A new spinning reserve requirement forecast method for deregulated electricity markets

Ancillary services are necessary for maintaining the security and reliability of power systems and constitute an important part of trade in competitive electricity markets. Spinning Reserve (SR) is one of the most important ancillary services for saving power system stability and integrity in response to contingencies and disturbances that continuously occur in the power systems. Hence, an accurate day-ahead forecast of SR requirement helps the Independent System Operator (ISO) to conduct a reliable and economic operation of the power system. However, SR signal has complex, non-stationary and volatile behavior along the time domain and depends greatly on system load. In this paper, a new hybrid forecast engine is proposed for SR requirement prediction. The proposed forecast engine has an iterative training mechanism composed of Levenberg–Marquadt (LM) learning algorithm and Real Coded Genetic Algorithm (RCGA), implemented on the Multi-Layer Perceptron (MLP) neural network. The proposed forecast methodology is examined by means of real data of Pennsylvania–New Jersey–Maryland (PJM) electricity market and the California ISO (CAISO) controlled grid. The obtained forecast results are presented and compared with those of the other SR forecast methods.     

Technical and economic aspects of ancillary services markets in the electric power industry: an international comparison

We present a comparative analysis of technical and economic aspects of ancillary services on the markets of England and Wales, Nordic Countries, California, Argentina, Australia and Spain, comparing the services of voltage control, frequency regulation and system restoration. All the analyzed markets rely on the existence of an administrator of ancillary services, function that leads to the figure of the system operator. Among the services analyzed, the mandatory nature of voltage control and primary frequency regulation stands out, being both the ancillary services with the higher market price and the shortest period of time requirements. In general, the recognized costs of the services correspond to investments operation, maintenance, and opportunity costs. In the provision of these ancillary services, there are no clear preferences for a particular resource allocation mechanism, where mandatory provision, auctions, competitive offers and different time length bilateral contracts are combined.     

Ramping ancillary service for cost-based electricity markets with high penetration of variable renewable energy

System operators and electricity market stakeholders are facing new challenges related to increasing variability in both generation and demand. Rising generation levels of variable renewable energy (VRE) sources cause fluctuations in net loads that need to be met in real time by the rest of the system resources. While in some bid-based markets ancillary services have been proposed to procure ramping in an economic and efficient way, cost-based markets are struggling to define products and mechanisms that can accommodate to their rules, so as to incentivize and properly remunerate their procurement. In this paper we conceptualize a ramping ancillary service (RAS) for cost-based electricity markets with high penetration of VRE. The proposed RAS scheme is evaluated through simulations of the Chilean electric system. Numerical results show that it can be implemented in cost-based markets with positive technical and economic results, and that it may be a suitable solution to alleviate net load changes caused by high penetration of VRE.     

The potential of demand-side management in energy-intensive industries for electricity markets in Germany

This paper investigates the technical and economic potential of energy-intensive industries to provide demand-side management (DSM) in electricity and balancing markets through 2030. Increasing shares of renewables will lead to a rising demand for ancillary services at the same time that less conventional plants will be available to provide these services. This paper makes projections on the extent to which DSM from industrial processes can provide economic benefits in electricity markets with renewables by providing tertiary reserve capacity. Different industrial processes and their specific technical and economic properties are investigated and compared with other storage devices and electricity generation technologies. Based on an extension of an existing European electricity market model, simulations are used here to make long-term forecasts for market prices, dispatch and investments in the electricity markets through linear optimization.     

The Nordic approach to market-based provision of ancillary services

This paper presents an overview of the markets for ancillary services, which are regulated and traded differently within and across borders in the Nordic countries. We describe the services provided and their characteristics in terms of definition, participation, contracting approach and duration, selection of offers, and dispatch criteria. Further, we assess the costs, specify the payments, and discuss cost allocation, and we conclude with a policy discussion of ancillary services in the Nordic countries.     

