Integrating renewable generation into the Independent Electricity System Operator (IESO) controlled grid
Volume 3 - Special Issue

INTRODUCTION

Ontario's Long Term Energy Plan ("LTEP") and the Ontario Power Authority ("OPA") Feed-In Tariff Program ("FIT") evidence the Province's continuing commitment to renewable energy. The realization of the ambitious renewable energy targets - 10,700 MW by 2018 - drives the need for significant change in the day-to-day operation of the Ontario electricity grid and the administration of the energy market.

The Independent Electricity System Operator ("IESO") is facilitating the development of an integration plan through stakeholder engagement, an initiative referred to as Renewable Integration, SE-91 ("SE-91"). SE-91 has provided a forum to discuss design principles for forecasting, dispatch, visibility and future markets of wind and solar generation.

To initiate SE-91, the IESO developed a set of design principles to provide the foundation for integrating renewable resources into IESO operations, as introduced in its discussion paper entitled Integrating Renewable Resources- Design Principles ("Design Principles").

DESIGN PRINCIPLES

The Design Principles consist of eleven principles divided between three areas, namely, forecasting, visibility and dispatch of renewable generation, as follows:

Forecasting

1. Implementation of centralized forecast for all wind and solar resources with an installed capacity of 5MW or greater and all wind and solar resources directly connected to the grid.
2. Real-time forecast data will be used for variable generation dispatch and actual real-time data will be used for calculating foregone energy to support OPA contract settlement.
3. The costs paid to the centralized forecast service providers will be treated as procured service charges and will be recovered from consumers through existing procurement market recovery mechanisms.

Visibility

4. All variable resources subject to centralized forecasting will provide static plant information and data.
5. All variable resources subject to centralized forecasting will provide dynamic data (real-time telemetry).
6. All forecasts of facility output for resources subject to centralized forecasting will be publicly available.

Dispatch

7. All variable resources connected to the grid, and embedded variable resources that are registered market participants, will be actively dispatched on a five-minute economic basis.
8. Variable generators should operate within a compliance deadband when ambient conditions offer sufficient fuel.
9. Variable generators will be entitled to congestion management settlement credit payments.
10. IESO may establish floor prices for offers from baseload generators (i.e. wind, must-run hydro and nuclear) to ensure efficient dispatches during periods of local and/or global surplus baseload generation events.
11. Directly connected variable resources (and embedded resources that are market participants) will be eligible to participate in operating reserve and ancillary markets where technically feasible. However, such integration will be considered on a cost benefit basis, and is not likely to be addressed in the near term.

Visibility Technical Working Group

The Visibility Technical Working Group was the first in the series of working groups established under SE-91. The Visibility Group focused primarily on defining data requirements for wind and solar generators to implement a centralized forecasting system and the design details that will be required to ensure that production of embedded solar and wind resources can be monitored by the IESO. Prior to this initiative, the IESO required market participants with variable generation (such as wind and solar resources) to submit energy forecasts for their facilities in what is effectively a "decentralized" forecasting platform.

The Visibility Group concluded with an amendment to the IESO market rules which implements the objectives of this working group. First, the market rule amendment introduced the concept of ‘variable generation' - all wind and solar (PV) resources with installed capacity of 5 MW or greater or directly connected to the grid. Second, an obligation was placed on variable generators to provide the required static and dynamic data in accordance with criteria listed in the applicable IESO market manual. In addition, market participants with renewable facilities previously classified as ‘intermittent generators' that fall within the definition of ‘variable generation' will no longer be required to submit their own forecasts for energy upon the implementation date of a centralized forecasting system. During the transition period between decentralized and centralized forecasting, wind and solar PV resources will be required to submit site specific data as well as their own forecasts for an interim period. Finally, variable generators will also have to adhere to additional communication requirements with the IESO and meet defined performance standards based on their facility. The rule amendment became effective as of November 1, 2011.

Dispatch Technical Working Group

Next, the IESO established the Dispatch Working Group whose purpose was to allow the IESO to treat and dispatch variable generators, which are market participants, in the same manner as other conventional resources, using to the greatest extent possible, the IESO's existing dispatch methodology. Issues to be addressed by the group included, among others, the following:

• What technical limitations exist for wind and solar generators that must be respected by the dispatch algorithm in order to produce a viable dispatch instruction?
• Are two price/quantity pairs sufficient to capture price sensitivity over the entire operating range of a variable generator?
• Do wind and solar generators require the ability to submit ramp rates and break points? Should the IESO assume a common ramp rate for variable generators as dictated by their fuel type?
• If constrained schedules are going to be calculated every 5 minutes for variable generators, but only a subset of these instructions must be followed, how will variable generators be notified for which dispatch instructions they are to comply?
• Under what conditions will variable generators be held to compliance to their dispatch instructions? What compliance deadbands are appropriate for variable generators?
• How will congestion management settlement credits be calculated for variable generators where differences in operating profit between market schedule and revenue may be driven by factors other than a direct dispatch instruction from the IESO?

Participants in the Dispatch Group will continue to address these issues, together with stakeholder feedback, through the first half of 2012.

Floor Price Working Group

Finally, in November, 2011, the Floor Price Focus group was established to enable the IESO and stakeholders to address issues relating to floor prices. To begin consultations with the group, the IESO published a discussion paper, Dispatch Order for Baseload Generation, to develop a common understanding among stakeholders of the technical, regulatory and public safety implications of baseload generation. The stated primary reasons to dispatch baseload generators, including wind generation, are:

• global oversupply;
• local oversupply or congestion; and
• operational needs such as ramping.

The IESO held meetings with generators and equipment manufacturers representing nuclear, hydroelectric, wind and solar resources to address topics such as dispatch flexibility and manoeuvrability, technical or equipment related limitations, risk to environmental quality or public safety, and regulatory restrictions on operations based on type of resource. Based on results from its research, the IESO has proposed that the relative dispatch order for baseload generation should be as follows:

1. wind and solar generators; then
2. hydroelectric; then
3. nuclear.

Next steps for the Floor Price Focus Group will include review of any additional comments received and finalization of a preferred floor price option.

SUMMARY COMMENT

Considerable attention and resources have been devoted to the introduction of green energy policy and development of implementing legislation and programs. With tens of thousands of applications submitted, Ontario's FIT Program clearly met the objective of attracting developer interest. Arguably, however, the policies and rules that ultimately result from the work of SE-91 is where the proverbial rubber will hit the road.

All discussion papers and meeting materials are available for review on the IESO webpage at https://www.ieso.ca/imoweb/consult/consult_se91.asp