About System Reliability and Ancillary Services

In this section we will dwell on the continuous nature of electricity, and seek to provide a minimum background insight into the concept of system reliability which is the quality of the system, and into the concept of ancillary services which are the services necessary to maintain this quality.

The commodity electricity is traded, registered and settled in terms of energy. Electricity is, however, a continuously supplied commodity. The actual production or consumption of electricity within a given time period may be represented by a continuous power load function. The term power may simplified be described as the momentary level of production / consumption. Energy is the integral of the power load function within a given time period. The connection between power and energy is illustrated in figure 7. The power load at a given instant of time is measured in Watt, while energy is measured in Watt hours81. An energy amount of 1 kWh thus refers to the energy equivalent of a constant power load function of 1 kW during an hour.

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Normal denominations are kWh, MWh, GWh or TWh. Here we have that 1 kWh = 1000 Wh, 1 MWh = 1000 kWh, 1 GWh = 1000 MWh, and 1 TWh = 1000 GWh.

We can, somewhat simplified, say that electricity production and consumption (including losses) must balance at all times. Essentially this applies to the momentary level of power supply, as well as to the energy level. On an aggregate level, variations in the power loads of the individual producers and consumers will to some extent even out. Still, following the rhythm of daily life in the society, we find identifiable patterns of the aggregate load profile, for example with lower energy use at night, higher loads during the day-time, and with identifiable peak-load hours. It is, however, not to be expected that the aggregate production and consumption load will balance at all times by itself. This means that any implied imbalances in the aggregate net load supply, rapidly must be met to secure the momentary balance and quality of the system.

In maintaining this balance and system quality we can say that the system operator has to maintain an adequate system reliability. While our above discussion gave an ad hoc idea of the system quality in the notion of a ‘system balance’, the quality dimension is in essence more elaborate. We can, still simplified, summarize the aspect of system quality, in the dimensions of stability of frequency, quality of voltage, and security of delivery:

 Frequency Stability: The requirement of a stable frequency in the system refers to that frequency and time deviations are held within specified limits.

 Voltage Quality: This refers to the stability of the voltage level, with specified limits and rules as to the occurrence of voltage irregularities.

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 Reliability of Delivery: This term refers to the risk of short-term interruptions, among other factors due to failure in the network. A further dimension is how fast the system can be restored after such interruptions.

On one hand, central supervision and coordination of the system by the system operator is an essential factor in the provision of system reliability. This is necessary as control and measures for adjustment are dependent upon the overall condition of the system. On the other hand, various forms of generation capacity are required to carry out these necessary adjustments of the system. These capacity and services we will term ancillary services.

Most ancillary services are provided by the general production plant owner, though also flexible consumers may represent a valuable source of some types of ancillary services82. In principle different production facilities with special attributes and abilities may be required to carry out the various services needed to balance the various quality attributes of the system, as well as to ensure a sufficient ex ante preparedness of the system to meet unforeseen momentary situations. Ancillary services thus include a large range of power-related functions and capacities that are necessary to keep the system working and reliable. While our focus will be on the economic system for procuring this capacity in the short and long term, we will not go into any kind of technical detail. However, to give an idea of the diversity of such capacity, let us briefly and simplified outline main categories of ancillary services. Our exposition illustrates the classification of the main categories of ancillary services at the time of study, as described in Wangensteen, Grande and Bakken (1996). Within each category we also see that the ancillary services can be further differentiated along different dimensions.

 Primary regulation reserves: This is capacity for instantaneous adjustment of power to deal with real-time momentary variations due to surges or reductions in aggregate demand. This includes reserves for handling momentary deviations in frequency, as well as other acute disturbances in the system. The reserves in this category are activated automatically and continuously, and thus represent the ancillary services that have the shortest response time. Important dimensions in this category are the level of deviation in frequency before the capacity is activated (e.g. deviations of 0.1 Hz, 0.15 Hz, 0.5 Hz), the response time (e.g. 5 seconds, 30 seconds), and the duration which indicates the time until the activation is to be ended.

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The regulation power market is a market for the supply of one form of ancillary services, namely secondary regulation reserves with a response time of 15 minutes. Note that flexible consumers may also supply this form for regulation given that they meet the requirements of a technical nature, as well as required response times.

 Secondary regulation reserves: These reserves are typically activated after the primary regulation reserves. The generator, or in principle also a flexible consumer, supplies regulation power, by offering to adjust power upward or downward within given response times. Relevant dimensions here are automatic versus manual activation, response time (e.g. 30 seconds, 15 minutes, 4 hours83), and duration which is the time period until which the activation is ended, and the next reserve category is to be activated.

 System safeguard: This is automatically activated measures to avoid breakdown of the power system. This category is activated in extraordinary situations after the reserves within the previous mentioned categories. An example is the pre-defined shut-down of production or consumption to handle serious and irregular disturbances in the system, such as if critical lines fall out, surcharge of lines, over-frequency, etc.

 Reactive power: Both the running reactive production and reactive reserves represent ancillary services that are activated due to deviations in voltage levels. The capacity may be differentiated along different dimensions, for example as to the size of deviations to occur for the capacity to be activated.

The specific definition and specification of ancillary services varies from country to country, and will in principle reflect the needs and characteristics of the underlying production technologies in the specific electricity system. A borderline case of ancillary services and normal deliverance of power are the services of so-called load-following, which deals with variations that take place systematically over a given, but short period, e.g. adjusting generation to adapt to predictable hour-to-hour and daily variations in demand. The load- following services thus address the planned following of a load curve, in contrast to the above-mentioned categories of ancillary services which address unforeseen instances. In the hydro-power system, where such costs are low, these services had not been a major issue. In contrast, the costs of load-following in thermal systems may be high, which implicates that greater attention is directed towards these services in thermal systems.

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Secondary regulation reserves with even longer response times may be termed tertiary reserves, etc. Also note that in thermal systems, the secondary regulation reserves may comprise generation by different production technologies. They may also classified by different response and ramping times, for example spinning reserves (capacity from generators already in operation that can be called on very shortly, e.g. 10 minutes), quick-start generators, and non-spinning reserves (that can be ramped within an hour).

Some of the above-mentioned ancillary services may require specialized equipment. For others, the production of the specified ancillary services is carried out with generation capacity which can be used in alternative means of production. An example is where the production capacity can be allocated to general planned energy production, as well as to reserves for providing ancillary services. An important objective of the pricing and resource allocation system of the market is here to ensure an efficient allocation of the production capacity with respect to its various competing uses.