LMP Fundamentals Across Wholesale Electricity Markets

June 20-21, 2024 | Online :: Central Time

0624-lmp-fundamentals

“This course is exactly what I was looking for to better understand price formation and dispatch in the electricity market.  The speaker is the only industry expert who addresses this topic in such complete detail.”  Associate, EDF Renewables

“Great way to learn how LMPs are calculated.” Rates and Policy Director, Northwest Requirements Utilities

“Explains a relatively unclear subject.”  Economist, Bonneville Power Administration

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“Love the suggestions for further reading.” Market Analyst, Southwest Power Pool

“Presentation highly organized. Speaker extremely knowledgeable and very clear in his explanations. Very extensive research conducted in preparation for presentation.” Senior System Metering Engineer, TriState G&T

“This course provided the insights into price formations that has taken my understanding to the next level.” Market Operations Engineer, ERCOT

“Excellent approach: we can read formal text book LP descriptions ourselves but this added valuable intuition.” Principal Economics & Business Advisor – Transmission Planning, Xcel Energy

This course examines the value of understanding, analyzing and forecasting electricity prices in the North American wholesale markets (ISOs and RTOs).  It forms a comprehensive introduction and overview of the locational pricing market (LMP) pricing structures, their evolution and possible extrapolations to the future of each independent system operator (ISO/RTO) organization.  Data sources that influence and shape LMP pricing will be identified, the mathematics of price formation discussed, and some analytical approaches described.

The information presented will benefit generation, transmission, financial, and other market participant staff who deal with current and future LMPs in wholesale electric markets by providing a deeper understanding of:  

1. what drives them
2. the complexity of supplying electrical energy around the clock
3. across an imperfect transmission grid
4. from a variety of suppliers
5. and without benefit of significant large-scale storage or rationing

Learning Outcomes

This course will:

• Explain the motivation and history behind the LMP markets
• Explain LMP price formation and illustrate with examples
• Examine characteristics of the individual LMP markets
• Describe challenges in analyzing and predicting LMP in various time frames
• Review various commercial applications (resource siting, market risk analysis)
• Examine the fundamental drivers of electricity prices (supply, demand and transmission network)
• Review the value and use of price forecasts for multiple market conditions and products
• Assess the LMP dynamics of unit commitment – how the market chooses which suppliers to buy from
• Explain the LMP dynamics of economic dispatch – how the market decides how much to buy from each supplier
• Identify how different resources are offered into the markets
• Review input data for fundamentals-based forecasting (market mimicking)
• Explain the LMP distinctions between modeling “day ahead” (DA) and “real time” (RT) markets

Thursday, June 20, 2024 : Central Time

9:00 – 9:20 a.m. :: Overview and Introductions

9:20 – 10:30 a.m. :: Setting the Stage

• Scoping the “DNA” of wholesale electricity markets
  • From vertical integration to deregulated competition
  • Maximizing consumer and supplier surplus, continuously
  • Premise > price = value
  • Day ahead (DA) reservation and real-time (RT) balancing
• Who participates, why and how?
  • Physical
    • Generators
    • Bulk consumers
    • LSEs
  • Financial market participant
    • Virtual
    • Traders
  • Congestion hedge (FTR)
• Characteristics of LMP-style Markets
  • Architecture
  • Offers
  • Settlements

LMP Price Formation Overview

• Price formation principles
  • Constrained optimization
  • Components
    • energy + loss + congestion
• The role of transmission in separating prices
  • Congestion
  • Losses
• Charting the effects of increasing renewables supply
  • Depressed values and more volatility
  • Load often geographically distant
  • Not demand responsive or self-balancing
  • Variable, not firm
• Resource adequacy and reliability issues
  • The “cannibalization” problem
    • Curtailment
    • Declining “capture ratio”

