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The Solver also produces a “Break Even RRP (BERRP)” which approximates the price at which the dispatch of the service is marginal. The BERRP is used to allocate volume to PriceBands (PB) in a bid.
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Trader Parameters
Trader Parameters help determine where MW volume is to be allocated in a bid. There are four trader parameters for each FCAS;
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Trader delta Limit Volume (TdelLV).
Details of these Parameters are provided in the sections below.
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Learn how to edit a Trader Parameter in Trader Parameter Page |
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FCAS Bid Formulation
The difference between the DV input of the solver and the OV output of the solver is the Non Optimal Volume (NOV). Therefore
NOV = DV - OV.
The diagramme below, Derivation of inputs for FCAS bid formulationdiagramme below , shows how the user inputs , of Bid MaxAvail Volume (MAV) and Trader Limit Volume (TLV) are processed.
TLV MAV is a Trader Parameter, the purpose of which is to limit DV. Therefore,the physical bid parameter MaxAvail. Physical bid parameters are bid as normal by the Trader.
TLV is a Trader Parameter. The purpose of TLV is to limit DV as follows:
DV = Min(MAV, TLV)
For example the MAV for L60 is often 136MW however if the Trader wishes to constrain the DV (and thereby the potential OVan FCAS service may be large compared to the size of the market. For example, let MAV for L60 to be 150MW. If the Trader wishes to constrain the DV (and thereby the potential OV) to less than this amount, say 30MW, then a TLV of 30MW for L60 can be applied. The DV is then the minimum of MAV and TLV, i.e. 30MW. If MAV is greater than DV then the difference is the Non Discretionary Volume (NDV). Therefore
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The NDV is not an input into vAdvisor.
The following workflow is specific to FCAS and is a more detailed version of the general ‘optimisation process’ shown above.
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Once OV, NOV and NDV have been derived, a coherent Depending on market conditions, the OV output of the solver for each service and duid could be equal to zero, DV or anywhere in between. The difference between DV and OV is termed the Non Optimal Volume (NOV). Therefore,
NOV = DV - OV.
The following workflow is specific to FCAS and is a more detailed version of the general ‘optimisation process’ shown above. It shows the derivation of the DV, NDV, OV and NOV.
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Once OV, NOV and NDV have been derived, a coherent bid needs to be formulated. Note that,
OV + NOV + NDV = MAV
However there are many degrees of freedom when assigning these volumes in a bid because there are a number of PBs that volume may be allocated where the OV would be expected to be dispatched and where the NOV and NDV would not be expected to be dispatched , (at least under normal market conditions).
For example, if the FRRP is $20 then OV may be allocated in any PBs less than $20 and NOV and NDV may be allocated in any PBs greater than $20. Note that if price forecasts are 100% accurate then it doesn’t matter how OV, NOV and NDV are allocated, as long as OV and NOV/NDV are allocated in PBs less than, and greater than FRRP respectively.
However FRRPs differ from actual price outcomes and therefore allocating OV, NOV and NDV is important since it can impact actual revenue and can also impact longer term market dynamics. Therefore volume allocation rules must be defined to formulate a bid. A simple example of an allocation rule is to allocated allocate OV to PB1 and NOV to PB10. This allocation rule is strictly could be thought of as a pricetaker strategy where you are indifferent to variations in actual prices compared to forecast prices. The goal of this strategy would be to ensure you are enabled the volumes that the solver determined to be optimal - irrespective of the actual price outcomes.
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FCAS volume allocation process
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The three volumes; OV, NOV and NDV all need to be allocated to PBs in a bid. Note that,
OV + NOV + NDV = MAV
The workflow above shows the inputs and the logic to allocate each workflow below, FCAS Volume Allocation, shows the inputs and the logic to allocate each of these three volumes to a bid. The workflow also shows an additional three optional inputs to the bid formulation called Trader Prices (TP1, TP2 and TP3).
These Trader Prices help define a lower or upper bound of prices (pricebands) where volume may be allocated.
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Examples of these allocations are provided in the excel spreadsheet, Bid Formulation Examples.xls. |
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Optimal Volume (OV) Allocation
OV is allocated in PBs between the BERRP and FRRP. the maximum of FRRP and TP1. (Note that by definition generally BERRP < FRRP for when OV > 0. If TP1 is not null then OV is allocated in PBs between BERRP and the maximum of FRRP and TP1. The purpose of TP1 is to prevent all of the OV being inserted into very low PBs in the event )
If there are no available PBs between the BERRP and max(FRRP, TP1) then allocate OV in the first PB < BERRP.
