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Acknowledgement: This report was supported by the Shakti Sustainable Energy Foundation. Shakti Sustainable Energy Foundation works to strengthen the energy security of India by aiding the design and implementation of policies that support energy efficiency and renewable energy. The views and analyses represented in the documents do not necessarily reflect that of Shakti. The company accepts no liability for the content of this document, or for the consequences of any actions taken on the basis of the information provided. We thank Dr. Pramod Deo (former, Chairperson, CERC), Mr. S. K. Soonee (CEO, POSOCO), Mr. Vijay Sonavane (Former Member, MERC), Mr. Sushanta Chatterjee & Mr. Rakesh Shah (CERC), Mr. Pankaj Batra (CEA), Disha Agarwal and Mr. Deepak Gupta (Shakti Foundation) for their valuable inputs during development of this report. We acknowledge contributions received from numerous colleagues and industry leaders during stake holder consultations organized by IESA over past year.

Authors Dr. Rahul Walawalkar, Judith Judson, Avinash Mirajkar, Vinayak Walimbe, Raj Chintapalli & Debi Dash

Copyright © 2013-14, Customized Energy Solutions All rights reserved. No part of this publication may be reproduced in any form or by any means without prior permission of Customized Energy Solutions. All information contained herein is obtained by Customized Energy Solutions research team from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, such information is provided “as is” without warranty of any kind. While every reasonable effort is made to ensure that the information provided on this site is accurate, no guarantees for the currency or accuracy of information are made. Companies / Products are identified by proprietary or trade names to help readers identify particular types of products but this is not, and is not intended to be, an endorsement or recommendation of any product or manufacturer referred to.

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Contents EXECUTIVE SUMMARY ..........................................................................................8 INTRODUCTION .....................................................................................................10 ANCILLARY SERVICES IN MODERN GRID ...................................................... 10 Types of ancillary services ................................................................................... 11 Response times required ..................................................................................... 12 Suitable technologies for ancillary services .......................................................... 16 Ancillary service procurement .............................................................................19 Ancillary service prices ........................................................................................ 22 INDIA POWER SECTOR OVERVIEW ...................................................................25 CURRENT SCENARIO ......................................................................................... 25 UNSCHEDULED INTERCHANGE (UI) MECHANISM ........................................27 GROWTH OF RENEWABLES IN INDIA ............................................................. 29 Wind energy growth ............................................................................................. 29 Solar Energy Growth ........................................................................................... 30 ESTIMATING INDIA ANCILLARY SERVICE REQUIREMENTS ........................ 30 ENERGY STORAGE TECHNOLOGIES FOR ANCILLARY SERVICES .............32 REVIEW OF ENERGY STORAGE TECHNOLOGIES .........................................32 TECHNICAL BENEFITS OF ENERGY STORAGE .............................................36 Grid Stabilization: ............................................................................................... 36 Grid Operational Support: ................................................................................... 36 Power Quality and Reliability: ..............................................................................36 Load Shifting: ......................................................................................................36 Supporting the integration of intermittent renewable energy sources: .................37 MAJOR ENERGY STORAGE PROJECTS AROUND THE GLOBE ................... 38 AES - Altairnano-PJM Li-ion Battery Ancillary Services Demo ............................. 40 AES- Los Andes Battery Energy Storage System .................................................. 41 AES Laurel Mountain .......................................................................................... 42 AES Gener Angamos Power Plant .......................................................................42 Beacon 20 MW Frequency regulation plant, NY ................................................... 43 Ecoult Grid Energy Storage demonstration, PJM .................................................44 SUMMARY OF LEADING ENERGY STORAGE TECHNOLOGIES .................... 46 4|Page