10:30 – 10:45 a.m. :: Morning Break

10:45 a.m. – 12:45 p.m. :: LMP Analysis and Forecasting Overview

• LMP in context of modern government policy
  • Market design – select “cheap” vs. “clean”
  • Discuss relationship to federal tax credits (PTC, ITC)
  • States “clean” procurement preferences and mandates
  • C&I contract for “clean” to meet ESG goals
  • Carbon price (e.g., RGGI)
  • Emission allowances (EAs) and renewable energy credits (RECs)
  • Out-of-market contracts and subsidies distort market outcomes
• LMP Analysis
  • Challenges and approaches
  • Data availability
  • Trends and correlations
  • Investigating congestion
  • Volatility
• LMP Forecasting
  • Challenges and approaches
    • Long-term forecasting (5-25 years)
    • Mid-term forecasting (1-5 years)
    • Intra-day forecasting
    • Uncertainty
    • Statistical vs. fundamental approaches
  • Identifying the drivers of future prices
    • Fuel price
    • Renewable penetration rate
    • Electrification of the economy
    • Transmission grid expansion (slow or fast?)
    • Distributed resources and storage

12:45 – 1:30 p.m. :: Lunch Break

1:30 – 3:00 p.m. :: Survey of the LMP Markets

• Supply mix, market volume, load patterns
• Market reports, market websites, congestion patterns
• Issues and future directions

3:00 – 3:15 p.m. :: Afternoon Break

3:15 – 5:00 p.m. :: Survey of the LMP Markets (continued)

• CAISO
• ERCOT
• ISO-NE
• MISO
• NYISO
• PJM
• SPP
• AESO and IESO (Alberta and Ontario)

5:00 p.m. :: Course Adjourns for Day

 

Friday, June 20, 2024 : Central Time

9:00 – 10:30 a.m. :: Applying LMP to Commercial Operation Decisions

• Siting new generating resources
  • LMP basis risk and curtailment risk
• Siting Energy Storage
  • LMP volatility intra-day presents arbitrage opportunity
    • Forecasting LMPs via machine learning
  • Creating flexibility (near renewables, hydro and nuclear)
  • Profiting from transmission congestion, renewable curtailment
  • Storage as a transmission asset for congestion management
  • Long duration storage (8 hours or more)
• FTR valuation
• Contracting with generating resources
• Ratemaking
  • Time of use rates
  • Transactive energy exchange (direct consumers-to-consumers)

10:30 – 10:45 a.m. :: Morning Break

10:45 a.m. – 12:15 p.m. :: Future Trends and Their Prospective Impact on Market LMPs

• Electrification of the economy
  • Energy efficiency to reduce electric demand
  • Transport and heating to increase electric demand
• Renewables in the supply mix
  • Tax incentives, investor appetite, off-take, returns
• Transmission expansion
  • Bulky, intermittent, large impact
  • Before and after comparison
• Distributed resources and storage
  • Aggregation and virtual power plants (VPPs)
• Flexibility, not energy, sets LMP in the future?
  • Ramping capability as a service
    • Controllable consumption?
    • Scarcity Pricing
  • Trends in other countries
  • Past, present and future

12:15 p.m. :: Course Adjourns

Nicholas Pratley has worked in electrical power systems analysis and design for more than three decades. Trained in Electrical Engineering at McGill University and the Universite de Montreal polytechnical school, he began his career as a consulting engineer designing power distribution for heavy industrial projects and moved on to become a subject matter expert in power systems analysis for software vendors and consulting firms. He has experience with generation interconnection studies and transmission planning, including more than 15 years in electricity market simulation and price forecasting. Mr. Pratley has received training on Plexos, GE MAPS and PROMOD IV production cost models, and provided training and consulting services using PROMOD for many years. Clients have included transmission owners and developers, municipal utilities deciding whether to join an ISO market or where to construct a new generating plant, competitive generation (IPP) developers forecasting transmission congestion risk for wind/solar/storage project siting and contract negotiation, and pension funds investing in renewable generation projects. His work has influenced decisions to acquire, divest, build or invest in dozens of projects worth multiple billions of dollars. In his current professional capacity, Mr. Pratley focuses on the U.S. northeast wholesale electricity markets, federal and state policy, and transmission plans with respect to large-scale renewable energy development. He also prepares and presents training courses using his expertise in LMP wholesale electricity markets.

