Assessment of Markets for Frequency and Voltage Control Ancillary Services

Assessment of Markets for Frequency and Voltage Control Ancillary ServicesAncillary ServicesLeonardo Energy webinar2 October 2009

Yann ReboursEDF R&[email protected]

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)

PP

PmaxLmax

PL


0Producers

0Consumers

f

50 Hz51 Hz49 Hz

Voltage example

Voltage map in French Guyana

ELA-CSG Malouin Suzini

93,9 kV 91,8 kV91,7 kV


Dégrad des Canes

Petit Saut

Kourou

TDFBalata

Etoile

St Laurent

Piquage

95,5 kV

93,3 kV

94,6 kV93,5 kV 92 kV91,9 kV

93,5 kV

Fundamentals of voltage control (U/Q)

Udistance

voltage


Q1 Q2 Q3 Q4

Who can provide f / U control services?

Generating unitsLoadsNetwork assets:

LinesTransformers, …

Purpose-built devices:


Purpose-built devices:Capacitor bankFACTSSynchronous compensatorInertia wheel, …

These controls are calledancillary services

System services vs ancillary services

Power system

Ancillary servicesAS

System servicesSS

(e.g., f and U within boundaries)

(e.g., real-time adaptation of P

and Q)


(private goods) (public goods)

Some users The other users

boundaries)and Q)

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. Quality2. Quantity3. Location


1. Specify the quality of AS

A perfect specification does not existFour definition levels are possible:

ElementaryFunctionalPracticalStandardized

General

Precise


secondary f/P

TSO Producer

PSignal

primaryf/P

1. Functional definition


tertiary f/PInstructions

operator

secondary U/Q

TSO Producer

tertiary U/Q

SignalQ

primaryU/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 onlyThe identification of the important parameters allows an inter-system comparisonIn Europe, standardisation is necessary (same recommendation but different applications)


1. Standardised definition

Helps a practical and universal definition:Does not rely on the input signalTake 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 needsA cost / benefit approach should be preferred

But difficult to estimate the value because SS have a triple objective:

Security (e.g., avoid blackouts)


Security (e.g., avoid blackouts)Quality (e.g., avoid over-voltages)System utilisation (e.g., reduce losses)

In practice:Inelastic demandMinimizing provision cost (rational buyer)

Research:Generally focused on VOLLBut VOLL does not consider quality + system utilisation

2. AS quantities in practice

Indicators have been proposed to compare systemsGive 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 deliveryAn uniform distribution is desirable (in case of network islanding)Regulation at the transmission level is more critical (meshed network)

For an optimal repartition:


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

Cost of ancillary services

1. Cost components of ancillary services2. Method to estimate the de-optimisation cost3. Results on EDF Producer’s portfolio


1. Main cost components for a producer

Fixed costsInvestments in extra generating capacitiesWorkforce

Capacity reservation costDe-optimisationOpportunity cost


Utilisation costMore fuel is usedIncreased wear-and-tear

Very difficult to calculate precisely the AS costMany componentsInterdependent time horizonsHard to separate energy-only and AS costsCosts very different from one country to another (energy-mix dependent)

2. Method to estimate the de-optimisation cost

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

De-optimisation cost = CostD-1 dispatch with reserves– Cost


– CostD-1 dispatch without reserves

G1

without reserves(cheaper dispatch)

G2 G1 G2 G3

energy for loads

frequency controlnon-used capacity

with reserves(more expensive dispatch)

2. The method in practice

1. APOGEE dataset with initial constraints

2. APOGEE dataset with reserve demand = 0 MW

APOGEE(EDF’s short-term dispatch algorithm)

OTESS


APOGEE dispatching 1 APOGEE dispatching 2

Database

Web-based interface

OTESS(Data management tool developed during the thesis)

Other data for correlation

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)


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 modelledOnly 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 costTherefore:

The reserve should be remunerated in order to avoid distortion of energy pricesAn 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 followingAllowing short-term arbitrage is thus essential


3. The cost is not seasonal

Low values from the PACFIt 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-optimisationDoes the value of time control justify its cost? [Rebours et al (2009)]


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

Procurement of ancillary services

1. Responsible entity for procurement2. Matching supply and demand3. Procurement methods4. Structure of remuneration5. Market clearing


5.6. Price caps7. Give appropriate incentives8. 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


The thesis highlights eight fundamental featuresMarket 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 ASHas enough incentive to optimize its demandNo barrier for new entrants

But :Cost recovery problem


TSO is both consumer and provider of system servicesNot necessarily enough incentives to optimize the procurement

2. Matching supply and demand

Over the long run:Connecting conditions: not optimal, but it worksHowever, 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 necessaryIncitation for participants to propose their capacities (e.g., with an attractive price)


Incitation for participants to propose their capacities (e.g., with an attractive price)

3. Procurement methods

Use several methods in parallel is necessaryTrend: f/P: competition – U/Q: regulated


4. Structure of remuneration

Depends on the services because cost structures are differentAn asymmetric remuneration is preferable (upward price ≠ downward price)

But if too complex, scoring can be difficult


5. Market clearing

StructureCentralised (pool) or decentralised (exchange)?

BiddingSealed-bid first-price auction desirable, but under perfect competition assumption

ScoringDifficult because multi-dimensional


Difficult because multi-dimensional

Time coordinationCommon clearing for energy / transmission / AS is essentialBut difficult in a decentralised structure

SettlementAlways 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 usersUtilisation cost: “polluter” pays

Data transparency (e.g., how is the demand computed?)Control of performance and behaviours. Give incentives to auto-control


controlPenalties and rewards

8. Metrics for market evaluation

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


Data for 2004-5

Conclusions


The thesis in a nutshell

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

Cost of AS = fixed / capacity reservation / utilisationThe thesis improves the knowledge on the de-optimisation cost by


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 frameworkDraw 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…)


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.


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 thesisSpecial thanks to:

Daniel Kirschen who supervised this thesisand Bruno Prestat who provided some slides presented here


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Assessment of Markets for Frequency and Voltage Control Ancillary Services

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