Professional Documents
Culture Documents
Provision from
Distributed Generation
CONTRACT NUMBER: DG/CG/00030/00/00
CONTRACT NUMBER
DG/CG/00030/00/00
Contractor
The investigation was undertaken during the second and third quarter of 2004 and
was subject to review and commentary from the TSG WS5 P06 Project Manager
and the P06 Project Steering Group whilst in progress. The Project Steering Group
was made up of a diversity of people, including Distribution Network Operators
(DNO’s), NGT, generators and consultants.
The final report was submitted to Future Energy Solutions (FES) in September
2004. FES are the DTI’s New & Renewable Energy Programme’s managing
contractor.
Objectives: The aims and objectives of the study were to investigate the
potential for creating ancillary service markets at the distribution level in Great
Britain. Specifically the study sought to:
The study did not cover the longer term potential (beyond 2015) for ancillary
services that were deemed to have little or no potential in the short to medium
term. However, due to the relative low levels of DG penetration at present and the
absence of a distribution level ancillary service market (accepting that some
bilateral arrangements do exist and that DG can participate already at the
transmission level), it is accepted by the project manager that further work in this
area will probably not be feasible until DG penetration increases and the future
structure of the power system is better understood.
Next Steps: As already touched on, significant further work on the WS5 P06 area
is probably a little premature until DG penetration increases and the active nature
of the future power system becomes more established.
Bilateral Agreements are likely to continue to be used in any developing ancillary
service market in the short to medium term and if further studies are to be carried
out at this stage, the focus should be on developing commercial
frameworks/agreements. The Distribution Commercial Forum appears well placed
to develop the necessary commercial arrangements and RPZs could represent
ideal test-beds for such services.
Nigel Turvey
Project Manager, TSG WS5 P06
11th October 2004
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
Disclaimer
While ILEX considers that the information and opinions given in this work
are sound, all parties must rely upon their own skill and judgement when
making use of it. ILEX does not make any representation or warranty,
expressed or implied, as to the accuracy or completeness of the information
contained in this report and assumes no responsibility for the accuracy or
completeness of such information. ILEX will not assume any liability to
anyone for any loss or damage arising out of the provision of this report.
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
CONTENTS
EXECUTIVE SUMMARY I
1. INTRODUCTION 1
2. BACKGROUND REVIEW 6
TABLES
FIGURES
GLOSSARY OF TERMS
ADSL Asymmetric Digital Subscriber MV Medium Voltage
AVR Automatic Voltage Regulator MVA Mega Volt-Ampere
BETTA British Electricity Trading & MW Megawatt
Transmission Arrangements
BOA Bid/Offer Acceptance NETA New Electricity Trading
Arrangements
BM Balancing Mechanism NGC National Grid Company
BMU Balancing Mechanism Unit OCGT Open Cycle Gas Turbine
BSC Balancing & Settlement Code OFGEM Office of Gas & Electricity
Markets
CAPEX Capital Expenditure OHL Overhead Line
CCGT Combined Cycle Gas Turbine O&M Operation and Maintenance
CHP Combined Heat & Power OPEX Operational Expenditure
CI Customer Interruptions OS Overall Standards
CML Customer Minutes Lost PN Physical Notification
CUSC Connection & Use of System PSTN Public Switched Telephone
Code Network
DFIG Doubly Fed Induction PTO Public Telephone Operators
DG Distributed Generation PV Photo Voltaic
DGCG Distributed Generation Co- ROC Renewables Obligation
ordination Group Certificate
DNO Distribution Network Operator RPZ Registered Power Zone
DTI Department of Trade & SMS Short Message Service
DUoS Distribution Use of System SVC Static Voltage Compensator
GB Great Britain SYS Seven Year Statement
GS Guaranteed Standard TNUoS Transmission Network Use of
System
GSM Global System for Mobiles TSG DGCG Technical Steering
IIP Information & Incentives TSO Transmission System
KV Kilovolt UC Underground Cable
KW Kilowatt UMTS Universal Mobile
Telecommunications System
LAN Local Area Network UoSA Use of System Agreement
LV Low Voltage VAr Volt-Ampere reactive
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
EXECUTIVE SUMMARY
The aims and objectives of the study were to investigate the potential
for creating ancillary service markets at the distribution level in Great
Britain (GB). Specifically, the study sought to:
• investigate any existing arrangements for distribution level
ancillary services markets worldwide;
• review the high level options for the design of ancillary service
markets;
• examine the prospects and opportunities for the different forms of
Distributed Generation (DG);
• investigate the commercial frameworks and technical procedures
that might be required;
• explore the infrastructure requirements; and
• assess the impact on different market participants.
