What is RTO/ISO?

Did you know from Electricity System in U.S.A. What is RTO/ISO?

In the united states Regional transmission organizations (RTOs) in the United States are electric power. Transmission system operators (TSOs) that coordinately control and monitor multiple electrical grid states. The interstate transfer of electricity is considered interstate commerce. Therefore, electric grids spanning several states are regulated by the Federal Energy Regulatory Commission (FERC), and Independent System Operators (ISOs) are organizations similarly formed at the direction of FERC in designated areas. Playing a key role in managing the electric grid and facilitating wholesale electricity markets, ISO coordinates, controls, and monitors the operation of electric power systems, usually in a single U.S. state but sometimes across multiple locations. State RTOs generally perform the same functions as ISOs but cover a larger geographic area.

The two are similar in that RTO is clearly defined and arises from the concept of grid reliability. The division between ISO and RTO is subtle for some and quite specific for others. Therefore, they can be compared and summarized as follows.

ISO

1. Organizations that will not be subject to [FERC’s] direction or recommendations

2. The neutral party is responsible for managing and regulating the electricity transmission grid in a state or region.

3. Using an ownerless electric power transmission system.

4. An independent agency regulated by the federal government.

5. For the purpose of opening access to retail and wholesale markets for supply.

ROT

1. Designated by [FERC] to regulate the operation of regional electric transmission grids in their area.

2. Coordinate, control, and monitor larger power grids with higher voltages than traditional energy company distribution systems.

3. Coordinate electricity generation and transmission within integrated regional markets.

4. Independent administrative organization

5. It acts as an independent operator of the regional electricity market.

How does Wholesale Electricity Markets work?

Wholesale electricity markets operate as markets where electricity is bought and sold between generators, suppliers and other market participants. These markets play a key role in determining electricity prices and ensuring a reliable power supply to meet demand. An overview of how the wholesale electricity market works and a typical wholesale electricity market structure includes several key elements:

1. Energy market: In the energy market Electricity is bought and sold for immediate delivery. Market participants submit bids specifying the amount of electricity they are willing to supply or demand at various price levels. Market operators (such as RTOs or ISOs) match supply and demand in real time. It offers the lowest cost generator to meet demand while considering grid reliability constraints.

2. Capacity market: The capacity market ensures that there is sufficient production capacity to meet future electricity demand. Generators are compensated to maintain available capacity. It provides financial incentives for investing in next-generation facilities. Capacity auctions are held to provide capacity commitments for future periods.

3. Ancillary service market : Ancillary service market provides services necessary to maintain grid stability, such as frequency control. Voltage support and redundancy Market participants offer these services. And market operators will provide these services to ensure network reliability under various operating conditions.

Market Operations: Wholesale electricity markets are operated by regional market operators (RTOs or ISOs) that oversee the functioning of the markets. Network operations and market participant compliance These operators guarantee compliance with market rules. Facilitate electricity trading and additional services and maintain the reliability of the electrical grid.

Price determination: Wholesale electricity prices are determined by the interaction between supply and demand in the market. Prices may vary based on factors such as fuel prices, powertrain limitations, weather conditions and market regulations. Market operators use market clearing algorithms to calculate prices and allocate resources efficiently.

Overall, the wholesale electricity market plays an important role in ensuring reliable electricity supply at competitive prices. Promote efficiency and facilitate the integration of renewable energy sources into the grid.

Reference

https://www.rff.org/publications/explainers/us-electricity-markets-101/

https://hmong.in.th/wiki/Regional_transmission_organization#google_vignette

This article is a part of the class “751447 SEM IN CUR ECON PROBВ” supervised by Asst. Prof. Napon Hongsakulvasu Faculty of Economics, Chiang Mai University Write your This article was written by Nattawan Onlam 631615020