1. Selecting Extended Reserve Emily Calvert, Energy Analyst 1

2. Contents Overview -Scheme -System Inputs -Unit load -Unit configuration Objective function -Meet block targets -Minimise cost Output -Procurement schedule © Copyright NZX Ltd. 2015 2

3. AUFLS scheme Two blocks Each distributor obliged © Copyright NZX Ltd. 2015 3 Extended Reserve scheme Four blocks Spread across North Island Overview Extended Reserve BlockTargetMinMax 110812 210812 3657.5 465 BlockMin 116 2

4. Overview © Copyright NZX Ltd. 2015 4 Extended Reserve system

5. Overview Select standard and flexible demand units for each block taking into account penalties and constraints 1.Meet block targets 2.Minimise costs © Copyright NZX Ltd. 2015 5 Objective Function

6. Overview Mixed integer linear programming Selects demand units to meet block targets Includes penalties and constraints Uses iterative sampling approach Tests against other years’ data © Copyright NZX Ltd. 2015 6 Selection Tool

7. Input IdentifierDate00:0000:3001:0001:3002:00… ABCD000101/04/1510 ABCD000201/04/1555555 ABCD000301/04/1555555 ABCD000401/04/1522222 ABCD000501/04/1511111 © Copyright NZX Ltd. 2015 7 Unit load

8. Input © Copyright NZX Ltd. 2015 8 Unit load

9. Input © Copyright NZX Ltd. 2015 9 Unit load

10. Input © Copyright NZX Ltd. 2015 10 Calculate block requirements

11. Input Identifier # current relays # new relays Currently allocated Fast responseFlexible… ABCD0001101YS ABCD0002102NM ABCD0003000NN ABCD0004000NP ABCD0005000NN © Copyright NZX Ltd. 2015 11 Unit configuration: Capabilities

12. Input Identifier Residen tial Light & Primary Industry Heavy Industry Commerci al Public Health &Safety… ABCD00010.0 1.00.0 ABCD00020.0 0.80.20.0 ABCD00030.50.40.0 0.1 ABCD00041.00.0 ABCD00051.00.0 © Copyright NZX Ltd. 2015 12 Unit configuration: Customer classes

13. Selecting Extended Reserve Minimise objective = relay cost + flex relay cost + interruption cost + block penalty + fast relay cost – fast relay benefit © Copyright NZX Ltd. 2015 13 Objective Function

14. Selecting Extended Reserve Block 1 (EIH 0.278) Block 2 (EIH 0.136) Block 3 (EIH 0.054) Block 4 (EIH 0.032) Type A: Standard $4,000 + $0 + $4,420 = $8,420 $4,250 + $0 + $2,162 = $6,412 $4,250 + $0 + $859 = $5,109 $4,350 + $0 + $509 = $4,859 Type B: Flexible $4,000 + $500 + $4,420 = $8,920 $4,250 + $500 + $2,162 = $6,912 $4,250 + $500 + $859 = $5,609 $4,350 + $500 + $509 = $5,359 © Copyright NZX Ltd. 2015 14 Cost varies across reserve type and block Example of costs for demand unit ABCD0004 Assume Block 1, 100% residential, average demand 1MW Most likely to be used Least likely to be used

15. Selecting Extended Reserve Minimise objective = relay cost + flex relay cost + interruption cost + block penalty + fast relay cost – fast relay benefit © Copyright NZX Ltd. 2015 15 Objective Function

16. Selecting Extended Reserve © Copyright NZX Ltd. 2015 16 Penalties – finding the Goldilocks Zone Max Min

17. Selecting Extended Reserve © Copyright NZX Ltd. 2015 17 Constraints

18. Selecting Extended Reserve © Copyright NZX Ltd. 2015 18 Constraints

19. Selecting Extended Reserve © Copyright NZX Ltd. 2015 19 Constraints

20. Output IdentifierAllocatedFlexibleArmedStandby… ABCD0001YYYN ABCD0002NNNN ABCD0003YNNN ABCD0004YNNY ABCD0005NNNN © Copyright NZX Ltd. 2015 20 Procurement schedule

21. Summary Overview -Scheme -System Inputs -Unit load -Unit configuration Objective function -Meet block targets -Minimise cost Output -Procurement schedule © Copyright NZX Ltd. 2015 21

22. Questions? 22 © Copyright NZX Ltd. 2015