Ancillary Services

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Ancillary services refer to functions that help grid operators maintain a reliable electricity system. Ancillary services maintain the proper flow and direction of electricity, address imbalances between supply and demand, and help the system recover after a power system event. In systems with significant variable renewable energy (RE) penetration, additional ancillary services may be required to manage increased variability and uncertainty.

Ancillary services can include:

  • Synchronized regulation, which is a service that corrects for short-term changes in electrical imbalances that might affect the stability of the power system.

  • Contingency reserves, which are used to respond to an unexpected failure or outage of a system component, such as a generator, transmission line, circuit breaker, switch or other electrical element.

  • Black-start regulation, which supplies electricity for system restoration in the unlikely event that the entire grid loses power.

  • Flexibility reserves, which is an emerging concept for addressing variability and uncertainty on timescales longer than contingency and regulating reserves.

Regulatory context strongly shapes how different systems procure ancillary services. For example, vertically integrated utilities use administrative tools such as contracts, requests for proposals, and internal acquisitions to procure the suite of ancillary services they need to balance supply and demand and maintain grid reliability. In contrast, in partially or wholly restructured power systems, electricity generators with technical capacity to provide ancillary services can participate in competitive ancillary services markets. In some cases, ancillary services (such as frequency and inertial response) can be assured through interconnection requirements rather than contractual or market mechanisms. Regardless of power system structure, variable RE poses three key considerations for procuring ancillary services:

  1. The variability and uncertainty of wind and solar energy increases requirements for various ancillary services, affecting the scheduling and pricing of those services.

  2. The magnitude of variable RE impacts vary depending on system conditions, which makes the ancillary service demands difficult to generalize across timescales and systems.

  3. Allowing variable RE to provide in ancillary services can offer more supply to the power system, but could pose challenges based on the unique characteristics of the variable resources in question.

The aggregate impact of significant variable RE on the grid suggests the need for modifications to current procurement mechanisms and ancillary services market designs and rules, and the potential for separate ancillary services markets. Further, understanding the interactions among ancillary services, energy markets, and policy is critical to creating incentives that encourage positive interplay between variable RE and the grid. Without proper policy alignment, generators may be discouraged from providing ancillary services if they are rewarded for energy generation alone.

Example Interventions

The following are possible strategies to encourage ancillary services, particularly under high variable RE penetration scenarios:

  1. Enhance the system operator’s ability to monitor variable RE generation (i.e., increase the visibility of variable RE), including distributed systems, allowing for more accurate forecasting and adequate anticipation of ancillary service needs. 
  2. Consider defining and procuring new ancillary services to manage high variable RE penetrations. For example:
  • Following reserves, which provide minute-to-minute balancing during normal system conditions. A following ancillary service would provide faster-ramping resources for systems with high variable RE penetrations, which may increase ramp requirements beyond the capabilities of the generation fleet that normally provides regulation or contingency reserves.
  • Frequency responsive reserve and inertial response, which respond within seconds following a contingency. Historically, these services have been provided by inertia and governor response inherent in the conventional generation fleet, but the displacement of large synchronous generators with significant wind and solar may reduce the ability of the generation fleet to supply these services. Wind turbines with active power controls, fast-acting storage, and possibly demand response can provide frequency and inertial response if properly encouraged to do so through ancillary service procurement mechanisms or interconnection requirements.
  • Reactive power and voltage control, which maintain voltages within acceptable limits and enables the system to respond to both contingencies and shifts in generation and demand. Interconnection requirements or compensation can motivate generators (including solar and wind) to provide reactive power and voltage control. 
  • When calculating flexibility reserves, do so dynamically by regularly updating calculations based on current conditions or near-term forecasts. For example, if no wind is being generated, then wind ramp-down is not needed.
  • Encourage participation by variable RE generators in the provision of ancillary services:
    • When cost-effective, place reactive and active power controls on large-scale variable RE generators to diversify and increase reserve resources.
    • Interconnection agreements could include requirements for control capability, ride-through, inertial response, and voltage regulation, which help support grid stability through automatic response.
    • For utility-scale wind, interconnection agreements can also include output modulation and cut-in power ramp control that provide for grid stability.
  • Technologies such as telecommunications and remote controls for distributed generation (DG) clusters can promote effective communications between system operators and generators.
  • Access demand response as a reserve and provide sufficient incentives for end-users to participate in demand-side management programs. This can include frequency response provided by consumer aggregators. [See also the Demand Response and Storage topic webpage].

  • Sources: PJM 2012-2013, Cochran et al. 2012, NERC 2011, ICER 2012, and GE Consulting 2014

    Key Video

    Flexibility Options in Electricity Systems

    Ecofys, May 2014

    This filmed presentation summarizes a 2014 report from Ecofys. The first half of the video discusses the grid operation challenges that arise with high penetrations of variable RE. The second half of the video describes the various technical, regulatory, and market options for improving flexibility of the grid over the short-, medium-, and long-term. The Ecofys report includes factsheets on the following topics: Active Power Control (pg. 19), Demand Management in Industrial Installations and in Services and Households (pgs. 21-22), Electric Vehicles (pg. 23), Compressed Air Storage (pg. 27), Fly Wheels (pg. 28), and Batteries (pg. 29).

    Reading List and Case Studies

    Effective Ancillary Services Market Designs on High Wind Power Penetration Systems

    National Renewable Energy Laboratory, December 2011

    Ancillary service market designs may require changes in systems with greater penetration of variable RE, particularly wind. This paper explores design considerations that take into account economics and engineering. The authors examine current market design, services pricing and cost allocation, changes to existing designs, and the potential for new designs. The report focuses on load following, frequency response, inertial response, and reactive power/voltage control. 

