| Electric utilities are responsible for meeting customer demand in a safe and cost effective manner. Utilities produce or procure energy from generating resources to meet this demand in various intervals, from hour-ahead to twenty years or more into the future. The vast majority of the power thus procured is on a forecast basis.;Power supply and customer demand must always be perfectly balanced; otherwise damage will occur to generating units and/or the electric grid. Since forecasts of customer demand can never be perfect, there must exist sufficient generator flexibility to compensate for instantaneous fluctuations in supply or demand.;Grid capacity services provide this flexibility. Sufficiently agile generating units help ensure grid reliability by continuously matching supply and demand. Consequently, power plants capable of such flexibility have incremental value to ratepayers and grid operators. This value is realized through market awards of grid capacity services at the prevailing grid capacity service price. In this project, we use multiple regression analyses to forecast grid capacity service prices. These forecasts establish, in part, the value of generating facilities that ABC electric utility may wish to procure on behalf of its customers. Capturing the incremental value of grid capacity service helps the utility to make prudent financial decisions which affect the electric rates paid by their customers. |
