Ancillary Services Market

What is the Ancillary Services Market?

The ancillary services market is a critical component of the electricity system, providing essential support services that maintain grid stability, reliability, and efficiency. These services, which include frequency regulation, voltage control, spinning reserves, and black start capability, ensure the smooth operation of the grid by addressing short-term imbalances and technical constraints. The ancillary services market operates alongside primary electricity markets like the Day-Ahead, the intraday continuous market and the intraday auction market , facilitating the real-time adjustment of supply and demand.

The Purpose of the Ancillary Services Market

The main purpose of the ancillary services market is to provide mechanisms through which grid operators can procure and deploy various support services necessary for maintaining grid stability and reliability. These services are crucial for balancing supply and demand, maintaining voltage levels, and ensuring the grid can recover from disturbances or outages.

Electricity grids require constant monitoring and adjustment to maintain a stable frequency and voltage. Factors such as sudden changes in demand, unexpected generation outages, or fluctuations in renewable energy production can disrupt the balance. Ancillary services help manage these disruptions by providing immediate and precise adjustments. For example, frequency regulation services adjust the output of power plants to maintain the grid's frequency within a narrow range, while spinning reserves provide quick-response power to cover sudden shortfalls.

How the Ancillary Services Market Operates

The ancillary services market operates through a combination of market-based mechanisms and regulatory requirements. Grid operators, such as Transmission System Operators (TSOs) and Distribution System Operators (DSOs), procure ancillary services from market participants, which include power plants, demand response providers, and other entities capable of providing these services.

There are four key types of ancillary services:

• Frequency Measure: This includes system services for frequency maintenance, such as frequency regulation and balancing energy, as well as sheddable loads that can be deactivated to guarantee network stability.
• Voltage Measure: These services ensure voltage levels are kept within a certain range to maintain the safety of the grid. They include power factor correction and managing loss energy due to transmission.
• Supply Reconstruction: After a power failure, ancillary services like black start capability are crucial. These services enable the power supply to be restored quickly without needing external power sources.
• Operational Management: This includes the control and monitoring of the grid, including redispatch and feed-in management to prevent grid bottlenecks, and managing available capacities and capacity mechanisms to ensure reliable power supply.
  
  

Market participants submit bids to provide these services, detailing their capacity, availability, response time, location, and price. Grid operators evaluate these bids based on criteria such as cost, location, and response time, selecting the most cost-effective solutions to ensure grid stability.

Once selected, participants are compensated based on their bids and the services provided. The compensation structures vary, with some services paid through capacity payments (for being available) and others through performance payments (for actual service provision). For example, a power plant providing spinning reserve might receive a payment for maintaining readiness and an additional payment if the reserve is activated.

Impact of the Ancillary Services Market

The ancillary services market offers numerous benefits to the overall electricity system. By providing real-time adjustments to balance supply and demand ancillary services help maintain a stable and reliable grid, while also facilitating the integration of variable renewable energy sources by addressing the fluctuations and imbalances associated with wind and solar power. Services such as black start capability ensure that the grid can recover quickly from outages, maintaining continuous electricity supply.

Conclusion 

The ancillary services market is an essential component of the modern electricity grid, providing the necessary support to maintain stability, reliability, and efficiency. By leveraging market-based solutions and real-time adjustments, it enhances the integration of renewable energy sources and promotes cost efficiency. As the electricity landscape continues to evolve, the importance of ancillary services will only grow, making them indispensable for the operation of a resilient and sustainable electricity grid.

Difference Between Balancing Markets and Ancillary Services Markets

Balancing markets and ancillary services markets both play crucial roles in maintaining grid stability and reliability, but they serve different purposes and involve distinct mechanisms. Balancing markets are specifically designed to address short-term imbalances between electricity supply and demand in real-time, ensuring the grid frequency remains stable by deploying balancing energy and capacity. These markets react to immediate deviations by adjusting the power feed-in or consumption dynamically. On the other hand, ancillary services markets encompass a broader range of support services that are essential for the overall operation and reliability of the power grid. These include not only frequency regulation but also voltage control, spinning reserves, and black start capabilities. While balancing markets focus on real-time correction of imbalances, ancillary services markets provide preventive and corrective measures to maintain grid stability, manage voltage levels, and ensure the grid can recover from outages.

Glossary

• Transmission System Operator (TSO): An entity responsible for the transmission of electricity across the main high-voltage networks.
• Distribution System Operator (DSO): Organizations responsible for distributing electricity through the lower voltage networks to end-users.
• Frequency Regulation: A service that maintains the grid frequency within a specified range by adjusting the output of generators or consumption of large consumers.
• Voltage Control: A service that ensures voltage levels across the grid remain within acceptable limits by adjusting reactive power production and consumption.
• Spinning Reserve: Immediate backup power from generators that are online but not fully loaded, ready to respond to sudden supply shortfalls.
• Non-Spinning Reserve: Backup power from generators that can start up quickly or demand response resources that can reduce load.
• Black Start Capability: The ability to restart parts of the grid following a complete blackout, using specific power plants designed for this purpose.
• Demand Response: The adjustment of electricity consumption by end-users in response to grid needs or price signals.
• Capacity Payments: Payments made to service providers for maintaining readiness to provide ancillary services.
• Performance Payments: Payments made to service providers for the actual provision of ancillary services.
• Market-Based Procurement: The process of acquiring ancillary services through competitive bidding, ensuring cost-effectiveness and efficiency.
• Grid Stability: The ability of the electricity grid to maintain a constant voltage and frequency despite fluctuations in supply and demand.
• Renewable Energy Integration: The incorporation of renewable energy sources into the electricity grid while maintaining stability and reliability.