Maximizing generation revenues – beyond energy

Southern California Edison (SCE) is a large US electric utility that supplies power to more than
13 million people in central, coastal and southern California. The SCE hydro generation portfolio includes Big Creek on the San Joaquin River, the USA's oldest large-scale, integrated hydroelectric project, dating back to 1911. The Big Creek hydroelectric project consists of 23 generating units in nine powerhouses with a capacity of approximately 1,000 MW, and six major reservoirs with a storage capacity of more than 560,000 acre-feet. SCE also operates various dispatchable thermal units.

Energy deregulation in California has created bid markets for both energy and ancillary services which, in turn, has created opportunities and challenges for generators. SCE identified the need for a hydro optimization modeling tool to support both long- and short-term planning of its energy-limited hydro resources and, in particular, to maximize the opportunities on the energy and ancillary service markets, subject to operational and water management constraints. Following an RFP process in 2005, SCE contracted Hatch Energy's Synexus Global® business unit to supply and install its Vista Decision Support System (DSS) to assist in generation planning, market bidding and water/operations management for its Big Creek hydroelectric facilities.

Solution

Joint optimization of energy and ancillary services requires that the various types of transactions be appropriately modeled and relevant price forecasts made available. Each transaction was provided with an hourly price forecast and market size, although the size was considered to be quasi-infinite for practical purposes. The model supports both a frequently updated short-term price forecast, as well as long-term forecasts generally bulk-loaded at regular intervals. Deriving the optimum strategy, in terms of bidding energy versus ancillary services, is very complex and cannot be made without the aid of advanced optimization methods, especially considering the complexity of the hydroelectric resources. SCE is obligated to bid the entire system capacity to the California ISO, as a split between the various energy and ancillary products.

Synexus Global's Vista DSS solution explicitly provides long-term water management guidance and short-term scheduling of the generating units on an hourly basis, which will be used in turn to guide bidding into the energy and ancillary services markets. Ancillary service markets include up-regulation, down-regulation, spin and non-spin, as well as load following (increments and decrements). Various water-resource and power-transmission constraints are modeled. Vista DSS is incorporated into SCE's overall least-cost dispatch resource planning process, which requires that energy-limited resources (such as hydro generation) are scheduled to operate in the hours with the highest values for energy and ancillary services, in order to minimize ratepayer costs by maximizing revenue on the market and/or minimizing cost of operations of the portfolio.

In particular, Vista DSS facilitates the following:

• Integration of forward pricing of market energy and ancillary services with
  the operating constraints to maximize revenues
• Coordination of long-term plan and short-term trading
• Sharing of operational data and schedules among the various groups
  within the SCE organization.

Conclusion

A primary objective of the Vista implementation for SCE was to provide an automated process for optimal, revenue-maximized, short-term planning of energy and ancillary services on an hourly basis for the day-ahead California market. A graphical summary output representation is illustrated below.

With an increasing number of ISO’s now providing market pricing mechanisms for ancillary services, the ability of generators such as SCE to maximize revenues by optimizing both the supply of energy and supply of ancillary services has become very real. The Vista-derived optimal short-term plan finds the right balance between these various considerations, while taking into account water storage limitations and all the operational constraints of SCE’s Big Creek hydro system.

For further information, please contact:

Richard Carryer
Managing Director, Synexus Global
Oakville, ON
+1 905 465 4903
RCarryer@Synexusglobal.com