We will be using Microsoft Teams to facilitate your participation in the upcoming event. You do not need to have an existing Teams account in order to participate in the broadcast – the course will play in your browser and you will have the option of using a microphone to speak with the room and ask questions, or type any questions in via the chat window and our on-site representative will relay your question to the instructor.

• Microsoft recommends downloading and installing the Teams app if possible. You may also use the Edge browser or Chrome.
• You will receive a separate email with a unique link to a personalized landing page which will include links to join all sessions of this event.
• If you are using a microphone, please ensure that it is muted until such time as you need to ask a question.
• The remote meeting connection will be open approximately 30 minutes before the start of the course. We encourage you to connect as early as possible in case you experience any unforeseen problems.

Please Note: This event is being conducted entirely online. All attendees will connect and attend from their computer, one connection per purchase. For details please see our FAQ

If you are unable to attend at the scheduled date and time, we make recordings available to all attendees for 7 days after the event

REGISTER NOW FOR THIS EVENT:

LMP Fundamentals Across Wholesale Electricity Markets

June 20-21, 2024 | Online

Your registration may be transferred to a member of your organization up to 24 hours in advance of the event. Cancellations must be received on or before May 24, 2024 in order to be refunded and will be subject to a US $195.00 processing fee per registrant. No refunds will be made after this date. Cancellations received after this date will create a credit of the tuition (less processing fee) good toward any other EUCI event. This credit will be good for six months from the cancellation date. In the event of non-attendance, all registration fees will be forfeited. In case of conference cancellation, EUCIs liability is limited to refund of the event registration fee only. For more information regarding administrative policies, such as complaints and refunds, please contact our offices at 303-770-8800

Credits

EUCI is accredited by the International Accreditors for Continuing Education and Training (IACET) and offers IACET CEUs for its learning events that comply with the ANSI/IACET Continuing Education and Training Standard. IACET is recognized internationally as a standard development organization and accrediting body that promotes quality of continuing education and training.

EUCI is authorized by IACET to offer 1.0 CEUs for this event

Instructional Methods 

This program will use PowerPoint Presentations and group discussions. 

Requirements For Successful Completion Of Program 

Participants must log in each day and be in attendance for the entirety of the event to be eligible for continuing education credit.

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Upon successful completion of this event, program participants interested in receiving CPE credits will receive a certificate of completion.

Course CPE Credits: 11.5
There is no prerequisite for this Course.
Program field of study: Specialized Knowledge
Program Level: Basic
Delivery Method: Group Internet Based
Advanced Preparation: None

EUCI is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of accountancy have final authority on the acceptance of individual courses for CPE credit. Complaints regarding registered sponsors may be submitted to the National Registry of CPE Sponsors through its web site: www.nasbaregistry.org

Who Should Attend

Representative Organizations

• Independent power producers (IPPs)
• Load-serving entities (LSEs) and utilities
• Local distribution companies (LDCs)
• Merchant power ventures
• Merchant transmission providers
• Wholesale trading companies
• Power marketers
• Energy service providers/companies (ESPs/ESCOs)
• Smart grid resource providers
• Demand response providers/aggregators
• Large energy customers
• Consumer advocates
• Regulatory counsel
• State regulatory staff

Responsibilities

• Generation bidding
• Scheduling
• Asset management
• Marketing and business development
• Financial marketers
• Power trading
• Power supply analyst
• Contract administrators and analysts
• Energy management
• Revenue assurance
• Energy operations and supply
• Retail load supply
• Structured power
• Bulk power
• Energy finance and analysis
• Confirmation administration
• Procurement management