Techno-Economic Analysis of Balancing Area Consolidation
Todd Ryan, Carnegie Mellon, (617) 784-5342,
Paulina Jaramillo, Carnegie Mellon,
Gabriela Hug, Carnegie Mellon,
Overview
Balancing area consolidation could support the integration of variable energy resources by allowing the power system to counteract variability in the most economic way that meets the reliability standards of the grid. Balancing area consolidation does this by letting different regions share the variability of their renewable resources, thus allowing opposing fluctuations negate each other. Additionally, there is an economic efficiency gained by consolidating and optimizing the dispatch of generation over a greater set of resources [1, 2]. Currently there are over one hundred balancing areas in North America and their distribution of sizes span over three orders of magnitude, from approximately 200 MW to 100,000 MW of peak load; this shows that there is significant potential for more consolidation and savings in North America. The goal of this research is to estimate economic benefits associated with balancing area consolidation and the equity of these gains.
Methods
This research aims to model actual balancing areas before and after they have undergone a consolidation and at varying hypothetical levels of wind penetration. This will be done using a variety of data sources that allow us to estimate the load, the generation resources, the wind production, and demand for balancing services for each balancing area in the country. Using these data we can run an economic dispatch model that will co-optimize the deployment of resources to minimize the cost of energy and the cost of balancing services while meeting system needs. The key output from this model is not the dispatch of the plants but rather the cost to consumers, the profit gained by the producers, and how these change before and after consolidation. The final result being the estimated economic benefits associated with balancing area consolidation and the equity of these gains. These results are compared to other estimates of the benefits of the Midwest ISO consolidations.
Load data for each balancing area in the U.S. was extracted from annual planning reports to the Federal Energy Regulatory Commission (Form 714) [3]. Information on the generators in each balancing area is available through the eGrid data set. Wind production data can be found in the Eastern Wind Interconnection Transmission Study (EWITS) data sets [4].
We use the consolidation of the Midwest Independent System Operator (MISO) as a case study, estimating the economic gains and equity associated with BA consolidation. Of the 30 balancing areas that have consolidated into the MISO, we were able to model 16 of the balancing areas before and after consolidation – two have since left MISO (First Energy and Duke), and sufficient data was not found for many of the other areas [5-13].
Results
The results suggest that there is an economic efficiency gain the distribution of the gains depends on the relative slopes of the pre- and post-consolidated supply curves. In many cases the economic gains are not equitably distributed.
Conclusions
As regulators, utilities, and balancing areas should be aware of the fact that consolidation can produce economic gains but that these gains are often inequitable. Knowing this means that regulators can choose whether or not to address this inequity through rate-cases or other regulatory mechanisms.
References
1. Milligan, M. K., Brendan; Beuning, Stephen (2010). Combining Balancing Areas' Variability: Impacts on Wind Integration in the Western Interconnection. WindPower 2010. Dallas, Texas, National Renewable Energy Laboratory.
2. Makarov, Y. E., PV; Zhou, N.; et al; (2010). Analysis Methodology for Balancing Authority Cooperation in High Penetration of Variable Generation. Richland, Washington, Pacific Northwest National Laboratory.
3. FERC Form 714. http://www.ferc.gov/docs-filing/forms/form-714/elec-subm-soft.asp
4. Corbus D. Eastern wind integration and transmission study. Technical Report, National Renewable Energy Laboratory, 2011.
5. FERC “Order conditionally authorizing establishment of Midwest Independent Transmission System Operator and establishing hearing procedures” Federal Energy Regulatory Commission, Docket number ER98-1438-000, 9/16/1998.
6. MISO "History”, Midwest ISO webpage, accessed 3/30/12. https://www.midwestiso.org/AboutUs/History/Pages/History.aspx
7. FERC “Order accepting in part and rejecting in part proposed tariff changes and establishing hearing procedures”, Federal Energy Regulatory Commission, 98 FERC ¶ 61,064, Docket number ER02-485-000, 1/31/2002.
8. FERC “Order accepting, in part, and rejecting, in part, tariff revisions, subject to modification”, Federal Energy Regulatory Commission, 98 FERCC ¶ 61,075, ER01-3142-000, 1/31/2002.
9. FERC “Order on certification and conditional approving revised tariff sheets”, Federal Energy Regulatory Commission, 110 FERC ¶ 61,289, docket number ER04-691-014, 3/16/2005.
10. NERC “NERC Balancing Authority (BA) Certification of the Midwest Independent System Operator (Midwest ISO)”, North American Electric Reliability Corporation, March 14th, 2008.
11. NERC “NERC Balancing Authority (BA) Certification Review of the Midwest ISO as part of the MidAmerican Energy, and City of Muscatine, Iowa Integration”, North American Electric Reliability Corporation, August 29th, 2009.
12. NERC “NERC Balancing Authority (BA) Certification Review of the Midwest ISO as part of the Dairyland Power Cooperative Integration”, North American Electric Reliability Corporation, April 25th, 2010.
13. NERC “NERC Balancing Authority (BA) and Reliability Coordinator (RC) Certification Review of the expanded Midwest ISO footprint of Big Rivers Electric Corporation (BREC)”, North American Electric Reliability Corporation, August 24th, 2010.