Ancillary ServicesAccounting & Settlement Mechanisms H K Chawla DGM, NRLDC 1
Regulatory Provisions• Maiden definition in Indian context in the CERC (Indian Electricity Grid Code), Regulations, 2010 “Ancillary services in power system (or grid) operation means services necessary to support the power system (or grid) operation in maintaining power quality, reliability and security of the grid, e.g active power support for load following, reactive power support, black start etc” Clause 11(1) (b) of the amended CERC UI Regulations, 2009 (Application of Fund Collected through UI) “Providing ancillary services including but not limited to ‘load generation balancing’ during low grid frequency as identified by the Regional Load Despatch Centre, in accordance with the procedure prepared by it, to ensure grid security and safety:”• NLDC prepared the approach paper & submitted it to CERC 2
Present Scenario • STOA Limitations Fragmented capacity Match Making• Unscheduled Interchange (UI): Balancing Mechanism for inadvertent interchange Limits on UI Volume Price Uncertainty Frequent Start-Stop operation
• Impact - Frequent Unplanned Load shedding - Value of load lost.• Need for – Flexibility and customization – Harnessing all available generation resources before load shedding
Power Supply Position (Feb’ 2013) Region Energy Deficit % Peak Deficit % Requirement Demand (MU) (MW)Northern 19,967 -8.0 36,923 -9.3Western 21,456 -1.9 37,343 -2.6Southern 22,544 -16.5 35,901 -13.1Eastern 8,133 -4.6 14,338 -5.3 NorthEastern 877 -6.7 1,934 -4.6All India 72,977 -8.4 126,439 -7.9 Source: CEA Monthly Report
FREQUENCY DURATION CURVE APR12 TO JULY12 FREQUENCY DURATION CURVE APR12 TO JULY12 For Dated 1-4-2012 to 31-7-2012 50.7 50.5 Frequency Below 49.7 Hz for 39% of Time. 50.3 50.1FREQ(In Hz) 49.9 49.7 49.5 49.3 49.1 48.9 48.7 0 10 20 30 40 50 60 70 80 90 100 Scroll % of Time Zoom
Why Ancillary Services for India ?• Reliability , Security, stability and Power quality• Restructured Power Systems• Lack of adequate Primary, Secondary and Tertiary Response Lack of Adequate Reserves• Loose Power Pools• Absence of Tight Frequency Control 7
Primary, Secondary and Tertiary Responses Primary Secondary Tertiary
Targets• Harness Fragmented Generation at Optimum Cost• Availability of more peaking capacity• Opportunity for Generators – Help the grid – Monetary Incentive – Mitigate load shedding – Value of Lost Load• Relieve of congestion – (utilization of Kayamkulam despite congestion)• Renewable Generation - Handling Variation thereby facilitating integration Confidence to Pumped storage plants 9
Kayamkulam Flowgate Limiting injection SR Import would relieve congestion Flowgate Limiting towards SR S1-S2 exchange importKayamkulamGeneration NLDC 10
Classifications of Ancillary Services• Frequency Support Ancillary Services (FSAS)• Voltage Control Ancillary Service• Black Start Ancillary Service
Section 27 (2) of the Electricity Act 2003“Provided further that no Regional LoadDespatch Centre shall engage in thebusiness of generation of electricity ortrading in electricity.”Role Despatch Decision Involvement in trading in electricity isavoided as Facilitation through power exchanges
Section 28 (3) of the Electricity Act 2003 ‘The Regional Load Despatch Centre shall a) be responsible for optimum scheduling and despatch of electricity within the region in accordance with the contracts entered into with the licensees or the generating companies operating in the region. b) keep accounts of quantity of electricity transmitted through the regional grid.’
Section 32 (2) of the Electricity Act 2003 ‘The State Load Despatch Centre shall a) be responsible for optimum scheduling and despatch of electricity within a State in accordance with the contracts entered into with the licensees or the generating companies operating in that State. b) .. c) keep accounts of quantity of electricity transmitted through the State grid.’
