The Energy Transition is well and truly underway.
- Globally, we are seeing increasing penetration of intermittent or variable resources for energy. The International Energy Agency forecasts almost 3,700GW of renewable capacity coming online over the 2023-2028 period; by 2028, 42% of global electricity generation will come from renewable sources with the share of wind and solar doubling to 25%.
- In addition, we are seeing increasing levels of Distributed Photovoltaic (DPV) generation with behind-the-meter batteries slowly catching up. These behind-the-meter resources simultaneously pose challenges to power system operation and represent enormous flexibility potential.
Markets all over the world are grappling with the effects of the Energy Transition:
- Ancillary services are no longer ancillary; they are essential! Markets experiencing rapid VRE penetration should not only consider definitional changes to their ancillary services, but also to cost recovery approaches to see if the users of ancillary services can modify their behaviour to reduce those costs.
- Capacity markets are having to rethink how to assign capacity to VRE to accurately reflect the contribution these resources make to reliability.
- Markets integrating Distributed Energy Resources and Demand-Side-Response are grappling with how to accurately assess performance of demand side response providers.
We are seeing interesting algorithms emerge to address the Energy Transition.
In this series we provide brief overviews of some relevant market algorithms.
In the first of our series, we talk about recovering or allocating costs of frequency control ancillary services using causer-based approaches to reduce those costs by incentivising the causers to modify their behaviours.
The Runway Method: A causer pays approach to allocate Contingency Reserves cost
Contingency Reserves are a type of frequency control ancillary service used to arrest and stabilise frequency if contingency occurs. This paper describes how the Runway Method can be used to allocate costs to the causers of contingencies.
Contribution based approaches to allocating Regulation Reserves costs
Regulation reserves are procured to maintain power system frequency at regulated levels by offsetting minor mismatches between electricity supply and demand. The need for regulation reserves is driven by volatility and variation in demand, or by deviation from dispatch generation targets or forecasts in the case of intermittent generators. With the Energy Transition, we are seeing increasing penetration of both Variable Renewable Energy (VRE) resources as well as distributed Photo-Voltaic (PV) systems or rooftop PV. Increasing levels of intermittent generation on a power system are likely to increase regulation reserve requirements. Causer pays approaches to allocating regulation reserve costs can incentivise the causers of variation to minimise their variation. In this paper we describe the causer pays approaches being implemented in Australia to allocate the cost Regulation Reserves to the causers of variation in system frequency.
RBP - Contribution based CRM - Regulation v1.0
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