ANCILLARY SERVICES IN UNITED STATES .................................................... 50 FREQUENCY REGULATION SERVICE .............................................................. 51 FERC Order 755 ..................................................................................................51 IMPLEMENTATION STATUS ................................................................................53 PJM Frequency Regulation Market SIZE.............................................................. 55 CAISO Regulation Market Size .............................................................................56 NYISO FREQUENCY REGULATION MARKET SIZE ..............................................56 ERCOT NEW ANCILLARY SERVICES MARKET DESIGN ......................................57 SYNCHRONOUS AND SUPPLEMENTAL RESERVES .......................................60 PJM ..................................................................................................................... 60 CAISO .................................................................................................................61 NYISO .................................................................................................................62 ERCOT ................................................................................................................64 OTHER NEW ANCILLARY SERVICES PRODUCTS FOR STORAGE ...............64 CAISO .................................................................................................................64 MISO ................................................................................................................... 65 ERCOT ................................................................................................................67 RECENT REGULATORY INITIATIVES AT FEDERAL LEVEL .......................... 68 Storage 2012 Act .................................................................................................68 FERC Order 719: DR .......................................................................................... 68 FERC Order 890 ..................................................................................................69 FERC Order 1000 ................................................................................................ 70 FERC Order 784 ..................................................................................................70 STATE LEGISLATION .......................................................................................... 72 CA AB 2514 implementation ....................................................................................... 72 Texas SB 943 & Project No. 39917 ................................................................................73 RECOMMENDATIONS ........................................................................................... 74 APPENDIX ...............................................................................................................79 A: ANCILARY SERVICE PROVISIONS IN INDIAN REGULATIONS .................79 Ancillary Services in India- Statutory Provisions under IEGC .............................. 79 Brief on 2012 Grid Blackout ................................................................................83 CERC Whitepaper on ancillary services: 2013 ..................................................... 84

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B: REGIONAL PRACTICES FOR ANCILLARY SERVICES IN US .................... 86 D: KEY ENERGY STORAGE INSTALLATIONS AROUND THE WORLD ..........95

List of Figures Figure 1: Typical Response times for different ancillary services in US markets .........14 Figure 2: Comparison of load following and frequency regulation (Source: B. Kirby) ..15 Figure 3: Roles of ancillary services during a disturbance on grid (Source: NPTEL, MHRD, India) .............................................................................................................16 Figure 4: Generator dispatch for energy, regulation and synchronous reserves (Source: PJM) .......................................................................................................................... 17 Figure 5: Comparison of response of conventional generator and storage to regulation signal (Source: Beacon) .............................................................................................. 18 Figure 6: Opportunity cost calculation for ancillary services (Source: PJM) ................21 Figure 7: All in cost for energy for consumers in NYISO (Source: NYISO State of market Report 2013) ..............................................................................................................24 Figure 8: Installed Generation Mix in India (Source: CEA data) ..................................25 Figure 9: All India Load Curve (Source: NLDC) ........................................................... 26 Figure 10: India grid frequency over 30 hours (Source: CES Data Acquisition Services) ..................................................................................................................................27 Figure 11: Evolution of grid frequency control in India...............................................28 Figure 12: India Cumulative Wind Power Capacity Projections (2011-2030) (Source: GWC) ......................................................................................................................... 30 Figure 13: Summary of available energy storage technologies (Power vs Discharge Duration) .................................................................................................................. 34 Figure 14: Current installed and under construction energy storage capacity in US (Source: US DOE) ......................................................................................................38 Figure 15: International energy storage projects listed in the US DOE Energy Storage Database (Source: US DOE) ....................................................................................... 39 Figure 16: AES - Barbados, PJM Frequency Regulation Project using Li-Titanate batteries from Altairnano ........................................................................................... 40 Figure 17: AES- Los Andes Project - Chile (Source: AES) ..........................................41 Figure 18: AES Laurel Mountain Energy Storage Facility (Source: AES) ..................... 42 Figure 19: AES Gener Angamos Power Plant with 20 MW Li-Ion energy storage for providing spinning reserves in Chile ..........................................................................43 Figure 20: Beacon 20 MW Frequency Regulation Plant, NY (Source: Beacon Power)...44 Figure 21: Ecoult PJM Frequency Regulation Signal response ...................................45 Figure 22: Summary of key regulatory changes in US over past decade ..................... 50 Figure 23: Comparison of response of conventional generator and storage to regulation signal from ISO-NE Regulation Pilot...........................................................................52 Figure 24: Components of Pay for Performance mechanism proposed under FERC order 755 ................................................................................................................... 53 6|Page

