ANCILLARY SERVICESANCILLARY SERVICES

THE NEXT STEP IN MARKET THE NEXT STEP IN MARKET GRANULARISATIONGRANULARISATION

DEFINITIONDEFINITION

Ancillary services are defined as all Ancillary services are defined as all those activities on the those activities on the interconnected grid that are interconnected grid that are necessary to support the necessary to support the transmission of power in transmission of power in maintaining and ensuring reliable maintaining and ensuring reliable operation and the required degree operation and the required degree of quality and safety.of quality and safety.

WHY ANCILLARY SERVICES?WHY ANCILLARY SERVICES? SYSTEM OPERATOR DUTIESSYSTEM OPERATOR DUTIES CONTROL THE FREQUENCY OF THE SYSTEM CONTROL THE FREQUENCY OF THE SYSTEM

WITHIN CERTAIN BOUNDS.WITHIN CERTAIN BOUNDS. CONTROL THE VOLTAGE QUALITY AND PROFILE CONTROL THE VOLTAGE QUALITY AND PROFILE

OF THE SYSTEM WITHIN CERTAIN BOUNDSOF THE SYSTEM WITHIN CERTAIN BOUNDS MAINTAIN STABILITY OF THE SYSTEMMAINTAIN STABILITY OF THE SYSTEM PREVENT OVERLOADS IN THE TRANSMISSION PREVENT OVERLOADS IN THE TRANSMISSION

SYSTEMSYSTEM RESTORE THE SYSTEM OR PORTION OF THE RESTORE THE SYSTEM OR PORTION OF THE

SYSTEM AT THE EARLIEST WHEN REQUIREDSYSTEM AT THE EARLIEST WHEN REQUIRED.. TRANSPARENCY IN THE SYSTEMTRANSPARENCY IN THE SYSTEM

WHAT ARE ANCILLARY WHAT ARE ANCILLARY SERVICESSERVICES

Unbundled Services to Unbundled Services to facilitate market facilitate market operationsoperations

Voltage SupportVoltage Support RegulationRegulation Help to maintain Help to maintain

reliable operationreliable operation ReservesReserves SchedulingScheduling Consists of physical Consists of physical

equipment and human equipment and human resources Supportresources Support

NERC IDENTIFIED AND NERC IDENTIFIED AND DEFINEDDEFINED

12 SERVICES12 SERVICES SYSTEM CONTROLSYSTEM CONTROL VOLTAGE CONTROLVOLTAGE CONTROL REGULATIONREGULATION OPERATING OPERATING

RESERVESRESERVES SPINNINGSPINNING SUPPLEMENTALSUPPLEMENTAL

ENERGY IMBALANCEENERGY IMBALANCE

LOAD FOLLOWINGLOAD FOLLOWING LOSS REPLACEMENTLOSS REPLACEMENT BACKUP SUPPLYBACKUP SUPPLY DYNAMIC DYNAMIC

SCHEDULINGSCHEDULING SYSTEM BLACK-SYSTEM BLACK-

STARTSTART NETWORK NETWORK

STABILITYSTABILITY

FERC REQUIRES THESE 6FERC REQUIRES THESE 6

NORMAL OPERATIONS REQUIRE 6 NORMAL OPERATIONS REQUIRE 6 SERVICES TO MAINTAIN SERVICES TO MAINTAIN GENERATION/LOAD BALANCEGENERATION/LOAD BALANCE

System controlSystem control Voltage controlVoltage control RegulationRegulation Energy imbalanceEnergy imbalance Load followingLoad following Loss replacementLoss replacement

FERC ANCILLARY SERVICES FERC ANCILLARY SERVICES CATEGORY -1CATEGORY -1

CATEGORY-1: SERVICES REQUIRED FOR ROUTINE CATEGORY-1: SERVICES REQUIRED FOR ROUTINE OPERATIONOPERATION

SYSTEM CONTROLSYSTEM CONTROL THE CONTROL AREA OPERATOR FUNCTIONS THAT THE CONTROL AREA OPERATOR FUNCTIONS THAT

SCHEDULE GENERATION AND TRANSACTIONS AND SCHEDULE GENERATION AND TRANSACTIONS AND CONTROL GENERATION IN REAL-TIME TO MAINTAIN CONTROL GENERATION IN REAL-TIME TO MAINTAIN GENERATION/LOAD BALANCE.GENERATION/LOAD BALANCE.

VOLTAGE CONTROLVOLTAGE CONTROL THE INJECTION OR ABSORPTION OF REACTIVE POWER THE INJECTION OR ABSORPTION OF REACTIVE POWER

FROM GENERATORS OR CAPACITORS TO MAINTAIN SYSTEM FROM GENERATORS OR CAPACITORS TO MAINTAIN SYSTEM VOLTAGES WITHIN REQUIRED RANGES.VOLTAGES WITHIN REQUIRED RANGES.

