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Regional Market Formation and Expansion

Our state-of-the-art market simulations utilize Power System Optimizer® (PSO), which can accurately capture the many operational and market features that are central to the differences between bilateral power markets with contract-path transactions and centralized wholesale power markets with nodal energy market designs. 

We are able to model status quo systems with individual balancing area commitment and dispatch and bilateral contract-path transactions. Our status quo modeling captures the market frictions such as trading margin requirements, 16-hour trading blocks, and the need to arrange transmission on the often-limited contract paths between balancing areas. We are able to contrast realistic simulations of the bilateral market structure with simulations of a “Day-2” regional market design with security-constrained optimized unit commitment and dispatch for both day-ahead and real-time markets, and co-optimized ancillary services markets, capturing both nodal transmission congestion and marginal losses.

Our unique ability to model forecast uncertainty between day-ahead and real-time settlement periods with PSO further enables us to capture the benefits of broader, frictionless, and real-time coordination over broad areas that experience a diversity of unforeseen changes to loads and generation output, especially in markets with high penetration of renewable generation.  These benefits are typically missed when assuming no forecast uncertainty. 

These advanced modeling capabilities offer increased precision to inform decisions to form an RTO, joining one RTO versus another, or introduce partial RTO-like solutions, such as energy imbalance markets.

Engagements
REPRESENTATIVE ENGAGEMENTS

Below is a list of representative engagements for our Regional Market Formation and Expansion 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.

Benefits of regional market participation

For Western Areas Power Administration (WAPA), Basin Electric, and Heartland Rural Electric Cooperative, we evaluated the costs and benefits of remaining as a standalone system compared to regional market participation in either the Southwest Power Pool (SPP) or the MidContinent Independent System Operator (MISO).  The effort included detailed market simulations of the three alternatives, which informed the clients’ choice to join SPP. 

Analysis of regional market alternatives for the Mountain West Transmission Group

For the eight members of the Mountain West Transmission Group in Colorado, Wyoming, and neighboring states, Brattle experts analyzed: (1) the implications on member transmission costs of different regional transmission tariff options; and (2) the costs and benefits of alternative regional transmission and market options.  The regional transmission and market analysis included detailed market simulations and estimation of member costs and benefits for: (a) retaining the current bilateral market construct; (b) forming a regional transmission group with de-pancaked transmission service; and (c) forming or joining a full “Day 2” regional wholesale power market.  The results informed the clients’ decision to explore regional market alternatives with CAISO, PJM, and SPP, which ultimately resulted in a commitment to join SPP. 

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