Assessment of Markets for Frequency and Voltage Control Ancillary Services

Assessment of
Markets for
Frequency and
Voltage Control
Ancillary Services
Leonardo Energy webinar
2 October 2009

Yann Rebours
EDF R&D
yann.rebours@ieee.org

Introduction

2 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009

Why controlling frequency and voltages?

All power system stakeholders need f and U within boundaries for:
Security of supply (e.g., by avoiding load shedding)
Behaviour and efficiency of equipments (e.g., by avoiding vibrations, overheating,
flickers…)
Security of equipments (e.g., by avoiding over-voltages or over-speeds)


Frequency example

Lost of a nuclear unit (1300 MW) within the UCTE system
(disturbance from normal operation)

50 mHz


Fundamentals of frequency control (f/P)

Pmax
Lmax

PL PP

50 Hz
0 49 Hz 51 Hz 0
Consumers Producers

f

Voltage example

Voltage map in French Guyana

Malouin Suzini
ELA-CSG
93,9 kV 91,7 kV 91,8 kV

St Laurent
Kourou
94,6 kV 91,9 kV 92 kV
93,5 kV
93,3 kV
Etoile
Piquage
Balata Dégrad des Canes
TDF
95,5 kV
93,5 kV
Petit Saut


Fundamentals of voltage control (U/Q)
voltage

U
distance

Q1 Q2 Q3 Q4


Who can provide f / U control services?

Generating units
Loads
Network assets:
Lines
Transformers, …
Purpose-built devices:
Capacitor bank
FACTS
Synchronous compensator
Inertia wheel, …

These controls are called
ancillary services


System services vs ancillary services

Power system

(e.g., real-time Ancillary services System services (e.g., f and U
adaptation of P AS SS within
and Q) (private goods) (public goods) boundaries)

Some users The other users


Rationale for the thesis

Final goal: improve efficiency & maximise global welfare

Formulate and structure the AS issue from a global point of view
(3 axes)
Illustrate the theory by comparing systems
Increase knowledge relative to AS cost (de-optimisation cost)
Give the tools to improve current systems (e.g., give methods and
checklists)
Feed in the research: propose future work

This presentation : only an overview


Summary

1. Introduction
2. Delivery of ancillary services
3. Cost of ancillary services
4. Procurement


Delivery of ancillary
services

1. Quality
2. Quantity
3. Location


1. Specify the quality of AS

A perfect specification does not exist
Four definition levels are possible:
Elementary General

Functional
Practical
Standardized Precise


1. Functional definition

TSO Producer primary
f/P
Signal
secondary f/P P

Instructions
tertiary f/P operator

TSO Producer
Signal primary
secondary U/Q Q
U/Q

tertiary U/Q


1. Survey with the functional definition

Help for a common vocabulary


1. Practical definition
AS are technical products: they need more specs than energy only
The identification of the important parameters allows an inter-
system comparison
In Europe, standardisation is necessary (same recommendation
but different applications)


1. Standardised definition

Helps a practical and universal definition:
Does not rely on the input signal
Take into account dynamics
Does not depend on the type of provider (e.g. load or generating unit)


2. Define the quantity of AS

SS are a public good only the TSO can define the needs
A cost / benefit approach should be preferred

But difficult to estimate the value
because SS have a triple objective:
Security (e.g., avoid blackouts)
Quality (e.g., avoid over-voltages)
System utilisation (e.g., reduce losses)

In practice:
Inelastic demand
Minimizing provision cost (rational buyer)
Research:
Generally focused on VOLL
But VOLL does not consider quality + system utilisation


2. AS quantities in practice

Indicators have been proposed to compare systems
Give incentives to improve practices


2. Instantaneous frequency characteristic

Quality + quantity = frequency characteristic

Proposed
definition

Current
definition


3. Define the location of AS

Location is important because:
Congestions can make impossible AS delivery
An uniform distribution is desirable (in case of network islanding)
Regulation at the transmission level is more critical (meshed network)

For an optimal repartition:
Incentives to develop AS at the appropriate locations
Exchange systems to allow short term arbitrage between areas
Coordination at the owner boundaries (e.g., between distribution and transmission)


Cost of ancillary
services

1. Cost components of ancillary services
2. Method to estimate the de-optimisation cost
3. Results on EDF Producer’s portfolio


1. Main cost components for a producer

Fixed costs
Investments in extra generating capacities
Workforce
Capacity reservation cost
De-optimisation
Opportunity cost
Utilisation cost
More fuel is used
Increased wear-and-tear
Very difficult to calculate precisely the AS cost
Many components
Interdependent time horizons
Hard to separate energy-only and AS costs
Costs very different from one country to another (energy-mix dependent)


2. Method to estimate the de-optimisation cost

Proposed method: easy & standard
Applied to EDF Producer over 879 days with operational data &
algorithm (from 09/2004 to 08/2007)

De-optimisation cost = CostD-1 dispatch with reserves
– CostD-1 dispatch without reserves

energy for loads
frequency control
G1 G2 G1 G2 G3 non-used capacity
without reserves with reserves
(cheaper dispatch) (more expensive dispatch)


2. The method in practice

1. APOGEE dataset with 2. APOGEE dataset with
OTESS initial constraints reserve demand = 0 MW

APOGEE
(EDF’s short-term dispatch
algorithm)

APOGEE dispatching 1 APOGEE dispatching 2

Other data for
correlation
OTESS Database
(Data management tool
developed during the thesis)

Web-based
interface


2. Advantages and limits of the method for EDF

Advantages of our study vs previous literature:
APOGEE takes into account many constraints (dynamics, hydro,
thermal…)
Actual day-ahead operational data as input
However, some limits in our study:
If hydro energy is provided, reserve is provided as well (historical constraint)
Water saving was not taken into account (days are considered as independent)
The precise management of hydro valleys was not considered
(only a global constraint for each reservoir)
Obviously, manual day-ahead re-dispatch is not modelled
Only short-term variable costs are considered

