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Cerc staff paper on 'introduction of ancilliary services in indian electricity market'


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A small article of CERC staff paper on Ancillary services

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Cerc staff paper on 'introduction of ancilliary services in indian electricity market'

  1. 1. CERC Staff paper on Introduction of Ancillary Services in IndianElectricity MarketPrior to Electricity Act, 2003, the utilities were a vertically integrated entity & theGeneration, Transmission & Distribution were all under one roof and hence the resourcesrequired for overall reliable operation were an integral function of these utilities. However,since the liberalisation of the electricity industry, the resources required for reliableoperation have been treated as ‘Ancillary service’, which the system operator has to obtainfrom other industry participants. As of today the system operator has no control overindividual power stations, and depends on market players to purchase these services. Hencethe need of an Ancillary service market has arisen and this paper tries to address the sameneed.Ancillary services are an indispensible part of the electricity industry and theseservices are support services which are required for improving & enhancing the reliability &security of the electrical power system. One of the primary objectives of IEGC1facilitatingthe functioning of power markets and providing of ancillary services support and as per theIEGC, operation of Ancillary Services is an exclusive function of RLDCs and the CERCregulations provide for utilisation of the amount left in the UI2pool account fund towardsthe funding of these ancillary services.Types of Ancillary Services1IEGC: Indian Electricity Grid Code.2UI: Unscheduled Interchange.Frequencysupport AncillaryServicesBlack startsupportservicesVoltage orReactivepower supportservices
  2. 2. Frequency support Ancillary Services (FSAS):Frequency support Ancillary services as the name suggests are required to supportfrequency in the grid, when the frequency in the grid fall below 0.05 Hz below the loweroperating frequency range as specified in the IEGC for two consecutive time-blocks, and insuch a situation the nodal agency will give instructions to the FSAS provider to despatch inthe third time block so that the frequency can be controlled.asass1.Unstable grid.2.To utilise the surplus capacity available.3.To facilitate renewable integration by reducing impactof their variation.NeedMechanism1.FSAS would be the service offered through bids by agenerating station.2.The bids would be through the Power Exchanges & aseparate product could be constituted for this.3. Theupper limit of UI rate to be the ceiling price forthe schedulded bids.Bidding &Pricediscovery1. The buyers to submit time-block-wise bid quantum & pricealong with the location.2. Bids to be placed for standard time blocks of 2 hours & tobe stacked up on merit-order basis.3. The bids would be invited on a day ahead basis consideredfor despatch next day.Criterias &conditions1. All the sellers & regional entites which part of thescheduling & deviation settlement mechanism for real &reactive power with voice & data telemetry facilities tobe eligible to participate.2. No Objection certificate issued by the concernedSLDC/RLDC.Dispatch inreal-time.1. If the frequency remains 0.05 Hz below the loweroperating frequency for two consecutive time-blocks,FSAS provider to despatch in third time block.2. If the frequency remains at 50.0 Hz for two conseutivetime blocks, FSAS to be withdrawn.Accounting&Settlement1. The power despatched under FSAS to be incorporatedinto the schedule of the overdrawing entities by therespective LDC.2. FSAS would be given a despatch certainity of 8 timeblocks.3. The energy despatched would be deemed to bedelivered at the Regional periphery.
