Groups - Retail Dynamic Price Product and Messaging Specification - Cazalet.pdf uploaded

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The document named Retail Dynamic Price Product and Messaging Specification
 - Cazalet.pdf has been submitted by Edward Cazalet to the OASIS Energy
Market Information Exchange (eMIX) TC document repository.

Document Description:
The attached document is focus on retail dynamic pricing. It was first
posted by me to the Energy Interop and NAESB sites last fall.

Within the document five high level use cases are described.  Cases A
through D describe customers with increasing interest and automation to
respond to dynamic prices.  The last case extends dynamic pricing to
include distribution congestion and loss pricing.

A.	Customer Changes their Usage in Response to Dynamic Prices
B.	Customer Uses Smart Appliances and Devices or Energy Management System
(EMS) in Response to Retail Dynamic Prices
C.	Retail Dynamic Prices with Ancillary Services
D.	Retail Service Provider Quotes Dynamic Forward Prices and Transacts
Energy with Customers 
E.	Distribution Operator Provides Dynamic Distribution Prices and Loss
Factors to Retail Service Providers

A.	Customer Changes their Usage in Response to Dynamic Prices 
Customer awareness of energy scarcity and customer attention to energy use,
each maintained by economic signals, are key benefits of the smart grid.
The most expensive use of the grid is to cover short term shortages in
energy supply. Today such shortages are caused as buildings respond to
weather or as the grid responds to unplanned outages. Tomorrow, as we rely
more on intermittent energy sources such as sun and wind, they will occur
more frequently. 
 Customers may increase their awareness of energy scarcity using dynamic
price information provided by In Home Display Devices (IHD) or other means
and can display past, current and projected consumption as well as past
current and forward energy prices. 
Customers without in-home display devices who are generally aware of
current prices and the effect of their usage decisions on their bill also
may be able to benefit from dynamic prices.
Customers without automated smart devices will typically want simpler
dynamic price protocols and transactions.  
In this case, Customers on a dynamic price service are likely to select, be
offered, or have as a default  a baseline amount of energy that can vary by
time of day and season.  A Retail Service Provider may provide, either a
cost of service rate or a competitive rate for the baseline service.  Any
amounts above the baseline would be measured by the Customer meter, perhaps
hourly, and billed at a real-time price.  Any amounts below the baseline
amount would be paid to the Customer at a real-time price.
The customer baseline will provide some cost certainty to the Customer on
his bill.  The real-time price applied to all customers will allow the
customer to profit when able to reduce usage below the baseline, but will
pass on the high cost from the system when the grid is under stress. 
Customers may learn over time to shift usage from high cost periods to low
cost periods and reduce their overall bill for electricity.

B.	 Customer Uses Smart Appliances and Devices or Energy Management System
(EMS) in Response to Retail Dynamic Prices
The Smart Grid allows customers to become actively involved in changing
their energy consumption habits by connecting their personal Smart
Appliances and Devices to the utility grid either directly or through an
Energy Management System(EMS).  Smart appliances and devices have their own
domain requirements, in particular safety requirements, and must manage
their own behaviors in response to coordinating and economic signals.
Communication is through the Facility Energy Services Interface (ESI) or
the metering system.  And, smart devices may also communicate directly with
the Retail Market Domain.  
For example, a building with air conditioning can decide to pre cool in the
morning and buy power at lower dynamic prices and sell back power in the
afternoon at higher forward dynamic prices, thereby reducing costs.  If the
building has active thermal storage (for example, ice) the building will
have even more flexibility to shift consumption to reduce costs.  Electric
water heating, electric space heating, refrigeration and some industrial
process all have thermal inertia that enables dynamic management of usage
in response to dynamic prices.  With more renewables, the dynamic prices
will be more volatile and the management of thermal storage using dynamic
prices to accommodate renewables variability will be very helpful.
This case includes Electric Vehicles whether charged at home, work or at a
charging station.  When the current dynamic price is lower than forward
dynamic prices for later in the day, it will generally be less costly to
charge at the lower price.  At night when there may be excess generation on
the grid the price could be very low or negative.  When the current dynamic
price is high it may be possible to defer charging. The customers driving
plans and habits, the efficiency of charging at different rates of charge,
the cost of gasoline for a hybrid electric vehicle will all be factors in
addition to the dynamic power prices that will determine when and how fast
to charge the vehicle batteries.  And as dynamic prices respond to grid
conditions continuously, the charging plan can be modified automatically. 
For example if too many Electric Vehicles attempt to charge at the same
time, the dynamic prices may increase, and some vehicles will automatically
decide to charge at a later time.
This case includes Distributed Energy Resources (DER).  A Customer may have
on-site solar PV, fuel cell, combined heat and power, storage or other
generation behind his meter.  Dynamic prices will enable intelligent
controllers for each device to determine when to generate, when not to
generate and when to store electricity. For example, if the solar PV panels
on the house feed more power back into the distribution grid than the house
consumes or can store at that time and if the dynamic price to the house is
negative, the solar PV panels may be turned off.  When battery storage is
available, battery controller can decide when to store and when to
discharge.  And a properly configured the Electric Vehicle may also be able
to deliver power back to the building or the grid when dynamic prices are
very high.
The availability of intelligent devices to automatically respond to dynamic
prices will allow the use of more frequent updating of prices and more
dynamic price products to better respond both to Customer preferences and
provide customer cost reduction while better interfacing with the grid.
Rather than having smart devices attempt to forecast real-time prices,
forward dynamic price quotes  provide opportunities to buy sell power
forward of the real-time delivery interval and know that the transaction
will benefit both the Customer and the overall grid.  And the response of
load to forward signals will enhance grid reliability and allow central
station generation to be operated at a steady rate with less cycling and
startup and shutdown which increases costs and GHG emissions. 

