficiently;

100%

AOCE is technology neutral and is in full alignment with FERC Order 2222 with regard to DER Aggregation for DER “grid services” participation in wholesale markets. Interconnection requirements for Resources participating in AOCE will follow all State, Federal and local Utility requirements, as in today’s case, for efficiency.

[2]

Allow interested buyers and sellers to participate;

100%

AOCE is modeled after the very successful Renewable Energy Buyers (REBA) marketplace, which is open to any buyer and resource owner with the financial assurance needed to participate in the exchange and establish a capacity commitment. AOCE is designed to attract new investments through an attractive ROI, based on a uniform clearing price for capacity as a replacement for shrinking and unreasonable capacity payments produced by ISO FCM and the ability to trade established capacity commitments, through AOCE.

[2]

Provide for an appropriate level of state involvement in market design and implementation

100%

AOCE should be developed within an open forum where all stakeholders are allowed to participate. States acceptance of the final AOCE market design, is a mandatory requirement that is uncontestable. AOCE was originally submitted to NAESB, an ANSI standards development organization that follows open and transparent processes for standards development.

[3] [4]

 

address the clean energy and resource adequacy needs of the region by directly and properly accounting for the resource adequacy values of clean energy resources

100%

The ISO will be expected to maintain proper records from each AOCE clearing event in which resources have been issued a capacity supply obligation to meet each States defined Energy Goals. AOCE clearing results contain detailed records for each resource clearing the market, after State approval. This also prevents the potential for double counting and double paying that can occur when multiple processes are used to acquire capacity.

[5]

a new, regionally-based market framework that delivers reliable electricity service to local homes and business, but that framework must also account for and support States’ clean energy laws in an efficient and affordable manner. 

100%

AOCE has been designed with State interests and requirements as a priority design goal. States provide the ISO with all of the AOCE operating parameters and guidelines needed to properly acquire capacity to meet State Energy goals, as the top priority. States maintain final approval over ISO proposed capacity clearing results, prior to any announcement of capacity clearing results by the ISO. AOCE also ensures a reliable electric grid by supporting the acquisition of ISO specified grid services needed for reliability.

[1] [6]

models that could be implemented under state jurisdictional authority

100%

States are indeed an important stakeholder in the final market design for AOCE. States supply the ISO with AOCE operating parameters for acquiring capacity to satisfy State Energy goals. States have the final approval over which resources are allowed to clear the AOCE capacity market, before the ISO makes any market clearing result announcement. It is also conceivable that each State could operate their own AOCE market solution, however this may result in excessive operating costs, as opposed to a centrally operated market by the ISO.

[1] [3]

address the aforementioned challenges associated with the existing capacity market design and our energy and ancillary services markets

100%

The current FCM market is failing to provide much needed generators with enough revenue to ensure their availability, when needed. Consumers are overpaying for excess capacity. Critical resources needed for grid reliability are being unfairly charged to a limited consumer base, i.e. CT, when it would be more appropriate to charge all beneficiaries of this valuable service, across the region.

AOCE addresses all of these key requirements. AOCE follows the design of other grid operators, e.g. Hawaii and Ireland, with high penetration of renewable resources, by moving to a “grid services” framework and away from “plain old capacity”

[3] [7]

 

References:

[1] https://energycentral.com/c/ec/achieving-new-england-state-energy-goals-within-aoce-nepool-wholesale-capacity

[2] https://energycentral.com/c/ec/aoce-helps-nepool-generators-receive-proper-valuation-and-saves-consumers

[3] https://www.naesb.org/pdf4/weq_aplan100219w2.pdf

[4] https://energycentral.com/c/iu/how-are-energy-industry-standards-created-and-become-federal-regulations

[5] A separate document specifying the detail data model for AOCE bids and offers is available upon request. These 65 data elements provide a strawman proposal to further refine the data requirements that will be needed in the final market design.

[6] https://energycentral.com/c/ec/how-does-aoce-help-isorto%E2%80%99s-acquire-adequate-grid-services-capacity-needed

[7] https://www.naesb.org/pdf4/weq_aplan100219w1.docx

 

 

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