Wide Open Load Following: Mark Lively

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Wide Open Load FollowingMark Livelys Approach
toPricing Reactive Power

• 2004 December 2
• CEIC Luncheon Seminar
• Carnegie Mellon University
• Electric Industry Center

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Reactive Power Payments

• Mandatory Reliability Standards
• NERC imposes fines each time it identifies
  problem
• Offender pays NERC fund
• Counter-party ???

• Market for Unscheduled Flows
• FERC sets mechanism for metered amounts
• Offender pays counter-party
• Counter-party earns revenue

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Reactive Power PricingList of Approaches

• Cost of service for generation
• Competitive bidding among generators
• Tie to providing active power generation
• WOLF for unscheduled amounts
• Generation
• Load
• Independent reactive sources
• Inter-control area flows

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Reactive Power Pricing Cost of Service Method

• AEP Method (Opinion 440, 1999 July 30)
• Annual revenue requirement
• Used recently by several IPPs
• Big Sandy Peaker Plant, LLC ER04-1103
• Hills Energy, LLC ER04-1102
• PJM has a performance requirement, or else
  payment is withheld

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Reactive Power Pricing Competitive Bidding

• Ancillary service
• Bid for capacity availability
• Dispatched by system operator
• Performance requirement (?)

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Reactive Power Pricing Tie to Providing Active
Power

• Reactive Capability Related to Active Capability
• Perhaps 5 KVAR for 100 KW
• .9 Leading (48 kvar) or .95 Lagging (-33 kvar)
• Most generators able to produce some reactive
  under normal conditions
• Actual reactive power dispatched centrally
• Nonperformance charge (?)

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Reactive Power PricingWOLF for Unscheduled
Amounts

• Mortar for the brick wall of contracts
• Payment for non-performance
• Payment for over-performance
• Non-participating IPPs, including DG
• Loads
• Standalone reactive devices
• Inter-control area flows

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Wide Open Load Following

• People worked harder for a reward, especially
  one that coincided with patriotism. Tom Clancy,
  Without Remorse.

• Producers work harder for a reward, especially
  one that coincides with reliability. Mark
  Lively, in explaining WOLF.

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Wide Open Load FollowingBasic Concept

• Use the quantification of the quality of public
  goods to set the simultaneous prices of the
  unscheduled portion of related commodities whose
  usage impacts the public goods. Note that the
  unscheduled portion of the commodity can be
  positive or negative.

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Wide Open Load FollowingPublic Goods

• Non-excludabilityIt is difficult to keep people
  outFireworks display
• Non-rivalrous consumptionMy usage does not
  interfere with your usageFireworks display
• For electricity, electric potential meets this
  description of a public good
• Measured as voltage

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Wide Open Load FollowingReactive Power

• Power provided and maintained for the explicit
  purpose of insuring continuous, steady voltage on
  transmission networks. Reactive power is energy
  which must be produced for maintenance of the
  system and is not produced for end-use
  consumption. Electric motors, electromagnetic
  generators and alternators used for creating
  alternating current are all components of the
  energy delivery chain which require reactive
  power. Losses incurred in transmission from heat
  and electromagnetic emissions are included in
  total reactive power. This power is supplied for
  many purposes by condensers, capacitors and
  similar devices which can react to changes in
  current flow by releasing energy to normalize the
  flow, and regulating generators may also have
  this capability.

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Wide Open Load FollowingReactive Power

• Power merely absorbed and returned in load due to
  its reactive properties
• Symbolized by the letter Q and is measured in the
  unit of Volt-Amps-Reactive (VAR)
• Mathematical construct

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Wide Open Load FollowingReactive Power

• In an alternating current circuit both the
  current and voltage are sinusoidal. If there is a
  phase separation between the two quantities, the
  instantaneous power will have to 'work' harder to
  produce the equivalent power if they were in
  phase.
• Reactive power is described as the amount of
  power required to overcome the phase shift
  between the current and voltage. It is generally
  regarded as waste power as it is used to
  'energize' the circuit to allow it do useful
  work.
• In an alternating current circuit both the
  current and voltage are sinusoidal and power is
  expressed as the product of current and voltage.
  In a simple resistive circuit the voltage and
  current are in phase, the real power is equal to
  the apparent power and no reactive power flows.
• However when the voltage and current pass through
  certain types of circuits (inductive or
  capacitive) the voltage and current become out of
  phase. This phase separation is usually called
  the Power factor and the current is said to lag
  or lead the voltage.
• Capacitive circuits generate reactive power and
  inductive circuits absorb reactive power. If
  large quantities of reactive power (positive or
  negative) are present then the overall power
  factor will be low.

