Anurandha Annaswamy: Computation Model of the Nexus Between Natural Gas and Electricity Infrastructures

A Computation Model of the Nexus between Natural Gas and Electricity

Infrastructures

Active-adaptive Control Laboratory Department of Mechanical Engineering

Massachusetts Institute of Technology

Anuradha Annaswamy

Joint work with Neha Nandakumar

EnergyTech 2015, Cleveland, November 30, 2015

Natural Gas and Electricity Infrastructures

• Gas-fired units are increasing due to: o reduced footprint and increased efficiency compared to coal, o higher penetration of volatile renewable power, and o the need to reduce energy imports from foreign sources.

• Efficient interaction between the two infrastructures is therefore highly important!

Interdependence between the two

infrastructures

EnergyTech 2015

From the Boston Globe

September 25, 2014

1

Cold weather High penetration of natural gas

• The price of electricity increases as the electric generation mix encompasses more natural gas

ISO-NE fuel mix on October 29, 2015, 7:10 PM

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Consumption of Gas by the Electricity Sector

November 2015 Monthly Energy Review http://www.eia.gov/totalenergy/data/monthly/pdf/mer.pdf

• Electric consumption of gas increased over the past few years and trends expected to increase

• Electric consumption greater than consumption of every other individual sector

Electric consumers not a trivial participant in gas markets

Electric consumer

RCI Consumers

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Implications of Renewable Generation

𝑑𝑒𝑚𝑎𝑛𝑑 𝐺𝑑 = 𝐺𝑐𝑜𝑎𝑙 + 𝐺𝑛𝑢𝑐𝑙𝑒𝑎𝑟 + 𝐺𝑜𝑖𝑙 + 𝐺𝑔𝑎𝑠 + 𝐺ℎ𝑦𝑑𝑟𝑜 +𝐺𝑠𝑜𝑙𝑎𝑟 + 𝐺𝑤𝑖𝑛𝑑

• With greater retirement of fossil fuel generation and increased penetration of renewable generation into the electric grid, the reliance on natural gas as a flexible fuel to accommodate fluctuating renewable generation is increasing

Gas

Renewable

Coal

Nuclear

Generation Mix (as of Nov 28, 2014)

EnergyTech 2015

Gas

Renewable

Oil

Potential Generation Mix with increasing renewables

Interdependency between NG and Electricity Networks

Natural Gas Network IEEE 118-bus Electricity Network

Gas Marketer

Natural Gas Power Plant

(NGPP)

ISO-NE Electric

Dispatch

Renewable Penetration

• Interaction is affected by o Material flow o Market flow

• Material flow – Pipeline architecture, Linepack, Storage • Market flow – Access to gas for NGPP is primarily in

spot/secondary markets via non-firm contracts

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RCIT

Natural Gas Infrastructure – Market Model

Marketer (or Pipeline Operator)

Gas Producers

Main

Local Distribution Companies (LDC)

RCI Consumers

Interstate Pipelines

Marketer (or Pipeline Operator)

Local Distribution Companies (LDC)

RCI Consumers

Distribution Pipelines Commodity Contracts

Capacity Contracts

Our focus: To develop a computation model depicting market transactions within the NG-E combined network

NGPP

NGPP

Interdependency between NG and Electricity Networks – Market Flow

Gas Marketer


(NGPP)

ISO-NE Electric

Dispatch


Bilateral transaction between marketer and NGPP

NGPP bids to ISO

NGPP gets dispatched amount to produce

Adjustments to dispatch in real time markets

IEEE 118-bus Electricity Network

Two main issues: • Market misalignment • Unequal access to gas between NGPPs (GenCos) and RCITs (LDCs)

EnergyTech 2015

Natural Gas Network

Market misalignment in Day Ahead Market

12:00 am

6:00 am

12:00 pm

6:00 pm

12:00 am

Timely Nomination

Evening Nomination

Electric Day

Gas Day New

• Less uncertainty in DAM due to FERC 809 ruling - Genco knows how much gas they need, and nominate accordingly on the gas day (B occurs after A)

