``Ancillary services and regulation markets'' · EURELECTRIC, \Ancillary services { Unbundling electricity products { An emerging market", February, 2004 (link). EURELECTRIC, \Connection

$Page 1: ``Ancillary services and regulation markets'' · EURELECTRIC, \Ancillary services { Unbundling electricity products { An emerging market", February, 2004 (link). EURELECTRIC, \Connection$
“Ancillary services and regulation markets”

Pierre Pinson

Technical University of Denmark.

DTU Electrical Engineering - Centre for Electric Power and Energymail: [email protected] - webpage: www.pierrepinson.com

26 February 2018

31761 - Renewables in Electricity Markets 1

[email protected]

www.pierrepinson.com

As part of the overall context...

Here we are on the side of the System Operator, e.g., Energinet.dk in Denmark


Learning objectives

Through this lecture and additional study material, it is aimed for the students to be ableto:

1 Explain the need for ancillary services

2 Describe the various types of ancillary services

3 Understand differences between capacity, energy and other payments

4 Calculate revenues of ancillary providers


Outline

1 Definitions and needs for ancillary services

what are “ancillary services”?why would one need ancillary servicesdifferent types of ancillary services

2 Payment and revenues

capacity, energy and other paymentscalculation of revenues

3 Sequence and role of frequency-related ancillary services

from primary to tertiary reservesspecifics in Denmark

4 Future of ancillary services?


1 Definitions and needs for ancillary services


What are ancillary services?

“Ancillary services are all services required by the transmission ordistribution system operator to enable them to maintain the integrity andstability of the transmission or distribution system as well as the power

quality.”

EURELECTRIC, “Ancillary services – Unbundling electricity products – An emerging market”, February, 2004 (link).

EURELECTRIC, “Connection Rules for Generation and Management of Ancillary Services”, May, 2000 (link).


http://pierrepinson.com/31761/Literature/Eurelectric2004-ancillaryservices.pdf


What are ancillary services?

“Ancillary services are all services required by the transmission ordistribution system operator to enable them to maintain the integrity andstability of the transmission or distribution system as well as the power

quality.”

EURELECTRIC, “Ancillary services – Unbundling electricity products – An emerging market”, February, 2004 (link).

EURELECTRIC, “Connection Rules for Generation and Management of Ancillary Services”, May, 2000 (link).




Various types of ancillary services

We will focus on frequency-related services in the following, as they directly relateto system balance


Beware of naming conventions

Same issue goes for Denmark, as the country is split between 2 different powersystems with varied operational practice


Why would the power system be off-balance?

A sample of potential causes:

Electric load is greater or less than foreseen at the time of market-clearing

Renewable energy generation is greater or less than foreseen at the time ofmarket-clearing

Outages (/operational difficulties) of production units

Outages (/operational difficulties) of transmission equipments

Internal congestion (within market/balancing zone)

others?


Why would the power system be off-balance?

A sample of potential causes:

Electric load is greater or less than foreseen at the time of market-clearing

Renewable energy generation is greater or less than foreseen at the time ofmarket-clearing

Outages (/operational difficulties) of production units

Outages (/operational difficulties) of transmission equipments

Internal congestion (within market/balancing zone)

others?


A practical example: Load impact (1)

1 April 2014 - Nord Pool & Energinet data:

time of day [h]

pow

er [M

W]

1 6 12 18 24

040

010

0016

0022

0028

0034

00

DK−1: forecastsDK−1: observedDK−2: forecastsDK−2: observed

Comparison of forecasts (at the time of market clearing) and actual electric load,both for DK-1 and DK-2


A practical example: Load impact (2)

1 April 2014 - Resulting volumes to balance because of load forecasting errors:

time of day [h]

pow

er s

urpl

us/d

efic

it [M

W]

1 6 12 18 24

−20

0−

100

010

020

0

DK−1: surplus(+)/deficit(−)DK−2: surplus(+)/deficit(−)

The resulting balancing needs are fairly low, though there is a clear deficit of powerin DK-1


A practical example: Wind impact (1)

1 April 2014 - Nord Pool & Energinet data:

time of day [h]

pow

er [M

W]

1 6 12 18 24

020

040

060

080

010

00

DK−1: forecastsDK−1: observedDK−2: forecastsDK−2: observed

Comparison of forecasts (at the time of market clearing) and actual wind powergeneration, both for DK-1 and DK-2


A practical example: Wind impact (2)

1 April 2014 - Resulting volumes to balance because of wind power forecastingerrors:

time of day [h]

pow

er s

urpl

us/d

efic

it [M

W]

1 6 12 18 24

−20

00

200

400

600

DK−1: surplus(+)/deficit(−)DK−2: surplus(+)/deficit(−)

The resulting balancing needs look high for DK-1 and reasonable for DK-2


Where to find information about the system balance (and regulation)?