REGULATIONREGULATION THE USE OF GENERATION OR LOAD TO MAINTAIN MINUTE-THE USE OF GENERATION OR LOAD TO MAINTAIN MINUTE-

TO-MINUTE GENERATION/LOAD BALANCE WITHIN THE TO-MINUTE GENERATION/LOAD BALANCE WITHIN THE CONTROL AREA.CONTROL AREA.

LOAD FOLLOWING/ENERGY IMBALANCELOAD FOLLOWING/ENERGY IMBALANCE THE USE OF GENERATION TO MEET THE HOUR-TO-HOUR THE USE OF GENERATION TO MEET THE HOUR-TO-HOUR

AND DAILY VARIATIONS IN LOADAND DAILY VARIATIONS IN LOAD

FERC ANCILLARY SERVICES FERC ANCILLARY SERVICES CATEGORY -2CATEGORY -2

CATEGORY-2: SERVICES NEEDED TO PREVENT AN CATEGORY-2: SERVICES NEEDED TO PREVENT AN OUTAGE FROM BECOMING A CATASTROPHEOUTAGE FROM BECOMING A CATASTROPHE

SPINNING RESERVESSPINNING RESERVES

SUPPLEMENTAL RESERVESSUPPLEMENTAL RESERVES

NETWORK STABILITY SERVICESNETWORK STABILITY SERVICES CATEGORY-1 CAN ALSO ACT LIKE CATEGORY-2 CATEGORY-1 CAN ALSO ACT LIKE CATEGORY-2

SERVICES AND PREVENT VOLTAGES FROM SERVICES AND PREVENT VOLTAGES FROM DECAYING SO FAR THAT VOLTAGE COLLAPSE DECAYING SO FAR THAT VOLTAGE COLLAPSE OCCURS, AND SYSTEM CONTROL IS REQUIRED OCCURS, AND SYSTEM CONTROL IS REQUIRED TO MANAGE THESE SERVICES.TO MANAGE THESE SERVICES.

FERC ANCILLARY SERVICES FERC ANCILLARY SERVICES CATEGORY -3CATEGORY -3

CATEGORY-3: SERVICES NEEDED TO CATEGORY-3: SERVICES NEEDED TO RESTORE THE SYSTEM AFTER A BLACKOUTRESTORE THE SYSTEM AFTER A BLACKOUT

SYSTEM BLACKSTART CAPABILITYSYSTEM BLACKSTART CAPABILITY THE ABILITY OF A GENERATING UNIT TO THE ABILITY OF A GENERATING UNIT TO

PROCEED FROM A SHUTDOWN CONDITION TO PROCEED FROM A SHUTDOWN CONDITION TO AN OPERATING CONDITION WITHOUT AN OPERATING CONDITION WITHOUT ASSISTANCE FROM THE ELECTRICAL GRID AND ASSISTANCE FROM THE ELECTRICAL GRID AND THEN TO ENERGIZE THE GRID TO HELP OTHER THEN TO ENERGIZE THE GRID TO HELP OTHER UNITS START AFTER A BLACKOUT OCCURS.UNITS START AFTER A BLACKOUT OCCURS.

RESERVESRESERVES IMPORTANT FOR BOTH ENERGY AND IMPORTANT FOR BOTH ENERGY AND

REACTIVE POWERREACTIVE POWER NEEDED FOR MAINTAINING THE NEEDED FOR MAINTAINING THE

INTEGRITY OF THE TRANSMISSION INTEGRITY OF THE TRANSMISSION SYSTEMSYSTEM

DESIGNED TO RESPOND TO DESIGNED TO RESPOND TO UNCERTAINITIESUNCERTAINITIES GENERATION OUTAGEGENERATION OUTAGE LOAD VARIATIONSLOAD VARIATIONS

TYPES OF RESERVESTYPES OF RESERVES SPINNING:-SPINNING:-

FREQUENCY STABILISATIONFREQUENCY STABILISATION AVAILABLE INSTANTLYAVAILABLE INSTANTLY TIME OF RESPONSE – FEW SECONDS TO 5 MINUTESTIME OF RESPONSE – FEW SECONDS TO 5 MINUTES CAN BE FAST START UNITS OR DMS LOADSCAN BE FAST START UNITS OR DMS LOADS NO MANUAL INTERVENTIONNO MANUAL INTERVENTION ENERGY REQUIRED IS NOT LARGEENERGY REQUIRED IS NOT LARGE ON-BARS FOR SHORT PERIODS OF TIMEON-BARS FOR SHORT PERIODS OF TIME