• Unequal access due to non-firm contracts – gas is available only if RCITs release gas

Bids to ISO Schedule

Posted

A

B

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Market misalignment in Real-time Market

12:00 am

6:00 am

12:00 pm

6:00 pm

12:00 am

Intraday Nomination 1

Timely Nomination



6:00 am

12:00 pm

6:00 pm

12:00 am

Evening Nomination

Electric Day

Gas Day New

• Only 3 instances when NGPPs find out if additional gas will be available • Unequal access – gas is available only if RCITs release gas • NGPPs may not be able to meet their dispatch

Bids to ISO

Schedule Posted

Schedule Reposted

Re-bid for gas

EnergyTech 2015

Implications of Renewable Generation

0 50 100 150 200 250 300 35049.88

49.9

49.92

49.94

49.96

49.98

50

50.02

50.04

T ime [s]

Bu

sF

requ

enci

es[H

z]• If gas plants cannot meet their dispatch needs hourly and make up for renewable

generation fluctuations, there can be a power imbalance, leading to frequency errors

𝑑𝑒𝑚𝑎𝑛𝑑 𝐺𝑑 = 𝐺𝑐𝑜𝑎𝑙 + 𝐺𝑛𝑢𝑐𝑙𝑒𝑎𝑟 + 𝐺𝑜𝑖𝑙 + 𝐺𝑔𝑎𝑠 + 𝐺ℎ𝑦𝑑𝑟𝑜 +𝐺𝑠𝑜𝑙𝑎𝑟 + 𝐺𝑤𝑖𝑛𝑑

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Gas

Renewable

Oil

Potential Generation Mix with increasing renewables

Interdependency between NG and Electricity Networks – Unequal access

Natural Gas Network (MA)

Gas Marketer


(NGPP)

ISO-NE Electric

Dispatch


Bilateral transaction between marketer and NGPP

NGPP bids to ISO

NGPP gets dispatched amount to produce

Adjustments to dispatch in real time markets


Two main issues: • Market misalignment • Unequal access to gas between NGPPs (GenCos) and RCITs (LDCs)

Marketer 1

Computational Model

𝑢(𝑞, 𝑇, ∅)

𝑢(𝑞, 𝑇, ∅)

Valuation function of customer provided to each seller Quantity

of gas Price for gas

Preference type

𝑣1(𝑞, 𝑇, ∅)

𝑣2(𝑞, 𝑇, ∅)

WTP for secondary release capacity

Price setter for firm capacity

Price setter for different contract types

Marketer 2

Marketer 3

Pipeline Company

Producer

Consumer

1

Consumer 2

Consumers/LDCs can be on interruptible or firm contracts for commodity and capacity

Marketer-consumer bilateral transactions (with or without bidding)

Transactions regarding sale of capacity

Transactions regarding sale of commodity

Computational Model (contd.)

𝑢𝑖 𝑠𝑖 , 𝑠−𝑖 = 𝑢𝑖 𝐺, 𝑇, ∅ = ∅𝑉 𝐺 − 𝑇

𝐸𝑢0 𝑠𝑖 , 𝑠−𝑖 = 𝑃𝑙 𝑇𝑙 − 𝑐𝐺𝑙 + 𝑃𝑢(𝑇𝑢 − 𝑐𝐺𝑢)

𝐺𝑖 ≤ 𝛽𝐶𝑟

5

𝑖

𝐺𝑖 ≥ 0

55

𝑖

𝐺𝑗 = 𝑑𝑒𝑚𝑎𝑛𝑑

5

𝑗

∅𝑙𝑉 𝐺𝑙 − 𝑇𝑙 ≥ 0

∅𝑢𝑉 𝐺𝑢 − 𝑇𝑢 ≥ ∅𝑢𝑉 𝐺𝑙 − 𝑇𝑙

s.t.

s.t. 𝑇 ≤ 𝑃𝑔 ∗ 𝑃𝑐

NGPP/Consumer

Gas Marketer M1

M2

M3

C1

C2

𝑢(𝑞, 𝑇, ∅)

Quantity of gas

Price for gas

Preference type

∅𝑙 or ∅𝑢 are of type non-firm and firm contracts where ∅𝑙 = bundle (G𝑙, 𝑇𝑙) ∅𝑢 = bundle (G𝑢, 𝑇𝑢) And the marketer chooses {∅𝑙, ∅

𝑢} to maximize its profit

EnergyTech 2015

Computational Model (contd.)

