Following the green light given by Department of Energy (DOE) and the Energy Regulatory Commission (ERC) through the issuance of DOE Advisory 2024-01-001-SEC and the ERC’s interim approval of the Price Determination Methodology for the Co-optimized Energy and Reserve Market (Order, ERC Case No. 2023-002 RC), IEMOP announces the commencement of the Full Commercial Operations of the Reserve Market at dispatch interval 0005H on 26 January 2024. The Full Commercial Operations shall allow the participation of ALL certified A/S Providers in the scheduling and dispatch process in the WESM for the provision of regulation, contingency, or dispatchable ancillary services. Additionally, the reserve schedules and prices determined through the WESM shall be binding for scheduling and dispatch, while resulting spot transactions shall be settled through the market.
The key benefits of the Reserve Market include:
- Co-optimization: This refers to the simultaneous optimization of capacities in providing multiple electricity services to get the best energy mix at the most affordable price while maximizing resource use.
- Dynamic Reserve Requirement: This refers to a flexible approach to determining the amount of reserve capacity required at any given time, based on real-time conditions, rather than a fixed or static amount. By not keeping a higher-than-necessary fixed reserve, costs can be efficiently determined, which may benefit end-users in terms of electricity prices. This would also allow the grid to adapt to changes quickly. By adjusting reserves based on real-time conditions, there is a reduced risk of blackouts or other power disruptions.
- Single Buyer Model: Central procurement by the System Operator simplifies operations and streamlines coordination. Having a single buyer also optimizes the procurement of reserves, ensuring the most effective mix of reserve products based on the system’s needs. It also ensures more consistent procurement practices.
- Settlement Net of Contracted Reserves: When settling accounts, the pre-agreed contracted reserves are considered and settled at a contracted price. Any difference between the scheduled and contracted reserve is settled at the reserve market price. This ensures that electricity market participants have a clear and efficient method of reconciling and settling their financial obligations related to reserve capacities.
The Full Commercial Operations of the Reserve Market heralds a new era of competitive power supply procurement with the end goal of ensuring sufficient and reliable power supply for our country.