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Wide Open Load FollowingReactive Power

• In alternating current power transmission and
  distribution, reactive power is an abstract
  quantity used to describe the effects of a load
  which on the average neither supplies nor
  consumes power. It is defined as the product of
  the rms voltage, current, and the sine of the
  difference in phase angle between the two.
  Compare to other definitions of power (effective
  power, apparent power, complex power). Reactive
  power is usually denoted Q and expressed in
  volt-amperes reactive, or var (not watts). This
  is to avoid confusion when specifying the power
  of a load (var automatically refers to reactive
  power).
• Reactive power is associated with the
  reactance of a load, and unlike effective power,
  can be positive or negative. A purely
  capacitive load is associated with a positive
  reactive power, whereas a purely inductive load
  is associated with a negative reactive power. To
  maintain efficient transmission, it is often
  necessary to reduce the magnitude of the reactive
  power in a system. This is known as power
  factor correction

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Wide Open Load FollowingVoltage and Reactive
Power

• Leading reactive power raises local voltageAdd
  capacitors to counteract low voltage conditions
• Lagging reactive power lowers local voltage
• Add reactors to counteract high voltage
  conditions
• Turn off capacitors

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Wide Open Load FollowingReactive Power
Voltage Low High Voltage Low High
Leading Good Bad
Lagging Bad Good
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Wide Open Load FollowingReactive Power
Low Voltage Reward Leading Punish Lagging
High Voltage Reward Lagging Punish Leading
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Wide Open Load FollowingReactive Power
Low Voltage Reward Leading Punish Lagging
Q Pricing (/KVARH)
India UI
High limit
Lower Than Normal Voltages
Higher Than Normal Voltages
Low limit
India UI
NOTE Q is defined to be positive for leading
reactive power
High Voltage Reward Lagging Punish Leading
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Wide Open Load FollowingReactive Power
Low Voltage Reward Leading Punish Lagging
Q Pricing (/KVARH)
High limit
Lower Than Normal Voltages
Higher Than Normal Voltages
Low limit
NOTE Q is defined to be positive for leading
reactive power
High Voltage Reward Lagging Punish Leading
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Wide Open Load FollowingMarginal Cost Pricing

• Each participant has incentive to increase
  production until its marginal cost is equal to
  the WOLF price
• The WOLF price decreases as participants increase
  production
• The WOLF price thus provides an indirect measure
  of marginal cost

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Wide Open Load Following Dynamic Economic Theory
Supply
Demand
Price (/MVARH)
Equilibrium Price
Formula
Price Pressure
Nominal Price
Shortage
Reactive Power (MVAR)
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Wide Open Load FollowingAdjusting the Curve

• For small voltage excursions, no harm, no foul
• Low voltage excursions are more serious than high
  voltage excursions

Voltage
Severity of problem
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Wide Open Load FollowingControl Theory
target

Quantify Power Quality

-
cost
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Wide Open Load FollowingVariance from Marginal
Cost

• Large participants can optimize income by
  producing such that their marginal cost is less
  than the WOLF price
• Set production level so that marginal cost is
  equal to marginal revenue
• Marginal revenue is price plus production times
  the derivative (which is negative) of price with
  respect to production

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Wide Open Load FollowingVariance from Marginal
Cost

• Incremental cost
• Need better definition of cost shape
• Integrate under the curve
• Price varies with amount of reactive produced

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Wide Open Load FollowingControl Theory
target

Quantify Power Quality

frequency
Voltage
-
cost
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Wide Open Load FollowingSimultaneous Pricing
Working in India

• Infamous for low frequency

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Wide Open Load FollowingSimultaneous Pricing
Working in India

• Introduced Reliability Tariff 2003 January 1
• Raised all UI prices about 40 2004 April 1

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Wide Open Load FollowingSimultaneous Pricing
Working in India

• Average frequency dramatically improved

UI Price 0.0
Max Price 420.0
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Wide Open Load FollowingSimultaneous Pricing
Working in India

• Improved Frequency Distribution

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WOLF Negotiated Contracts

• WOLF Pricing provides
• Alternative price
• Way to determine penalty
• Way to determine reward
• Assessment of successful contract negotiations
• Pricing for affiliates

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WOLF Versus Negotiated Contract
WOLF Pricing
/KVAR-Year
Negotiated Contract
Annual Hours of Operation
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Wide Open Load Following

• Provides price for unscheduled reactive power
• Leads to marginal cost price discovery
• Feedback corrects the price
• Works with partial VAR obligation
• Related concept a success in India
• Supports contract negotiations