Figure 25: Status of ISO/RTO Order 755 Implementation..........................................54 Figure 26: Proposed ancillary service framework in ERCOT (Source: ERCOT) ............58 Figure 27: Comparison between current and proposed ancillary services framework (Source: ERCOT) ........................................................................................................59

List of Tables Table 1: Types of ancillary services in US energy markets (Source: Sandia) ...............12 Table 2: Summary of ancillary services (Response times, duration and cycle time) (Source: B. Kirby).......................................................................................................13 Table 3: Summary of technology suitability for various ancillary services .................. 19 Table 4: Summary of frequency regulation prices across US markets (2005-13) (Source: CES GOLD) ..................................................................................................22 Table 5: Summary of synchronous reserve prices acoross US markets (2009-13) (Source: CES GOLD) ..................................................................................................23 Table 6: Summary of non-synchronous prices across US Markets (2009-13) (Source: CES GOLD) ................................................................................................................23 Table 7: Energy Storage technology comparison ........................................................ 35 Table 8: Summary of key international projects (Source: US DOE)............................. 39 Table 9: Comparison of US system operators (Source: CES Research) ....................... 51 Table 10: Comparison of Pay for Performance market design across US Markets .......55 Table 11: Anticipated growth in frequency regulation requirements under various renewable penetration scenarios (Source: PJM) ......................................................... 56 Table 12: Anticipated changes in NYISO frequency regulation requirements based on wind penetration........................................................................................................57

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EXECUTIVE SUMMARY

Managing variability of electricity load has been a nightmare for the grid operators in India, especially as over 59% of power generation capacity is met by coal thermal plants which do not have the capability to respond quickly to fluctuations in the power demand and supply. Apart from this, to make things worse for system operators in the country, rise in the wind power and other renewable energy supply, which consist of over 12% of the generation mix in India, has led to uncontrolled variability on the generation side. Such a scenario has led to questions on India’s preparedness to maintain grid stability, especially after the grid failure in 2012. In the structured power markets, like those in the US, ancillary services include the amenities that support the provision of energy to support power system reliability and security. The ancillary services markets are tied with the design of the energy market which needs careful consideration of the power system economics. This report reviews the ancillary service markets in the US, the various technologies and the pricing mechanisms which these markets are following. As understood from the US market, energy storage technologies have better capabilities to cater to ancillary services like frequency regulation, load following, voltage support, reactive power supply, black start and others than the thermal, gas and renewable energy power plants. ESS (Energy Storage System) can provide ancillary services with much better response time. Although most of these technologies are technically viable for utility-scale systems, some are believed to have more potential than others for providing ancillary services as demonstrated by examples of various operational projects in this report. Last 3-4 years have witnessed rapid reduction in prices in energy storage technologies due to the increasing commercialization and manufacturing scale up. India could accelerate this trend by providing a huge market for such technologies. Currently most of the international technology developers are exploring local manufacturing or localization of these technologies. Introduction of ancillary service requirements in a technology neutral manner will accelerate such localization efforts and will help in bringing down the costs further. However, working of levelized cost of ancillary services may indicate that some of the technologies may require additional financial support during initial deployment phase for 2-3 years. Indian grid regulations have tried to address some of the technical characteristics of ancillary services through existing mechanisms such as Unscheduled Interchange (UI) mechanism and power factor incentives. These mechanisms have served their purpose by improving the grid conditions as compared to prevalent issues but need to get augmented / replaced by systematic introduction of ancillary services in the coming years.