For Scandinavia (and more precisely Denmark):

historical data at Energinet’s page: ’Download of market data’

real-time data at Nord Pool’s page: ’Regulating volumes’ (also lots of other data)

Some other examples:

real-time (and historical) data for France (RTE) at RTE’s page: ’Daily balancingenergy volume’

historical data for the Netherlands (TenneT) at TenneT’s page: ’Export data’

A very nice App for Spain (REE) at REE’s page: ’Electricity demand tracking inreal-time’

etc.


http://www.energinet.dk/EN/El/Engrosmarked/Udtraek-af-markedsdata/Sider/default.aspx

http://www.nordpoolspot.com/Market-data1/Regulating-Power1/Regulating-Volumes1/NORDIC/Hourly1/

http://clients.rte-france.com/lang/an/visiteurs/vie/mecanisme/jour/volume.jsp

http://clients.rte-france.com/lang/an/visiteurs/vie/mecanisme/jour/volume.jsp

http://www.tennet.org/english/operational_management/export_data.aspx

https://demanda.ree.es/movil/peninsula/demanda/total

https://demanda.ree.es/movil/peninsula/demanda/total

2 Payments and revenues


What is the system operator paying for?

Capacity Energy

And possibly:

performance

mileage

etc.

Nota: Capacity is exclusive - one cannot offer capacity for service provision andsimultaneously use it for selling energy through the day-ahead market(!)


3 Sequence and role of frequency-related ancillary services


Ancillary services in Denmark

Denmark is originally connected to two different power systems with differentoperational practice

Ancillary services are then different in DK1 and DK2...

Energinet, “Ancillary services to be delivered in Denmark – Tender conditions”, October 2012 (link).


http://pierrepinson.com/31761/Literature/Energinet-ancillaryservicesindenmark.pdf

Ancillary services in DK1 and DK2

(with focus on frequency-related services)

DK1

Primary reserves

Secondary reserves(Load FrequencyControl)

Manual reserves

DK2

Frequency-controlled normaloperation reserves(FNR)

Frequency-controlleddisturbance reserves(FDR)

Manual reserves


Primary reserves (DK1)

There is an overall need for +/−3.000MW of primary-type reserves over continentalEurope (following ENTSO-E assessment and recommendation)

This amount (capacity) is shared among all system operators

For DK1, this share is of +/−27MW

Response to frequencydeviation


Primary reserve activation and market (DK1)

Required characteristics ofreserve response (prior certification)

daily day-ahead auctions

inflexible demand (27MW)

need for upward and downward capacity

merit order on capacity offers

energy is not considered (Energy-neutralservice)


Primary reserve payment (DK1)

For market participant i :

RevenueGi = PGi λc

where

Pi : accepted capacity

λc : clearing price

In this example:

G1: 10MW × 10DKK/MW = 100DKK

G1: 5MW × 10DKK/MW = 50DKK

G1: 5MW × 10DKK/MW = 50DKK (out of the 6MW originally offered )

others: 0DKK

Here, only generators are considered... Though demand could also provide such services(e.g., batteries, electric boilers)31761 - Renewables in Electricity Markets 24

Secondary reserves (DK1)

Two distinct goals:

Relieve the primary reserve which has been activated

Restore any imbalance on the interconnections

The capacity requirement for DK1 is of +/−90MW (following ENTSO-E assessment andrecommendation)


Secondary reserve market (DK1) (1)

Payment for capacity AND for energy (This is not an energy-neutral service!)