    Ancillary Service and Balancing Authority Area Solutions to Integrate Variable Generation

    North American Electric Reliability Corporation, March 2011

    This report explores how various balancing areas in North America provide ancillary services and addresses regulatory institutional practices for maintaining system integrity. The report surveys different practices that balancing areas use to plan for and manage the provision of ancillary services and makes recommendations related to enlarging and/or increasing the coordination among balancing areas to provide ancillary services. The authors seek to clarify the balancing area rules that each entity much follow, and how the many balancing areas in North America can operate in a homogenous way to address ancillary service requirements for variable RE generation.

    Active Power Control from Wind Power: Bridging the Gaps

    National Renewable Energy Laboratory, January 2014

    This report examines the three forms of active power controls that wind may be able to support, including synthetic inertial control, primary frequency control, and automatic generation control regulation. These controls contribute ancillary services to the power system. The study analyzes millisecond timeframes to characterize the impact of using wind to provide active power controls on the lifetimes of large wind plants as well as on the broader power system. The authors explore the implications of active power controls on economics and power system engineering control design. They conclude that wind may earn additional revenue and reduce production costs to consumers by providing power control services, and that market design, reliability criteria, and engineering design will impact future opportunities for wind generators to provide these services. 

    Ancillary services in Spain: Dealing with High Penetration of RES

    RED Elétrica de España, 2010

    This document includes a summary of the Spanish power system schedule (page 5) and electricity price stacks with ancillary services broken out (page 13). The report also includes a chart showing the impact of wind on primary, secondary, tertiary, and supplemental reserves (page 27). Also included is a description of Spain’s RE generation control center. 

    Operating Reserves and Variable Generation: A comprehensive review of current strategies, studies, and fundamental research on the impact that increased penetration of variable renewable generation has on power system operating reserves

    National Renewable Energy Laboratory, August 2011

    This report first provides a characterization of the various types of reserves, followed by a summary of how reserves are applied internationally currently, and how reserves could be managed in the future. The purpose of the assessment is to understand differences and commonalities between practices and to suggest options for improved practices, especially under higher variable RE penetration scenarios. 

    PJM Renewable Integration Study: Task Report: Review of Industry Practice and Experience in the Integration of Wind and Solar Generation

    PJM, Exeter Associates, Inc., and General Electric International Inc., November 2012

    This report describes state-of-the-art practices with respect to variable generation integration. The report is predominantly based on an extensive literature review and includes highlights of ancillary service requirements for distributed generation in Germany and Spain. Pages 167 – 177 contain information on regional ancillary service practices in the United States.

    Regulatory and Policy Examples

    Staff Paper on Introduction of Ancillary Services to Indian Electricity Market

    Central Energy Regulatory Commission, April 2013

    This discussion paper from the India's Central Energy Regulatory Commission examines the impetus for developing an ancillary services market and focuses on the services of frequency support, voltage control, and black start. The report also explores challenges for developing an ancillary services market and is the first step in a stakeholder engagement process intended to inform any regulatory actions taken by the commission. 

    ERCOT Concept Paper: Future Ancillary Services in ERCOT

    Electric Reliability Council of Texas, September 2013

    The Electricity Reliability Council of Texas (ERCOT), a U.S. independent system operator with relatively high wind penetration is exploring new possibilities for its ancillary services planning and procurement processes. This analysis is intended to inform potential market redesigns that take into account an evolving resource mix (including higher levels of variable RE) in an effort to better address the challenges of these new resources, and to better utilize existing and new resources. This report focuses on frequency control and does not address emergency response service, voltage support, reliability must-run, and black-start. 

    Eastern Wind Integration and Transmission Study

    National Renewable Energy Laboratory and EnerNex, February 2011

    This study summarizes the results of an in-depth modeling of the U.S. Eastern Interconnection, wind integration study, and transmission analysis. The study examines various technical issues under a 20% wind integration scenario. Section 5 examines power system regulation and balancing, and Section 6 explores impacts on systems operation. The report assesses ancillary services that provide both spinning and nonspinning reserves and offer frequency response, balancing, and system security.

    Flexible Ramping Product

    California Independent System Operator, 2011

    In 2011, the California Independent System Operator (CAISO) began a stakeholder engagement process to develop a market-based ramping product. The stakeholder engagement process will also help inform how ramping costs could be allocated to generation and demand. The CAISO website includes information on the initiative status, current meetings, and tariff and policy development.

    Flexible Ramping Constraint

    California Independent System Operator, 2011

    Similar to the Flexible Ramping Product initiative, CAISO is undertaking a stakeholder engagement process to provide a ramping product for the five-minute interval market. Information on the Federal Energy Regulatory Commission proceedings, policy and tariff development, and implementation can be found on the CAISO website.

    FERC Order 784: Third-Party Provision of Ancillary Services; Accounting and Financial Reporting for New Electric Storage Technologies

    Federal Energy Regulatory Commission, July 2013

    FERC Order 784 is a final rule from the United States Department of Energy’s Federal Energy Regulatory Commission (FERC) that outlines revisions to its regulations to foster competition and transparency in ancillary services markets. The revision affects market-based rate regulations, ancillary services requirements under the pro forma open-access transmission tariff (OATT), and accounting and reporting requirements. The changes proposed also modify the accounting regulations to increase transparency for energy storage facilities.

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