review of bulk energy storage in sem gaelectric energy storage t&sc modification working group 6...

Review of Bulk Energy Storage in SEM

Gaelectric Energy StorageT&SC Modification Working Group

6th September 2012

Mullany Engineering Consultancy

Energy, from Utility to User

Working Group TOR• Define “Technical characteristics & capabilities of a CAES unit, and of other units having

similar characteristics ”

• Proposer: “impacts of registering in the SEM and the Market Rules as currently drafted”

– Whether one or more existing registration options could be amended to allow registration of a CAES unit (perhaps by changing definitions in the TSC).

• Examine the current Special Unit clauses to see if they can accommodate such units

• Identify potential changes to the TSC

• What are the likely high level impacts (time, cost and resources to implement option)?

• How the identified option(s) further(s) the objective of the Demand Side Vision and other SEM

• Deliver a recommendation to SEM Committee with a drafted modification


Evaluation Criteria Impacts (TOR)• Assess the options in terms of the following questions:

– The Working Group should consider how the following items, and others that may be discussed, can be addressed with respect to the option by which registration of CAES Units and other energy Storage Units in the TSC will occur.• Offering & Scheduling

– Commercial Offer data

– Technical Offer Data

– Other data provision & sharing

• Energy Settlement

• Calculation of Eligible Availability

• Calculation of Capacity Payments– When in generation mode

– When in pumping mode

• Calculation of Constraint Payments and Charges

• Calculation of Uninstructed Imbalance Payments and Charges

• Credit & Settlement

• Inclusion in the MSP software and uplift

• Treatment of Energy Storage Units when under test

– Committee policy objectives?


Policy Objectives

• We also need to agree as a group what a unit registration in SEM should facilitate for that unit

• While each proposal must understand how it impacts the list of the TOR evaluation criteria, e.g. Energy Settlement, these more flow from wider SEM policy

• The policy must be the first high-level port of call when evaluating options, not the detail– Although the detail is important and ultimately required


Our Objectives for this Meeting

• Long-term: a method for registering storage technologies in the SEM that allows them to recover their short-run costs and compete equitably within the market schedule

• Today: – A restatement of SEM Policy, becoming the first set of agreed

evaluation criteria for our discussions– Evaluation of existing SEM options against those criteria– Agreement that existing options are not sufficient– Listing/workshop alternative structures, agreeing next steps


CAES Overview


Compression Train

Generation Train

Well Head

Storage Cavern

Depth

pmax

pmin

Δp

81MW load~53 MW minimum

134MW generation27MW minimum

At stated figures:• 8 hours running• 10 hours to fill

CAES and Other Storage• CAES running costs comprise:

– The electrical energy consumed to compress air– Avoidable import UoS when consuming power *– The gas consumed in the running of the generator *– Avoidable O&M *

• We believe what is missing from the T&SC is the ability to ensure those costs marked * are recoverable

• We believe recovery of such short run energy costs is important for all storage technologies• A project needs to evaluate these SEM revenues alongside other DS3

revenues


SEM Policy Evaluation Criteria


• Apart from the market structures allowing the recovery of appropriate costs, insofar as possible we should have…– Market schedule should reflect generator characteristics to lower

constraint costs for consumers– System operator should have correct data to minimise cost of

production in SO dispatch– Commercial offer structures should allow transparent compliance

demonstrable to RAs under BCOP– Market revenues earned by generators are independent of SO

dispatch, based on the context of the COD and TOD

Insofar as possible…


• Market does not always succeed in getting COD and TOD to match generator capabilities– Increasing price quantity pairs for CCGT– Generator mode and fuel switching

• These are limitations caused by the technical / time feasibility of solving the MSP software, and therefore not “unduly discriminatory”

• This does not mean, however, that a “principle of acceptance” has been established that generators should be OK with managing unreflective cost structures

• Option 1: “The Split Unit”– Demand Side Unit plus Energy Limited Generator Unit– Potentially “negative generator” instead of DSU

• Option 2: Pumped Storage– With adjusted efficiency to capture running costs

• Our Assumptions– Generators, “negative generators” and pumped storage demand subject to

full central dispatch– Demand Side Units subject to demand reduction dispatch from a

nominated schedule


Existing Options and Underlying Assumptions


Option 1: The Split UnitDemand Side Unit Energy Limited Generator Unit

Submits Running Schedule to Market,

COD, TOD

Dispatched down by System Operator

Submits COD and TOD to Market

Dispatched by System Operator

Actual Availability, Dispatch, Metered Generation Ex Post

MSQ Calculated, Constraint Payments

Actual Availability, Dispatch, Metered Generation Ex Post

EnergyLimit

MSQ Calculated, Constraint Payments

Dispatch of the demand side impacts the energy limit of the Generator Unit

• Commercial Offer Data– Both generation and demand have to forecast SMP in making their offer

– DSU must forecast a) low demand price and b) when it occurs in nomination

– Generation offer made up of cost of demand and overall running costs

– Storage has to forecast market prices making BCOP difficult to comply with

• Energy Limit– Energy limited plant is required to correct energy limits in TOD to minimise cost

of constraints

– Storage is reliant on SO DSU dispatch to determine stored energy

– Generator MSQ revenues are dependent on stored energy

– Revenues are not independent of SO dispatch


Option 1: The Split Unit Challenges

• Restrictive offering of service– Unit owner submitting demand profiles– Demand dispatch down only…– Offer structure limits capability of machine to reduce cost of

production

A Demand Side Unit service is an overly restrictive operation of a storage device, and is not supported by

Gaelectric.

