IEEE Power & Energy Magazine - March/April 2022 - 55

The amount of reserves needed in the context of distribution-level
NWAs is unaddressed, and additional research and industry efforts to
develop guidelines and standards for this issue would be beneficial.
rigorous as co-optimized clearing but is easier to communicate
and demonstrate.
The results of the local reserve auctions determine the
DERs to be scheduled and set the clearing price for the
reserve service. The service involves being " on standby " on
an hourly basis in case of a contingency event. As depicted in
Figure 7, if an event takes place, the DERs receive a deployment
notice, giving them 30 min to start providing energy.
Then, the DSO can specify the required duration of the DERs
response with a 5-min granularity, giving it more flexibility
in addressing contingencies. Participants with DERs providing
reserve service in the demonstration receive payments
when scheduled as reserve (in Canadian dollars per kilowatt)
in return for being " on standby, " and they receive deployment
payments (in Canadian dollars per kilowatt-hour) when there
is a contingency and DERs are deployed. With the reserve
service, the demonstration seeks to explore how operating
reliability could potentially be met when relying on DERs
as NWAs. However, the amount of reserves needed in the
context of distribution-level NWAs is unaddressed, and additional
research and industry efforts to develop guidelines and
standards for this issue would be beneficial.
Limits of Auctions
Auctions are competitive processes. For them to function
well and have economically efficient outcomes, conditions
for competition must exist. Market power concerns are
heightened when securing distribution-level services, given
that their smaller, local nature may limit competition. The
ability of many smaller DERs to participate in distributionlevel
markets could act as a balancing dynamic, enabling
more competition. However, currently, as seen in the results
of the demonstration, many DERs participate in opportunities
to provide services as part of aggregations as opposed to
contributing directly on an individual basis.
While there may be a great number of DERs participating
indirectly as part of an aggregation, if the number of
aggregator entities taking part in auction processes is small,
competition may still be limited. Thus, market power is an
important consideration in designing auction processes for
distribution-level services. Processes to monitor and mitigate
market power will be needed. In cases where distribution
services must be sourced on a highly localized basis and
competition may be highly restricted, auctions would not be
appropriate. For such circumstances, other service procurement
designs could be considered, such as programs with
predetermined prices.
Future Work
At the time of writing, the demonstration was ongoing. The
November 2020 local capacity auction had taken place, and
the May-October 2021 commitment period, throughout
which local energy auctions and associated energy activations
had occured, had come to an end. As discussed, the
2021 local capacity auction was forthcoming, and a local
reserve auction mechanism had been added for the May-
October 2022 commitment period, which is expected to
yield new and interesting insights. In parallel to the operational
aspects of the demonstration, a study and technical
paper were being developed.
One of the demonstration's primary objectives is to explore
the coordination required between a transmission-level
Platform Checks
Load Forecast
Before 7 a.m.
L
7 a.m.
Standby Notice
Issued
T-2 h
Reserve Notice
Issued
figure 7. A process example for local reserve service in the demonstration.
march/april 2022
ieee power & energy magazine
55
Availability
Window Opens
12 p.m.
Reserve Hours
5 min
Deployment
Intervals
T-30 min
Deployment
Notice Issued
9 p.m.
Availability
Window Closes
IEEE Power & Energy Magazine - March/April 2022

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