fcm offer review trigger price renewables exemption proposal
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FCM Offer Review Trigger Price Renewables Exemption Proposal. Abigail Krich, Boreas Renewables for RENEW Doug Hurley, Synapse Energy Economics NEPOOL Markets Committee Sept 13, 2011. Exemption Eligibility. New renewables that meet current Class I REC definition in any New England State. - PowerPoint PPT PresentationTRANSCRIPT
FCM Offer Review Trigger Price Renewables Exemption Proposal
Abigail Krich, Boreas Renewables for RENEWDoug Hurley, Synapse Energy Economics
NEPOOL Markets Committee Sept 13, 2011
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Exemption Eligibility
• New renewables that meet current Class I REC definition in any New England State
2
Renewable Resources in Past FCAs
New summer capacity values cleared in previous FCAs (MW)
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Note: Values in table are to the best of my knowledge from ISO-NE FERC Filings. It is possible that the non-intermittent renewables numbers are higher than shown here or that some of these resources do not qualify for Class I RECs.
Exemption Mechanics
• Allow FCA to clear, set Capacity Clearing Price• Post-auction, establish Alternative Capacity Price– ACP is the price that would have prevailed had the
exempted resources submitted competitive offers
• All offers below ACP clear, including those between CCP and ACP
• All cleared offers receive a CSO for a prorated quantity such that no more than ICR is purchased
4
Exemption Mechanics Continued
• All resources with a CSO paid the same price, the Alternative Capacity Price
• Total FCA payments identical to the status-quo which has no renewables exemption
• Exempted MWs that clear continue to be included in future ACP calculations until the need for new capacity displaces those MWs
5
Why Have A Renewables Exemption?
Quantity
Price
Capacity Clearing Price
Base Case Without Exemption
ICR
Renewables unable to clear, capacity not recognized
Duplicate, excess capacity purchased
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With An Exemption,Why Have Price Correction?
Quantity
Price
Capacity Clearing Price (with exemption)
Exemption Without Price Correction
ICR
Exempted renewables
Price suppression
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Capacity Clearing Price (without exemption)
How Does Price Correction Work?
Quantity
Price
Capacity Clearing Price
Step 1: Renewables Exempt from Offer Review Trigger Price, FCA Clears
ICR
Exempted renewables
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How Does Price Correction Work?
Quantity
Price
Alternative Capacity Price
Step 2: Renewables Re-priced to Determine Alternative Capacity Price
ICR
Renewables re-priced to competitive or benchmark price
Capacity Clearing Price
9
How Does Price Correction Work?
Quantity
PriceStep 3: Offers below ACP Clear, but this exceeds ICR which FERC rejected
ICR
Alternative Capacity Price
Offers below ACP Clear
Excess above ICR
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Proration Eliminates Excess Capacity
Quantity
PriceStep 4: All offers below ACP prorated to eliminate excess capacity
ICR
Alternative Capacity Price
Offers below ACP Clear, get prorated, receive ACP on prorated quantity
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Proration Eliminates Excess Capacity
Quantity
PriceStep 4: All offers below ACP prorated to eliminate excess capacity
ICR
Alternative Capacity Price
Offers below ACP Clear, get prorated, receive ACP on prorated quantity
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Shaded area equals total FCA payments
FCM Payments From Load Identical To Base Case
Quantity
Price
Capacity Clearing Price
Base Case Without Exemption
ICR13
Shaded area equals total FCA payments
Previous Examples NOT To Scale!
Quantity
Price100 MW Exempted Renewables Shown to Scale
ICR ≅ 34,000 MW
Alternative Capacity Price
Excess above ICR requires proration
100 MW exempted renewables
Offers below ACP Clear
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Renewables Are So Small, Why Bother With Price Correction and Proration?
Quantity
Price
Base Case Capacity Clearing Price
ICR
Example 1: ICR Crosses Offer Curve At Level Point
Renewables unable to clear
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Renewables Are So Small, Why Bother With Price Correction and Proration?
Quantity
Price
ACP = CCP
ICR
Example 1: ICR Crosses Offer Curve At Level Point
Exempted renewables
No price difference, 0.3% proration
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Renewables Are So Small, Why Bother With Price Correction and Proration?
Quantity
Price
Base Case Capacity Clearing Price
ICR
Example 2: ICR Crosses Offer Curve At Steep Point
Renewables unable to clear
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Renewables Are So Small, Why Bother With Price Correction and Proration?
Quantity
Price
Alternative Capacity Price
ICR
Example 2: ICR Crosses Offer Curve At Steep Point
Exempted renewables
Capacity Clearing Price
Shielded from large price difference, same 0.3% proration
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Why Price Correction and Proration?
• Price correction– Needed to prevent potentially large price supression– Exemption without price correction leads to a large,
unpredictable risk for suppliers• Proration – Allows price correction without purchasing excess
above ICR– Ensures load pays no more than in the base case– Smaller, more predictable risk for suppliers than price
suppression
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