IEEE Power & Energy Magazine - March/April 2022 - 54

standby notice is sent to participants, indicating that there
may be forthcoming energy activations. Subsequently,
approximately two hours before each hour in the availability
window, defined as noon to 9 p.m., the platform
checks the latest demand forecast to confirm whether a local
requirement is materializing. If a requirement is confirmed,
a local energy auction is conducted by the platform to select
the DERs that will be activated for energy, and an auction
clearing price is determined.
The demonstration's local energy auction uses a simple
clearing process, where bids are ordered according to price
and DERs are selected until the local requirement is met.
The bid of the DER selected last sets the clearing price in
the demonstration's local energy auction. The clearing price
is used as a simply derived distribution locational marginal
price for settling participants for the energy service
they provide. Several simplifications are embedded into the
approach for deriving the distribution locational marginal
price, including ignoring electrical losses and applicability
only to radial systems. Nonetheless, the use of the distribution
locational marginal price in the demonstration is an
important step toward more granular pricing for DERs.
Furthermore, the performance of DERs that participate
in the demonstration as demand response resources is
measured against the installations' baseline consumption.
Demand response is when end consumers reduce their electricity
consumption because of activations in the demonstration
and, more generally, other system needs and price
signals. The baseline consumption for the performance
assessment of demand response DERs represents what the
use would have been had there not been an activation of the
DERs. The demonstration's rules outline how the baseline is
calculated based on historical meter data so that participants
have transparency into the process.
Activations in the demonstration are limited to a maximum
of 10 events, each lasting up to 4 h. The number of
events was capped to give participants some certainty
regarding the level of effort and cost involved. However,
while this approach reduces the risk for participants, it
100
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06 12
Time (h)
figure 6. The local energy and reserve requirements.
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Loading Threshold
Loading Threshold
Requirement
Local Reserve
Requirem
Local
Require
increases the operational difficulty for the DSO, which
needs to ensure that it will have DERs available for all
expected periods with a local requirement throughout the
duration of the commitment period.
Year Two Enhancement: Local
Reserve Auctions
In managing distribution NWA projects, DSOs need to
ensure reliability, which could involve having reserves on
standby to handle potential contingencies. DSOs are faced
with faults, outages, and system restoration as part of their
day-to-day distribution network operations and management.
However, using DERs as NWAs involves DSOs relying
on DERs to balance the local distribution system at
times, which is an activity that differs from typical DSO
functions. Using DERs to balance supply and demand at the
distribution level introduces new contingency modes into the
system. An example is if DERs activated for energy service
unexpectedly become unavailable. In such a scenario, local
DER reserves could be used to fill the shortfall on short
notice. Importantly, operating reserves at the transmission
level cannot be used to support distribution NWA projects,
as they are not deliverable when DERs are needed for distribution
NWA purposes (i.e., when the distribution system
is import-constrained). Therefore, the DSO must source the
reserve service from DERs sited downstream of the network
infrastructure limitations that are giving rise to the need to
use DERs as NWAs.
A reserve service has been introduced into the demRequirement
Local
onstration
for the DSO to use, specifically in the hours
when there is a local requirement and energy activations
take place. There are different classes of reserve service
that can be defined with varying degrees of readiness to
respond to contingencies. For the demonstration, a 30-min
reserve service has been developed, and if there is a contingency,
DERs can be deployed to provide energy within
half an hour. That amount of time was chosen because it was
expected to enable a broader set of participants to provide
reserve service in addition to energy service. It is possible
to include only a 30-min reserve service, considering that
the reliability needs in the demonstration are simulated. In
an actual implementation of an NWA project with real reliability
needs, reserves with faster readiness (e.g., 10 min)
will likely be required.
As indicated in Figure 6, it is in the hours when a local
requirement is identified that the DSO establishes a reserve
requirement and conducts local auctions to meet it. Local
reserve and energy auctions are linked because the same
DERs participate in both and are available to provide either
service. Similarly, in wholesale-level markets, energy and
operating reserve auctions consider the same resources, and
the processes are often co-optimized to ensure that assets
are used in an overall optimal way. In the demonstration,
the auctions are sequentially run, with the energy auction
first and the reserve auction following, which is not as
march/april 2022
Megawatts
IEEE Power & Energy Magazine - March/April 2022

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