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Winds of Change Freshen Resource Adequacy

Intermittent and interruptible resources increasingly are being considered in regional resource adequacy calculations—but the approaches differ.

Fortnightly Magazine - May 2007

to determine the reserve margin that satisfies the NERC reliability council LOLE standard of one-day-in-10-years. 3 PJM applies Mid Atlantic Area Council criteria across its entire region, regardless of NERC reliability council boundaries. 4 This model considers load, generation, imports and exports, and the reliability value of load-management programs. Inputs to this model are supplied by stakeholders ( e.g., generators and distribution companies.) Generation statistics generally are based on the most recent five years of historical performance. New generating units roll actual performance data into their historical base as it becomes available. PJM’s current installed reserve margin is 15 percent. 5 PJM classifies intermittent resources as either mature or immature. Mature resources are those with three or more years of operational history, and immature resources are those with less history. The effective capacity of mature wind farms is the mean average of three single-year capacity factors. For immature wind farms, PJM assigns an effective capacity of 20 percent, although this percentage is subject to change upon operational data to the contrary. 6

Midwest ISO: In the State of Change

The Midwest ISO encompasses all, or portions of, at least four NERC regions: ECAR, MAIN, MAPP, and SPP, and about 15 states and the province of Manitoba. 7 The Midwest ISO is in the process of consolidating its 26 balancing authorities, which may change the way the region’s reserve margin is calculated. However, for the foreseeable future, the following applies.

The Midwest ISO does not require a set reserve margin for its entire territory, although discussions are underway to do so eventually. Instead, each load-serving market participant is required to continue to follow the reserve requirements of their individual state(s) and NERC region(s).

Each generation resource that sells power into the Midwest ISO market must pass a deliverability test and be designated as a network resource. As long as this test is passed, any generating resource can participate in the Midwest ISO market. The only specific criterion for wind generation is that “all wind farms’ maximum output should be reduced to 20 percent in the model because only 20 percent of wind farm’s maximum output can be counted for capacity purposes, unless demonstrated otherwise.” 8 The Midwest ISO considers interruptible demand as an alternative capacity resource and requires only that the resource meet the adequacy requirements of the state, province, and NERC region where the resource is located.

ERCOT (Texas): The Big Wind State

The minimum reserve margin for ERCOT is 12.5 percent, as set by the Texas Public Utility Commission (PUC). ERCOT calculates the reserve margin annually. ERCOT’s calculated reserve margin for 2007 is about 15.2 percent, but is expected to decline over the next few years until new proposed generation is built. 9 ERCOT complies with the same LOLE/LOLP standards in calculating its reserve margin as the other NERC regions.

To calculate its reserve margin, ERCOT considers all installed generation, private co-generation facilities, imported capacity, large loads under interruptible contracts, mothballed units (assuming a 1-year restart time frame), and planned units with a signed interconnection agreement. While wind generation is