Barriers to the implementation of response options aimed at mitigating the impact of wind power on electricity systems

Increasing shares of renewable energy in transmission and distribution grids are significantly changing the way electricity systems must function. While these technologies offer great opportunities to fight climate change and reduce Europe's dependency on foreign energy sources, their successful integration poses significant challenges. This article identifies and discusses a set of barriers that have been identified by market parties, European institutions and partners in the European project RESPOND. According to the research findings, main barriers to be overcome include the lack of incentives for generation from some technologies to be installed and participate in markets (both renewable and required conventional generation acting as a back‐up), lack of participation of renewables in ancillary services markets, lack of conventional generation and demand providing flexibility to the system, difficulty to carry out required reinforcements to the transmission grid both at local and at regional level, inefficiency of existing network congestion management schemes, as well as well‐designed transmission and distribution network charges and lack of incentives for distribution system operators to implement Active Network Management practices in the operation and planning of their networks. Copyright © 2010 John Wiley & Sons, Ltd.     

Potential of trading wind power as regulation services in the California short-term electricity market

A short-term electricity market is usually composed of the energy market and ancillary service market. However, wind power is not allowed to be traded in ancillary service markets although it has been proven technically feasible to be regulation services. This paper aims to explore the market potential of trading wind power as regulation services in the California electricity market. A model for wind power trade in the day-ahead (DA) market is established considering the uncertainties of market prices and wind power. An optimal trading strategy for wind power producers is derived by using an analytical algorithm. Trading wind power as regulation is tested by using actual data and the impacts of market control on the market outcome are discussed. The results show that, based on the current framework of the California electricity market, wind power producers can earn much more money if they bid in the DA energy and regulation markets than if they only bid in the DA energy market. The results also show that the potential to enhance profit for wind power producers is larger in the regulation down market than in the regulation up market.     

Ancillary services and optimal household energy management with photovoltaic production

This article presents a project designed to increase the monetary value of photovoltaic (PV) solar production for residential applications. To contribute to developing new functionalities for this type of PV system and an efficient control system for optimising its operation, this article explains how the proposed system could contract to provide ancillary services, particularly the supply of active power services. This provision of service by a PV-based system for domestic applications, not currently available, has prompted a market design proposal related to the distribution system. The mathematical model for calculating the system's optimal operation (sources, load and exchanges of power with the grid) results in a linear mix integer optimisation problem in which the objective is to maximise the profits achieved by taking part in the electricity market. Our approach is illustrated in a case study. PV producers could gain by taking part in the markets for balancing power or ancillary services despite the negative impact on profit of several types of uncertainty, notably the intermittent nature of the PV source.     

Market failures of Market Coupling and counter-trading in Europe: An illustrative model based discussion

The horizontal integration of the energy market and the organization of transmission services remain two open issues in the restructured European electricity sector. The coupling of the French, Belgian and Dutch electricity markets (the trilateral market) in November 2006 was a real success. The extension of the system to Germany in November 2010 also proceeded smoothly and the intent is to continue with the same market architecture. But Market Coupling is based on a zonal system which has often failed in meshed grids. This may cast doubts on what will happen in the future when electricity demand picks up again and wind develops. The nodal system has generally been more successful than zonal architectures but its implementation is not currently foreseen in the EU.This paper analyzes versions of Market Coupling that differ by the organization of counter-trading. While underplayed in current discussions, counter-trading could become a key element of Market Coupling as its geographic coverage expands and wind penetrates. We simplify matters by assuming away strategic behavior between the energy and counter-trading markets and conduct the analysis on a stylized six node example taken from the literature. We simulate Market Coupling for different assumptions of zonal decomposition and coordination of Transmission System Operators (TSOs). We show that these assumptions matter: even in the absence of strategic behavior, Market Coupling can be quite vulnerable to the particular situation on hand; counter-trading can work well or completely fail and it is not clear beforehand what will prevail. Our analysis relies on standard economic notions such as social welfare and Generalized Nash equilibrium, but the use of these notions is probably novel. The nodal organization is the reference first best scenario: different zonal decompositions and degrees of coordination are then studied with respect to this first best solution.     

The effect of communication architecture on the availability, reliability, and economics of plug-in hybrid electric vehicle-to-grid ancillary services

Researchers have proposed that fleets of plug-in hybrid vehicles could be used to perform ancillary services for the electric grid. In many of these studies, the vehicles are able to accrue revenue for performing these grid stabilization services, which would offset the increased purchase cost of plug-in hybrid vehicles. To date, all such studies have assumed a vehicle command architecture that allows for a direct and deterministic communication between the grid system operator and the vehicle. This work compares this direct, deterministic vehicle command architecture to an aggregative vehicle command architecture on the bases of the availability, reliability and value of vehicle-provided ancillary services. This research incorporates a new level of detail into the modeling of vehicle-to-grid ancillary services by incorporating probabilistic vehicle travel models, time series ancillary services pricing, and a consideration of ancillary services reliability. Results show that including an aggregating entity in the command and contracting architecture can improve the scale and reliability of vehicle-to-grid ancillary services, thereby making vehicle-to-grid ancillary services more compatible with the current ancillary services market. However, the aggregative architecture has the deleterious effect of reducing the revenue accrued by plug-in vehicle owners relative to the default architectures.     

