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

Yann Re...
Introduction




2 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebou...
Why controlling frequency and voltages?

      All power system stakeholders need f and U within boundaries for:
         ...
Frequency example

      Lost of a nuclear unit (1300 MW) within the UCTE system
      (disturbance from normal operation)...
Fundamentals of frequency control (f/P)

                                                                                 ...
Voltage example

      Voltage map in French Guyana



                                                                   ...
Fundamentals of voltage control (U/Q)
voltage


U
                                                                        ...
Who can provide f / U control services?

      Generating units
      Loads
      Network assets:
         Lines
         ...
System services vs ancillary services


                                                                Power system



(e...
Rationale for the thesis

      Final goal: improve efficiency & maximise global welfare

      Formulate and structure th...
Summary


                                                                                     1. Introduction
           ...
Delivery of ancillary
                                                                                     services

     ...
1. Specify the quality of AS

      A perfect specification does not exist
      Four definition levels are possible:
    ...
1. Functional definition




 TSO                                                               Producer                  ...
1. Survey with the functional definition

      Help for a common vocabulary




15 - A Comprehensive Assessment of Market...
1. Practical definition
      AS are technical products: they need more specs than energy only
      The identification of...
1. Standardised definition

      Helps a practical and universal definition:
         Does not rely on the input signal
 ...
2. Define the quantity of AS

      SS are a public good     only the TSO can define the needs
      A cost / benefit appr...
2. AS quantities in practice

      Indicators have been proposed to compare systems
      Give incentives to improve prac...
2. Instantaneous frequency characteristic

      Quality + quantity = frequency characteristic



   Proposed
   definitio...
3. Define the location of AS

      Location is important because:
         Congestions can make impossible AS delivery
  ...
Cost of ancillary
                                                                                     services

         ...
1. Main cost components for a producer

      Fixed costs
         Investments in extra generating capacities
         Wor...
2. Method to estimate the de-optimisation cost

      Proposed method: easy & standard
      Applied to EDF Producer over ...
2. The method in practice

                                                       1. APOGEE dataset with                  ...
2. Advantages and limits of the method for EDF

      Advantages of our study vs previous literature:
         APOGEE take...
3. Results: the cost is not negligible
      Up to 7,8 % of the dispatching cost
      Therefore:
         The reserve sho...
3. The de-optimisation cost is variable
      During 54 % of the time, the cost changed by more than 20 %
      from one d...
3. The cost is not seasonal

      Low values from the PACF
      It is difficult to apply the results over one period to ...
4. Synchronous time control costs money

      Because of time control, the reserve was modified by the French
      TSO u...
Procurement of
                                                                                     ancillary services

  ...
Eight fundamental features

      Why a market is necessary?
         AS are externalities (e.g., energy, transmission)
  ...
1. Responsible entity for procurement

      Only the TSO should be the responsible entity for procurement:
         Knows...
2. Matching supply and demand

      Over the long run:
         Connecting conditions: not optimal, but it works
        ...
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 remu...
5. Market clearing

      Structure
         Centralised (pool) or decentralised (exchange)?
      Bidding
         Sealed...
6. Price caps

      Avoid price caps as much as possible




38 - A Comprehensive Assessment of Markets for Frequency and...
7. Give appropriate incentives
      For cost allocation, the best:
         Fixed cost: shared by all users (transmission...
8. Metrics for market evaluation

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




41 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebou...
The thesis in a nutshell

          Needs for SS = quality / quantity / location
          The thesis surveys various syst...
Suggestions for future work

          Regularly assess systems with the proposed framework
          Draw the limit betwe...
For further reading…

      Technique:
         "A Survey of Frequency and Voltage Control Ancillary Services—Part I: Tech...
Acknowledgments

      Many thanks to all my colleagues who help me during this thesis
      Special thanks to:
         D...
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Assessment of Markets for Frequency and Voltage Control Ancillary Services

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All users of an electrical power system expect that the frequency and voltages are maintained within acceptable boundaries at all times. Some participants, mainly generating units, provide the necessary frequency and voltage control services, called ancillary services. Since these participants are entitled to receive a payment for the services provided, markets for ancillary services have been developed along with the liberalisation of electricity markets. However, current arrangements vary widely from a power system to another.

This thesis provides a comprehensive assessment of markets for frequency and voltage control ancillary services along three axes: (a) defining the needs for frequency and voltages, as well as specifying the ancillary services that can fulfil these needs; (b) assessing the cost of ancillary services for a producer; and (c) discussing the market design of an efficient procurement of ancillary services.

Such a comprehensive assessment exhibits several advantages: (a) stakeholders can quickly grasp the issues related to ancillary services; (b) participants benefit from a standardised method to assess their system; (c) solutions are proposed to improve current arrangements; and (d) theoretical limitations that need future work are identified.

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Assessment of Markets for Frequency and Voltage Control Ancillary Services

  1. 1. 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
  2. 2. Introduction 2 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  3. 3. 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) 3 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  4. 4. Frequency example Lost of a nuclear unit (1300 MW) within the UCTE system (disturbance from normal operation) 50 mHz 4 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  5. 5. Fundamentals of frequency control (f/P) Pmax Lmax PL PP 50 Hz 0 49 Hz 51 Hz 0 Consumers Producers f 5 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  6. 6. 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 6 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  7. 7. Fundamentals of voltage control (U/Q) voltage U distance Q1 Q2 Q3 Q4 7 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  8. 8. 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 8 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  9. 9. 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 9 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  10. 10. 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 10 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  11. 11. Summary 1. Introduction 2. Delivery of ancillary services 3. Cost of ancillary services 4. Procurement 11 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  12. 12. Delivery of ancillary services 1. Quality 2. Quantity 3. Location 12 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  13. 13. 1. Specify the quality of AS A perfect specification does not exist Four definition levels are possible: Elementary General Functional Practical Standardized Precise 13 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  14. 14. 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 14 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  15. 15. 1. Survey with the functional definition Help for a common vocabulary 15 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  16. 16. 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) 16 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  17. 17. 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) 17 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  18. 18. 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 18 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  19. 19. 2. AS quantities in practice Indicators have been proposed to compare systems Give incentives to improve practices 19 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  20. 20. 2. Instantaneous frequency characteristic Quality + quantity = frequency characteristic Proposed definition Current definition 20 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  21. 21. 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) 21 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  22. 22. 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 22 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  23. 23. 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) 23 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  24. 24. 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) 24 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  25. 25. 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 25 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  26. 26. 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 26 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  27. 27. 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 27 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  28. 28. 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 28 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  29. 29. 3. The cost is not seasonal Low values from the PACF It is difficult to apply the results over one period to another 29 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  30. 30. 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) 30 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  31. 31. 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 31 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  32. 32. 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 32 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  33. 33. 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 33 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  34. 34. 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) 34 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  35. 35. 3. Procurement methods Use several methods in parallel is necessary Trend: f/P: competition – U/Q: regulated 35 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  36. 36. 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 36 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  37. 37. 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 37 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  38. 38. 6. Price caps Avoid price caps as much as possible 38 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  39. 39. 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 39 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  40. 40. 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 40 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  41. 41. Conclusions 41 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  42. 42. 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 42 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  43. 43. 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…) 43 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  44. 44. 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 44 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009
  45. 45. 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 45 - A Comprehensive Assessment of Markets for Frequency and Voltage Control Ancillary Services - Y. Rebours - 2 October 2009

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