Selling Excess Energy in ERCOT
A Presentation for Waste Heat to Power Workshop
September 25, 2007
Copyright 2004
Agenda
 About Fulcrum
 ERCOT Market Overview
 Marketing Excess Power
 Working with a QSE
About Fulcrum
Energy Management Services
Power Generators
n
Retail Electricity Providers
n
Large Consumers
n
Financial Entities
About Fulcrum
 3,057 MW of power generation under management
– Fossil Fueled – 2,702 MW
– Renewable – 355 MW
 Managed more than 1,650 MW of natural gas fired
cogeneration facilities at 4 locations in ERCOT
 FERC licensed power marketer, ERCOT Level 4 QSE,
California Scheduling Coordinator, member of PJM,
ISO-NE and NYISO
 Experienced team offering relationship free of
conflicts of interest
Large Consumer Management Services
 24 hour scheduling and dispatch of gas and power
 Marketing and origination of excess generation
capacity
 Development and assistance in executing a
procurement, hedging and risk management plan
 Evaluation of alternative plant operating
parameters to minimize overall cost of power
Large Consumer Management Services
 Valuation analyses for development of onsite
cogeneration projects
 Assistance in establishing a “Self Serve” REP
 Assistance in valuation, qualification, and marketing
of electrical load shedding capacity (“LAAR”)
 Assistance in mitigating ERCOT TDSP charges
ERCOT Market Overview
2007 Report on the Capacity, Demand, and Reserves in the ERCOT Region
Summer Summary
Load Forecast:
Total Summer Peak Demand, MW
less LAARs Serving as Responsive Reserve, MW
less LAARs Serving as Non-Spinning Reserve, MW
less BULs, MW
Firm Load Forecast, MW
2007
63,794
1,125
0
0
62,669
2008
65,135
1,125
0
0
64,010
2009
66,508
1,125
0
0
65,383
2010
67,955
1,125
0
0
66,830
2011
69,456
1,125
0
0
68,331
2012
70,733
1,125
0
0
69,608
Resources:
Installed Capacity, MW
Capacity from Private Networks, MW
Effective Load-Carrying Capability (ELCC) of Wind Generation, MW
RMR Units under Contract, MW
Operational Generation, MW
2007
61,424
6,513
298
169
68,404
2008
61,424
6,217
298
169
68,108
2009
61,424
6,217
298
169
68,108
2010
61,424
6,217
298
169
68,108
2011
61,424
6,217
298
0
67,939
2012
61,424
6,217
298
0
67,939
50% of Non-Synchronous Ties, MW
Switchable Units, MW
Available Mothballed Generation , MW
Planned Units (not wind) with Signed IA and Air Permit, MW
ELCC of Planned Wind Units with Signed IA, MW
Total Resources, MW
553
2,848
165
0
0
71,970
553
2,848
510
550
171
72,740
553
2,848
419
550
174
72,652
553
2,848
594
550
174
72,827
553
2,848
558
1,300
174
73,372
553
2,848
522
2,100
174
74,136
less Switchable Units Unavailable to ERCOT, MW
less Retiring Units, MW
Resources, MW
158
0
71,812
317
375
72,048
317
375
71,960
0
433
72,394
0
433
72,939
0
433
73,703
Reserve Margin
(Resources - Firm Load Forecast)/Firm Load Forecast
14.6%
12.6%
10.1%
8.3%
6.7%
5.9%
Summer 2007 Fuel Types - ERCOT
6.4%
0.3%
0.7%
20.5%
0.4%
71.7%
Natural Gas
Wind
Coal
Water
Other
Nuclear
ERCOT Operations
 ERCOT ISO acts as single control area operator
to ensure reliability
 All schedules flow and ERCOT manages
congestion through the balancing energy market
 Zonal market today
– Inter-zonal congestion is directly assigned
– Intra-zonal congestion is uplifted to Load
Serving Entities on the basis of Load Ratio Share
 Transmission Congestion Rights can be
purchased to manage congestion risk
ERCOT Operations
 ERCOT also manages load and generator