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1
The Renewables Obligation Order 2002, Statutory Instrument No. 914, 2002
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iv
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v
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Ancillary
Ancillary Wind
Wind Wind
Wind Land
LandFill
Fill
Biomass
Biomass Solar
SolarPV
PV Hydro
Hydro
Service
Service non-DFIG
non-DFIG DFIG*
DFIG* Gas
Gas
Size
Size <<50
50MW
MW >50
>50MW
MW 1–100MW
1–100MW 11––10MW
10MW <100
<100kW
kW >>1MW
1MW
Frequency
Frequency HF
HFonly
only HF
HFonly
only HF
HFonly
only
Reserve
Reserve Possible
Possible Possible
Possible Possible
Possible Possible
Possible Possible
Possible Possible
Possible
Reactive
Reactive
Network
Network Limited
Limited
Support
Support
Future
Future Future
Future Future
Future
Black
BlackStart
Start islanding?
islanding? islanding?
islanding? islanding?
islanding?
Frequency
Frequency Limited
Limited Limited
Limited
Possible:
Possible:High
High
Reserve
Reserve Possible
Possible penetrations
penetrations
Reactive
Reactive
Network
Network Possible:
Possible:High
High
Support
Support penetrations
penetrations
Future
Futureisland
island Future
Futureisland
island
Black
BlackStart
Start Possible
Possible opportunity?
opportunity? opportunity?
opportunity?
Whilst all of the above services were explored in detail, only TSO
Frequency Response, TSO Regulating and Standing reserve and DNO
Security of Supply contributions represent realistic opportunities for
distributed generators in the short or medium term.
Combined Cycle Gas Turbines (CCGT) and DFIG wind farms were the
most promising technologies for the provision of TSO Frequency
Response services whereas CCGTs, diesel standby generators and
perhaps micro CHP were best placed to provide reserve services.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
The analysis undertaken suggests that the value of the most feasible
ancillary services will be relatively low. Consequently, such services
will represent incremental revenue opportunities for DG. In general, it
would not be possible to develop business cases for investing in DG
solely on the basis of ancillary service income.
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Recommendations
The extent of opportunities on DNO networks will largely relate to
load growth and asset replacement profiles. Whilst it has not been
possible to quantify the relative magnitudes of these opportunities
within this project, such information will be critical to evaluating
service materiality under alternative future development scenarios
and should be explored further.
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1. INTRODUCTION
1.1 This report describes a joint study undertaken as part of the DTI’s
New and Renewable Energy Programme by ILEX Energy Consulting
and the University of Manchester Institute of Science and Technology
(UMIST) with contributions sourced from many interested
stakeholders including:
• DNOs
• TSO
• Renewable and non-renewable plant developers and operators
• Micro-CHP developers
• Academics
• Ofgem
1.2 The study investigated the potential for distribution level ancillary
services to be provided by generators, in-line with the anticipated
increase in electricity generation from distributed resources.
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1.9 From the outset, this study has adopted a broad definition for
ancillary services at a distribution level, which, whilst remaining
primarily generation focused, could encompass a wide range of new
and existing services. This approach deliberately avoided any
constraints arising from a strict interpretation of the term as applied
in the UK transmission context.
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1.17 Section 5 sets out the prospects for distributed generation in terms of
the capabilities of different technologies. It also contains a summary
of distributed generation capabilities in terms of technology type,
ratings, infrastructure requirements to provide ancillary services and
renewable considerations. An important output from this study
relates to the different technical capabilities of each type of
distributed generation.
1.18 In Section 6, the technical and commercial frameworks for the most
attractive distribution level ancillary services are expanded to
describe the commercial interfaces and trading options for the
different market participants. The section also discusses interactions
between transmission and distribution level ancillary services. This
section also provides a high level analysis of the interaction between
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2. BACKGROUND REVIEW
2.1 Part of the remit of this study was to determine the extent to which
ancillary services are already being provided by distribution system
connected generation, both within Great Britain (GB) and
internationally. This requirement was addressed through:
• Liaison with DNOs forming part of wider international groups
operating distribution assets in Europe and North America, e.g.
