The US Federal Energy Regulatory Commission has approved a flexible ramping product is it hoped will help the California Independent System Operator handle growing amounts of variable renewable generation in its footprint and among participants in the energy imbalance market.
In a sign of California's changing resource mix, the ISO footprint hit a fresh solar peak of 8,375 MW on August 9, up from a 6,446-MW peak set in August 2015.
In a decision released Monday, FERC rejected calls by generators, power marketers and traders for the new product to be biddable.
"The value of the flexible ramping product to grid reliability does not necessitate that it be a bid-based product, so long as the compensation provided under [the ISO's] proposal is just and reasonable, which we find it to be," FERC said.
At issue is a May proposal under which the ISO will procure forecast net load ramp and the capacity to meet ramping uncertainty in the real-time market. The forecast net load ramp is the expected ramp between market intervals.
Load or supply resources that increase the ramp between intervals will be charged for the flexible ramping product while load or supply resources that decrease the forecast ramp will receive a payment.
Also, through "uncertainty awards," the ISO will procure upward and downward ramping capability to address unexpected changes to its load forecasts, as long as the benefits of the purchases outweigh the costs.
UNCERTAINTY PRODUCTS FOR EIM, BALANCING AUTHORITIES
The ISO plans to set separate uncertainty requirements and issue separate uncertainty awards for each balancing authority area as well as for the EIM area as a whole, according to FERC's order.
The proposal, which has been under development since 2011, will help the ISO integrate intermittent renewable generation on its system, according to the grid operator.
The Western Power Trading Forum, the Electric Power Supply Association and the Independent Energy Producers Association wanted a biddable product. In part, they argued that the ISO's proposed product is an ancillary service that should be subject to bidding like other ancillary services.
FERC disagreed. "That the flexible ramping product may meet the definition of an ancillary service, or be similar to other ancillary services, such as spinning reserves or regulation, does not require that [the ISO] procure it in the same manner as those other products," it said.
Also, FERC supported basing the price of the uncertainty awards on the opportunity cost of not selling energy or ancillary services in the ISO real-time markets instead of having them biddable.
"Because the opportunity cost paid for uncertainty awards is based on the real-time energy price, we find that flexible ramping product compensation is market-based, as opposed to an administratively determined price, even though suppliers will not submit separate bids for it," FERC said.
The ISO's proposal, approved by its board in February, grew out a stakeholder process that started in 2011.