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CERC (Central Electricity Regulatory Commission) and NLDC (National Load Dispatch Centre) are considering on introducing ancillary services. Regulatory body should consider clear technology neutral specification for identification of various ancillary services and quantify the magnitude at regional / national level. Some of the ancillary services will need to be procured on state / regional basis considering the transmission infrastructure availability as well as nature of ancillary services. Regulations should have a clear roadmap for deployment of ancillary services under various scenarios, which can provide clear investment signals for potential project developers and technology developers. There is a need for proper enforcement for procurement of ancillary services. Failure of enforcing ancillary service procurement and payment mechanism could create significant hurdles in meeting the goals. Initially, some demonstration projects may be set up under the ownership of transmission companies and operated by State/Regional Load Dispatch Centers as these agencies may operate such assets in an unbiased way and may keep grid security as only priority. Simultaneously, market rules may be created for introduction of such services through exchanges. Powergrid Corporation of India ltd. (PGCIL) has already announced a tender for 3 demonstration projects at Puducherry for demonstration of LI-Ion, Advanced Lead Acid as well as other advanced batteries for frequency regulation. Indian regulators and policy makers could utilize learning from such demonstration projects for framing the ancillary service requirements. Rapid advances in both conventional and emerging technologies will make it possible for India to significantly improve the power quality and reliability. Such transformation could be achieved by 2020 as most of the technologies required are already commercially available and sufficient insights are available for introduction of ancillary services based on experiences of developed countries from around the world. As estimated by Customized Energy Solutions and Indian Energy Storage Alliance, the ancillary service market in India has a potential of almost 5 GW through 2020 and ESS technologies can supply over 1 GW of this market.

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INTRODUCTION

Indian electricity sector is developing rapidly to support the ongoing economic development and social goals set up by policy makers. Currently India operates one of the largest electric grids in world with total installed capacity of over 237 GW. Over past 2 decades various policies and initiatives have focused on meeting the energy needs through centralized generation (such as large hydro projects, ultra mega power projects, nuclear power generation) as well as distributed generation sources such as wind, solar and biomass power. The next step in the development of Indian grid is introduction of ancillary services, which are critical for providing reliability and power quality for the electricity supply. This report is designed to provide readers an introduction to the ancillary services and their relevance to the Indian grid in current as well as future supply – demand scenarios. The report will also provide information on various energy storage technologies that could become part of the solutions for meeting ancillary services in India in coming decade. Authors have drawn insights from introduction of various policies in US that have facilitated introduction of both ancillary services as well as emerging technologies (such as energy storage and demand response) in past decade. Finally by using the understanding of the Indian power system and international experiences, a roadmap is suggested for deployment of ancillary services and introduction of emerging technologies to the Indian electric grid. ANCILLARY SERVICES IN MODERN GRID

Ancillary services have been developed in many of the restructured power system regions especially in the developed and deregulated electricity markets. Ancillary services include the services that support the provision of energy to support power system reliability and security. The ancillary services markets are tied with the design of the energy market therefore need careful consideration of power system economics. To support the scheduling of energy on power systems, operators require ancillary services. Ancillary services may include a number of different operations which include frequency support, voltage support, and system restoration. To encourage the individual participants of the market to provide these services, ancillary services markets need to be created.

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Types of ancillary services The following ancillary services are defined by the US Federal Energy Regulatory Commission (FERC) in its Order 888, Promoting Wholesale Competition Through Open Access Non-discriminatory Transmission Services: 1) Scheduling, system control and dispatch: This is the service that the Independent System Operator (ISO) or Regional Transmission Organization (RTO) provides. 2) Reactive supply and voltage control from generation service: Reactive power is essential for maintaining transmission line voltages within acceptable limits to deliver power. Reactive power supply and voltage control is generally supplied as a cost-based service. 3) Regulation and frequency response service: Regulation is typically supplied and priced by dynamic markets in ISO/RTO regions. It is used to assist in controlling frequency. However, frequency response, as defined by the droop response of governors immediately in response to frequency is generally not included in any dynamic markets nor is it given cost-based rates. 4) Energy imbalance service: Energy imbalance is usually the service of the realtime markets balancing out the imbalance from the forward markets and therefore is priced by the real-time energy markets. 5) Synchronized reserve service: This service is typically supplied and priced by dynamic markets in ISO/RTO regions. 6) Supplemental reserve service: This includes non-synchronized 10 minute and 30 minute operating reserve service. This service is typically supplied and priced by dynamic markets in ISO/RTO regions Ancillary service could also be grouped as Primary, Secondary and tertiary.

