Page Description - Information and Content about RTOs, ISOs, and Grid
Operators - Definitions & Terms.
Definitions and Terms:
- Deliverability - A generator deliverability test is
applied to ensure that capacity is not "bottled" from a resource adequacy
perspective. This would require that each electrical area be able to
accommodate the full output of all of its capacity resources and export, at
a minimum, whatever power is not consumed by local loads during periods of
peak system load. Export capabilities at lower load levels can affect the
economics of both the system and area generation, but generally they do not
affect resource adequacy. Therefore, export capabilities at lower system
load levels are not assessed in this deliverability test procedure.
Deliverability, from the perspective of individual generator resources,
ensures that, under normal transmission system conditions, if capacity
resources are available and called on, their ability to provide energy to
the system at peak load will not be limited by the dispatch of other
capacity resources in the vicinity. This test does not guarantee that a
given resource will be chosen to produce energy at any given system load
condition. Rather, its purpose is to demonstrate that the installed capacity
in any electrical area can be run simultaneously, at peak load, and that the
excess energy above load in that electrical area can be exported to the
remainder of the control area, subject to contingency testing. In short, the
test ensures that bottled capacity conditions will not exist at peak load,
limiting the availability and usefulness of capacity resources for meeting
resource adequacy requirements. In actual operating conditions energy-only
resources may displace capacity resources in the economic dispatch that
serves load. This test would demonstrate that the existing and proposed
capacity units in any given electrical area could simultaneously deliver
full energy output to the control area. The electrical regions, from which
generation must be deliverable, range from individual buses to all of the
generation in the vicinity of the generator under study. The premise of the
test is that all capacity in the vicinity of the generator under study is
required, hence the remainder of the system is experiencing a significant
reduction in available capacity. However, since localized capacity
deficiencies should be tested when evaluating deliverability from the load
perspective, the dispatch pattern in the remainder of the system is
appropriately distributed. Failure of the generator deliverability test when
evaluating a new resource in the System Impact Study brings about the
following possible consequences. If the addition of the resource will cause
a deliverability deficiency, then the resource should not be fully counted
towards resource adequacy reserve requirements until transmission system
upgrades are completed to correct the deficiency. A generator that meets
this deliverability test may still experience substantial congestion in the
local area. To adequately analyze the potential for congestion, various
stressed conditions (i.e., besides the system peak load conditions) will be
studied as part of the overall interconnection study for the new generation
project. Depending on the results of these other studies, a new generator
may wish to fund transmission reinforcements beyond those needed to pass the
deliverability test to further mitigate potential congestion—or relocate to
a less congested location.
- Virtual Bids - Convergence bids, also known as virtual
bids, are not backed by any physical assets and therefore are purely
financial in nature. Virtual bids are submitted in the day-ahead market and,
if cleared in that market, are automatically liquidated with the opposite
sell/buy positions at real-time prices. Thus, a virtual supply bid is an
offer to sell power at the day-ahead price and buy the same amount of
electricity back at the real-time price, while a virtual demand bid is an
offer to buy power at the day-ahead price and sell an equal amount back at
the real-time price. A bidder either earns or loses money depending on the
difference between the day-ahead and real-time prices. Virtual bidding is
used by generators and utilities to hedge their physical market positions
and manage their exposure to the differences between day-ahead and real-time
prices. Its use also has led to increased convergence between day-ahead and
real-time markets by arbitraging the difference between the prices in those
markets. FERC has extolled these and other benefits of virtual bidding when
approving similar schemes for other regional markets and, in fact, ordered
the Cal-ISO to implement such bidding within 12 months of launching its
market redesign in April 2009.