Therefore, the method gives a minimum cost (real cost is higher)
Further studies will be completed in 2009 to remove some limits


3. Results: the cost is not negligible
Up to 7,8 % of the dispatching cost
Therefore:
The reserve should be remunerated in order to avoid distortion of energy prices
An efficient procurement is essential


3. The de-optimisation cost is variable
During 54 % of the time, the cost changed by more than 20 %
from one day to the following
Allowing short-term arbitrage is thus essential


3. The cost is not seasonal

Low values from the PACF
It is difficult to apply the results over one period to another


4. Synchronous time control costs money

Because of time control, the reserve was modified by the French
TSO up to January 2009 (±150 MW)
This policy cost millions of euros/year in de-optimisation
Does the value of time control justify its cost? [Rebours et al (2009)]

ftarget = 50.01 Hz (27 days over 01/2005 - 07/2007) ftarget = 49.99 Hz (175 days over 01/2005 - 07/2007)


Procurement of
ancillary services

1. Responsible entity for procurement
2. Matching supply and demand
3. Procurement methods
4. Structure of remuneration
5. Market clearing
6. Price caps
7. Give appropriate incentives
8. Metrics for market evaluation


Eight fundamental features

Why a market is necessary?
AS are externalities (e.g., energy, transmission)
Cost is non negligible
So what design?

The thesis highlights eight fundamental features
Market designers (legislator, regulator, TSO…) should explain the
current choices regarding these features


1. Responsible entity for procurement

Only the TSO should be the responsible entity for procurement:
Knows the value of AS
Has enough incentive to optimize its demand
No barrier for new entrants
But :
Cost recovery problem
TSO is both consumer and provider of system services
Not necessarily enough incentives to optimize the procurement


2. Matching supply and demand

Over the long run:
Connecting conditions: not optimal, but it works
However, it is still linked to the security of supply issue (enough generating units)
How can we optimize this demand over the long run?
Over the short run:
An elastic demand is necessary
Incitation for participants to propose their capacities (e.g., with an attractive price)


3. Procurement methods
Use several methods in parallel is necessary
Trend: f/P: competition – U/Q: regulated


4. Structure of remuneration

Depends on the services because cost structures are different
An asymmetric remuneration is preferable (upward price ≠ downward price)
But if too complex, scoring can be difficult


5. Market clearing

Structure
Centralised (pool) or decentralised (exchange)?
Bidding
Sealed-bid first-price auction desirable, but under perfect competition assumption
Scoring
Difficult because multi-dimensional
Time coordination
Common clearing for energy / transmission / AS is essential
But difficult in a decentralised structure
Settlement
Always in debate: zonal or nodal?
Uniform or differentiated?
Clearing frequency


6. Price caps

Avoid price caps as much as possible


7. Give appropriate incentives
For cost allocation, the best:
Fixed cost: shared by all users (transmission tariff)
Reservation cost: based on the potential utilisation of users
Utilisation cost: “polluter” pays
Data transparency (e.g., how is the demand computed?)
Control of performance and behaviours. Give incentives to auto-
control
Penalties and rewards


8. Metrics for market evaluation

Effective: are there enough SS?
Low cost to run the AS market
Economic efficiency. One indicator:

Data for 2004-5


Conclusions


The thesis in a nutshell

Needs for SS = quality / quantity / location
The thesis surveys various systems + proposes how to better specify
the needs for SS

Cost of AS = fixed / capacity reservation / utilisation
The thesis improves the knowledge on the de-optimisation cost by
proposing a standardized method + applying it on EDF’s portfolio

Market design = entity responsible / supply-demand / procurement
method / structure of payment / clearing / price cap / incentives /
assessing method
The thesis identifies, describes and analyses these features +
illustrates with examples + suggests some ways of improvements


Suggestions for future work

Regularly assess systems with the proposed framework
Draw the limit between negotiable and non-negotiable products
(why stability is not remunerated?)
Deepen the understanding of costs (AS cost + market cost)
Improve market design (e.g., long-term incentives, demand
elasticity, better allocation of costs, better data transmission…)
Facilitate the exchanges between areas:
Standardise products
Standardise markets
Co-ordinate energy / interconnections / AS

Develop alternative AS suppliers (e.g. loads, wind power…)


For further reading…

Technique:
"A Survey of Frequency and Voltage Control Ancillary Services—Part I: Technical Features", IEEE
Transactions on Power Systems, vol. 22 (1), pp. 350-357, February 2007.
Y. Rebours, J. Pestourie, and E. Monnot, "Five Good Reasons to Abandon Synchronous Time
Control", presented at the IEEE Powertech, Bucharest, Romania, 2009.
Market design:
"A Survey of Frequency and Voltage Control Ancillary Services—Part II: Economic Features", IEEE
Transactions on Power Systems, vol. 22 (1), pp. 358-366, February 2007.
"Fundamental design issues in markets for ancillary services", The Electricity Journal, vol. 20 (6), pp.
26-34, July 2007.
Thesis:
Y. Rebours, "A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary
Services", PhD Thesis, Faculty of Engineering and Physical Sciences, The University of Manchester,
Manchester, U.K., 2008. Available:
http://www.eee.manchester.ac.uk/research/groups/eeps/publications/reportstheses/aoe/rebours_PhD
_2008.pdf


Acknowledgments

Many thanks to all my colleagues who help me during this thesis
Special thanks to:
Daniel Kirschen who supervised this thesis
and Bruno Prestat who provided some slides presented here


Assessment of Markets for Frequency and Voltage Control Ancillary Services

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