Changing Market Dispatch Ken Rutter Evolution of Dispatch

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Changing Market Dispatch Ken Rutter

Changing Market Dispatch Ken Rutter

Evolution of Dispatch OLD DISPATCH • Baseload • Regulation Load Following • Reliability CURRENT

Evolution of Dispatch OLD DISPATCH • Baseload • Regulation Load Following • Reliability CURRENT DISPATCH • Emphasis on Lowest Price Dispatch • Tax Subsidy Influence • Diverse Generation Mix • Reliability 2

What is Baseload Generation? It use to be that the efficiency of coal resulted

What is Baseload Generation? It use to be that the efficiency of coal resulted in units running at maximum output. Their operation profile looked like a block volume. Coal was baseload. Other units followed load. Now wind is “cheaper”, and some view it as being first dispatched. Is “baseload” even a relevant term any longer? 3

Wind Tax Subsidies Were a Game Changer SPP Total Load SPP Wind Generation SPP

Wind Tax Subsidies Were a Game Changer SPP Total Load SPP Wind Generation SPP hit a new wind to load record on 12/4 56. 25% Tax benefit up to $25 -$30/MWh 4

Basin Focuses on Economic Dispatch of Our Assets Basin’s members benefit by dispatching our

Basin Focuses on Economic Dispatch of Our Assets Basin’s members benefit by dispatching our assets based on market economics or by purchasing lower cost energy from the market – Lower fuel costs – Purchases below generation costs (negative prices at times) – At times our assets are cheaper than others and can add value through surplus sales 5

Basin September Wind Generation • Basin currently has 1400 MW of wind generation available

Basin September Wind Generation • Basin currently has 1400 MW of wind generation available • Basin’s average September load was 2322 MW at our load zone 6

Basin September Coal Dispatch • Coal backed down to unit minimums when uneconomic •

Basin September Coal Dispatch • Coal backed down to unit minimums when uneconomic • Challenges at times with operating at minimums with financial losses • More and more, short-term economic shutdowns are becoming common 7

Basin September Natural Gas Dispatch • Basin currently has 1500 MW of natural gas

Basin September Natural Gas Dispatch • Basin currently has 1500 MW of natural gas generation available • Gas dispatch for reliability and sometime for regulation value • Maintenance costs for natural gas are considered in dispatch decisions 8

Challenges Ahead • Operation of coal assets in this type of market: – Unit

Challenges Ahead • Operation of coal assets in this type of market: – Unit minimums – Operational risks (fuel in bunkers) – Ability to do short-term shutdowns – Wear and tear from ramping • Operation of natural gas assets in this type of market: – Maintenance engineered previously based on unit starts – What is the true cost of maintenance? • Operation of wind assets – Negative market prices vs. penalties in power purchase agreements – Market saturation and capability to handle wind vs. load levels 9

Thank You

Thank You