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When it comes to balancing supply and demand in real time, the California Independent System Operator (CAISO) relies on a suite of tools to maintain grid reliability. One of these tools is Regulation Up, a critical ancillary service that ensures the grid can respond to sudden increases in demand or unexpected drops in supply. But how does CAISO deploy Regulation Up in the 5-minute market, and what role do Automatic Generation Control (AGC) signals play in this process?
In this blog post, we’ll explore how Regulation Up is awarded and dispatched in CAISO’s real-time market, how AGC signals interact with resource participation, and what this means for settlement. By the end, you’ll have a clear understanding of how this essential service keeps the grid stable and how resources can participate effectively.
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How Regulation Up is awarded in CAISO’s real-time market
CAISO awards Regulation Up capacity through a co-optimized market process that simultaneously evaluates energy and ancillary service bids. In the real-time market, this process occurs in the Fifteen Minute Market (FMM) and the Real-Time Dispatch (RTD) intervals. Resources offering Regulation Up must meet stringent performance criteria, including the ability to respond to dispatch instructions within 10 minutes and sustain output for at least 30 minutes after reaching their awarded capacity.
Once a resource submits a Regulation Up bid, CAISO evaluates it based on price, performance, and system needs. The market optimization ensures that the most cost-effective resources are selected while meeting the grid’s reliability requirements. Importantly, only online generating units or qualified Non-Generator Resources (NGRs) can provide Regulation Up in the real-time market.
How Regulation Up is dispatched and the role of AGC signals
After a resource is awarded Regulation Up capacity, its deployment is managed through CAISO’s Automatic Generation Control (AGC) system. AGC sends real-time digital control signals to resources, instructing them to increase their output or reduce their consumption to balance the grid. These signals are dynamic, adjusting every few seconds to reflect real-time grid conditions.
For example, if there’s a sudden spike in demand, AGC signals will direct Regulation Up resources to ramp up their output immediately. This rapid response helps maintain system frequency and ensures that the grid operates within its prescribed limits. Resources must maintain a minimum performance accuracy of 25% to continue participating in Regulation Up services.
What this means for resource participation and settlement
Participating in Regulation Up offers resources both opportunities and challenges. On the one hand, resources can earn additional revenue by providing this high-value ancillary service. On the other hand, they must meet strict performance and operational requirements, including maintaining sufficient state of charge (SOC) for energy storage systems.
Settlement for Regulation Up is based on both capacity and performance. Resources are compensated for the capacity they offer, as well as for the energy they deliver when dispatched. If a resource fails to meet its performance obligations, it may face penalties or reduced payments.
Why Regulation Up is essential for grid reliability
Regulation Up plays a vital role in maintaining grid stability, especially as the energy landscape evolves to include more variable renewable resources. By enabling rapid, precise adjustments to supply and demand, Regulation Up ensures that CAISO can meet its reliability standards while integrating new technologies and resources.
For resources looking to participate, understanding the market rules and operational requirements is key to maximizing revenue and contributing to grid reliability. Whether you’re a generator, an energy storage operator, or a demand response provider, Regulation Up offers a pathway to play a critical role in the energy transition.
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