The AURORAxmp production cost model is the primary tool used for the projections of zonal and nodal energy prices. AURORA is a security constrained hourly dispatch model that allows estimation of LMPs, recognizing nodal differences in congestion and marginal losses. AURORA is deployed with ESAI’s proprietary input assumptions and is used to estimate the chronological dispatch of the system (accounting for start-up costs and run-time limits) and forecast nodal and zonal LMP for all 8,760 hours of a year. While similar to other nodal production costs models such as GE MAPS or ProMOD, AURORA has some unique features that facilitate accurate modeling of actual market and asset details and allow extensive flexibility in the footprint and level of detail included for an individual model run:
- Limits on transmission constraints can be changed dynamically, on an hourly basis, as often occurs for the major reactive interfaces that contribute significantly to regional congestion in the RTO markets;
- Fuel prices can be adjusted on a daily (or even hourly) basis to capture, e.g., winter price spikes that might be muted in a model that includes only monthly average prices.
- Unit specifications (heat rate, capacity, etc.) can be adjusted at any time interval desired, down to hourly granularity. This flexibility allows seasonal or intra-seasonal fluctuations to be accurately captured.
- Transmission outages can be simulated on an hourly basis, allowing the topology to change for different periods within a model run;
- Multiple power flows can be used for different time periods within a given model runs, allowing changes in system conditions in different time periods to be captured.
- The footprint of the model can be narrowed to a single RTO, with an hourly schedule of interchange with neighboring pools. The model can be run with a broader footprint for using a more simplified regional representation in order to estimate the hourly interchange with each neighboring market, and then run with full nodal detail for a single RTO. This approach allows the LMPs for given market to be calculated accounting for only the constraints and generation actually modeled in that market, more closely matching the actual LMP calculations of the Northeast RTOS.
ESAI supplements the Aurora model with a second tool: the PowerWorld Simulator. Like AURORA, PowerWorld can perform a security constrained dispatch, estimating LMP (including congestion and losses) for an hourly snapshot of the system. PowerWorld solves for the optimal dispatch for a given system snapshot, allowing very quick sensitivity analysis to changes in system conditions or other inputs. We anticipate using the PowerWorld Simulator to inform the AURORA model and to run on an ad hoc basis to look into congestion drivers, see the effects of new lines, or analyze changes to network topology. In particular, in cases where the AURORA model produces LMP patterns that do not capture congestion observed in the real market, PowerWorld can both provide a check on the model results and provide insights about the conditions under which the congestion occurs and why AURORA may not capture those conditions (e.g., seasonal line outages). Additionally, PowerWorld allows graphical illustration of power flows and binding constraints for specific system conditions or dispatch.
ESAI has detailed models of the capacity markets in each of the RTOs as well. The models capture the supply and demand fundamentals, as well as the impact of detailed market rules. We run our capacity models in conjunction with our energy price forecasts, and also account for interaction (imports/exports/opportunity costs) among the capacity markets. This framework provides a comprehensive and internally consistent set of price forecasts, unit operations, and capacity additions and retirements. ESAI’s capacity market models simulate the actual market clearing and auction processes used by the ISOs and capture the impact of market rule changes. For example, ESAI’s model of the PJM RPM capacity market captures the auction mechanics associated with introduction of the Capacity Performance and Base Capacity products and estimates prices for each product. For New York, ESAI’s ICAP market model captures the impact of offer floors for new capacity and proposed changes in market mitigation rules.