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Generation Reserves: The Grid Security Question

A cost-benefit study shows the value of adding synchronized generating reserves to prevent blackouts on the scale of Aug.14.
Fortnightly Magazine - January 2004

A cost-benefit study shows the value of adding synchronized generating reserves to prevent blackouts on the scale of Aug.14.

If nothing else, the blackout of Aug. 14 showed just how physically vulnerable the electric transmission network has become to problems that begin at a very localized level. That vulnerability stems in part of the greater volume of long-distance transactions imposed on the grid by today's power industry.

But the blackout also revealed a greater truth, one that can be spelled out in economic terms. Considering the huge social cost of such events, it should be worth our while to consider virtually any investment of a reasonable scale that might provide us a fair degree of security against a repeat occurrence.

And if that investment could take the form of a simple addition to the supply of generation-rather than the more costly and politically more complicated alternative of adding transmission lines-then so much the better.

As it happens, that turns out to be precisely the case-that judicious and targeted additions of generation reserves, synchronized with the grid for easy availability, could have turned things around in the Midwest on Aug. 14, according to the findings of a study conducted by my firm.

The study of the Eastern Interconnection we performed, using a real-life configuration of the system, indicates that grid reliability can be achieved not only by transmission investment, but also by increasing the availability and flexibility of the generation resources. Grid operators face a challenge in allocating reserves, both synchronized and standby, across various control areas within the grid. Using a model that optimizes market operations centrally across the grid, and which takes into consideration grid security and cost in day-ahead markets and dispatch, can enhance the reliability of the system and reduce the occurrence and extent of blackouts.

In fact, the Federal Energy Regulatory Commission (FERC) has recommended a very similar sort of solution. For example, FERC Order 2000 clearly has identified the procurement of ancillary services to maintain grid reliability as a vital function of regional transmission organizations (RTOs). More recently, in its standard market design (SMD), FERC recommends a security constrained unit commitment (SCUC)-another hallmark of PJM and other regional grid groups that have developed bid-based power markets with locational marginal pricing (LMP).

Consequently, it is our belief that these functionalities proposed by FERC are crucial and will go a long way in improving grid reliability. Some grid operators are missing some elements of SCUC. An ideal implementation of SCUC should incorporate sufficient N-1 and N-2 contingency planning (first- and second-level contingencies), as well as remedial action schemes applied to certain groups of transmission lines, in conjunction with sufficient amounts of synchronized operating reserves that support the generation resource commitment.

Simulations and Observations

We performed simulations that included bidding, unit commitment and dispatch, as well as planned and forced generator outages, and forecast the amount of unserved energy (or load curtailment) in each hour at each location on the network. In our analysis, we varied the level of synchronized operating reserve to examine its effect on unserved energy.