IEEE Power & Energy Magazine - March/April 2022 - 52

also have insight into conditions that drive the activation of
their DERs. The platform shows the DSO's demand forecast
and loading threshold levels that trigger the need for DERs,
as demonstrated in Figure 3. This feature introduces some
transparency into the activation process and provides participants
with data to incorporate into their assessments of
when activations may take place. In this manner, the platform
facilitates the demonstration and operationalizes the
local capacity, energy, and reserve auctions.
Local Capacity Auction
The local capacity auction seeks to secure DER capacity to
address distribution-level needs. This enables the DSO to
meet peak demand during the commitment period, which is
defined as 1 May-31 October 2021 for the first operational
year and 1 May-31 October 2022 for the second operational
year. As part of the project design, the demonstration area
was identified as summer peaking, and the local capacity
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auction is therefore focused on the " summer half " of the
year. The auction could easily be expanded to address the
" winter half " if the need for DERs was identified during that
period, too.
The target of the local capacity auction was 10 MW in the
first year. While the goal was modest, it represented approximately
1% of the load in the demonstration area, which is
not an insignificant quantity. For the second year, the target
was increased to 15 MW. A key reason for the adjustment
was to model how an NWA project could be structured with
periodic expansions of the capacity target (e.g., year over
year) as the load grows. While the approach was to secure
a meaningful capacity target for demonstration purposes,
in an actual implementation of an NWA scheme, planners
would conduct a detailed study of the expected load
growth, distribution network congestion, network upgrade
requirements, and NWA deferral value to assess the economics
of using DERs in comparison to network infrastructure
upgrades.
As part of the local capacity auction, what represents
Forecast
Actual
Loading Threshold
Hour
figure 3. The demand forecast for part of the demonstration
area on 6 October 2021.
table 1. The 2020 local capacity auction results.
Successful
Participants
NRG Curtailment
Solutions
Longo Brothers
Fruit Markets
Edgecom Energy
GC Project
Markham District
Energy
Tycho Poly
Total
52
Local Capacity
Obligation (kW) Resource Category
EnergyHub Canada 1,200
400
1,000
3,000
1,000
2,900
500
10,000
ieee power & energy magazine
Demand response
Demand response
Demand response
Demand response
Demand response
Thermal resource
Demand response
capacity must be exactly defined. In the demonstration, DER
capacity can be provided by thermal and storage resources
that deliver energy and directly connect to the distribution
system. DER capacity can also be provided by demand
response resources that reduce energy consumption. Additionally,
DERs must be capable of sustaining their capacity
power output for at least four consecutive hours. This parameter
may be adjusted as required to enable the DSO to reliably
meet its expected needs. Similar to resource adequacy
assessments conducted in bulk system planning, a rigorous
analysis must be performed to ensure that the capacity service
being sought from DERs will reliably address the needs
of the distribution NWA project. The target and parameters
that define DER capacity in the local capacity auction have
to be set to ensure distribution-level resource adequacy.
The maximum clearing price in the local capacity auction
is another key design parameter. It was set at CAD$1.60/kWday
for the demonstration. The maximum price was based
on data points that relate to the cost of centralized generation
plus data points associated with the value of deferring investment
in new network infrastructure. In setting the maximum
clearing price, assumptions at the high end of the range were
used to ensure sufficient incentive to drive participation in
the project. The local capacity auction for the first operational
year of the demonstration was held in November 2020 (see
Table 1). It cleared 10 MW from seven participants at a price
of CAD$0.64/kW/business day in the commitment period,
which is a substantial discount from the CAD$1.60/kWday
maximum. Using other and perhaps more familiar
units, CAD$0.64/kW-day represents CAD$80,000/MW for
the May-October commitment period. Also, an interesting
variety of DER types was observed among the successful
participants in the auction. For instance, EnergyHub Canada
is an aggregator of smart residential thermostats. Markham
District Energy has combined heat and power facilities to
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Demand (MW)
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