(This also includes making the demand not centrally dispatchable via retail registration in a standard Supplier Unit)


Option 1: The Split Unit Challenges

• Power purchased like any other demand customer• This assumes that storage would have the right to

manage its own demand schedule• When storing, demand has direct impact on generator

availability – implication is generator would be self-decommitting

• Alternatively, demand is fully dispatchable and outside of market

• Penal relative to existing precedent of pumped storage rules; charged demand price


Option 1: Further Commentary on DSU / Standard Supplier Unit

• Will improve offered flexibility to system operator– But may need to have some form of maximum stored energy

limit to prevent non-technical air compression…

• Issues with BCOP compliance remain– Any structure that relies on storage submitting a definite price

will not be transparent

• Dependence of revenue on SO dispatch likely to become more difficult– SOs may determine based on COD not to store any energy…


Option 1: Split Unit with Negative Generator…

• Standard pumped storage unit with efficiency increased to capture running costs

• What does this mean? See some example on next slide…

• Note that efficiency increase needs to assume a relationship between forecast SMP and the running costs– Again, this may pose issues with BCOP– But let’s continue to examine this option to see how it evaluates

against the other criteria• Constraint costs• Cost of production• Revenue dispatch independent• Generator recovering revenues


Option 2: Pumped Storage


Option 2: Standard Efficiency (Standard Storage Technology)

MSQ

Time (one Trading Day)

SMP = €20/MWh SMP = €60/MWh

Gen

Pump

1MWh

0.7MWh

Efficiency = 0.7MWh. 1MWh storage. Running costs to be recovered = €30

Revenue = -€20 + €42 = €22; Have not recovered the running costs


Option 2: Adjusted Efficiency (Standard Storage Technology)

MSQ



Gen

Pump

1MWh

1.2MWh

Efficiency at 1.2. We assume that plant due to energy limit is not impacting prices

Revenue = -€20 + €72 = €52; (IR in previous example plus running costs)


Option 2: Standard Efficiency (CAES)

MSQ



Gen

Pump

1MWh

Efficiency = 1.3MWh (burning gas for CAES adds to energy release beyond that stored). 1MWh storage. Running costs to be recovered = €30. Lower high price for demonstration.

Revenue = -€30 + €52 = €22; Have not recovered the running costs with “IR”

1.3MWh


Option 2: Adjusted Efficiency (CAES)

MSQ



Gen

Pump

1MWh

1.8MWh

Efficiency at 1.8. We assume that plant due to energy limit is not impacting prices

Revenue = -€20 + €72 = €52; (IR in previous example plus running costs)


Option 2: Adjusted Efficiency (CAES)

MSQ



Gen

Pump

1MWh

1.8MWh

Flat SEM Price Example…

Revenue = -€20 + €36 = €16; Market will schedule plant with flat SMP

• Constraint costs: We are deliberately enshrining technical inaccuracies into MSQ to manage commercial cost recovery– MSQ becomes deliberately infeasible to follow in physical dispatch – we

enshrine increased constraint costs to the consumer into the code– And unfair MSQ pressure on other generators!

• Cost of production: System operators are provided with inaccurate data to dispatch the system; – SO requirement to minimise production costs undermined

• SMP revenue is dispatch independent: good!– But see constraint revenues below…

• Constraint payments: They are not paid to generator– The lack of constraint payments to pumped storage means that generator is not

guaranteed to recover costs Mullany Engineering Consultancy

Option 2: Pumped Storage Review

• Split Unit:– Struggles with BCOP compliance

– Revenue not dispatch independent

– Generator not guaranteed to recover its costs (worse with negative generator)

– Restrictive offer reduces value in reduction of production costs (for DSU)

• Pumped Storage– BCOP compliance again difficult

– Market revenue dispatch independent: good

– Generator not guaranteed to recover its costs under constraint scenarios

– Enshrining increased constraint costs on consumers

– Makes minimisation of cost of production difficult with non-technically accurate offers


Review of Existing Options

• No existing structure is fit for purpose

• Gaelectric believes that potential viable options are:– “Interconnector Unit” style unit, with

• similar flexibility to manage COD as IU, e.g. participant is allowed to manage offer to procure “storage”

• similar to IU procuring BETTA energy

– Pumped Storage Unit, with• explicit commercial costs considered in MSQ schedule• Constraint payments

• Seek agreement on first statement, and commitment to work towards development of listed and further potential options… Mullany Engineering Consultancy

Gaelectric Conclusions

review of bulk energy storage in sem gaelectric energy storage t&sc modification working group 6...

Documents

storage caes

sem committee

registration of caes

wider sem policy

restatement of sem policy

electrical energy

existing options

unit registration