imbalances with the balancing energy market
and ancillary services
 The Balancing Energy market accounts for
less than 5% of the overall market
 ERCOT runs a daily auction for Ancillary
Services (Regulation Up/Down, Responsive
Reserves, Non Spinning Reserves,
Replacement Reserves)
Marketing Excess Power
Bilateral Trading
•
•
•
•
EEI Master Purchase and Sales Agreements
Market trades by Zone or ERCOT Seller’s Choice
On peak 5 x 16 HE 0700 thru HE 22
Off peak 7 x 8 HE 23 and HE 24 plus HE 0100 thru
0600
How the Bilateral Market Works
Electricity sellers
Resources
Electricity buyers
Bilateral
transactions
QSEs
Qualified Scheduling Entity
Load
Serving
Entities
Bilateral
transactions
QSEs
Marketing Excess Power in ERCOT
 Post deregulation in ERCOT, QF has a viable market in
which to market its power and there are no special
PURPA put rights
 Excess power can be marketed in:
– Bilateral market to any Power Marketer or Load
Serving Entity (majority of trading occurs in bilateral
market)
– ERCOT real time Balancing Energy market
– Ancillary services market
 In the bilateral market, power is typically sold on a firm
basis with liquidated damages for non-performance
(“Firm LD”)
 Long term structured contracts typically include a
capacity and energy component
Forward Market Prices
ERCOT Houston
9/24/2007
Henry
Hub
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
AVG 2008
AVG 2009
AVG 2010
AVG 2011
AVG 2012
8.18
8.20
8.01
7.61
7.63
7.70
7.78
7.84
7.86
7.95
8.37
8.79
7.99
8.32
8.13
7.88
7.63
5x16
62.98
62.73
67.48
66.88
69.98
78.55
92.04
92.78
78.53
70.34
65.61
62.57
72.54
72.61
74.62
71.98
70.23
5x16 Heat
Rate
7.69
7.65
8.42
8.79
9.18
10.21
11.84
11.83
9.99
8.85
7.84
7.12
9.08
8.73
9.25
9.21
9.27
2x16
58.12
57.89
62.30
61.77
62.56
68.69
76.97
82.94
72.57
65.03
60.60
57.97
65.62
65.70
67.52
65.15
63.57
2x16 Heat
Rate
7.10
7.06
7.78
8.12
8.20
8.93
9.90
10.58
9.23
8.19
7.24
6.59
8.21
7.90
8.36
8.33
8.38
7x8
50.72
50.78
48.59
48.95
46.82
47.24
56.56
52.68
49.24
45.93
48.05
51.21
49.73
47.82
43.69
52.50
50.76
7x8
Heat Rate
6.20
6.20
6.07
6.44
6.14
6.14
7.28
6.72
6.26
5.78
5.74
5.83
6.22
5.75
5.38
6.68
6.66
Wrap
53.15
53.22
53.67
53.32
52.69
54.95
63.03
64.29
56.92
52.01
52.97
52.91
55.26
54.18
52.20
56.93
55.26
Wrap
Heat Rate
6.49
6.49
6.70
7.01
6.91
7.14
8.11
8.20
7.24
6.55
6.33
6.02
6.92
6.51
6.44
7.25
7.27
7x24
58.01
57.81
59.91
59.95
60.87
65.96
77.38
77.16
67.49
61.08
58.59
57.69
63.49
62.96
62.89
64.09
62.38
7x24
Heat Rate
7.09
7.05
7.48
7.88
7.98
8.57
9.95
9.84
8.58
7.69
7.00
6.56
7.94
7.57
7.78
8.18
8.22
ERCOT BALANCING MARKET
 The marginal clearing
price of balancing energy
(“MCPE) is set every 15
minutes
 Last offer cleared
establishes MCPE for an
interval
 MCPE is capped at
$1,500 today and
transitioning to $3,000
with nodal
Year
2004
2004
2004
2004
2004
2005
2005
2005
2005
2005
2006
2006
2006
2006
2006
2007 YTD
2007 YTD
2007 YTD
2007 YTD
Zone
North
South
West
Houston
Northeast
North
South
West
Houston
Northeast
North
South
West
Houston
Northeast
Houston
North
South
West
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
5x16
47.63
46.62
46.87
47.91
46.75
74.49
69.65
74.38
75.99
73.41
57.46
55.75
57.40
58.20
56.79
62.71
61.01
61.57
60.67
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
2x16
43.95
42.84
43.88
43.72
43.93
63.84
60.29
63.35
64.04
63.14
54.10
52.88
53.94
54.87
52.94
56.55
55.55
55.45
55.71
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