Fostering economic demand response in the Midwest ISO

The Midwest Independent System Operator (MISO) runs the power grid in 14 states and one Canadian province and has a peak demand of some 116,000 MW. Its operational area is richly supplied with reliability-triggered demand response programs such as direct load control of residential appliances and curtailable/interruptible rates for commercial and industrial customers. However, economic demand response programs are lacking. This paper discusses three different ways in which such programs can be introduced in the wholesale energy markets run by MISO. These include, first, an approach in which utilities and load serving entities move retail customers to dynamic pricing and other time-based pricing rates; second, an approach in which these same entities and possibly third-parties bid price responsive demand curves into the wholesale market; and third, an approach in which demand response is bid as a supply resource into the wholesale market.     

Demand participation in the restructured Electric Reliability Council of Texas market

Does an electricity market which has been restructured to foster competition provide greater opportunities for demand response than a traditional regulated utility industry? The experiences of the restructured Electric Reliability Council of Texas (ERCOT) market over the past eight years provide some hope that it is possible to design a competitive market which will properly value and accommodate demand response. While the overall level of demand response in ERCOT is below the levels enjoyed prior to restructuring, there have nonetheless been some promising advances, including the integration of demand-side resources into competitive markets for ancillary services. ERCOT's experiences demonstrate that the degree of demand participation in a restructured market is highly sensitive to the market design. But even in a market which has been deregulated to a large degree, regulatory intervention and special demand-side programs may be needed in order to bolster demand response.     

Resource and revenue potential of California residential load participation in ancillary services

Increasing penetrations of intermittent renewable energy resources will require additional power system services. California recently adopted an energy storage mandate to support its renewable portfolio standard, which requires 33% of delivered energy from renewables by 2020. The objective of this paper is to estimate the amount of energy storage that could be provided by residential thermostatically controlled loads, such as refrigerators and air conditioners, and the amount of revenue that could be earned by loads participating in ancillary services markets. We model load aggregations as virtual energy storage, and use simple dynamical system models and publicly available data to generate our resource and revenue estimates. We find that the resource potential is large: 10–40 GW/8–12 GWh, which is significantly more than that required by the mandate. We also find that regulation and spinning/non-spinning reserve revenues vary significantly depending upon type of load and, for heat pumps and air conditioners, climate zone. For example, mean regulation revenues for refrigerators are $11/year, for electric water heaters are $24/year, for air conditioners are $0-32/year, and for heat pumps are $22–56/year. Both consumer choices, such as appliance settings, and policy, such as the design of ancillary service compensation and appliance standards, could increase revenue potentials.     

Optimal generation and reserve dispatch in a multi-area competitive market using a hybrid direct search method

With restructuring of the power industry, competitive bidding for energy and ancillary services are increasingly recognized as an important part of electricity markets. It is desirable to optimize not only the generator’s bid prices for energy and for providing minimized ancillary services but also the transmission congestion costs. In this paper, a hybrid approach of combining sequential dispatch with a direct search method is developed to deal with the multi-product and multi-area electricity market dispatch problem. The hybrid direct search method (HDSM) incorporates sequential dispatch into the direct search method to facilitate economic sharing of generation and reserve across areas and to minimize the total market cost in a multi-area competitive electricity market. The effects of tie line congestion and area spinning reserve requirement are also consistently reflected in the marginal price in each area. Numerical experiments are included to understand the various constraints in the market cost analysis and to provide valuable information for market participants in a pool oriented electricity market.     

