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Performance-based Energy Resource Feedback, Optimization, and Risk Management

Today, grid planning and operations do not adequately differentiate resource performance. Grid operators rely on offline guesses regarding overall resource performance and system risk exposure, which threatens the reliability and resilience of the power grid, especially given the nature and characteristics of emerging intermittent resources. The default strategy to combat the inability to quantify resource offer risk and system risk is to use antiquated grid management practices, which rely on conventional technologies (e.g., thermal plants). These obsolete management systems and decision support tools have no way to incorporate or capture uncertainty of a particular resource and there is no acknowledgement of the correlation of stochastic resources across the interconnected, synchronized power grid. These practices suppress the value proposition, utilization, and adoption of emerging technologies.

The PERFORM program aims to shift the operations and planning to a risk-driven paradigm. Future operations and investment strategies will more closely resemble portfolio management practices; resource offers will be differentiated by their overall historical performance and prediction of their real-time performance. This shift enables the ability to balance the tradeoff between minimizing costs versus delivery risk while providing the foundation for an incentive compatible environment that efficiently mitigates risk. This program will provide grid operators a transparent quantification of their system position and overall risk exposure, which does not exist today. The PERFORM program goals are to:

  • Design planning and operational practices built upon risk management and performance evaluation of all players in the electric power sector, from behind the meter to bulk resources
  • Develop transparent risk assessment methodologies that are well understood and widely adopted
  • Leverage finance, actuarial science, and operations research approaches to quantify risk, mitigate risk, and achieve a risk-driven resource value proposition based on portfolio management
  • Translate financial and actuarial concepts to grid resource performance metrics
  • Identify new business opportunities for assessment of resource performance to enable efficient risk mitigation

This workshop aimed to identify innovative and ground-breaking grid risk management technologies by convening experts in finance, actuarial science, operations research, market design, and power systems. Decision making under uncertainty will transform grid planning and operations and pave the way for new business ventures for the evolving $300 billion per year electric power sector. The workshop goals were to:

  • Explore future R&D pathways and identify key partnerships to ensure a transformative and disruptive impact for grid planning and operations based on a risk-driven paradigm
  • Identify the required validation mechanisms to assess innovative grid risk management technologies that aim to significantly reduce operational costs, improve system reliability and energy efficiency, and incentivize efficient utilization of emerging resources
  • Engage with a broader community to facilitate revolutionary ideas in grid risk management to support the transformation of the power sector

The meeting's output helped direct the actions of ARPA-E towards the most promising and appropriate high risk, high return R&D funding opportunities and management strategies.

Day 1Monday, June 17
8:00AM - 8:30AM

Registration (breakfast on your own)

8:30AM - 8:40AM

Welcome and Opening Remarks

Dr. Jennifer Gerbi, Associate Director for Technology, ARPA-E

8:40AM - 9:00AM

Workshop Background and Objectives

Dr. Kory Hedman, Program Director, ARPA-E

9:00AM - 9:20AM

Speaker:

Jessica Harrison (MISO): Managing Risk in the Grid, Today and Tomorrow

9:20AM - 9:40AM

Speaker:

Mahesh Morjaria (First Solar): Grid Services from Solar: Challenges and Opportunities

9:40AM - 10:10AM Coffee Break
10:10AM - 12:10PM

Breakout Session 1:

Towards Industry Adoption and Pilot Testing

12:10PM - 1:20PM Lunch
1:20PM - 1:40PM

Speaker:

Mark Ahlstrom (NextEra / President, ESIG): The Future of Flexibility from All Resources: From System Operations to Markets

1:40PM - 2:00PM

Speaker:

Clyde Loutan (CAISO): Operational Challenges and Potential Opportunities Transitioning to a Low Carbon Grid

2:00PM - 2:30PM Coffee Break
2:30PM - 4:30PM

Breakout Session 2:

Data: What do we need? How do we get it? 

4:30PM - 5:00PM

Day 1 Open Discussion / Panel

Dr. Kory Hedman, Program Director, ARPA-E

 

Day 2Tuesday, June 18
8:00AM - 8:30AM Registration (breakfast on your own)
8:30AM - 8:40AM

Day 2 Welcome and Recap of Previous Day

Dr. Kory Hedman, Program Director, ARPA-E

8:40AM - 9:00AM

Financial Analogs and Metrics for Risk Assessment and Categorization

Dr. Joseph King, Program Director, ARPA-E

9:00AM - 9:20AM

Speaker:

Richard Messmer (GE): Portfolio Management - Sustaining Financial Stability in a Global Economy

9:20AM - 9:40AM

Speaker:

Ivilina Popova (Texas State University): Financial Metrics Useful for Grid Management
and Introduction to Hedging in the Grid Space

9:40AM - 10:10AM Coffee Break
10:10AM - 12:10PM

Breakout Session 3:

From Finance to Grid: Translation, Metrics, and Validation
 

12:10PM - 1:20PM Lunch
1:20PM - 1:40PM

Speaker:

Richard Tabors (TCR Consultants): Dealing with Risk and Uncertainty: Resource Adequacy in a Zero Marginal Cost World

1:40PM - 2:00PM

Speaker:

Glen Swindle (Scoville Risk Partners): Pricing in a Stochastic Environment

2:00PM - 3:00PM

Open Discussion: Path to Adoption in a Stochastic Environment

Dr. Kory Hedman, Program Director, ARPA-E

3:00PM -
6:00PM
General Networking plus One-on-One Discussions with ARPA-E

 

Additional Presentation Materials
PERFORM_Mod.pptx
PERFORM_Handout_Mod.pdf