Existing Mechanism for Energy Accounting• Energy accounting on 15-minute time block basis.• Three part tariff for both beneficiaries as well as generators• Three parts are : Generators Beneficiary (State)Capacity Charge Declared Capacity Capacity ShareEnergy Charge Scheduled Energy Schedule DrawalUI Charge Difference between Difference between Scheduled energy and Schedule drawal and Actual Generation actual drawal 15
UI Mechanism• For deviation from scheduled generation/ Drawal• Monday to Sunday is the weekly accounting period• Inputs – DC, Scheduled Injection/ Drawal, Bilateral/ collective exchanges, Metered Energy, Frequency• Issued Weekly by RPCs• Physical account maintained by RLDCs• Interest on late payment of UI charges• Responsibility of the State/SLDC- Further apportioning/recovery of UI charges from the various Discoms and embedded customers in the State 16
Existing Settlement SystemRLDCs and SLDCs have a key role in themetering and settlement system • RLDCs at the regional level • SLDCs at the State levelObjective of the settlement system is to determineWho bills whom for how much quantum of powerand how much money?
10 MW TRADER 10 MW @ Rs. 2.00/ u @ Rs. 2.20/ uA B AGREEMENTSA ACTUAL FLOW B 8 MW 12 MW GRID
TRADER Rs. 2.20/ u forRs. 2.00/ u for 10 MW10 MW PAYMENTSA B UI for 2 UI for 2 MW MW UI POOL A/C
Interchange: Possible CombinationsScheduled-Scheduled Unscheduled-UnscheduledExisting SI UI Possible Combinations SI UI Scheduled-Unscheduled Interchange under FSAS UI SI NLDC 24
FSAS• Focus – Stabilize the frequency by utilizing the left over fragmented generation capacity.• Umbrella (un-despatched generation) – Liquid fuel based – Diesel based – Merchant/ IPPs/ CPPs• Liquid fuel and diesel based capacity – The load serving utilities partially harnessing intra-state and inter-state sources. – Un-despatched capacity and need of load serving entities fragmented. – Such Generations commercially feasible, if UI rates are higher than their costs. 25
Framework of FSAS• Facilitation of FSAS through Power Exchanges• New product for introducing FSAS• Separate category of user group – Seller registration for FSAS• Users to be Part of the existing settlement mechanism including deviations• Proper visibility with data, communication, telemetry• Standing clearance from concerned SLDC/RLDC 26
Procedure• Competitive Bidding Process• Window to open after closure of Day Ahead Market – Sellers to bid in either of the exchanges – Declaration of supplier, bid area, quantum, duration, price• Adherence to the ‘anonymity philosophy• Sellers in DAM with un-cleared bids and other sellers with surplus/idle power can be the Prospective participants. 27
Possible Opportunity for FSAS Ancillary Lost Sell Volume (Sell Bid-Unconstrained MCV) (Apr-12 to Mar-13)Volume in MWH
• Compilation and Stacking of bids – For every time block of the next day – Stacking based on bid price• Overall optimization by stacking and despatch of bids on National basis
Despatch under FSAS• Despatch in real time – System Conditions – Deficit anticipation by the system operator .• Lower limit in the IEGC frequency band ie 49.70 Hz as the threshold frequency.• System operator will trigger FSAS below threshold frequency. – Merit Order of bids• Despatch certainty of at least 12 time blocks (i.e 3 hours) to prevent frequent start-stop operation. 30
• Backing down,subject to system conditions, during the said 12 time blocks, compensation to the extent of their fixed cost.• Despatch in case of Congestion – Pan India merit order may be discounted – TTC/ATC across Inter & Intra Regional to be honoured• Consent from seller to ascertain its readiness – Participants option to schedule in STOA continue.
Scheduling & Accounting for FSAS• Scheduling to be routed through Power Exchanges similar to that of Day Ahead Market• PXs to reveal the injection point/ identity of the identified bidders.• Despatched bids: incorporated in schedule of Sellers• Unmatched one to one schedule 32
• Despatched bid quantum attributed towards drawal of the POOL; a fictitious notional entity.• Drawees/ users of despatched power quantum to pay back for the service in the form of UI charges• Scheduling as per present practice on regional basis – By SLDCs for embedded players
Settlement under FSAS• Settlement Uniform pricing – As paid to the costliest generator who was called in last for that respective time block• Energy based settlement• Upper limit of CERC UI vector : ceiling price 35
• Payment to sellers through power exchanges – Transfer of Funds from respective regional UI pool to exchanges next day . – Exchange to pay to the supplier of services same day• Scheduling , Transmission charges(PoC) and losses as applicable for STOA transactions
Voltage Control Ancillary Service• VCAS to support & maintain voltage within the permissible limit.• Provision for Voltage control ancillary service embedded in IEGC.• Priced for regional entities except generating stations for Reactive Energy Exchange when voltages beyond 103% or 97%.• Cost of supplying reactive power – The capital cost of the equipment .• Generators – Reluctant to operate synchronous condenser mode Friction and windage losses. – Sometimes reduction in real-power production capability.• Participation in Voltage Control by Generators may be compensated through Ancillary Service.