1

1. Primary frequency control is a local automatic control that rapidly (within seconds) adjusts generator output or load to offset large changes in frequency. Primary frequency control acts to arrest a sharp drop or spike in frequency. It is designed to keep the frequency within specified limits in response to the forced outage of a generator or the loss of a large load. Primary frequency response is the combination of primary frequency control and system inertia acting to arrest frequency decline. System inertia is a term describing the ability of a power system to resist changes in frequency, and is measured in MW-seconds. 2. Secondary frequency control (frequency regulation) is a central automatic control that acts to adjust active power production to restore the frequency and power interchanges with other systems to their nominal levels following an imbalance. Automatic generation control (AGC) that acts on a time frame of

1

A Survey of Operating Reserve Markets in U.S. ISO/RTO-managed Electric Energy Regions; Sandia National Labs; 2012

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several seconds to counteract frequency deviations is used for providing frequency regulation service. 3. Tertiary frequency control consists of manual changes in scheduled unit commitment and dispatch levels in order to bring frequency and/or interchanges back to nominal values when secondary frequency control is unable to perform this task. This includes synchronous (spinning), nonsynchronous (non-spinning) and operating (or supplemental) reserves.

Table 1: Types of ancillary services in US energy markets (Source: Sandia)

Response times required The primary and tertiary frequency control is required for maintaining reliability of the grid, while the secondary frequency control (frequency regulation) is essential for providing power quality. Following chart represents the typical response time for each of these ancillary services. 1. Frequency Regulation: Most of the system operators in US utilize a regulation control signal that varies every 4-6 seconds to regulating resources. In recent years US has adopted a pay for performance mechanism (explained later in the report) for providing incentives for technologies that can provide faster and accurate response to this regulation control signal. 2. Synchronized and non-synchronized reserves: In most of the us markets both the synchronous and non-synchronous reserves are provided by units that can provide response within 10 minutes. Synchronous reserves are provided by 12 | P a g e

generation resources or demand response that are already synchronized to the grid. The non-synchronous reserves are provided by quick start units that are not synchronized but can still respond within 10 minutes. 3. Operating reserves or supplemental reserves are used in case of emergencies where synchronous or non-synchronous reserves are not sufficient to bring the grid frequency to pre-disturbance level and typically provide 30 mins of response time. 4. Reactive Power or Voltage support service is a localized service and is procured on a continuous basis to keep the distribution voltage levels within permissible limits. Table 2: Summary of ancillary services (Response times, duration and cycle time) (Source: B. Kirby)

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Figure 1: Typical Response times for different ancillary services in US markets

Following chart shows the difference between load following and frequency regulation, which are ancillary services utilized during the normal operation of grid. Tertiary reserves (synchronous, non-synchronous and operating reserves) are utilized for recovering the system from a contingency or disturbance such as tripping of a generator or a transmission line or sudden change in generation.

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Figure 2: Comparison of load following and frequency regulation (Source: B. Kirby)

Following figure explains the sequence of events during a disturbance on grid. In this, it is assumed that at 7:45 A.M., a big generator is suddenly disconnected. This is the situation when reserve services should come into play. Depending upon the minimum time in which the generation should start providing corrective action, different ancillary services kick in and help in restoring the grid frequency.

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Figure 3: Roles of ancillary services during a disturbance on grid (Source: NPTEL, MHRD, India)

Suitable technologies for ancillary services Various generation, energy storage and demand response technologies could be utilized for providing these ancillary services. Suitability of any technology for a particular ancillary service depends on min response time required, duration of energy delivery necessary and the technical parameters for each technology. Following chart shows how a conventional generator can provide energy, regulation and synchronous reserve services at same time. The quantity of each service can be optimized based on the co-optimization run by the system operator. Such optimization requires consideration for energy cost, variable operations and maintenance cost as well as opportunity costs that a generator may incur by providing ancillary services.

