Interview with Josh Taylor
Josh Taylor is an assistant professor of Electrical and Computer Engineering and the Associate Director of the Institute for Sustainable Energy at the University of Toronto. His interests include power systems, demand response, optimization, and machine learning.
In this interview, Josh Taylor answers questions regarding his IEEE Smart Grid webinar. To view this webinar on-demand, click here here.
QUESTION: This is very informative on a transactional basis. However, what strategies would you employ to overcome regulatory obstacles to the implementation of your proposals?
First, there needs to be an auction for FSRs like system operators now use for FTRs. This is something we are currently working on. Second, system operators need to run multi-period optimal power flow instead of single period optimal power flow. Otherwise, they cannot correctly model storage. I believe some already do this. Third, storage needs its own asset class based on its unique characteristics and which accommodates differences between storage technologies. Further to this, there needs to be standard parameterizations for storage in markets, for example, one based on energy capacity, power capacity, and coefficients for leakage and injection/extraction losses. All of these ideas are fairly straightforward. Other issues that are less clear are how to fairly and consistently pay storage for providing multiple services, and whether aggregations of flexible loads should be treated like storage in markets. Some of these are questions for real economists. At the highest level, a big carbon tax would spur investment in storage and as a likely byproduct accelerate the development of appropriate policies.
For the FTR case, a fraction of the general welfare benefit is remunerated through the FTRs. Is this fraction comparable for the FSR case? Are there estimates of the fractions for either case?
The quantities paid to FTRs versus FSRs are entirely system dependent, but there is a clear intuition for which will be larger. The values of FT/SRs reflect the benefit additional transmission/storage capacity would render to the system. In a system in with heavy transmission congestion but light storage usage, most of the system operator's surplus will go to FTR payments. If storage is frequently used to its energy or power capacity (storage congestion) but transmission lines are rarely congested, then most of the surplus would go to FSR payments.
Would FSR affect markets for ancillary services such as reactive power/voltage control, spinning reserve, frequency regulation, etc.?
As shown not directly. The FSRs in my presentation are only defined for steady-state dispatch, which models services like load-shifting and peak-shaving. In principle, FSRs could be defined for these other services as long as they can be described within a convex optimization / duality framework. For example, financial rights could be straightforwardly defined for steady-state reactive power/voltage support using convex relaxations of optimal power flow, and such rights could accommodate any device capable of providing reactive power. The relevant question, however, is whether these services should be packaged into financial rights. Reactive power support is largely local, which raises issues of market power. How to operate and pay storage for using the same capacity to provide multiple services is an important research question
What are the benefits of taking out the storage out of the real time electricity market?
This question, in my mind, becomes more and more central as we transition to a zero-marginal cost infrastructure. One reason FTRs make sense is that the cost of using transmission varies much more slowly than the physical time scales on which power systems are dispatched. There is no reason for transmission lines to bid in markets because they usually have nothing new to declare on a daily, hourly, or five-minute basis. Hence, such a setup would only create vulnerabilities to gaming. FTRs enable system operators to reward transmission in proportion to its systemic benefit without making them active players in electricity markets. I see the same argument holding for energy storage. Renewables are similarly low to zero-marginal cost. In a power system composed mainly of renewables, transmission, and storage, i.e., a power system without fuel, the cost of running the system would vary much more slowly than its physical operation. In this case I'm not sure we need real-time electricity markets at all.