SUPPLEMENTALSUPPLEMENTAL ENERGY BALANCING ENERGY BALANCING TIME OF RESPONSE – SEVERAL MINUTES TO HALF-HOURTIME OF RESPONSE – SEVERAL MINUTES TO HALF-HOUR MAY REQUIRE MANUAL INTERVENTIONMAY REQUIRE MANUAL INTERVENTION LARGER ENERGY REQUIREMENTSLARGER ENERGY REQUIREMENTS

BACK-UPBACK-UP TIME OF RESPONSE – MORE THAN HALF-HOURTIME OF RESPONSE – MORE THAN HALF-HOUR EXPECTED TO STAY ON BARS FOR A LONGER PERIODEXPECTED TO STAY ON BARS FOR A LONGER PERIOD

FREQUENCY REGULATIONFREQUENCY REGULATION PRIMARY FREQUENCY CONTROLPRIMARY FREQUENCY CONTROL

DROOP SETTINGDROOP SETTING FREQUENCY RESPONSE OF HVDC LINKFREQUENCY RESPONSE OF HVDC LINK

SECONDARY FREQUENCY CONTROLSECONDARY FREQUENCY CONTROL AUTOMATIC GENERATION CONTROLAUTOMATIC GENERATION CONTROL DIRECT CONTROL OF SPECIFIED PLANTSDIRECT CONTROL OF SPECIFIED PLANTS ABILITY TO DISCONNECT DEMANDABILITY TO DISCONNECT DEMAND

FREQUENCY CONTROL CAN ALSO BE FREQUENCY CONTROL CAN ALSO BE ATTAINED BY SENDING PRICE SIGNALS TO ATTAINED BY SENDING PRICE SIGNALS TO GENERATORS(ABT?)GENERATORS(ABT?)

FREQUENCY RANGE AND ACTIONSFREQUENCY RANGE AND ACTIONS

FREQUENCY BANDFREQUENCY BAND

AVERAGE RESERVE CLEARING AVERAGE RESERVE CLEARING PRICES IN NYISO IN 2002PRICES IN NYISO IN 2002

10 Minute Spin10 Minute Spin East: $3.03East: $3.03 West: $2.82West: $2.82 10 Minute Non Synch10 Minute Non Synch East: $1.51East: $1.51 West: $1.27West: $1.27 30 Minute Reserve: $1.1330 Minute Reserve: $1.13

LOAD-FOLLOWING LOAD-FOLLOWING RESERVERESERVE

TYPICALLY 1% OF CAPACITY IS OF THIS TYPICALLY 1% OF CAPACITY IS OF THIS TYPETYPE

LINKED TO AGC AND FGMOLINKED TO AGC AND FGMO HIGHER O&M COSTS AND HEAT RATESHIGHER O&M COSTS AND HEAT RATES COST INCLUDES FIXED COSTSCOST INCLUDES FIXED COSTS FIXED COSTS ARE HIGHER SINCE FIXED COSTS ARE HIGHER SINCE

LIFETIME OF THE UNIT IS LOWEREDLIFETIME OF THE UNIT IS LOWERED

REACTIVE SUPPORT SERVICESREACTIVE SUPPORT SERVICES

VOLTAGE CONTROL VOLTAGE CONTROL EQUIPMENTEQUIPMENT

NETWORK STABILITY SERVICESNETWORK STABILITY SERVICES

MAINTENANCE AND USE OF SPECIAL MAINTENANCE AND USE OF SPECIAL EQUIPMENT (POWER-SYSTEM EQUIPMENT (POWER-SYSTEM STABILIZERS AND DYNAMIC-BRAKING STABILIZERS AND DYNAMIC-BRAKING RESISTORS) TO MAINTAIN A SECURE RESISTORS) TO MAINTAIN A SECURE TRANSMISSION SYSTEM.TRANSMISSION SYSTEM.

PROVIDING ANCILLARY PROVIDING ANCILLARY SUPPORTSUPPORT

ANCILLARY SERVICE CAN BE ANCILLARY SERVICE CAN BE ARRANGED BYARRANGED BY OWNING THE EQUIPMENT NECESSARY TO OWNING THE EQUIPMENT NECESSARY TO

PROVIDE THE SERVICEPROVIDE THE SERVICE CONTRACTING WITH THE ANCILLARY CONTRACTING WITH THE ANCILLARY

SERVICE PROVIDERS ON A LONG TERM SERVICE PROVIDERS ON A LONG TERM BASISBASIS

CREATING A MARKET FOR SUPPLY OF CREATING A MARKET FOR SUPPLY OF SERVICE.SERVICE.