Capacity

purchased on a monthly basis

combined and symmetrical upward and downward products

based on bilateral contracts (negotiated, non-public)

→ Result for Generator Gi : PGi (MW) and λG

i (DKK/MW)


Secondary reserve market (DK1) (2)

Energy

All energy ∆Ei generated/consumed is to be paid for (for given generator Gi )

Two reference prices are to be considered: day-ahead price λS for that time, as wellas balancing price λB (from balancing market - to be discussed next week)

Minimum revenues are ensured by always having a spread of at least 100 betweenday-ahead and balancing prices

In practice, in the upward regulation case:

Energy revenue(Gi ) =

{(λS + 100)∆Ei if λB < λS + 100,

λB∆Ei otherwise

And, in the downward regulation case:

Energy revenue(Gi ) = −{

(λS − 100)∆Ei if λB > λS − 100,λB∆Ei otherwise

The (negative) revenue in the downward regulation case consists in buying backenergy that was already sold through the day-ahead market!31761 - Renewables in Electricity Markets 27

Secondary reserve payments (DK1)

Example (for a given time unit, upward regulation cases):

RT R© is to generate 50MWh through the day-ahead market (λS = 200DKK/MWh)

RT R© has a contract for secondary reserve provision, with PGRT = 10MW,

λGRT=20DKK/MW

2 illustrative cases:

Need for upward regulation, energy fully delivered, balancing price λB =250DKK/MWh,

Revenue(RT R©) = 10× 20 + 10× (200 + 100) = 3200DKK

Need for upward regulation, energy half delivered, balancing price λB =320DKK/MWh,

Revenue(RT R©) = 10× 20 + 5× 320 = 1800DKK


Secondary reserve payments (DK1)

Example (for a given time unit, downward regulation cases):


RT R© has a contract for secondary reserve provision, with PGRT = 10MW,

λGRT=20DKK/MW


Need for downward regulation, energy fully “consumed” (/reduced), balancing priceλB = 150DKK/MWh,

Revenue(RT R©) = 10× 20− 10× (200− 100) = −800DKK

Need for downward regulation, energy half “consumed”, balancing price λB =50DKK/MWh,

Revenue(RT R©) = 10× 20− 5× 50 = −50DKK


Manual (/tertiary) reserves (DK1)

The full timeline forreserve products

daily day-ahead auctions

varying demand

need for upward and downward capacity

merit order on capacity offers

energy is paid for at the balancing price λB


Tertiary reserve payments (DK1)

Example (for a given time unit, upward regulation cases):


RT R© gets cleared to provide tertiary reserves, with PGRT = 20MW, λG

RT=2DKK/MW


Need for upward regulation, energy fully delivered, balancing price λB =250DKK/MWh,

Revenue(RT R©) = 20× 2 + 20× 250 = 5040DKK

Need for upward regulation, energy half delivered, balancing price λB =320DKK/MWh,

Revenue(RT R©) = 20× 2 + 10× 320 = 3240DKK


Tertiary reserve payments (DK1)

Example (for a given time unit, downward regulation cases):


RT R© gets cleared to provide tertiary reserves, with PGRT = 20MW, λG

RT=2DKK/MW


Need for downward regulation, energy fully “consumed” (/reduced), balancing priceλB = 150DKK/MWh,

Revenue(RT R©) = 20× 2− 20× 150 = −2960DKK

Need for downward regulation, energy half “consumed”, balancing price λB =50DKK/MWh,

Revenue(RT R©) = 20× 2− 10× 50 = −460DKK


Activation sequence

Two main approaches:

Reactive (/corrective)approach

Proactive approach


Questions / discussion


For you to do...

Before the next session on Monday 5 March 2018

For those who want to know more energy and services:

J.M. Morales et al. (2014). Integrating Renewables in Electricity Markets, Chapter 3: “Clearing theday-ahead market with a high penetration of stochastic production” (pdf)

For those who want to understand how reserve needs may be quantified:

R. Doherty and M. O’Malley (2005). A new approach to quantify reserve demand in systems withsignificant installed wind capacity. IEEE Transactions on Power Systems 20(2): 587–595 (pdf)

M. Matos and R. Bessa (2011). Setting the operating reserve using probabilistic wind power forecasts.IEEE Transactions on Power Systems 26(2): 594–603 (pdf)


http://pierrepinson.com/31761/Literature/reninmarkets-chap3.pdf

http://pierrepinson.com/31761/Literature/doherty2005.pdf

http://pierrepinson.com/31761/Literature/matos2011.pdf

Thanks for your attention! - Contact: [email protected] - web: pierrepinson.com


Documents

``Ancillary services and regulation markets'' · EURELECTRIC, \Ancillary services { Unbundling electricity products { An emerging market", February, 2004 (link). EURELECTRIC, \Connection