Developing Smart Dispatch Tools in the PJM Market

Written by Andrew Ott

Smart dispatch tools, advances in customer consumption management techniques and storage technologies can help offset operational challenges and energy price increases associated with the adoption of cleaner, lower-emitting and renewable supply resources.

The trend in U.S. electricity supply resources on the grid is towards cleaner, lower-emitting and renewable resources. This shift from traditional supply resources creates opportunities and challenges. One notable challenge is a reduction in operational flexibility caused by incentivizing the retirement of legacy resources—largely coal-fired—which are being replaced by resources with significantly different operating characteristics and capabilities. Intermittent resources have limited ramping and control capabilities, and remaining thermal resources are becoming more operationally constrained due to emission restrictions imposed by environmental regulations. On the other hand, growing opportunities in the areas of smart grid and alternative resource technologies have the potential to make power transmission, distribution and consumption more flexible than it has been in the past.

PJM Interconnection is a regional transmission organization that plans and manages the electric transmission system over a large portion of the eastern United States. At PJM, we are developing computational innovations such as improved real-time dispatch optimization and a “perfect dispatch” concept to evaluate and improve real-time dispatch efficiency. While the primary driver for this smarter approach was to improve power system and wholesale market operations, the innovations also resulted in efficiency gains that have delivered savings in total system production costs and increases in transmission system utilization.

The "perfect dispatch" tool is an automated optimization package which, at the end of each operating day, reviews dispatch decisions and suggests improvements. It analyzes how operators are managing uncertainties, such as those arising in load forecasting, and suggests more optimal responses. The perfect dispatch process has also brought to light opportunities to improve dispatch software, inspiring innovations like time-coupled optimization and operator visualization interfaces.

The operational improvements PJM has made since we hatched the perfect dispatch concept in 2009 have resulted in accumulated production cost savings of more the $500 million. Additionally, dispatch improvements have resulted in annual production cost savings of over $130 million per year, and we expect to see continued savings. These regional market efficiency gains have provided benefits to PJM stakeholders and electricity customers in the PJM region.

Looking into the future, increasingly tight supply resource limitations may partially be offset by technology innovations in alternative resources and the evolution of customer response technologies. These developments are likely to result in substantially more distributed resources for the supply of grid services such as capacity operating reserves and frequency regulation. The smart dispatch tools that are currently available are being enhanced to take advantage of the benefits of the diversity these resources can provide.

For example, improved battery technologies have enabled storage-based resources to participate in PJM's frequency regulation market. PJM has adapted dispatch and control signals and enhanced market rules to better enable participation by storage-based resources in the frequency regulation market.

To take another example, PJM analyzed frequency regulation requirements and resource response characteristics to develop what we call an alternative "zero energy" fast response signal: It allows limited energy resources to provide regulation on a sustained basis while maintaining stringent operational standards necessary to ensure reliable operation.

PJM also worked with stakeholders to reduce minimum participation requirements for the wholesale market to 0.1 MW to allow smaller alternative resource participation. Operational experience has demonstrated that these alternative technology-based resources provide excellent frequency regulation response services and are able to compete in the market.

PJM has also adapted software and market rules to allow demand-response-based resources to compete in the synchronized reserve market. PJM's rules for that market require all synchronized reserve resources to respond within ten minutes of an event declaration. Operational experience indicates that demand response-based resources generally respond in one to two minutes, which is well within the compliance window and in the upper quartile of performance for all synchronized reserve resources.

Due to the sustained growth in these alternative resources, over 20 percent of PJM's synchronized reserve is now supplied by demand-response-based resources. From the progress made so far, it appears that alternative technology and demand-response based resources have the capability to supply a substantial portion of operational grid services requirements, which will help the industry manage the continued evolution of the resource supply mix.

In addition to the development of alternative resources for fast-response grid services, the evolution of supply resources also requires new approaches to load-following capabilities. For instance, better capabilities and efficiencies can be gained by aligning wholesale market prices with retail rates. Aligning real-time retail and wholesale pricing would allow more efficient use of demand control technologies in response to system supply conditions.

The deployment of smart meters and advanced metering infrastructure, coupled with the deployment of time-differentiated retail rates, will soon make it possible for residential and commercial customers to automatically adjust their electricity consumption in response to price signals. Combined with the development of distributed resource technologies, this will create the need for power system control and dispatch software to accommodate thousands of additional control points on the power grid. While some of these distributed resources will be capable of responding to dispatch signals, many may simply be customers’ automated and distributed responses to price and environmental signals. With this new complexity, traditional load forecasting techniques could quickly become inadequate and the development of new forecasting algorithms will be required to capture customer usage patterns with respect to price.

Tracking and controlling the high penetration of distributed customer response and distributed resources can be accommodated through advances already made in power system optimization software deployed by PJM. Improved price-responsive load forecasting coupled with advanced optimization software will allow regional market operators to account for price-responsive demand as part of the dispatch and load following control systems. Such systems will maximize the value of distributed price-responsive demand, which will help mitigate expected cost increases due to restrictions on supply resources resulting from new environmental compliance requirements.



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Andrew L. Ott, a senior member of IEEE, is Senior Vice President of Markets for PJM Interconnection and serves as a board member for the Association of Power Exchanges, PJM Technologies and PJM Environmental Information Services. He has been with PJM for more than 15 years, supervising the divisions responsible for market operations and strategy, regulatory affairs, customer relations and performance compliance. He serves as the U.S. representative and working group chair for the CIGRE (International Council on Large Electric Systems) C5 Study Committee on Electricity Markets and Regulation. Ott received his BS degree in electrical engineering from Pennsylvania State University and an MS in applied statistics from Villanova University.