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Electricity Market Modeling

The Brattle Group offers an unparalleled combination of electricity market modeling capabilities, a rich understanding of the interrelationships among market factors, and practical and thoughtful application of models to address our clients’ critical questions and challenges.

We have been engaged in a large number of electricity market modeling assignments across every wholesale market in North America and Europe. We have worked with market participants, regulators, and system operators, often in the context of regulatory proceedings, policy analysis, and stakeholder engagements. We pride ourselves on communicating our insights so they are intuitive, useful, and credible to target audiences.

We provide specialized market simulation tools to address the wide range of wholesale electricity market matters and challenges faced by our clients.

We bring to our engagements several types of modeling tools that can be customized to meet our clients’ specific needs.  In applying these tools we consistently demonstrate our ability to analyze the details that matter, ensure that the results make sense, and clearly communicate insights into markets, values, and risks.

Areas of Expertise

Engagements
REPRESENTATIVE ENGAGEMENTS

Below is a list of representative engagements for our Electricity Market Modeling practice.

Evaluation of "Wind Catcher" Energy Connection line to integrate the largest wind project in the U.S.

For American Electric Power (AEP), we developed a market simulation and benefit-cost framework to quantify the benefits of integrating the proposed 2,000 MW Wind Catcher generating plant through a 765 kV generation tie line from the wind-rich Oklahoma Panhandle region to the Tulsa load center. We quantified congestion and marginal loss benefits, impact on AEP load and generation prices, and costs compared to acquiring a similar amount of wind generation through traditional procurement options.  We also assisted AEP in integrating these analyses into its company-specific resource planning framework for presentation to state regulatory commissions.

Benefit-cost analysis of ERCOT's proposed Future Ancillary Services design

For the Electric Reliability Council of Texas (ERCOT), we evaluated the benefits of its proposal to unbundle ancillary services, enable broader participation by load resources and new technologies, and tune its procurement amounts to system conditions. We worked with ERCOT staff to assess each ancillary service and how generation, load resources, and new technologies could participate. We also directed their simulation of the market using PLEXOS, and evaluated other benefits outside of the model.

Simulation of marginal losses implementation in ERCOT

For a group of market participants in Texas, we estimated the impacts of implementing marginal losses in the ERCOT market on system production costs, transmission losses, LMPs, load payments, and generator revenues. We simulated the ERCOT power system using PSO and calibrated the model status quo model to recent generation and load patterns. The study results were made public in a proceeding before the Texas Public Utility Commission.

Review and simulation analysis of PJM's capacity demand curve

For PJM, we conducted all four official reviews of its Reliability Pricing Model (2008, 2011, 2014, and 2018). We evaluated the demand curve shape, the CONE parameter, and the methodology for estimating net energy and ancillary services revenues. We recommended improvements to support participation and competition, avoid excessive price volatility, and safeguard future reliability performance. We submitted testimony before the FERC and participated in settlement discussions.

Renewable integration for Aruba and other island systems

Island power planning faces distinct problems not observed in larger markets. Brattle experts prepared a study for W.E.B. Aruba, the power generation and water provider on the island, on integrating 30 percent of wind energy and 10 percent of other renewables, including solar and biogas. The study included development of different ancillary service requirements, detailed operational simulations accounting for renewables and load forecast uncertainty and variability, generator maintenance and forced outages, economic cost, and benefit evaluations of renewables integration. Several technologies were analyzed to improve wind integration, including different types of storage and demand management solutions. Including the approved second wind plant, several solar plants, and other innovative technology options, Aruba is expected to attain nearly 50 percent energy from renewable resources by 2018. Brattle experts are now being asked to help prepare a roadmap for Aruba to achieve the ultimate goal of becoming 100 percent oil-fuel free (for energy and water production). Similar analyses have been prepared for several other islands.

Optimization of existing hydro storage facilities' market participation

For a large generation and transmission utility operating in an RTO market, Brattle evaluated the historical energy and ancillary services market performance of a large multi-unit hydro-storage power plant. Using detailed simulations of regional market participation and statistical analysis of historical resource bids in these markets, we developed more optimal bidding strategies for the power plant. The improved bidding strategies cover energy and ancillary services in the day-ahead and real-time markets considering forecasting uncertainties. The selected strategy is forecasted to increase net plant revenues by 200 to 300% compared to historical revenue realizations.

