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FERC Okays Electronic Dispatch of Wind and Hydro in ISO-NE Market

August 5, 2015 By Cheryl Kaften

The Federal Energy Regulatory Commission (FERC) has approved a modified electronic dispatch method for certain wind and hydropower resources in the Independent System Operator-New England (ISO-NE) market (ER15-1509), in order to help “manage localized congestion.”

The FERC order, posted on July 27, accepts, in part, ISO-NE’s proposed tariff revisions, which are due to become effective on April 10, 2016 – a year after the application was first made by both the system operator and the New England Power Pool Participants Committee. By building in one year of lead time, the commission has provided time for “ISO-NE’s efforts to inform and train smaller hydro resources, as they prepare for the changes.”

The decision enables the ISO to upgrade from manual dispatch and curtailment to electronic management of these resources – specifically nonsettlement-only wind and hydro intermittent power resources greater than 5 MW – using “Do Not Exceed (DNE)” Dispatch Points. The Do Not Exceed limit represents the maximum amount of economical wind and hydropower generation that the New England grid can accommodate without causing any reliability issues.

Specifically, using the DNE limit is expected to benefit ISO-NE and its regional customers by:

  • Providing a dispatch guideline for hydro and wind resources;
  • Ensuring reliable system operation;
  • Allowing low-cost intermittent resources to provide as much energy as possible; and
  • Making hydro and wind power resources eligible for setting prices.

In making the decision, FERC rejected tariff language proposed by ISO-NE that would have excluded wind resources from participating in its regulation and reserves markets – agreeing with renewable energy developers who argued that a “blanket exclusion” was not justified.

“We agree with RENEW and SunEdison that eligibility for providing these services should be based on capability and performance characteristics rather than categorical exclusions,” the commission commented.

However, FERC disagreed with the developers’ argument that “all resources that are technically capable of being dispatched, such as biomass resources, [should] become dispatchable resources; instead noting that We are not persuaded by RENEW’s and SunEdison’s claims that it is necessary to expand the proposed dispatchability requirements beyond resources addressed in the instant filing.

Rather, the commissioners deferred the decision to the system operator, noting, “Given that ISO-NE plans to address this issue through its stakeholder process, and the lack of evidence in the record of the instant proceeding, we are not persuaded that all non-dispatchable resources should be subject, at this time, to the new rules proposed herein.”

FERC stated that “We find that these changes are particularly important, given not only the amount of wind and hydro resources in operation today (878 MW and 321 MW, respectively), but also the large amount of wind and hydro resources active in the interconnection queue (over 4,000 MW).

We agree with ISO-NE that these changes will improve price formation, particularly in areas that have a high penetration of renewable resources and limited transmission capacity; and system reliability, because of the reduced reliance on manual curtailments. Further, these proposed changes will allow for better alignment between price signals and operational requirements

FERC further directed ISO-NE to submit a compliance filing within 30 days of the date of the order.

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