Presentation from the EPRI-Sandia Symposium on Secure and Resilient Microgrids: Microgrid Market Operations with Distribution System Operators, presented by Mohammad Shahidehpour, Baltimore, MD, August 29-31, 2016.

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Microgrid Market Operations with
Distribution System Operators
Mohammad Shahidehpour, IEEE Fellow
Galvin Center for Electricity Innovation
Illinois Institute of Technology

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n Smart Grid
n Advanced monitoring and sensing devices, sophisticated
meters, and real-time communication and control
infrastructures.
n Self generation, Controllable loads, Community storage
n Microgrids with distributed generation and storage devices
n Aggregation of small customers with shiftable/curtailable
loads
n Large customers with on-site generation and storage
systems and curtailable and shiftable/deferrable loads
Changing Energy Landscape
Goal: Enhance the Power System Reliability, Resilience,
Economics, Security, and Sustainability

3. n Energy:
n Load Shifting
n Peak Shaving
n Load
Reduction
n Deferred Generation
Investment
n Deferred T&D
Investment
n Reduced O&M Costs
n Distribution Reliability:
n Lower SAIFI
n Lower CAIDI
n Power Quality
n System Reliability
n Capacity
n Ancillary Services
n Load Following
n Balancing Energy
Economic Social
Benefits of Microgrids/ Active Distribution Systems
Reliability Environmental
§ Green House Gas Reduction
§ Higher Renewable Portfolio
Standard Compliance
§ Renewable Energy Credits
§ Enhanced Energy
Independence
§ Enhanced Economic
Development
§ Improved Customer
Satisfaction
§ Improved Customer Choice
Presumer Values

4. n Seams between Wholesale and Retail Markets
n Operational
n Scheduling Practices and Protocols
n Retail and Wholesale Coordination
n Impact of Voltage Level on Load Aggregation/Demand Response
n Distribution Congestion Management
n Pricing Mechanism
n Optimal Scheduling Practices
n Bus LMPs versus Distribution LMPs
n Rate-Setting Process/Retail Tariffs
n Distribution Charges
Microgrid Market Challenges

5. Bulk Power Products
• Day-Ahead Energy
• Real-Time Energy
• Balancing Energy
• Non Spinning Reserves
• Spinning Reserves
• Regulation
Capability Data/
Telemetry
Dispatch
Instructions
DSO Data
• Generation/Load Data
• Time of Use
• Critical Peak Price
• Dynamic Pricing
• Commercial/Industrial Curtailment
Contracts
• Direct Load Control Options
• Etc
Bulk Power Limits
• Pmax , Pmin
• Ramp Rate
• Min/Max Up & Down Time
• Incremental Cost Curve
DSO :Closing the Gap with ISO
(Retail and Wholesale Operations)
Bulk Power
Markets
DSO
Dispatch & Operations
Microgrid
Substation
Transmission
Operator
Large
Generators
Substation
PCC
Microgrid
Substation

6. DSO as a Partner to Microgrids / Presumers

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11. Community Microgrid In Chicago
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DSO’s Decision Making Model
ISO’s Operation Model
DSO Model
Microgrids/Load Aggregators with
DR Flexibility

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DSO’s Decision Making Model

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ISO’s Day-Ahead Operation with DSO

15. n Generation Capacity Cost Savings
n Annual Savings per MW of DR: $40K - $120K
n NPV: $300K - $900K per MW of DR
Note: NPV Cost of a CT ~ $600K per MW
n Energy Cost Savings
n A few thousand dollars per MW of DR per year
n NPV Range: $50K - $200K per MW of DR
n T&D Cost Savings
n Sample quotes (different among Regions )
n High Annual Savings NPV: $1.5M per MW of DR
n Low Annual Savings NPV: $200K per MW of DR
n Savings/Revenues from Ancillary Services
n A few thousand dollars per MW of DR per year
n NPV Range: $50K - $200K per MW of DR
n Total Cost Savings per MW of DR
n NPV: $600K - $2.8M per MW of DR
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
Generation T&D Energy Cost Ancillary
Services
$K
DR Benefits Offered by DSO

16. $0.00
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
$100.00
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LMP ($/MWh)
Hour of the Day
Average Summer Day RT LMP (Anaheim; June-September)
Average of Hours Ending 1 through 8: $20.50
Average of Hours Ending 14 through 21: $47.71
Potential Impact of Summer DR :
• Fixed DR Schedule: $26,000/MW DR
• Optimal DR Schedule: $49,000/MW DR
Load Shifting Benefits