  3. 3. Voltage Control Ancillary Services (VCAS)The CEA and CTU are entrusted with the responsibility of transmission system planningunder the provisions of electricity act 2003. The CTU fine tunes the plans prepared by theCEA over a shorter period in coordination with CEA. CEA and CTU use system studies toanticipate generators and load at various points in the grid. Reactive power requirementsmay change:1) Due to variations between the anticipated and the actual conditions of generationand load.2) As more and more elements get added to the grid.To maintain the voltage level, capacitor and/or reactor at various nodes need to bechanged/added. Provision of reactive power could be allowed under reactive power supportancillary services which will result in a reduction of cost. The mobile reactors or capacitorswould be a big advantage which will be used by the system operator by bidding through thepower exchange when there is a critically low voltage in the grid at one or moreinterconnection points.Execution of VCASPrice bids are submitted in the power exchanges for providing VCAS onnodal basis.Nodal agency shall prepare a combined node-wise stack from the stack ofnode-wise bids for VCAS furnished by the Power exchangesPayment to be made on the actual node-wise reactive support subject tothe maximum ceiling rate of reactive energyThe providers of VCAS to be paidThe mobile VCAS may be provided by the Government owned transmissioncompanies
  4. 4. Black Start Ancillary Services (BSAS) & ExecutionCentral Electricity Authority Regulations mandate hydro generating stations for providingblack start facility. Incentives may be provided to all flexible generators who provide blackstart facility when such services are sought by the system operator.Nodal Agency & Market SurveillanceIt is proposed that the system operator, namely National Load Despatch Centre (NLDC)should be the nodal agency for implementation of the ancillary services as NLDC monitorsthe grid real-time. The nodal agency would be responsible to issue No Objection Certificatesubject to the condition that the capacity cleared for day-ahead transaction in powerexchanges shall not exceed the total capacity for which clearance has been obtained. Also amarket surveillance Committee may be constituted comprising of the representatives fromNLDC, RLDCs, RPCs, Power Exchanges and traders for successful implementation of theancillary services market.Generators capable ofproviding start up powerwhen instructed by theload despatchers tomandatorily provide theBlack Start ServicesNodal agency tobe paid BSASwhen the same isrequiredOn the day of providingBSAS generators to bepaid for one daycapacity charges asdetermined by theCommissionThe energy charges tobe paid at twice theenergy chargesdetermined by theCommission for thevolume of energysupplied during therestoration process.
  5. 5. ISSUESOUR VIEWSWith increasing demand for power, capacity addition has seen a major boost especially inthe renewable space. This has made the grid much more difficult to control & peak demandscan make grid parameters go haywire .Though sufficient measures have been taken toimprove the grid stability after the ‘ Twin Grid shock’ last year, Ancillary services will furtherhelp in improving the reliability of the grid and also further help phase-out the UImechanism as well as act as a deterrent to market participants that are a threat to the gridsecurity.• Ancillary Services primarily aim at improving thereliability of System Operation• Could be seen as a mechanism to replace UImechanism in a long runNeed for Ancillary Service• The power exchanges would inherit the risk ofdefault in payment by buyers.Formation of aclearing house mechanism where all trades bymarket participants would be routed may beevolvedPayment Risk• Necessary to ensure that generators do not givepreference to FSAS at the cost of their PPAs to getbetter price for their powerPossible Breach of PPAs• Energy Market would be cleared first and bid forbalance unsold quantity of power can be made inAncillary Service marketMarket Design• Requirement to pay a commitment charge toprovide sufficient incentive to attract generatorsin the Ancillary Service Market viewinguncertainity in the despatch of generationCommitment Charge• It is necessary that system operator provides loadgeneration balance forecasting on daily basis foroptimum decision making in procurement ofancillary servicesForecasting
  6. 6. ABOUT THE AUTHORSMr. Abhishek Amarnani and Mr. Kalyan Verma.Abhishek Amarnani and KalyanVerma are pursuing MBA in Power Management fromNational Power Training Institute (NPTI), Faridabad. Abhishek has done his B.E in‘Power’ from NPTI Nagpur, while Kalyan has a B.E degree in Electronics &Instrumentation from Sathyabama University, Chennai. Abhishek wants to make a markin Renewable sector; on the other hand, Kalyan has a special interest in the Distributionsector & Smart Grids. Earlier both had co-authored a report on Coal in India named‘PowerPlus Coalnomics’.Source: CERC - Staff paper on Introduction of Ancilliary Services in Indian ElectricityMarket.