Q1. The California PX auction cleared in a way that is very similar to the econo
ID: 1163436 • Letter: Q
Question
Q1. The California PX auction cleared in a way that is very similar to the economic dispatch procedure we studied in Lesson 4. The offers of generators were arranged in increasing price order and the PX price would be set by the intersection of that supply curve with the demand curve (see figure 7.5 in the lesson).
Suppose that there were four generators in the California PX market. All generators have 20 MW of capacity. Generator A submits a supply offer of $20/MWh; Generator B submits a supply offer of $35/MWh; Generator C submits a supply offer of $50/MWh; and Generator D submits a supply offer of $80/MWh.
Suppose that demand in California was 55 MWh and that demand is totally price inelastic (so that the demand curve is a vertical line, as we had done with economic dispatch in Lesson 4). Calculate the clearing price in the PX market.
Q2. This question builds on the set of generators and the result of Question 1. All generators schedule their power to be delivered in the SP15 zone. This, however, would congest the transmission line going into SP15. The California ISO must now solicit adjustment bids. The California ISO needs to reduce the scheduled flow on the transmission line going into SP15 by 20 MW. Generators A and B are located in zone NP15; Generator C is located in zone ZP26 and Generator D is located in zone SP15. Generator A submits an adjustment ofor of $10 per MWh to re-schedule its energy to be delivered in NP15. Generator B submits an adjustment ofor of $35/MWh to reduce its output. Generator C does not submit an adjustment offer. Generator D submits an adjustment offer of $80/MWh to increase power output within zone SP15. The California ISO needs to reduce loading on the SP15 transmission line by 20 MW in the cheapest way possible. What should it do, and what would the resulting zonal prices be?
Explanation / Answer
1) It is given that there are 4 generators in the California PX market having the capacity of 20MW. Generator A has the power supply of $20/MWh; Generator B of $35/MWh;
This explains that when the price of $20 /MWh, there is only one generator which can supply this power. While for the price $35/MWH, there are two generators with 20 MW each having a total supply of 40 MWH,
The supply and demand schedule can be given as below:-
Price Demand Supply
0 55 0
20 55 20
35 55 40
50 55 60
80 55 80
The market clearing price is between $35 and $55, and more close towards $55 as at the price of $55, total supply is 60 MWH and the demand is of 55 MWH
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