Benefits and cost analysis of implementing a Western U.S.-wide energy market

In 2016, Brattle experts led a team of multiple consulting companies to help California ISO evaluate ISO regionalization and transitioning the Western Interconnection into a locational marginal cost-based full “Day-2” energy market with centralized optimized day-ahead unit commitment and real-time dispatch. Our role included using PSO to develop West-wide nodal production cost simulations for 2020 through 2030 to assess impacts on ratepayers, emissions, grid operations, and the ability to integrate large amounts of variable renewable generation across the region. We also analyzed the findings of other regional markets that have gone through similar transitions, reviewing two dozen ex-post and ex-ante studies of the costs and benefits of regionalization, transitioning from zonal to nodal market design, and migrating from a real-time imbalance market to a full day-ahead market with optimized unit commitments and ancillary services markets. Our work culminated in a public report and several presentations to stakeholder groups across the West and in California. It provided the analytical foundation for active ongoing multi-state discussions about ISO regionalization.

Experts
Publications
Presentation
Maximizing the Market Value of Flexible Hydro Generation
March 29, 2018
Published by The Brattle Group, Inc.

The study examines flexible hydro resources in wholesale power markets and finds that improving operational practices and market rules may be able to enhance the value of these resources by 200% to 500%.

Report
The Future of Cap-and-Trade Program in California: Will Low GHG Prices Last Forever?
December 05, 2017
Yingxia Yang, Michael Hagerty, Ashley Palmarozzo, Hannah Sheffield, Metin Celebi, Marc Chupka, and Frank C. Graves
Published by The Brattle Group, Inc.

A discussion paper examining the trends of the California greenhouse gas (GHG) market and analyzes the underlying future drivers that will affect California GHG prices to achieve the state’s ambitious goal of 80% decarbonization by 2050.

Presentation
Modeling the 1-Step and 2-Step Dispatch Approaches to Account for GHG Emissions from EIM Transfers to Serve CAISO Load
November 17, 2017
Prepared for the California ISO
Report
Impacts of Marginal Loss Implementation in ERCOT
October 11, 2017
Metin Celebi, Toshiki Bruce Tsuchida, Rebecca Carroll, Colin McIntyre, and Ariel Kaluzhny
Prepared for Ad Hoc Group, including Vistra Energy, The Wind Coalition, and First Solar
Report
Advancing Past "Baseload" to a Flexible Grid: How Grid Planners and Power Markets Are Better Defining System Needs to Achieve a Cost-Effective and Reliable Supply Mix
June 26, 2017
Prepared for the Natural Resources Defense Council (NRDC)

The report examines why traditional “baseload” power plants, such as coal and nuclear, are becoming less economical, why their ability to produce power continuously is less essential in today’s supply mix, and why operational flexibility is an increasingly important ingredient for a cost-effective supply of electricity.

Report
Senate Bill 350 Study: The Impacts of a Regional ISO-Operated Power Market on California
July 12, 2016
Prepared for the California Independent System Operator. Co-authored by members of The California Independent System Operator, Energy and Environmental Economics, Inc., Berkeley Economic Advising and Research, LLC, and Aspen Environmental Group.
Report
Cost-Benefit Analysis of ERCOT's Future Ancillary Services (FAS) Proposal
December 21, 2015
Prepared for the Electric Reliability Council of Texas (ERCOT)
News & Knowledge
March 29, 2018
Brattle Economists: Some Hydro Plants Substantially Undervalued in Today's Power Markets

Economists at The Brattle Group released a study today that examines flexible hydro resources in wholesale power markets and finds that improving operational practices and market rules may be able to enhance the value of these resources by 200% to 500%.

December 05, 2017
Reaching California's Deep Decarbonization Goals May Require Large Increases in Carbon Prices in the Absence of Further Technological Breakthroughs, According to Brattle Economists

A discussion paper by economists at The Brattle Group examines the trends of the California greenhouse gas (GHG) market and analyzes the underlying future drivers that will affect California GHG prices to achieve the state’s ambitious goal of 80% decarbonization by 2050. 

June 26, 2017
Brattle Economists Recommend Moving beyond "Baseload" Generation for Planning and Operating Today's Electric Grid

Brattle economists have released a report explaining how the use of the term “baseload” generation is no longer useful for the purposes of planning and operating today’s electricity system.

July 12, 2016
Study Co-Authored by Brattle Economists Examines Impacts of a Regional Power Market in the Western U.S. for California ISO

Brattle economists have co-authored a new study that provides a comprehensive examination of the impacts of transforming the California Independent System Operator into a multistate, regional ISO.