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Caiso Uses PLEXOS to Test New Market Design
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The California Independent System Operator (CAISO) is in the
process of implementing new market rules. The new market rules
involve changing from a zonal to a nodal marketplace. As part of
this transition, the CAISO has performed a study to determine the
impact on market prices from the new market design. Since
PLEXOS is able to simultaneously optimize energy and
ancillary-service markets (reg-up and down, spin, non-spin),
PLEXOS was used to determine the hourly commitment under the
new market rules and in a LMP (Locational Marginal Price) market.
The CAISO's Market Redesign and Technology Update (MRTU) will
change the way the CAISO performs scheduling and congestion
management. Before the new MRTU is implemented, the CAISO is
performing a series of analyses to evaluate likely outcome of the
MRTU implementation. In this study, market prices are forecast
using historical bids and data from 2004. The mixed Integer
Programming (MIP) capability of PLEXOS is used since it fully
represents an optimized unit commitment that enforces
constraints and since the MRTU will use MIP for these purposes.
Forecast LMP prices resulting from the study indicate that
significant price variations can occur for short periods of time as
shown in Graph: LMP Congestion Price.
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PLEXOS ' Dynamic Bids Used for Regional Transmission Study
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The California Independent System Operator (CAISO) developed a
methodology to dynamically forecast generator strategic bids
based on the system conditions for each individual hour. This
methodology is a significant improvement compared to static bid
adders which do not change in response to load fluctuations or
generation outages.
The dynamic bidding capability has been incorporated into the
PLEXOS model and used for several studies performed by the
CAISO to evaluate major transmission expansions. The bids are
developed each hour, for each generating unit, based on the
level of system operating reserves and the level of uncommitted
generation from independent power producers. This approach
is called the Residual Supply Index (RSI). RSI measures the extent
that the largest supplier is pivotal in meeting system demand. A
regression equation based on historical observation relates the
Price / Cost Markup to the RSI and the percentage of load
unhedged.
The economic viability is heavily dependent on the strategic
asssumptions as is shown in the graph: 2008 CAISO Ratepayer
Benefits.
A description of the original CAISO methodlolgy for developing
bid-based prices can be found in Chapter 2 of the TEAM report:
CAISO Methodology
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2008 CAISO Ratepayer Benefits
(Millions of Dollars)
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PLEXOS Solutions licenses the PLEXOS software
product in North America and provides
implementation, training, and support services.
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Eric Toolson, CEO
(916) 722 - 1484
PLEXOS Solutions
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