October 5, 2021 | pspc WEBEx - PowerPoint Presentation

1. October 5, 2021 | pspc WEBEx Fei ZengTechnical manager, Resource Studies and assessmentsForward Capacity Auction 16 (FCA 16)Estimated Hours of System Operating Reserve Deficiency for 2025-2026 Capacity Commitment Period (CCP)

2. 2ObjectiveTo provide an estimate of hours of system operating reserve deficiency for Capacity Commitment Period 2025-2026 (associated with FCA 16) and observations regarding that estimatePrior studies:Study conducted in 2013 for CCP 2016-2017http://www.iso-ne.com/static-assets/documents/committees/comm_wkgrps/mrkts_comm/mrkts/mtrls/2013/jul10112013/a12a_iso_memo_07_05_13.pdfStudy conducted in 2016 for CCP 2020-2021 https://www.iso-ne.com/static-assets/documents/2016/12/iso_memo_operating_reserve_deficiency_dec_19_2016.pdfStudy conducted in 2017 for CCP 2021-2022 https://www.iso-ne.com/static-assets/documents/2017/12/pspc_oprting_resrve_deficiency_memo_12072017.pdfStudy conducted in 2018 for CCP 2022-2023 https://www.iso-ne.com/static-assets/documents/2018/12/pspc_oprting_resrve_deficiency_memo_12072018.pdfStudy conducted in 2019 for CCP 2023-2024 https://www.iso-ne.com/static-assets/documents/2020/02/2020_05_28_pspc_iso_memo_fca_14_operating_reserve_deficiency_info.pdfStudy conducted in 2020 for CCP 2024-2025 https://www.iso-ne.com/static-assets/documents/2020/12/a00_pspc_2020_12_iso_memo_or_def_fca_15.pdf

3. 3Study AssumptionsResources and load assumptions are based on those presented to the Power Supply Planning Committee (PSPC) on June 29, 2021, for developing the Installed Capacity Requirement (ICR) - Related Values* for FCA 16https://www.iso-ne.com/static-assets/documents/2021/06/a04_pspc_2021_06_29_assumptions_to_be_used_in_fca16_icr_calculations.pptxOperating reserve requirement = 2,305 MW Resources and load relief assumed available after the declaration of a reserve deficiency with the activation of ISO New England Operating Procedure No. 4, Action During a Capacity Deficiency (OP-4)Tie benefits = 1,830 MW https://www.iso-ne.com/static-assets/documents/2021/07/a02_pspc_2021_07_27_fca_tie_benefits.pptxLoad relief from implementing 5% voltage reduction1% of 90/10 peak net of the behind-the-meter photovoltaic (BTM PV) and demand resources = 263 MW Depletion of operating reserve to a minimum of 700 MW* The ICR, net ICR, Local Sourcing Requirement, Maximum Capacity Limits, Marginal Reliability Impact (MRI) system and zonal Demand Curves, and the HQICCs are collectively referred to as the ICR-Related Values

4. 4Study ApproachStart with the ICR model using the assumptions as specified in the prior slideCalculate the expected number of hours per year in which there are insufficient resources to meet the New England system-wide load and operating reserve requirementsScale the system load up or down to a chosen system installed capacity margin (in 400 MW increments above or below the net ICR)The 400 MW increment size is based on the most recent study to determine the size and characteristics of proxy units*The purpose of scaling the load up or down is to mimic the condition of the system installed capacity margin being long or shortCalculate the expected number of hours per year in which there are insufficient resources to meet the system’s load and reserve requirements at the chosen system installed capacity margins* The 2014 proxy unit study is available at: http://www.iso-ne.com/static-assets/documents/committees/comm_wkgrps/relblty_comm/pwrsuppln_comm/mtrls/2014/may222014/proxy_unit_2014_study.pdf