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Figure 4: Generator dispatch for energy, regulation and synchronous reserves (Source: PJM)

In past 3-4 years, various studies have demonstrated suitability of new type of resources such as energy storage and demand response can also provide various ancillary services including frequency regulation and synchronous reserves. In fact, some of the technologies may be even better suited for fast ramping ancillary services such as frequency regulation as demonstrated in the charts below. Based on these studies US Federal Energy Regulatory Commission has introduced Pay for performance mechanism for frequency regulation services in US in recent years as discussed later in this report.

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Figure 5: Comparison of response of conventional generator and storage to regulation signal (Source: Beacon)

The left hand chart in figure above shows response from a typical thermal generator to AGC signal, while the chart on the right hand side demonstrates capability of fast ramping flywheel to instantaneously meet the AGC command and provide a much better response to frequency regulation signal. Similar performance has been demonstrated by various advanced Li-Ion battery units as well as demand response resources such as water heaters. Following table provides a quick summary of technocommercial suitability of various technologies for providing different ancillary services.

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Table 3: Summary of technology suitability for various ancillary services

Frequency Regulation

Thermal

Coal Gas - CC Gas - CT Nuclear Diesel Generator

Renewable

Hydro Wind Solar Lead Acid

Energy Storage Technologies

Li-Ion Flow Batteries Other batteries Flywheel Pumped Hydro CAES Demand Response

Non Synchronous Synchronous Operating Reserves Reserves Researves

Voltage Support / Reactive Power

Load Following / Energy Imbalance

25% 100% 100% 0% 50% 100%

100% 100% 100% 25% 100% 100%

0% 100% 100% 0% 100% 100%

0% 100% 100% 0% 100% 100%

25% 50% 50% 25% 0% 50%

100% 100% 100% 0% 100% 100%

0%

25%

0%

0%

25%

0%

0%

0%

0%

0%

50%

0%

0% 100% 50% 50% 100% 100% 100% 25%

100% 100% 100% 100% 100% 100% 100% 100%

100% 100% 100% 100% 100% 100% 100% 100%

100% 100% 100% 100% 100% 100% 100% 100%

50% 50% 50% 50% 50% 50% 50% 25%

100% 100% 100% 100% 0% 100% 100% 25%

It is important to note that certain services could be provided by resources only when they are also providing energy. e.g. a gas turbine is suited to provide synchronous reserves, but it can only provide those reserves if the unit gets selected for energy dispatch as part of economic dispatch first. While a demand response resource can provide synchronous reserve service whenever load is connected to the grid. Some technologies also may have opportunity costs associated with providing ancillary services, which needs to be considered while dispatch decisions. e.g. most of the conventional technologies can provide reactive power to the grid, but it results in reduced output for energy, thus some generators may choose not to provide reactive power without appropriate financial incentives or regulatory requirements. Ancillary service procurement In most of the US regions, system operators are responsible for managing ancillary services. Distribution utilities or Load Serving Utilities have the obligation to procure appropriate amount of ancillary services based on their load share as compared to peak system load. 19 | P a g e

Ancillary services markets can either be dynamic with hourly or faster prices set based on system conditions, or they can be cost-based where set rates are made in advance to ensure the supply. Many of the ancillary services that assist in active power balance and frequency support will have dynamic markets since they are tied to the energy markets. Other services, like black start, will have cost-based services. Cost based ancillary services   

Scheduling, System Control & Dispatch Voltage Support Black Start

Market price based ancillary services   

Frequency Response Operating Reserves Energy Imbalance

In most of the regions in US, generators or load resources that provide ancillary services get paid for the services through system operators. Distribution utilities have option to either provide the ancillary services using their own resources or sign bilateral contracts from other resources capable of providing these services or purchase these ancillary services from the system operator. Opportunity cost is important part of the regulation and synchronous reserve price. As part of co-optimization of energy and ancillary services, in most of the US regions, system operators consider the lost revenue (when market price for energy is higher than the marginal cost for energy from the generator) or uplift cost (if the market price is lower than the marginal cost of the generator) along with the regulation or synchronous price bids submitted by generators. This is explained in the chart below.