M1

M2

M3

C1

C2

• Posed as a constrained optimization problem

• Optimization objective: Marketers’ profit

• Constraints: Capacity, Feasibility

• Mass balance

• Demand: From NGPPs

Marketer-NGPP interaction

max∑ 𝑃𝑐𝑜𝑚,𝑚,𝑖𝑗 𝐺𝑖𝑗𝑐 ∗ 𝐺𝑖𝑗𝑐 − ∑ 𝐶𝑔𝑎𝑠 𝐺𝑖𝑗 ∑(𝑓𝑖𝑗 ∗ 𝐶𝑖𝑗)

NG Dispatch model

to each NGPP

Electricity Market

Spot price, Allocated

quantity

Electricity Dispatch

Overall Structure of Analysis

𝐺𝑖 ≤ 𝛽𝐶𝑟

5

𝑖

𝐺𝑖 ≥ 0

55

𝑖

𝐺𝑗 = 𝑑𝑒𝑚𝑎𝑛𝑑

5

𝑗

EnergyTech 2015

Modeling of Unequal Access

• Focus on Secondary Release Capacity Market and Spot Market

𝑃𝑐: Pipeline Capacity 𝐷𝐿𝐷𝐶 : RCIT Demand 𝐶𝑟: Spot gas on Secondary Market

𝛽 = 1 −𝐷𝐿𝐷𝐶,𝑑𝐷𝑎𝑣

𝐶𝑟 = 𝑃𝑐 − 𝐷𝐿𝐷𝐶

Better models of 𝛽 under investigation

𝛽: capacity available to electric consumers − measure of unequal access

EnergyTech 2015

Massachusetts Case Study to Compute Cr, 𝛽

Gas Node 1

M1 M2 M3 M4 M5

NGPP1 NGPP2 NGPP3 NGPP4 NGPP5

Gas Node 2

Gas Node

4

Gas Node 5

Gas Node 4

Gas Node 5

• From actual monthly gas demand data, daily gas demand (LDC and NGPPs) calculated for state of

MA from Sept 2014 – April 2015

• Actual data from five main receipt point nodes from the Algonquin pipeline

• Assume 5 marketers of natural gas and 5 NGPPs owned by one generating firm

• The generating firm has equal or unequal access to gas with the marketers (as LDCs)

• Each marketer is tied to one node, and each of the 5 NGPPs are tied to one node where each

marketer can sell gas to any of the 5 NGPPs

EnergyTech 2015

Gas Dispatch to Gas Bids given Equal vs. Unequal Access to Secondary Release Capacity Market (SRCM)

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Ratio of Gas Dispatch to Gas Bids given Equal Access to SRCM Sept 2014 - Jan 2015

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Ratio of Gas Dispatch to Gas Bids Given Unequal Access to SRCM Sept 2014 - Jan 2015

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Zero dispatch implies inadequate pipeline capacity

Instances of zero dispatch can increase with renewable penetration

Summary

Gas Marketer


(NGPP)

ISO-NE Electric

Dispatch


• Nexus between NG and Electricity is of growing importance • Our computational model focuses on market and material flow • Market flow

o Market misalignment – can lead to power imbalance o Unequal access to gas – with growing renewables, can lead to increased instances of zero

dispatch


EnergyTech 2015

Natural Gas Network

Work in Progress

Gas Marketer


(NGPP)

ISO-NE Electric

Dispatch


• Obtain accurate data for NGPP curtailments o How often do NGPPs get curtailed the gas they bid for and can’t produce what the ISO

schedules them? o Complete or partial curtailment? On what timeline?

• Better modeling of market flow • Modeling of material flow • Interconnection with dynamic market mechanisms for electricity dispatch


EnergyTech 2015

Natural Gas Network