IEEE Power & Energy Magazine - March/April 2022 - 51

The operational phase launched in fall 2020, initiating the
first year of the participant-facing part of the project. The
second and final operational year commenced in fall 2021
and will run into 2022. The project will conclude by publishing
lessons learned and other documentation. The following
sections describe the demonstration's design and implementation
and highlight some preliminary results.
Demonstration Area and Eligibility
The southern part of York Region was identified by system
planners as a location well suited to the demonstration. York
Region is part of the Greater Toronto Area of Ontario. It is
also part of the inner ring of the Golden Horseshoe, which is
a densely populated and industrialized area. Specifically, the
demonstration focuses on southern York Region and captures
the towns and municipalities of Richmond Hill, Markham,
and Vaughan. To define eligibility in the project, the area is
described electrically as being downstream of several of the
substations in Figure 2. Demand in the area exceeds 1,300 MW
during summer peak hours and consists of a mix of residential,
commercial, and industrial loads. There are also DERs
in the area, which, if operated in new and beneficial ways,
could provide incremental value as NWAs.
Planning documents for York Region identify the area
as fast growing, with extensive urbanization expected to
continue. Due to this growth, new stations will be required
during the next decade. However, the DERs participating in
the demonstration are not being used to address an actual
reliability need, which would be the case in a real implementation
of an NWA project. Rather, the demonstration
simulates the capacity, energy, and reserve needs expected
to arise in the early 2030s if more stations are not be built.
In this manner, the auction mechanisms and capabilities of
participating DERs can be tested in a low-risk environment
while still describing the actual potential of using DERs as
NWAs in future years.
To test auction processes in managing an NWA project,
eligibility in the demonstration is focused on dispatchable
DERs. Specifically, demand response, storage, and thermal
resources, such as combined heat and power and biomass
facilities, that are owned and operated by third parties are
eligible to participate. While other resources and measures,
including solar photovoltaics and energy efficiency, can contribute
to NWA projects, the demonstration excludes nondispatchable
DERs to focus on the DSO's active management of
dispatchable DERs in near real time. Aggregations are also
eligible, enabling participants to group smaller-contributor
DERs to meet the minimum size threshold of 100 kW. Even
the aggregation of residential consumers, which may involve
thousands of contributor DERs, is permitted. Standalone
DERs qualify as long as they meet the 100-kW minimum
threshold One hundred kW is also the level required by order
2222 issued by the U.S. Federal Energy Regulatory Commission
(FERC) in September 2020. The FERC order allows
standalone DERs and DER aggregations that are 100 kW and
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larger to participate in organized wholesale markets in the
United States. Ontario, where the demonstration is situated,
is not under FERC jurisdiction, but the order is recognized
as an important benchmark for North America. The demonstration
differs in its approach, however, in that the 100-kW
threshold is for participation in the DSO's local auctions
for DERs, while the minimum size threshold in the Ontario
wholesale market is 1 MW.
Three Auction Processes
Implementing an NWA project at the distribution system
level involves several processes that, in combination, could
enable DERs to facilitate investment deferrals in traditional
infrastructure. In the demonstration, three major processes
are used, each defined as a distinct service with an associated
auction for clearing DERs and establishing prices. The
three services and auctions are modeled from similar mechanisms
and processes in wholesale markets but are applied
to enable DSOs to use DERs as NWAs to help manage the
distribution system.
First, as part of a capacity service, a local capacity auction
is conducted to enroll DERs several months in advance of
the demonstration's commitment period, which is when the
DERs will be used. This helps ensure that adequate capacity
is secured and will be available to the DSO. It also provides
participants with some lead time if they are installing
or aggregating new DERs. Second, as part of an energy service,
a series of local energy auctions is conducted during
the six-month commitment period to activate DERs when the
they are needed as NWAs (as described in the following).
Activating DERs as part of the energy service takes place
when demand exceeds a loading threshold established for the
demonstration area, which is intended to simulate the conditions
of an NWA project. Third, as part of a reserve service,
local reserve auctions are conducted on activation days
in tandem with local energy auctions to schedule DERs as
reserve resources. The DERs on reserve can then be deployed
on short notice if there is a contingency and they are needed.
To administer the three auction processes, a web-based
platform has been developed for the demonstration. It enables
the DSO, as the administrator, to set parameters for managing
the project. The DSO can, for instance, schedule a local
capacity auction and establish the capacity target the auction
will seek to secure. It can also set the values for conditions
that trigger an activation. Participants log in and manage
their part on the platform, as well. The platform enables
them to provide registration information and input bids for
the three auction processes. In case DERs are unavailable,
participants provide notice of the outage and information
about it to the DSO. For participants with aggregations, the
platform facilitates the periodic addition and removal of
contributor DERs.
Based on the demonstration's rules, the platform automatically
conducts the auction clearing process and presents
the results to the DSO and participants. Participants
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