These specifications are confidential and are the exclusive Intellectual Property of pdView Pty Ltd.

Renewable bid allocation - no FCAS

Summary

The allocation logic aims to maximise value in a similar way to how Traders intuitive and dynamically bid renewable plant. That is, Traders price volume depending on the expected price and the expected price trajectory.

Traders use their market knowledge to set key inputs in pdBidr. These inputs are four priceband values and two trader parameters called Trader Price Max (TP_max) and Trader Price Min (TP_min). Volume is then allocated to one of the four pricebands (or priceband1) as a function of these two Trader Parameters as well as the SRMC (or turn down price) and forecast prices. TPmax, TPmin and SRMC are Bid Parameters.

Inputs and definitions

Formulas

The complete formulas are provided at the end of this page under the heading “Formulas - complete” and are written to be programmatically unambiguous. To simplify the concept the following section excludes the dynamic FCAS liability and is headed “Formulas - simplified”.

Formulas - simplified

These formulas apply when either the Raise Contingency FCAS liability is ignored or negligible.

Price_type

The allocation rules are formulated to accommodate price uncertainty and are a function of both the expected price and the expected direction of price.

The forecast price for each dispatch interval is characterised as one of four “price_types (PT)” where the PT is assigned a label (which is entirely arbitrary) of either -10, -1, 1 or 10. PT is a function of the TPmin, SRMC and TPmax. PT is defined as follows:

PT for the next three dispatch intervals

Price_phase

The price_phase (PP) defines the trajectory of expected prices.

One of four price_phases is assigned to every dispatch interval, where a price_phase is defined as follows:

if PT = 10 then PP = 10

else PP = min(PT_{i to n}) where PT_i <> 10 for all i (where i is a dispatch interval)

end

Relative prices

The bid allocation rules defines price_type and price_phase as a function of TPmin, SRMC and TPmax.

Depending on the price_type and price_phase of a dispatch interval, volume is assigned to one of five Pricebands shown in the diagramme below. Note that the allocation rules are defined in the following section, the diagramme below simply shows the definition of PT as a function of TPmin, SRMC and TPmax (and by inference the definition of PP) and the relative position of the five possible pricebands that may be allocated volume.

*Note that in the diagramme above, PB2-5 could be any set of pricebands.

Allocation Rules - Simplified

Constraint_status = Any (-1, 0, 1)

Constraint_status = 0

Constraint_status = 1 (constrained off)

Constraint_status = -1 (constrained on)

Choosing values for Traderprice max and min

The aim of the volume allocation rules is for generation to be zero before prices become materially less than SRMC⁺ and for generation to be at a maximum before prices move materially greater than SRMC⁺ . To realise this aim volume should be allocated in anticipation of prices that would, or might, transition from prices that would result in positive earnings to prices that would result in negative earnings (and vice versa).

Trader judgement process

The physical trader has an important role in selecting appropriate values for TP_min , SRMC, TP_max and the pricebands (as bid). The approach below is by way of illustration or suggestion only.

1. Review the supply curve around your SRMC (say -$40, an example is shown below).

2. Choose a price point that is 100MW (say) below your SRMC but where the price point is not too much less than SRMC (enter this price point under Settings/Algo Bid Parameters as trader priceband min, TP_min). In the example I’ve chosen -$52.

3. Similarly choose a price point 100MW (say) above your SRMC but where the price point is not too much greater than SRMC (enter this price point as trader priceband max, TP_max). In the example I’ve chosen -$35.

4. Then choose PB2, PB3, PB4 and PB5 as shown below. Note that you may wish to reserve PB2 and PB3 for very low prices in the event that the spot trader wishes to take control of the bidding process. Hence the relevant priceband values (i.e. the first PB > TPmin, first PB < SRMC, first PB > SRMC and first PB < TPmax) could equally be PB4, PB5, PB6 and PB7.

Formulas - complete version

Price_type (PT)

The allocation rules are designed to ensure that the unit will not be generating if a FRRP less than the TP_min is likely to occur. Similarly they are designed so that the unit will be generating at full capacity if the unit is operating between TP_min and TP_max but the FRRP is likely to increase above TP_max. The allocation rules are also designed to accommodate price uncertainty.

The forecast price for each dispatch interval is characterised as a “price_type (PT)” where the PT is assigned a label (which is entirely arbitrary) of either -10, -1, 1 or 10. PT is a function of the TraderPrices and SRMC⁺. PT is defined as follows.

if FRRP > max(TP_max , SRMC⁺) then PT = 10

if FRRP > min(TP_max , SRMC⁺) and FRRP <= max(TP_max , SRMC⁺) then PT = 1

if FRRP > min(TP_min , SRMC⁺) and FRRP <= min(TP_max , SRMC⁺) then PT = -1

if FRRP <= min(TP_min , SRMC⁺) then PT = -10

PT for the next three dispatch intervals

Price_phase (PP)

A Price_phase (PP) is assigned to each dispatch interval and is a function of the current and future PT. The idea is to characterise the future price expectations beyond any given dispatch interval. The PP is defined as follows.

if PT = 10 then PP = 10

else PP = min(PT_{i=1 to n}) where PT_i <> 10 for all i

end

Allocation Rules

Constraint_status = Any (-1, 0, 1)

Constraint_status = 0

Constraint_status = 1 (constrained off)

Constraint_status = -1 (constrained on)