PRICING ANCILLARY SERVICESPRICING ANCILLARY SERVICES COSTS ARE NOT TRIVIAL :- 10% OF ENERGY COSTS ARE NOT TRIVIAL :- 10% OF ENERGY

CHARGES ARE TOWARDS ANCILLARY CHARGES ARE TOWARDS ANCILLARY SERVICES IN USASERVICES IN USA

SIZING HAS TO BE DONE FOR THE GRID SIZING HAS TO BE DONE FOR THE GRID BASED ON REGULATORY REQUIREMENTBASED ON REGULATORY REQUIREMENT

RESOURCES HAVE TO BE GROUPED IN RESOURCES HAVE TO BE GROUPED IN DIFFERENT SERVICES BASED ON HARD DIFFERENT SERVICES BASED ON HARD DATA :- DETERMINING THE SERVICE DATA :- DETERMINING THE SERVICE QUALITY ORDERQUALITY ORDER CRUCIAL FOR BIDDINGCRUCIAL FOR BIDDING

COSTING IS USUALLY ON REPLACEMENT COSTING IS USUALLY ON REPLACEMENT COST, LOST PROFITS AND OPPORTUNITY COST, LOST PROFITS AND OPPORTUNITY COSTSCOSTS

TYPICAL PRICING IN TYPICAL PRICING IN CALIFORNIA ISOCALIFORNIA ISO

ABT AND THE ANCILLARY ABT AND THE ANCILLARY MARKETMARKET CONCEPT OF LOOSE POWER POOLCONCEPT OF LOOSE POWER POOL

RESPONSIBILITY OF RESERVES, LOAD FOLLOWING ETC LIES WITH RESPONSIBILITY OF RESERVES, LOAD FOLLOWING ETC LIES WITH THE STATESTHE STATES

RESERVES, LOAD FOLLOWING ETC IN STATE PURVIEWRESERVES, LOAD FOLLOWING ETC IN STATE PURVIEW REACTIVE POWER PRICING MECHANISM IN PLACE FOR THE REACTIVE POWER PRICING MECHANISM IN PLACE FOR THE

LOOSE POWER POOLSLOOSE POWER POOLS THIS IS FOR THE AREA AS A WHOLETHIS IS FOR THE AREA AS A WHOLE REACTIVE SUPPORT MAY STILL BE REQUIRED AT VARIOUS BUSESREACTIVE SUPPORT MAY STILL BE REQUIRED AT VARIOUS BUSES THIS OPENS UP A MARKET OPPURTUNITYTHIS OPENS UP A MARKET OPPURTUNITY PRESENTLY MVAR BY GENERATORS ARE NOT COMMERCIALLY PRESENTLY MVAR BY GENERATORS ARE NOT COMMERCIALLY

MONITOREDMONITORED UI MECHANISM PROVIDES A COMPREHENSIVE BALANCING UI MECHANISM PROVIDES A COMPREHENSIVE BALANCING

MARKET AND A PRICING THRESHOLD FOR EMBEDDED MARKET AND A PRICING THRESHOLD FOR EMBEDDED ANCILLARY SERVICES/MARKETSANCILLARY SERVICES/MARKETS

REGULATOR HAS PROVIDED LARGE BANDWIDTH FOR REGULATOR HAS PROVIDED LARGE BANDWIDTH FOR FREQUENCYFREQUENCY LOAD FOLLOWING, SPINNING RESERVES YET TO MATURELOAD FOLLOWING, SPINNING RESERVES YET TO MATURE FGMO ALREADY IN PLACE AS MANDATED SERVICEFGMO ALREADY IN PLACE AS MANDATED SERVICE AVR IN SERVICE IS ALSO MANDATEDAVR IN SERVICE IS ALSO MANDATED

DUE TO UNBUNDLING GENCO’S MAY NOT READILY PART WITH DUE TO UNBUNDLING GENCO’S MAY NOT READILY PART WITH FREE SERVICES LIKE IN THE PASTFREE SERVICES LIKE IN THE PAST

UI PROVIDES THE REFERENCE PRICE FOR MW UI PROVIDES THE REFERENCE PRICE FOR MW BASED IMBALANCE ANCILLARY SERVICESBASED IMBALANCE ANCILLARY SERVICES

POWER POOL

ABT

UI PRICE

STATE SYSTEM

STATE SYSTEM

STATE

SYSTEM

STATE SYSTEM

ANCILLA

RY MARKET

ANCILLARY MARKET

ANCILLARY MARKET

ANCILLARY MARKET

OPPORTUNITY FOR

PROCURING MVAR FROM ISGS AS AN ANCILLARY

SERVICE

ISGS