Report: Real-Time Co-Optimization in ERCOT Would Cost Less Than 1% of Annual Capacity Market Costs

Implementing a "maximum" configuration of real-time energy and ancillary services co-optimization (RTEAC) in the ERCOT market would cost less than 1% of the annual projected cost of a capacity market, according to a real-time co-optimization impact assessment filed with the Public Utility Commission of Texas (Project 40000).

Specifically, ERCOT has estimated the cost of real-time energy and ancillary services co-optimization at $25 million to $42.5 million, depending on configuration.

The annual cost of a capacity market in ERCOT has separately been estimated, in a report filed by a capacity market supporter, at $4.7 billion.

Specifically, ERCOT evaluated two possible real-time co-optimization configurations:

1. A "minimum" real-time co-optimization approach:

• Co-optimizes Responsive Reserve Service (RRS) only

• Uses single interval real-time dispatch optimization

2. A "maximum" real-time co-optimization approach:

• Co-optimizes RRS, Online Non-Spin, Offline Non-Spin, Regulation Up and Regulation Down

- Uses a multi-interval optimization engine in 5 minute increments

- Optimizes real-time dispatch and real-time commitment for current and future intervals

• Establishes a separate Operating Reserve Demand Curve (ORDC) for each Ancillary Service (AS)

• Includes regional AS requirements

• Allows AS substitution

Based on surveying other ISOs and vendors, and based on recent project experience, ERCOT projected that the "minimum" configuration for real-time co-optimization would cost $25 million and take three to four years to implement.

ERCOT projected that the "maximum" configuration for real-time co-optimization would cost $42.5 million and take three to five years to implement.