This presentation provides an overview of present and possible future ways to allocate and assign benefits for reserve requirements

King, J.

Kirby, B.

Milligan, M.

UNT Digital Library

NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.Allocating Reserve RequirementsWECC WebExBrendan Kirby, Jack King, Michael MilliganNational Renewable Energy LaboratoryJuly 29, 2011NREL/PR-5500-52432Composite photo created by NRELNational Renewable Energy Laboratory                                                                                         Innovation for Our Energy FutureTopicsNational Renewable Energy Laboratory                                                                                         Innovation for Our Energy FutureAggregation Benefits (Old News)• Net reduction in:– Peak load• Capacity requirement– Contingency reserves• Spin, Non, Supplemental• Reserve sharing groups– Variability• Regulation• Load following / ramping– Uncertainty• Load forecast• Wind & solar forecasts– The amount of reduction depends on the correlation among individuals• Increased utilization of responsive resources– Generation– Responsive load– Shared across BAs All of this is well established and (relatively) easy to calculate.National Renewable Energy Laboratory                                                                                         Innovation for Our Energy FutureAllocating Aggregation Benefits is More Difficult • No single mathematically “correct” allocation method– Many methods are not “fair”– At least two different methods are “fair”, depending on the desired results• Many methods have undesirable consequences that are not immediately obvious Desired properties– Total allocated = Total required (easy)– Independent of sub-aggregations (hard)– Independent of order BAs are added to system (hard)National Renewable Energy Laboratory                                                                                         Innovation for Our Energy FutureAttractive Allocation Methods: Incremental• B joins A• B holds A harmless and covers all the additional reserve requirements• Can be OK if you are deliberately favoring B– B brings jobs, tax advantages, environmental benefits, …• Gives the entire aggregation benefit to B– Example of A and B with identical reserve requirements (assuming uncorrelated requirements)• A stand-alone reserve requirements = 100 MW• B stand-alone reserve requirements = 100 MW• Total stand-alone reserve requirements = 141 MW• A allocated reserve requirement = 100 MW (A held harmless)• B allocated reserve requirement = 41 MW (B supplying its full share)– Clearly B is getting the better deal• Harder to see but just as true if A and B have different stand-alone requirements • Things get more complex when C joins – order is important.National Renewable Energy Laboratory                                                                                         Innovation for Our Energy FutureAttractive  Allocation Method: Proportional• Simply ratio each component:• Does get the correct total• Has different results if J & K combine to make B first vs if reserves  are allocated directly to J & K• Disproportionate allocation to small entities.National Renewable Energy Laboratory                                                                                         Innovation for Our Energy FutureProportional Allocation Gives Different Answers for Different Sub-Aggregations• Area B could be allocated 30, 26, or 25• Identical area K could be allocated 30, 42, or 80National Renewable Energy Laboratory                                                                                         Innovation for Our Energy FutureGeometric Look at Variability & Reserves• A & B variability adds statistically to T:– Perfectly correlated: A & B are aligned;– Perfectly uncorrelated: A & B at 90o . • Allocating based on correlation with T has desirable properties:– Independent of sub-aggregations;– Allocate to as many or as few individuals as desired;– Independent of order: B first or last…;– Produces a “fair” result.National Renewable Energy Laboratory                                                                                         Innovation for Our Energy FutureORNL’s Vector Allocation is Numerically • Required data:– Total system reserve requirement;– Individual entity’s stand-alone reserve requirement;– Total system reserve requirement without the individual.( )σσ σ σσi allocationTotal i Total iTotal_ *=+ − −2 2 22National Renewable Energy Laboratory                                                                                         Innovation for Our Energy FutureORNL Vector Allocation Method• Allocation is independent of sub-aggregations.National Renewable Energy Laboratory                                                                                         Innovation for Our Energy FuturePreliminary Regulation Allocation ResultsNational Renewable Energy Laboratory                                                                                         Innovation for Our Energy FutureMultiple Reserves• Combine load, wind, and solar within each BA:– Physical aggregation.• Correlation may differ for each reserve;• Allocation may differ for each reserve:– Regulation;– Spin;– Non-spin.National Renewable Energy Laboratory                                                                                         Innovation for Our Energy FutureConclusions• Aggregation provides benefits because individual requirements are not 100% correlated;• Method needed to allocate reduced requirement among participants;• Differences between allocation results are subtle: – Not immediately obvious which method is “better;”– Many are numerically “correct”: they sum to the physical requirement;– Many are not “fair:”• Results depend on subaggregation and/or the  order individuals are included.• Vector allocation method is simple and fair.Questions?14NRLE/PIX  13367

Allocating Reserve Requirements

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Allocating Reserve Requirements

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