If there are still no PBs then allocate OV to PB1.
The purpose of TP1 is to prevent all of the OV being inserted into very low PBs in the event that FRRP is small (which is often the case for Lower contingency services). BERRP is often zero (or approaching zero), particularly for lower contingency services
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If you wish for TP1 to be ignored then set TP1 to zero. |
Non Optimal Volume (NOV) Allocation
NOV is allocated in PBs between the max(BERRP, FRRP) and TP1. If TP1 is less than BERRP, or if TP1 is null, then NOV is all allocated
If there are no available PBs then allocate NOV in the first PB > BERRP.
If there are still no PBs then allocate NOV to PB10.
Non Discretionary Volume (NDV) Allocation
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If you wish to avoid allocating NDV into very high pricebands then you may insert Trader Price 3 (TP3) which ensures NDV is allocated in PBs less than TP3. TP3 is generally used to prevent NDV being inserted into PB10.
Note that it is possible for the allocation conditions to result in no available PBs. For example if BERRP is greater than both TP2 and TP3. In this case all NDV is allocated to PB10NDV is allocated in PBs between max(TP2, BERRP) and TP3.
If there are no available PBs then allocate NDV in the first PB > max(TP2, BERRP).
If there are still no available PBs then allocate NDV in PB10.
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Aggregate of Volume Allocation
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Input | Acronym | L5m | L60s | L6s | Lreg | R5m | R60s | R6s | Rreg | ENERGY |
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MaxCapacity (as bid) | MAV | 80 | 136 | 14 | 75 | 81 | 131 | 13 | 75 | 550/600 |
Trader Limit Volume and Trader delta Limit Volume (MW) | TLV and TdelLV | 40 | 40 | null | 35 | 35 | 60 | null | 35 | 20 |
TraderPrice1 ($/MW) | TP1 | 0.4 | 0.5 | null | 6 | 0.5 | 0.9 | null | 7 | n/a |
TraderPrice2 ($/MW) | TP2 | 5 | 5 | null | 18 | 5 | 10 | null | 20 | n/a |
TraderPrice3 ($/MW) | TP3 | 12000 | 12000 | null | 12000 | 12000 | 12000 | null | 12000 | n/a |
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Glossary
Term | Acronym | |
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BreakEvenRRP | BERRP | a calculated RRP where the service is marginal based on FRRP of other services. Note that the BERRP may be greater or less than FRRP. |
CurrentVolume | CV | is the expected energy target based on the reference bid and FRRP. This is required since Energy optimisation is limited by the reference bid. |
DiscretionaryVolume | DV | = Min(MAV, LV) for each FCAS This variable is an input into the Solver |
ForecastRRP | FRRP | is the forecast RRP of the service. Initially this will be the latest p5min forecast. |
Max Avail Volume | MAV | is the maxavail as bid for each FCAS. Note that the word Volume has been appended to the definition for consistency with other volume definitions. |
Maximum Discretionary Volume | maxDV | is the maximum energy volume that the Solver may determine as optimal. |
Minimum Discretionary Volume | minDV | is the minimum energy volume that the Solver may determine as optimal. |
NonDiscretionaryVolume | NDV | = MAV - DV Note that this variable is not an input into the Solver. |
NonOptimalVolume | NOV | = DV - OV |
OptimalVolume | OV | is an output of the Solver and is the optimal volume of each FCAS to be dispatched. |
ReferenceBid | the last manual energy bid submitted to AEMO for a given day. | |
Trader Delta Limit Volume | TdelLV | is a user inserted value that limits the volume that may be repriced from an energy reference bid. |
Trader Limit Volume | TLV | is a user inserted value that aims to limit the Discretionary Volume consumed by the Solver for each FCAS. |
TraderPrice1 | TP1 | is an optional user inserted value that limits the minimum price of a Priceband when applied to the allocation of OV. |
TraderPrice2 | TP2 | is an optional user inserted value that limits the minimum price of a Priceband when applied to the allocation of NDV. |
TraderPrice3 | TP3 | is an optional user inserted value that limits the maximum price when applied to allocation of NDV. Generally this is used to avoid allocating volume to PB10. |
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