5. 5Study Approach, cont.The study does not consider:Operational constraints of the generation resources such as ramp rates, minimum up/down times, maximum number of starts per day, etc.Operational requirements associated with unit commitment/economic dispatchGenerating resource unavailability associated with lack of fuel supply, violation of generation air emission guidelines, etc.Transmission constraints associated with transmission outage due to maintenance, construction associated with system upgrades or unforeseen loss of transmission elementsOperational risks associated with under commitment of resources due to load forecast error or loss of resources due to abnormal weather conditions

6. 6Interpretation of Study ResultsThis analysis may be considered an extension of the ICR calculationUses the same model and underlying assumptionsLoad and resource availability are also the main driversFocus is on the risk of not having an adequate amount of installed capacity to satisfy load and operating reserve requirement, instead of meeting the 0.1 days/year Loss of Load Expectation (LOLE), which is the focus of the ICR calculationThis analysis simulates all the hours of the year, but most of the reserve deficiency hours are observed during the summer monthsHigh load conditions during the summerConditions that could trigger reserve shortage hours any time of the year (listed in the prior slide) are not modeled

7. 7Study Results – CCP 2025-2026Estimated annual hours of system operating reserve deficiencies Capacity LevelExpected 5 / 95 50 / 50 95 / 5net ICR + 3,200 MW1.00.40.82.2net ICR + 2,800 MW1.30.61.12.9net ICR + 2,400 MW1.80.71.53.7net ICR + 2,000 MW2.40.92.14.9net ICR + 1,600 MW3.21.22.86.1net ICR + 1,200 MW4.21.83.87.7net ICR + 800 MW5.52.65.010.0net ICR + 400 MW7.13.66.612.2net ICR9.04.98.215.5net ICR – 400 MW11.46.510.319.4net ICR – 800 MW14.58.313.224.3net ICR – 1,200 MW18.510.417.230.8net ICR – 1,600 MW23.813.422.538.3

8. 8Study Results – CCP 2025-2026, cont.The table in the prior slide summarizes: (a) the expected number of hours of operating reserve deficiency conditions annually, and (b) the estimated relative frequency of hours of operating reserve deficiency conditions annuallyValues in the “Expected” column are the average hours; values in the “5 / 95” column indicate the lower 5th percentile of the simulation results for the number of hours with system operating reserve deficiency conditions; values in the “50 / 50” column indicate the median hours; and values in the “95 / 5” column show the 95th percentileFor example, the value 0.4 in the first row under “5 / 95” column means that, based on the model, there is a 1-in-20 (or 5%) chance that the annual total hours with operating reserve deficiency conditions would equal 0.4 hour or less when installed capacity equals net ICR plus 3,200 MW. Similarly, the value of 2.2 in the far-right “95 / 5” column means that, based on the model, there is a 19-in-20 (or 95%) chance that the total hours with operating reserve deficiency conditions would be 2.2 hours or less annually

9. 9Study Results – CCP 2025-2026, cont.MWnet

10. 10Comparison Between Results for CCP 2025-2026 (FCA 16) and CCP 2024-2025 (FCA 15)MW

11. 11ObservationsThe estimated annual hours of operating reserve deficiency for CCP 2025-2026 (associated with FCA 16) are slightly higher than the estimated annual hours of operating reserve deficiency for CCP 2024-2025 associated with FCA 15)The slight increase can be attributed mainly to the following:Higher tie benefits assumptionsThe total tie benefits for FCA 16 is 95 MW higher than the total tie benefits for FCA 15 Relying on a larger amount of emergency resources to meet the ICR results in higher frequency of entering reserve shortage conditionLower net ICR for FCA 16Net ICR for FCA 16 is 1,625 MW lower than the net ICR for FCA 15, mainly due to the lower load forecast as a result of the new reconstitution methodology for passive demand resources Maintaining the same amount of system operating reserve requirement for a smaller system with a lower amount of installed capacity results in higher frequency of entering reserve shortage conditions

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