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ID: 177111

Dynamic operating reserve procurement improves scarcity pricing in PJM / Lavin, Luke

Lavin, Luke	Journal Article
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Summary/Abstract

Competitive electricity markets can procure reserve generation through a market in which the demand for reserves is administratively established. A downward sloping or stepped administrative demand curve is commonly termed an operating reserve demand curve (ORDC). We propose a dynamic formulation of an ORDC with generator forced outage probabilities conditional on ambient temperature to implement scarcity pricing in a wholesale electricity market. This formulation improves on common existing methods used by wholesale market operators to articulate ORDCs by explicitly accounting for a large source of observed variability in generator forced outages, whereby for a fixed load, more reserves are required during times of extreme heat and cold to maintain a constant risk of reserve shortage. Such a dynamic ORDC increases social welfare by $17.1 million compared to current practice in the PJM Interconnection during a high load week in a welfare-maximizing electricity market with co-optimized procurement of energy and reserves. A dynamic ORDC increases reserve prices under scarcity conditions, but has minimal effects on total market payments. The results are directly relevant to the modeled two-settlement electricity market in PJM, which is currently undergoing enhancements to its ORDC.

Key Words

Electricity Markets ; Operating Reserves ; Operating Reserve Demand Curve ; Correlated Failures ; Generating Availability Data System (GADS) ; Scarcity Pricing

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ID: 177103

What causes natural gas fuel shortages at U.S. power plants? / Freeman, Gerad M

Freeman, Gerad M	Journal Article
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Summary/Abstract

Using 2012–2018 power plant failure data from the North American Electric Reliability Corporation, we examine how many fuel shortage failures at gas power plants were caused by physical interruptions of gas flow as opposed to operational procedures on the pipeline network, such as gas curtailment priority. We find that physical disruptions of the pipeline network account for no more than 5% of the MWh lost to fuel shortages over the six years we examined. Gas shortages at generators have caused correlated failures of power plants with both firm and non-firm fuel arrangements. Unsurprisingly, plants using the spot market or interruptible pipeline contracts for their fuel were somewhat more likely to experience fuel shortages than those with firm contracts. We identify regions of the Midwest and Mid-Atlantic where power plants with non-firm fuel arrangements may have avoided fuel shortage outages if they had obtained firm pipeline contracts. The volume of gas needed by power plants to fuel the lost MWh in those regions was only a small fraction of the total volume delivered to potentially non-essential commercial and industrial pipeline customers in those regions and modest prices there at the times when power plants failed indicate gas was available.

Key Words

Correlated Failures ; Fuel Assurance ; Fuel Security

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