The document discusses design elements for low-carbon wholesale markets, including an overview of a clean restructuring report from the 21st Century Power Partnership. It summarizes strategies for improving planning and procurement processes with high levels of clean energy, how to design market rules and operations, considerations for grid expansion and interconnection, and provides a case study on Mexico's clean energy restructuring efforts.

1. Clean Restructuring
Design Elements for Low-Carbon Wholesale
Markets and Beyond
Monisha Shah, NREL
José María Valenzuela, WWF Mexico
Héctor Alejandro Beltrán, CRE

2. Webinar Overview
Clean Restructuring:
Design Elements for Low-Carbon Wholesale Markets and Beyond
• Overview of 21 CPP
• Overview of Clean Restructuring Report
• Procurement and Planning
• Market Rules and Operations
• Grid Expansion, Interconnection and Codes
• Mexico Case Study
• Q&A

3. Speakers
Monisha Shah
National Renewable
Energy Laboratory
José María
Valenzuela
World Wildlife Fund –
Mexico
Héctor Alejandro
Beltrán
Energy Regulatory
Commission of Mexico
Other Authors include:
• Danish Case Study: Kim Møller Porst, Anders Hasselager, Sandra Friis-Jensen, Mette
Vingaard, Danish Energy Agency
• German Case Study: Fabian Wigand, Silvana Tiedemann, Ecofys
• Main Report: Lori Bird, Owen Zinaman, and Jeffrey Logan, National Renewable Energy
Laboratory

4. India
(co-lead)
United States
(co-lead)
Denmark Finland Mexico South Africa Spain
21ST CENTURY POWER PARTNERSHIP
A MULTILATERAL CEM EFFORT

5. Report Overview
Clean Restructuring:
Design Elements for Low-Carbon
Wholesale Markets and Beyond
• Builds on Power
Systems of the Future
• An end vision for the
design of competitive
wholesale markets that
rely increasingly on VRE,
DR, and other flexible,
clean energy options
• Three case studies: Mexico, Denmark and Germany

6. Restructuring and Clean Energy
Increasing levels of clean energy can introduce new phenomenon
into the electricity system

7. Flexibility Options
Range of options for increasing the flexibility of a power system

8. Planning and Procurement
How might planning and procurement become more complex in clean
restructured markets?
• A more dispersed and
diverse set of clean and
variable energy resources
and market actors.
• Different interests between
system planners and
individual investors in
generation
• Revenue sufficiency
concerns can occur
• Allocating cost and risk while retiring fully or partially amortized
conventional generators in a market—in order to “make room” for new
clean energy capacity- can be tricky
Source: Energinet.dk, 2011
Danish power generation

9. Planning and Procurement
Strategies to Improve Planning and Procurement Processes with High Levels of Clean Energy
Enhancing Foundational Planning Data
• Conduct system flexibility assessments and potential studies, e.g.
EE and DR
• Utilization of high-fidelity wind and solar data
Enhancing System Planning Practices
• More integrative generation and transmission planning
• Utilization of advanced flexibility metrics and constraints in planning
exercises
Enhancing Market Structures and Procurement Practices
• Perform scenario analyses that explore transitions in market
structure
• Provide clear guidance on grid expansion plans for renewable
developers
• Include reasonable “right-to-curtail” provisions for new VRE
contracts;
• Formulate clear guidance on cost/risk allocation strategies for
retiring existing

10. Design of Market Rules and Operations
• Design and implementation of dispatch rules, e.g. shorter dispatch increments and
ability to revise bids based on forecasts
• By enlarging balancing areas, the relative variability and uncertainty in both the load
and system-wide renewable energy generation can be lowered.
• Rules and procedures for implementing curtailments, particularly for system
balancing
Wholesale market rules and operations can be designed for VRE and
flexibility

11. Design of Market Rules and Operations
Forecasting, Ancillary Services and New Market Products:
• Integration of forecasting into
market operations
• System operators need
adequate data from
generators to ensure accuracy
of system level forecasts.
• Imbalance penalties for
deviations from scheduled
generation can be effective
tools
• Market can be designed to change
the way ancillary services are
provided to the system including
Source: Greening the Grid: FORECASTING WIND AND SOLAR
GENERATION: IMPROVING SYSTEM OPERATIONS
load following, frequency responsive, inertial response, and reactive power support.
• New market products, such as ramping products, e.g. CAISO’s Flexiramp, may be
helpful for increasing system flexibility.
• Demand response can also be a cost-effective component of system flexibility for
energy, ancillary services, and capacity markets if certain barriers are addressed

