Alberta’s Electricity Market:
Design, Structure and Key
Considerations
Matt Ayres, Deputy Administrator
and Chief Economist
CanSIA Solar West October 1, 2014
Market Surveillance Administrator | 403.705.3181 | #500, 400 – 5th Avenue S.W., Calgary AB T2P 0L6 | www.albertamsa.ca
What does the Market
Surveillance Administrator do?
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Investigation
Enforcement
Compliance with rule and reliability standards
Market monitoring
Guidelines
State of the Market Reports: Assessment of
competition
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Todays topics
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Very quick guide to participating in the
Alberta Electricity Market
Focus on utility scale participation
Understanding competitive forces in the
market
How to find out more
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Alberta Electricity Market
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“Energy-only”
Wholesale market participants get paid based on
hourly prices for generation or providing
operating reserves.
Hourly prices can be quite volatile reflecting
availability of supply and competitive dynamics.
Forward markets for electric energy exist but
trading multiples are low.
Long term sales of power uncommon.
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Finding out more…
Basic information:
Alberta Wholesale Market: A description of basic structural features
http://albertamsa.ca/uploads/pdf/Archive/2012/SOTM%20Basic%20Structure%200
83012.pdf
Understanding Competition / Price Volatility:
State of the Market Report 2012
http://albertamsa.ca/uploads/pdf/Archive/2012/SOTM%20Basic%20Structure%200
83012.pdf
Generation Investment:
Investor Perspectives on the Attractiveness of Alberta’s Electricity Generation
Market
http://albertamsa.ca/uploads/pdf/Archive/2012/Investor%20Perspectives%20Repo
rt%20to%20MSA%20-%2017%20Augus.pdf
Connecting and Participating in the Market:
See www.aeso.ca
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What does hourly pricing mean
for solar?
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Market prices tend to be lower when demand is lower. E.g.
night
Market prices tend to be lower when lots of supply is
available. E.g. when its windy in southern Alberta.
If you have an estimated production profile for a solar
generator in Alberta it is easy to show they would have
received a much higher average price when they are
running than some other technologies.
Recognize large scale solar investment will have
consequences for competition.
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An example
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Using PVWatts (http://pvwatts.nrel.gov/) can generate a
production profile for an example solar generator.
Assumptions:
City:
Lat (deg N):
Long (deg W):
Elev (m):
Array Type:
Array Tilt (deg):
Array Azimuth (deg):
DC Rating (kW):
DC to AC Derate Factor:
Calgary
51.12
114.02
1077
Fixed (open rack)
51.1
180
1000
0.77
Note: PVwatts was updated on September 8, 2014 these numbers are from the previous version
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From that we get an hourly production profile we can
compare to historical hourly pool prices in Alberta.
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Hourly Averages
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$120
0.8
System Output (MW)
0.7
$100
0.6
$80
0.5
0.4
$60
0.3
$40
0.2
Pool Price ($/MWh)
$140
0.9
$20
0.1
0
$1
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3
4
5
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10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Hour
Average of AC System Output (MW)
Average of 2010 Pool Prices ($/MWh)
Average of 2012 Pool Prices ($/MWh)
Average pool price ($/MWh)
Total Revenue ($)
Average Revenue ($)
Average of 2013 Pool Prices ($/MWh)
Average of 2011 Pool Prices ($/MWh)
2010
50.89
96,970
72.77
2011
76.22
146,359
109.83
2012
64.42
131,300
98.53
2013
80.19
186,167
139.70
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Revenue Curves
Hourly Revenues for a 1MW Solar Farm ($)
$800
$700
$600
$500
$400
$300
$200
$100
$0%
10%
20%
2013 Revenues ($)
30%
40%
2012 Revenues ($)
50%
60%
2011 Revenues ($)
70%
80%
90%
100%
2010 Revenues ($)
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Cumulative Revenue
Cumulative Revenues for a 1MW Solar Farm ($)
$200,000
$180,000
$160,000
$140,000
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0%
10%
20%
30%
40%
50%
60%
70%
2013 Cumulative Revenues ($)
2012 Cumulative Revenues ($)
2011 Cumulative Revenues ($)
2010 Cumulative Revenues ($)
80%
90%
100%
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Other technologies
Source: Figure 3.9, State of the Market Report 2012
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Integrating solar in the Alberta
market
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Understanding the framework set out in the
legislation
Does solar generation face any unique
barriers?
Developers v. market participants
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Questions?
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