The high Bid Cost Recovery (BCR) payments to storage resources in systems like CAISO are primarily due to a few key factors:
- Differential Treatment: Storage resources are treated differently from conventional generators. When conventional assets are unavailable due to an outage, they are categorized as uninstructed imbalance energy (UIE), which is ineligible for BCR. In contrast, storage resources unable to meet day-ahead (DA) schedules due to state of charge (SOC) constraints are categorized as optimal energy (OE), making them eligible for BCR.
- State of Charge (SOC) Constraints: SOC constraints often lead to real-time dispatch variations from DA schedules. This can result in storage assets receiving BCR payments even if they are not truly available to deliver energy in real-time. It incentivizes operators to structure their DA bids strategically to capitalize on real-time BCR opportunities.
- Lack of Alignment with BCR Intent: Some BCR payments occur due to buy- and sell-back of DA schedules when SOC constraints bind, which does not align with the intent of BCR. This creates an opportunity for storage resources to inflate BCR payments by strategically bidding in a way that maximizes their combined BCR and market payments.
- Reform Initiatives: The issue has led to initiatives and proposals aimed at modifying the BCR calculation to better align with the needs and operational characteristics of storage resources.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-main-reasons-for-the-high-bcr-payments-to-storage-resources/