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Figure 6: Opportunity cost calculation for ancillary services (Source: PJM)

Resources that want to provide these ancillary services need to undergo appropriate performance and validation tests to ensure that they are capable of providing the necessary ancillary services and meet the operational criteria specified for selected service. Apart from the initial certification and validation, system operators can also monitor the performance of individual resources during actual operation, and reserve the rights to penalize under performance or even remove the resources from corresponding markets if a performance criterion is not met. Most of the system regulators in US procure frequency regulation service s 0.9 – 1.2% of the daily peak load. Quantities for other ancillary services such as synchronous, non-synchronous and operating reserves are determined based on detailed system studies that consider the largest contingency in the network. Various studies have also identified relationship between increasing share of variable renewables on the grid for increasing this requirement. For 10-15 % renewable penetration it is anticipated that the regulation requirement could increase by ~10-20%, while for significantly higher renewable share such as 20%, it is anticipated that the frequency regulation requirements may double for regions such as CAISO and PJM. 2 In addition CAISO and MISO are also considering introduction of new ancillary services for ramping and flexible capacity to meet grid balancing requirements under higher penetration of

2

Source: PJM Renewable Integration Study report 2014.

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renewables. Appendix B provides summary of regional practices and procedures regarding ancillary services across US. Ancillary service prices As discussed earlier each ancillary service is procured by the system operators based on either market based or cost based pricing mechanism. Table below provides summary of the ancillary prices across US over past 5 years. As you can notice the ancillary services prices have deviated a lot from year to year. There are various factors that have contributed to this including, but not limited to   

Changes in the fuel prices (coal, natural gas etc.) that has a direct impact on energy price and opportunity costs Changes in market design or market rules Changes in the supply – demand of resources providing ancillary services

Frequency Regulation Service ($/MWh)

Table 4: Summary of frequency regulation prices across US markets (2005-13) (Source: CES GOLD)

NYISO

PJM

CAISO

2005

$

40.01

$

64.02

$

37.24 $

2006

$

51.18

$

31.23

$

35.91 $

2007

$

56.32

$

35.30

$

26.13 $

2008

$

59.45

$

40.08

$

33.36 $

2009

$

37.20

$

23.51

$

10.34 $

2010

$

28.80

$

18.01

$

10.61 $

2011

$

11.80

$

16.41

$

16.13 $

2012

$ $

10.41 $ 10.11 $

22.93

$

10.04 $

34.89 $

7.81 $

2013

ERCOT 37.84 23.07 21.45 42.22 16.95 18.08 31.26 13.18 13.46

MISO

$ $ $ $ $

14.23 13.02 11.88 8.64 10.56

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Synchronous Reserve Prices ($/MWh) Table 5: Summary of synchronous reserve prices acoross US markets (2009-13) (Source: CES GOLD)

PJM

CAISO

2009

$

1.65 $

2010

$

1.92 $

2011

$

2.66 $

2012

$

1.45 $

2013

$

1.90 $

3.73 4.07 7.22 3.27 2.74

ERCOT

MISO

$ 9.96 $ $ 9.09 $ $ 22.92 $ $ 9.76 $ $ 9.77 $

3.08 3.43 3.01 2.54 3.32

Non Synchronous Reserve Prices ($/MWh) Table 6: Summary of non-synchronous prices across US Markets (2009-13) (Source: CES GOLD)

PJM 2009 2010 2011 2012

$

2013

$

CAISO

$ $ $ 0.62 $ 0.13 $

1.44 0.60 0.98 0.95 0.20

ERCOT

MISO

$ 2.31 $ $ 4.25 $ $ 11.77 $ $ 3.67 $ $ 3.47 $

0.37 1.65 1.50 1.42 2.02

As can be seen from the tables above, frequency regulation is the most valuable ancillary service in US markets, followed by synchronous reserve and nonsynchronous reserve service. Apart from looking at the ancillary service market prices that are paid to the resources providing these services, another way to consider these costs is the cost paid by consumers for ancillary services as part of overall cost of energy. Following chart shows this data for different regions with in NYISO for past 3 years. As seen below the ancillary service all in costs are typically