S-curves
S-curves are a way to add variation to the short-run marginal cost of generation to reflect both the varying technical charactarisitcs of individual plants within a technology group, and 'irrationality' in bidding behaviour.
In the production-cost model, we model at the technology level, as opposed to the plant level; for example, instead of considering the dispatch of individual CCGT units, we consider the behavior of the Houston CCGT fleet as a whole.
This simplification overlooks two key drivers of price in ERCOT:
- Bidding behavior - In times of system scarcity, generators will often bid at levels above their short-run marginal cost of production.
- Plant-specific characteristics - Not all CCGTs have the same operating costs due to factors such as age, location, heat rates, etc. These variations result in different operating costs and, as such, different bidding behavior.
To ensure we capture the impact the above has on price, our model uses 's-curves'. S-curves adjust the short-run marginal cost of a technology group at different points in the supply stack. We use historical real-time prices and offer curves from 60d SCED Generation Resource Disclosure to tune s-curves. This allows us to calibrate model outputs to historical prices.
The graphic below shows how s-curves would impact the supply stack in an indicative 15-minute period.
Updated 4 months ago