C.	Retail Dynamic Prices with Ancillary Services
In addition to responding to Dynamic Energy Prices, the Retail Customer or
a Distributed Energy Resources with Smart Devices may be able to provide
ancillary services such as frequency regulation or spinning reserve
capacity that can be called on by the grid operation under certain grid
emergencies.  The Retail Service Provider combines retail schedules for
ancillary services into an aggregate schedule into the wholesale market
operations scheduling system. The Retail Service Provider transmits any
ancillary services dispatches from the Grid Operator to the Retail Customer
and uses data from the Customer Meter to determine compliance and any
deviations from schedules and operations dispatches.

D.	Retail Service Provider Quotes Dynamic Forward Prices and Transacts
Energy with Customers 
Customers want to know the prices of products before they buy.  It is
beyond the scope of this specification to specify how Retail Service
Providers would determine the price levels to quote to Customers. However
it is useful to provide a high level description as to how Retail Service
Providers might operate so that we can specify the message protocols for
dynamic prices and transactions.
A Retail Service Provider typically assembles a portfolio of transactions
by purchasing and selling power products in wholesale markets to support
the sale and purchase of power products in retail markets.  Wholesale
markets involve generators, system operator markets, brokers, exchanges,
and marketers.   A Retail Service Provider will also pay for the costs and
losses to schedule, transmit and distribute the power products to Customers
so that the price to customers is an actionable price covering all costs.
Retail Service Providers, whether cost of service or competitive, do this
today.
Where permitted and facilitated by State regulatory policies, multiple
Retail Service Providers may compete to serve a given customer.  With the
Smart Devices and the message protocols specified here it will be possible
to purchase power in a given interval from one Retail Service Provider and
in another interval from a different Retail Service Provider. And at a
later time, the Customer may purchase additional power in the same
intervals from a third Retail Service Provider, or sell back to that Retail
Service Provider.
Dynamic Price Retail Service Providers will provide dynamic price quotes
forward of each Delivery Interval.  For example, at 8 am today, for the 2
pm to 3 pm delivery hour tomorrow, the Retail Service Provider may quote a
price for the Customer to buy (ask price) and a price for the Customer to
sell (bid price) for amounts of power to be delivered during the 2 pm to 3
pm hour tomorrow.  The ask  price typically will be slightly higher than
the bid  price.  As conditions on the wholesale market and the grid change
and as Customers respond to price quotes, a Retail Service Provider may
increase or decrease its price quotes to better reflect current supply and
demand.  Different Retail Service Providers may make different price quotes
and the Customer's Smart Devices can choose the best prices for
transactions.  Many frequent quotes for small amounts of energy with
automated response will support grid and market stability and reduce risks
to both Customers and Retail Service Providers.
Retail Service providers will post forward price quotes for a set of
delivery intervals over the next day or so.  This will provide a forward
price curve for smart devices (especially those with storage and thermal
inertia) to plan their operation and contract for the power required.
Retail Service Providers will also quote longer term prices for power
products days, weeks, months, and perhaps years ahead of delivery. 
Customers may purchase these products to lock in their power cost but still
be open to later transactions to buy more or sell back based on dynamic
prices closer to delivery.

A special case of forward priced service is customer baseline service based
on cost of service prices.  In this case a cost of service Retail Service
Provider offers a baseline amount of power in each hour of the day. The
amount may vary by hour of the day and season.  The price of this baseline
amount would be cost based.  However, the customer would be obligated to
pay for this baseline amount, but could sell back to Retail Service
Providers or buy more from Retail Service Providers at dynamic prices
quoted by these providers.
After the delivery interval, Retail Service Providers will also quote
prices for real-time energy measured by interval meters.  Customers will
pay or be paid by Retail Service Providers in excess of their forward
purchases from all Retail Service Providers.  Customer may be able to chose
the best price quotes for settling real-time actual energy deliveries.
Customers may also have the option to quote prices to Retail Service
Providers.  However, it can be difficult for Customers to know what price
to offer, especially when the price offered depends on the prices received
in other intervals for energy that may have been shifted in time using
storage, thermal intertie or changes in process operations or other
customer activities.

E.	Distribution Operator Provides Dynamic Distribution Prices and Loss
Factors to Retail Service Providers
Retail Service Providers will typically quote bundled prices that include
distribution costs and losses.  Alternatively, Retail Customers could buy
at wholesale locations and separately pay for distribution services, but
the bundled pricing is likely to be more convenient for Customers.
Today Distribution Operators charge cost of service prices and average loss
factors for distribution services.  However, the distribution grid may face
increased loads from simultaneous charging of Electric Vehicles and other
loads.  It also may face two way flows from distributed generation
including solar PV.  The need may arise to use congestion pricing and
marginal loss factors on the distribution grid in the same way that the
transmission grid uses congestion pricing and marginal losses in
jurisdictions with wholesale locational pricing. 
Distribution marginal losses on heavily loaded distribution feeders and
equipment can be much higher than losses at low loads.  Dynamic Retail
Prices that incorporate dynamic distribution marginal losses will provide
the correct economic signals to Retail Customers to reduce, increase or
shift load when they can.
A dynamic distribution price on a distribution feeder, for example would
signal to Customers on the feeder that the feeder is full.  In the case
where the feeder is full because of the simultaneous charging of several
electric vehicles, a higher dynamic congestion price will induce some
customers to curtail charging while other customers who see value in
charging now can continue.  The congestion price will be paid to those who
curtail charging by those who continue to charge.
How the congestion prices and marginal losses would be determined is beyond
the scope of this document.


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