Black Start Ancillary Service• Black start – Process to recover or reenergize a system from total or partial failure• Generating units with black start facility – Certain identified units – Required for black start of an electrical power system – Should be able to start without external support• CEA (Technical Standards for Connectivity to the Grid) Regulations, 2007 – Clause 6(4) (c) “Participate in contingency operation such as load shedding, increasing or reducing generation, islanding, black start, providing start up power and restoration as per the procedure decided by appropriate Load Despatch Centre;”.• Mandatory service as of now
• Startup supply requirement – 0.5% for hydro stations – 2% of the installed capacity for gas turbines• Expenditure associated with Black Start – capital cost of the equipment used to start the unit – cost of the operators – routine maintenance and testing cost – cost of fuel• Equipment cost recovered as fixed charges in generation tariff.• Units not reimbursed for the operating cost .• Need for Black Start as an Ancillary Service for voluntarily procurement from generating units.
ALL INDIA WIND ENERGY GENERATION 250 225 2011-12: MAX-168 MU; MIN-7 MU; AVG-57 MU 200 2012-13: MAX-224 MU; MIN-9MU; AVG-81 MU 175 150MU/DAY 125 100 75 50 25 0 01-Apr 01-May 31-May 30-Jun 30-Jul 29-Aug 28-Sep 28-Oct 27-Nov 27-Dec 26-Jan 25-Feb 26-Mar MONTH 2011-12 2012-13
Integration of Renewable Generation• Renewables 26.36 GW installed capacity targeted for 45 GW by 2015 (RPO target level of 10% Nationally).• Challenges for grid operators – Reliability top priority – Variability and uncertainty in aggregate electric demand . – Unit Commitment – Integration of intermittency nature of Renewable Generation – Frequency Control – Reactive Power Management – Physical constraints (i.e., available transmission) – Institutional constraints ( market structure)• FSAS to complement the diurnal changes in renewable generation.• FSAS to facilitate renewable integration by reducing the impact of their variation.
Summary• Ancillary services separate from basic system services as such to be remunerated appropriately• Discovery of Information – Undespatched generation: Quantum & price – Spinning Reserves: quantum & price• Home Grown Solution• Competitive Bidding• Cost to customers – Imbalance price based on the prevailing UI vector• Merit Order Despatch – Overall Countrywide Optimization 45
• Operational Flexibility for drawees• Generators -Respond to price signals -Incentive for response and helping the grid• UI and Ancillary – Two of the four pillars of market, Should co-exist• Reliance on FSAS as a routine practice to be avoided• Frequency Curve will get further smoothen with the availability of FSAS• Powerful signal for investment to Generators
Pillars of Market DesignSally Hunt – ‘ Making Competition Work in Electricity’ 47
Way Forward• Staff paper by CERC• National Diagolue• Capacity Building at SLDC• Procedure by Nodal Agency/NLDC• Implementation• Monitoring of actual delivery• Demand Response• NLDC/Nodal Agency indemnification.
Evolution of Power Market in India Ancillary Market Transmission Pricing (PoC)2011 PX 2008 Open Access 2004 ABT 2002-03 IEGC Feb.’2000
Pumped Storage Plants……. facilitation through FSAS• Nearly Rs. 2/kWh differential in peak and off peak prices of power• Increased standard of living……load curve with pronounced humps.• Higher level of pithead based coal generation……..lower off peak prices• Narrowing of frequency band would further increase the differential between peak and off peak prices in the market.• Absorbing large quantities of intermittent generation…..a major challenge……….pumped storage a beautiful complement
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