ISO-NE outlined proposed capacity accreditation for active and passive demand capacity resources at the NEPOOL Reliability Committee meeting Nov. 18.
The changes are part of the second phase of the RTO’s wide-ranging Capacity Auction Reform (CAR) project, which aims to develop a seasonal capacity market and establish a marginal reliability impact (MRI) approach to accreditation that values resources based on their expected contributions to reducing energy shortfalls.
Passive Demand Capacity Resources
ISO-NE’s passive demand capacity resource category is largely composed of energy efficiency resources but also includes some distributed generation.
Under the current accreditation process, ISO-NE determines seasonal qualified capacity based on estimated performance during a “fixed set of performance hours,” which is intended to estimate resources’ “expected contribution to resource adequacy during tight system conditions,” the RTO noted in a memo issued prior to the RC meeting.
ISO-NE said the current set of performance hours “do not align well with hours when resource adequacy is at risk,” noting that the most important hours for resource adequacy change as the resource mix changes.
Transitioning to a marginal reliability impact (MRI) accreditation process will better capture passive resource contributions during projected shortfall periods, said Clara Berger, senior market development analyst at ISO-NE.
The RTO plans to evaluate resources’ MRI value based on “class-based hourly profiles for different technologies and end uses.”
Each resource’s final accreditation value would reflect the class values and maximum capabilities associated with each of its components, as passive resources often include multiple assets.
For distributed generation participating as passive demand capacity, ISO-NE plans to make resource-specific performance adjustments. These resources submit hourly data to the RTO, which will enable these adjustments.
Berger noted that the new methodology would allow the RTO to account for performance differences between classes that are not captured under the existing rules.
“This approach incentivizes the development of PDR assets and measures that provide the greatest value to system reliability,” ISO-NE said.
Active Demand Capacity Resources
ISO-NE’s proposed approach to accrediting active demand capacity resources (ADCRs) is similarly focused on capturing the resources’ ability to reduce shortfall.
Under the current rules, ISO-NE accredits active demand resources based on information submitted when the resources enter the capacity market as new resources. The RTO does not update this information in subsequent auctions to account for actual performance.
“While the existing framework for ADCR qualification does not depend on ADCRs’ demonstrated ability to reduce demand during stressed conditions, the proposed MRI framework for ADCRs will utilize both ADCRs’ offered capability and actual performance for accreditation,” ISO-NE wrote.
The RTO noted there is “a considerable amount of heterogeneity in ADCR performance,” which creates risk that the market is procuring resources that are unable to perform at their full capacity during the most important hours.
Like passive resources, the contributions of active demand resources can depend on time of day, making it important for ISO-NE to evaluate accreditation at the most important hours for system reliability, ISO-NE said.
In the new accreditation process, the RTO proposes calculating MRI values using hourly profiles based on each resource’s maximum reduction values offered over the past three years, with adjustments for the observed performance factor.
For new resources, the profile will be based on the performance of other resources in the portfolio of the lead market participant. If this data is not available, ISO-NE will base the profile on the performance of all existing active demand resources, with separate class averages for standalone resources larger than 5 MW.
Tie Benefits
Also at the RC, ISO-NE discussed how it plans to calculate tie benefits in a seasonal market.
Tie benefits are intended to quantify the reliability contributions of transmission lines connecting New England to neighboring regions. ISO-NE currently determines annual tie benefits based on summer values because the New England grid is a summer-peaking system.
The RTO noted that tie benefits associated with cross-border lines with Canada reflect “seasonal load diversity” associated with Quebec and the Maritimes’ winter peaks, which enable the provinces to reliably export power when the New England grid is stressed in the summer.
In comparison, because New York and New England have similar load profiles, New York tie benefits “are mainly the result of diversity in resource outages or availability,” ISO-NE noted.
As part of the CAR changes, ISO-NE plans to begin calculating tie benefits seasonally while maintaining the same basic modeling approach.
Under a seasonal framework, both New York and Canadian tie benefits will likely be driven by “diversity in resource outages or availability,” instead of surplus capacity, which may reduce the overall amount of tie benefits the region can expect in the winter.