12. Grid Expansion, Interconnection and Codes
For network expansion and
investment:
• Expand infrastructure investment to
accommodate clean energy
resources and appropriately
allocate costs and risks among
developers and ratepayers.
• Integrated generation and
transmission planning, e.g. CREZ
Interconnection:
• Streamline the interconnection
process to allow for new entrants
Grid Codes:
• Updated grid codes to better
accommodate VRE and other
resources
• And better connect to surrounding
grids and enable larger balancing
areas

13. Country Case Studies: Clean Restructuring in Action
• Mexico – rapid restructuring designed
specifically for the integration of clean
energy
• Germany – electricity market 2.0
debate on how to update their
restructured market to better
accommodate clean energy and
enable flexibility
• Denmark – regional cooperation
enabling a larger balancing area with
Nordic neighbors
Bidding areas in the Nordic
region
Source: NordREG

14. Mexico Case Study
Mexico’s Clean Restructuring
Mexico’s power market reform evolves in parallel to
an opening of all energy makers. Key drivers:
- Reduce cost of supply through market efficiencies.
- Reduce cost of supply through change in the
structure of energy production away from heavy-
fuel oil.
- Comply with climate and energy transition
mandates and policies: 35% clean energy by 2024
from 18-20%.
Additional key elements
- Population without access to electricity: 2%
- Geothermal capacity: 0.9 GW
- Technical and non-technical losses in 2013: 16%
Key desired outcomes

15. Mexico Case Study
Mexico’s Clean Restructuring
- Ministry of Energy (SENER)
- Energy Regulatory Commission (CRE)
- Mexican Independent System Operator (CENACE)
- Federal Commission of Electricity (CFE)
Moving from a vertically integrated monopoly to a competitive market
Review of How the Roles of Various Actors Evolved
Industry Model (1995-2012)
Private
generation
Generación
Transmission Distribution
Market-based Industry (2013/2014 - present)
Generation Retail

16. Mexico Case Study
Mexico’s Clean Restructuring
- CRE established the set of minimum technical requirements to operate
and plan the Mexican Power System
- Based on the definition of an Adequate Level of Reliability
- Enforces 10 NERC-like standards
- Includes requirements for the development of the Smart Grid
- Creation of the National Reliability Committee
Economic Dispatch and the Ancillary Services Market
- CENACE (ISO) is responsible to perform the economic dispatch
- Based on merit order of variable costs
- LMP computed for more than 2, 000 nodes
- Creation of an ancillary services market
Reliability regulation: The Mexican Grid Code

17. Mexico Case Study
Mexico’s Clean Restructuring
- Independent System Operator.
- Robust regulatory and planning system.
- Restructuring and unbundling of the state utility (CFE)
- Clear rules for wholesale competitive market and regulated transmission
and distribution.
Key elements for clean energy deployment
- Clean Energy Certificates system with burden on the consumer side
- Long-term energy auctions
- High Renewable Energy Zones
Key market design instruments

18. Mexico Case Study
Mexico’s Clean Restructuring
The transformation of interconnection
- Serious administrative bottlenecks
- High regulatory risk
- Economic burden to the authority
- Cumbersome process for grid planning
(bias in favor of CFE projects)
PRODESEN
Programa de Desarrollo del Sector Eléctrico
- 15-years indicative planning for power
generation
- 5-years investment program for grid
infraestructure

19. Mexico Case Study
Mexico’s Clean Restructuring
First long-term auction call
- 6.3 TWh-year of energy and 6.3 million Certificates, based on the 5%
Certificates requirement for 2018.
- 500 MW of capacity.
- Energy to be delivered starting 2018.
Results
- 227 offers from 69 bidders.
- Projects: 18 winning bids from 11 companies.
- Technologies: 7 solar PV companies and 4 wind companies.
- Energy: 74% is going to solar and 26% to wind.
- Prices: lowest price below 40 USD.
- No offers for capacity.

20. Mexico Case Study
Mexico’s Clean Restructuring
First long-term auction

21. Contact Information
Authors
• Monisha Shah, NREL, monisha.shah@nrel.gov
• José María Valenzuela, WWF – Mexico, jvalenzuela@wwfmex.org
• Héctor Alejandro Beltrán, Energy Regulatory Commission of Mexico,
hbeltran@cre.gob.mx
Report Website and Link
21CPP Website:
www.21stcenturypower.org
Report available at:
http://www.nrel.gov/docs/fy16osti/66105.pdf
Report fact sheet:
http://www.nrel.gov/docs/fy16osti/66479.pdf