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The Electricity Grid's Ancillary Service Fad Diet 18 Mar 2016

The electricity grid as we know it is undergoing the biggest change in its 133 year history with renewable generators like wind and solar PV in particular pushing the system into an unprecedented level of uncertainty. 

The grid has historically been comprised of large conventional generators directly synchronised with the grid. These coal, gas or nuclear titans naturally provide synchronous inertia to the system which adds weight to the grid, stabilising it in the case of a contingency. A fat, gas and coal guzzling grid is easy to operate, just as it is easy eating burgers and chips for dinner every day but there comes a stage when a salad comprised of wind turbines and solar PV panels is the better option.

Renewable Energy makes it more difficult to maintain a grid. Wind and Solar generators are not synchronously connected to the grid and do not have natural inertia. In the event of an imbalance between generation and demand, the system frequency experiences a deviation, a lack of inertia can lead to a rapid drop in grid frequency as the system is inherently "lighter" and less stable. The same way it might be easier to push a vegan out of a ring than a sumo wrestler. The fact that wind generation displaces  conventional  synchronous  generation  reduces  both  the  total  system inertia  and  the number of units available to provide frequency response services.

New opportunities for flexible plant 

For the new look, light weight grid to operate safely and securely system operators must look towards new innovative solutions that counteract the difficulties encountered. The skinny grid has to hit the gym looking for strength in the form of increasingly important ancillary services and generators which can offer flexibility. Generators and devices which can offer these services can in turn access new potentially lucrative revenue streams.

The weight of the system determines how fast of a response is needed and a skinny grid like Ireland’s with added uncertainty and variability of wind requires significant response within seconds. To achieve this, investments are being made into modern control systems, plant retro-fit, storage devices, demand side services and brand new network devices.

A diverse range of technologies results in a more diverse set of characteristics and creates different challenges for the TSO in securely operating the system. Therefore it is important to not only incentivise efficient production of electricity but also system support so as to provide the appropriate economic signals to units that provide the most overall value. Increased renewable technologies offering zero marginal priced generation on the system reduce the conventional overall variable fuel cost but to achieve this a higher proportion of revenues will need to be allocated to system service provision. This means that system service provision will now become an important aspect of a generator’s revenue streams to recover their capital costs as seen in Figure 1. 

Figure 1: The shift in revenue streams of generators

 

Actions being taken by system operators

System operators in regions that are already experiencing difficulties with grid stability are taking action by providing significant incentives to procure sufficient system services to match their renewable generation increase. Ireland and Northern Ireland have set a challenging target of 40% from renewable resources by 2020. This level of renewable penetration into a synchronous system is unprecedented and poses significant challenges to the real time operation of the power system. The transmission system operators made a decision to double the amount of System Service products from a standard set of 7 reserve products to 14 products ranging from fast frequency and inertial response to ramping and voltage control. This means that the annual payment for these services is set to go up 400% to €235 million by 2020.

In 2014-15, the total cost of balancing services in the UK amounted to almost £1 billion (£989m) with more than 50 per cent of the total cost of balancing services related to frequency response, reserve generation and reactive power services in the ancillary market. The Commercial Frequency Response market alone was worth £126m with spending split between Firm Frequency Response (FFR) from generators and Frequency Control by Demand Management (FCDM).

This surge in the system service market has opened doors to new technologies which aim primarily access the expanding revenue stream. Europe’s first hybrid-flywheel energy storage plant owned and operated by Irish energy company Schwungrad Energie is expected to enter a test operational phase in February and intended to expand to 20 MW. A 10 MW battery storage array developed AES Energy is the first of its kind in UK & Ireland although a 200 MW tender for “Enhanced Frequency Response” directed at utility scale storage plant in the UK in early 2016 is expected to increase the presence of battery storage. 

“The call for expressions of interest, launched by the National Grid in September 2015 and closed in mid-November, resulted in 68 project submissions totalling 1.3 GW”, according to Adam Sims, senior account manager at National Grid.

Wind generators have also been quick to react to the changing market. Wind  power  has  historically  been  considered  as  a  non-dispatchable  source  of  energy  to  be  used when  available as  priority  dispatch. There has been a recent push by wind turbine manufacturers and grid codes to develop control systems to respond to significant frequency events. GE has developed two projects that integrate the battery technology into wind turbines allowing wind farm operators to reap the benefits of energy storage without the high costs of farm-level battery storage installation. Three 1.7 MW turbines will operate as part of a 140 MW project in Texas with GE seeking to roll out similar projects across Europe. 

It still rings true that significant frequency deviations are generally rare in large heavily interconnected systems such as mainland Europe. Synchronously connected systems can share inertia, active and reactive power so that the skinny grids in the link can be held up by some of the sumo wrestlers if needed. Frequency control is much more challenging in smaller isolated grids, especially if they have a high penetration of renewables. As renewable generation continues to increase we will see even the larger systems facing difficulties with system stability but isolated grids like Ireland and Great Britain are already encountering issues and looking further afield for solutions.

More electricity systems are turning towards salads and the health food industry that can provide the best system services supplements will be the most in demand. 

ElectroRoute has recently launched its DS3 Advisory Services providing analysis and guidance to clients looking to maximise their revenue streams through the DS3 auction. For further information, please contact Caoimhe or Alexander; 

caoimhe.giblin@electroroute.com
alexander.kulesh@electroroute.com

References

“The Decision Paper” SEM-14-108 - All Island Project
National Grid - Monthly Balancing Services Summary
http://schwungrad-energie.com/projects/
http://www.pde.co.uk/2015/08/aes-10mw-battery-storage-facility

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