The energy market in Norway and Sweden: introduction

This letter describes the structure and operation of the deregulated electric power system in Norway and Sweden. The letter gives overviews of the power system, the history of deregulation, the spot and futures markets, the transmission point tariff, congestion management, ancillary services, retail wheeling and settlement procedures     

A solar-driven combined cycle power plant

The main results of a feasibility study of a combined cycle electricity generation plant, driven by highly concentrated solar energy and high-temperature central receiver technology, are presented. New developments in solar tower optics, high-performance air receivers and solar-to-gas turbine interface, were incorporated into a new solar power plant concept. The new design features 100% solar operation at design point, and hybrid (solar and fuel) operation for maximum dispatchability. Software tools were developed to simulate the new system configuration, evaluate its performance and cost, and optimize its design. System evaluation and optimization were carried out for two power levels. The results show that the new system design has cost and performance advantages over other solar thermal concepts, and can be competitive against conventional fuel power plants in certain markets even without government subsidies.     

Valuation framework for large scale electricity storage in a case with wind curtailment

This paper investigates the value of large scale applications of electricity storage in selected European power systems in the context of wind generation confronted with a grid bottleneck. It analyzes the market value to 2030 of two storage technologies, assuming the market situation projected for Germany and France. The analysis assesses the evolution of storage economics based on the net present value of cash flows. Sensitivities to market and regulatory drivers of value are assessed, e.g. electricity price spreads, ancillary services revenues, wind curtailment and the level of carbon prices. The paper concludes by suggesting possible ways to improve the competitiveness of electricity storage, such as research and development and deployment programmes, and changes to the design of power markets and regulatory arrangements to enable storage owners to better capture the benefits of storage. Such changes would allow electricity storage, where economically viable, to play a critical role in establishing a future sustainable European power system.     

Plug-in hybrid electric vehicles as regulating power providers: Case studies of Sweden and Germany

This study investigates plug-in hybrid electric vehicles (PHEVs) as providers of regulating power in the form of primary, secondary and tertiary frequency control. Previous studies have shown that PHEVs could generate substantial profits while providing ancillary services. This study investigates under what conditions PHEVs can generate revenues using actual market data, i.e. prices and activations of regulating power, from Sweden and Germany from four months in 2008. PHEV market participation is modelled for individual vehicles in a fleet subject to a simulated movement pattern. Costs for infrastructure and vehicle-to-grid equipment are not included in the analysis. The simulation results indicate that maximum average profits generated on the German markets are in the range 30–80 € per vehicle and month whereas the Swedish regulating power markets give no profit.     

The policy challenges of tradable credits: A critical review of eight markets

This article offers a critical review of eight tradable permit markets: water permits at Fox River, Wisconsin; the U.S. leaded gasoline phase-out; sulfur dioxide credits under the U.S. Clean Air Act Amendments of 1990; the Regional Clean Air Incentives Market (RECLAIM) for controlling ozone and acid rain in Southern California; renewable energy credit trading at the regional level in the United States; individual transferrable quotas for fisheries at the national level in New Zealand; carbon credits traded under the European Union-Emissions Trading Scheme; and carbon offsets permitted under the Clean Development Mechanism of the Kyoto Protocol. By “critical” the article does not fully weigh the costs and benefits of each tradable credit scheme and instead identifies key challenges and problems. By “review” the author relied exclusively on secondary data from an interdisciplinary review of the academic literature. Rather than performing as economic theory suggests, the article shows that in many cases credit markets are prone to compromises in program design, transaction costs, price volatility, leakage, and environmental degradation. The article concludes by discussing the implications of these problems for those seeking to design more equitable and effective public policies addressing environmental degradation and climate change.     

Technical aspects of status and expected future trends for wind power in Denmark

The power system of Denmark is characterized by significant incorporation of wind power. Presently, more than 20% of the annual electricity consumption is covered by electricity‐producing wind turbines. The largest increase in grid‐incorporated wind power is expected to come from large (offshore) wind farms operating as large wind power plants with ride‐through solutions, connected to the high‐voltage transmission system and providing ancillary services to the system. In Denmark there are presently two offshore wind farms connected to the transmission system: Horns Rev A (160MW rated power in the western part of the country) and Nysted (165MW rated power at Rødsand in Eastern Denmark). The construction of two more offshore wind farms, totalling 400MW by the years 2008–2010, has been announced. This article presents the status, perspectives and technical challenges for wind power in the power system from the point of view of Energinet.dk, Transmission System Operator of Denmark. Copyright © 2006 John Wiley &Sons, Ltd