Flexibility Auctions: A Framework for Managing Imbalance Risk
Abstract
Today, flexibility from a limited number of distributed energy resources (DERs) is offered in wholesale electricity markets, and the value of flexibility is not yet recognized for economic hedging of delivery risk. Under a three-year project funded by the ARPA-E PERFORM program, our team is working towards developing an integrated risk management framework that will leverage flexibility from distributed and bulk resources to cost-effectively and reliably manage delivery risk of intermittent resources. Two concepts are at the core of the proposed integrated risk management framework: (A) flexibility options, which are a novel type of options and enable wholesale electricity market participants to hedge uncertainty by buying flexibility. (B) DER flexibility scores, which provide a way for utilities or aggregators to classify assets in groups with different likelihood of delivering contracted flexibility. This presentation will focus on the proposed ISO-product “flexibility options”, which is complementary to ramp and other products being introduced by ISOs/RTOs to manage net load uncertainties. Participating resources with imbalanced risk can buy flexibility options to hedge their production, whereas grid-connected resources that can provide physical flexibility can offer flexibility options. We will present basics of the formulation for a day-ahead ISO market that matches buyers and sellers of this hedge in coordination with existing capabilities to schedule energy and ancillary services, and outline how their settlements mitigate the impact of imbalance risk.
Speaker Bio
Dr. Robin Broder Hytowitz is a senior project engineer in Grid Operations and Planning at the Electric Power Research Institute. At EPRI, she focuses on wholesale market design and operations, supply resilience, and renewable integration. Dr. Hytowitz leads a North American Independent System Operator (ISO)/Regional Transmission Organization (RTO) working group on price formation in energy markets at EPRI, with representatives from each system operator. She supports modeling and analysis in projects related to managing imbalance risk, reliability services and products, extreme events and resource adequacy, and balancing and scheduling with high variable generation penetration. Prior to joining EPRI, Dr. Hytowitz completed a PhD at the Johns Hopkins University in Baltimore, MD. During her studies, she worked part-time in the Office of Energy Policy and Innovation at the Federal Energy Regulatory Commission, primarily researching current and proposed pricing models for wholesale electricity. Robin received a master’s degree in electrical engineering from Arizona State University in Tempe, AZ and a bachelor’s degree from Barnard College, Columbia University in New York, NY. After receiving her master’s degree, she served as a Fulbright Fellow studying wind power integration at the Technical University of Denmark in Lyngby, Denmark.