7x8
33.59
32.86
33.33
33.31
33.16
48.19
48.05
48.73
48.45
48.19
41.33
40.51
41.27
41.63
41.00
42.74
42.33
42.57
43.34
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
7x24
42.25
41.32
41.79
42.25
41.68
63.67
60.63
63.69
64.49
63.02
51.44
50.12
51.36
52.04
50.79
54.82
53.69
54.01
53.90
Factors to Consider in Short Term Sales
 Ability to commit to a Day Ahead
schedule
 Impact of steam requirements on ability to
control to a specific output level
 Natural gas cost, including imbalance
costs/constraints
 True costs of any waste fuels that are
burned in lieu of gas
 Marginal cost to produce power, including
O&M, taking into account any steam
revenues or cost of alternate steam supply
from a boiler
Factors to Consider in Short Term Sales
 Opportunity to reduce production of
product(s) to sell more power or interrupt
load to provide Responsive Reserves
 Day Ahead prices vs. Balancing Energy
prices
 Ability to offer intra-day flexibility
through Ancillary Services or short
schedules
 Emissions limits
Factors to Consider in Long Term Sales
 Term
 Price Structure
 Forward Price Curve for Natural Gas and
Power
 Hedging Strategies
 Delivery Point
 Firm LD vs. Unit Contingent
 Steam Requirements
 Dispatch ability / flexibility to ramp
up/down
 Ancillary Services Capacity
Factors to Consider in Long Term Sales








Fuel Supply Costs
Operating Costs
Forced Outage Rates
Planned Maintenance
Credit Requirements
Counterparty Default Risk
Financing Requirements
Emissions limits
Working with a QSE
Beginning Steps in ERCOT
 For projects >10 MW
– Request interconnection study from ERCOT
– ERCOT Study Fees $15 to $30K, depending upon size of the capacity
– Interconnection agreement with TDSP
– Process typically takes 90 to 270 days
 Registration as Power Generating Company with ERCOT
 Registration with PUC on or before the date power is first
generated
– See Section 25.109 of PUC Regulations
 Negotiation of QSE agreement, submit QSE paperwork to
ERCOT
 Installation of telemetry, AGC and ERCOT meter
QSE Operations
 24 hour operations, 365 days, similar to control area
system operations
 All load and resources must be represented by a QSE
 Only entity allowed to financially transact with ERCOT
 Submits energy schedules by zone, balanced between
obligations (retail load or bilateral trades) and supply
resources
 SCADA & telemetry required to continuously monitor
generation and to respond to dispatch instructions
QSE Operations
 Submits offers to sell balancing energy and ancillary
services to ERCOT
 Submits mandatory Balancing Down bids to ERCOT
 Schedules awarded Ancillary Services, including LAAR
 Submits power generation Resource Plans to ERCOT
 Responds to dispatch instructions from ERCOT
 QSE performance is monitored through measurement
of Schedule Control Error calculation
Additional Services to Consider
 Assistance in optimizing cogen plant operations
and market opportunities
 Valuation analysis for cogen development
 Assistance in hedging gas and power
 Assistance in structuring flexible fuel and long
term power sales contracts
 Assistance in negotiation of REP contract
 Assistance in establishing Self Serve REP
 Assistance in qualifying and monetizing LAAR
capacity
Contact Information
Kim Casey
Executive Vice President
Fulcrum Power Services L.P.
5120 Woodway Dr., Suite 10010
Houston, TX 77056
Office: 713-297-4523
Email: [email protected]
www.fulcrumpower.com