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Energy & Ancillary Services Markets

Brattle experts have supported efforts across the globe to design energy and ancillary service markets that are competitive, economically efficient, flexible, and enable high penetrations of renewables. We have supported several balancing area consolidation initiatives throughout North America. We have helped investors understand the business case for new technologies such as utility-scale energy storage, the ways in which such technologies can participate in energy and ancillary service markets, and the enhancements needed to existing market designs in order to support these technologies. Our experts have supported system operators and regulators in designing rules to mitigate the exercise of market power in energy markets.

Engagements
REPRESENTATIVE ENGAGEMENTS

Below is a list of representative engagements for our Energy & Ancillary Services Markets practice.

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.

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.

System security in Hawaii
Brattle experts assisted the Hawaiian Electric Companies (HECO) in developing its Power Supply Improvement Plan. Our support focused on how to maintain system security as renewable penetration increases toward 100% and displaces traditional synchronous generation. We evaluated the ancillary services needs to support system frequency following a contingency. We defined technology-neutral requirements that may be met by demand response, distributed resources, and new technologies as well as traditional resources. Finally, we evaluated how battery storage, curtailment of variable energy resources, and more flexible operation of remaining traditional resources could be used in real-time operations.
Energy market power mitigation in Western Australia
Brattle experts assisted the Government of Western Australia’s Public Utilities Office (PUO) in designing market power mitigation measures for its newly reformed energy market. As part of our support, we established design objectives, interviewed stakeholders, assessed specific market characteristics affecting the design, synthesized lessons learned from the current Western Australia energy market and several international markets, and proposed an approach to best meet the design objectives. Brattle’s proposal included defining screens and mitigation measures for day-ahead and real-time energy and ancillary services markets.
Battery storage in PJM's real-time energy and ancillary services markets

For a potential investor in battery storage technology, Brattle experts analyzed PJM’s real-time market participation rules for storage.  We developed a real-time energy and ancillary service bidding strategy that the asset owner could employ to nearly optimize storage operations, given expectations for prices and battery operations and constraints looking forward several hours. Our analysis estimates the net revenues that storage devices of various efficiencies and durations could earn by employing optimal bidding strategies.  We also identified changes in PJM’s real-time bid/offer rules that PJM would have to implement to fully enable optimal battery utilization from a system-wide perspective.  Finally, we estimated the revenues that storage devices of different configurations could earn in PJM’s capacity market, assessed the risk of performance penalties, and identified capacity market design modification that would be necessary to access the capacity value of storage resources.

Experts
Publications
Presentation
Barriers to an Innovative Energy Services Market
June 06, 2018
Presented at the Energy Networks 2018 Conference
News & Knowledge
June 06, 2018
Neil Lessem to Speak at Energy Networks Australia Conference

Brattle Senior Associate Neil Lessem will speak at the Energy Networks Conference, to be held June 5-7, 2018 in Sydney, Australia. The biennial conference will discuss how the energy network sector has evolved with advances in technology, regulation, and customer behavior.