EdF, E.ON, RWE, Western Power Distribution and Scottish Power.
• A review of the academic and commercial literature available
through a desk study concentrating on liberalised energy markets,
especially those with high penetrations of renewable and
distributed generation.
• Detailed analysis of the transmission-level ancillary services
market as managed and operated by the National Grid Company
in England and Wales.
GB Experience
2.2 Within GB it has been confirmed that there are already a number of
distributed generators providing ancillary services to the TSOs. These
services predominantly relate to frequency response from large-scale
conventional plant, such as 132 kV connected Combined Cycle Gas
Turbine (CCGT) generators, and Standing Reserve from standby
generators embedded within industrial customer premises.
2.5 Similarly, variations also exist between Grid Codes regarding the
obligations on generators to provide ancillary services. In GB, these
variations depend on the size of the generator relative to the overall
size of the transmission system, rather than connection voltage.
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2.7 A feature of TSO ancillary service provision in England and Wales has
been a gradual move away from centrally administered mandatory
solutions towards more flexible, commercial arrangements based
upon market mechanisms. Such approaches often utilise tender
processes, have less prescriptive technical requirements and
encourage wider participation from the demand-side and distributed
generation.
International Experience
2.8 In international liberalised energy markets, the provision of frequency
response and reserve services from distributed generators was found
to be commonplace. Typically generators rated in tens of Megawatts
(MW) would be required to provide such services by many European
TSOs.
2.10 The provision of TSO related ancillary services from smaller scale
generation (<10 MW) was found to be less widespread with TSOs
seeming to prefer the procurement of such services from larger-scale
conventional generators.
2
British Electricity Trading and Transmission Arrangements
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2.14 In recent years, NGC has been increasingly encouraged to reduce the
costs of system operation through regulatory incentives. NGC’s
System Operator incentive scheme achieves such incentivisation by
establishing an annual target for the costs of system operation
(including ancillary services). Where the costs of system operation
are lower than the agreed target, NGC is allowed to retain a
proportion of the savings. Similarly, where the costs of system
operation exceed the target, NGC is exposed to a proportion of any
overspend. The target for the SO incentive scheme in 2004/2005 is
£415 million including losses.
Frequency Response
2.16 Frequency Response services are required by TSOs to maintain the
system frequency within statutory tolerances. Frequency control is
achieved through the real-time matching of supply to demand, i.e.
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F re q u e n c y R e s p o n s e
F re q u e n c y C o n tro l
C o n tin u o u s S e r v ic e
5 0 .2
10 s 30 s 60 s T im e 1 0 m in s
Frequency (Hz)
5 0 .0
4 9 .8
P r im a r y S e c o n d a ry (to 3 0 m in s )
R e s e rv e
4 9 .5
4 9 .2 O c c a s io n a l S e r v ic e T r a n s m is s io n B u s in e s s
T r a n s m is s io n S e r v ic e s
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2.21 Although all large generators are required by the Grid Code to have
continuous and occasional frequency response capabilities, at any
instant, only a relatively small number of participants are actually
instructed by the TSO to operate in frequency sensitive mode.
2.23 NGC procure frequency response services from both generators and
demand-side participants on a mandatory or a commercial basis.
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2.27 A consequence of the short delivery timescales for both Primary and
Secondary response services is the requirement for sophisticated
dynamic control arrangements involving automatic generator
governor action.
2.30 High frequency response services are required in the event of high
system frequency scenarios, requiring generators to either reduce
output or to cease generating altogether. High frequency services are
also initiated through automatic generator governor action.
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a monthly average of system buy and sell prices obtained from the
Balancing Mechanism (BM) under NETA.
2.33 There are a number of options currently being discussed, (within the
Balancing Services Standing Group) which could apply market
mechanisms to the scheduling and remuneration of mandatory
frequency response services.
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2.41 The arrangements for energy reserves are similar to those for
frequency response in that the provision of reserve further ensures
that an energy balance can be achieved on the transmission system
and thus system frequency and stability can be maintained.
2.42 The key differences between frequency response and reserve services
relate to delivery timescales. Typically, reserve services are manually
initiated following TSO instructions and involve longer lead times. A
consequence of these simplified service initiation requirements is a
reduction in the sophistication of the associated control infrastructure
making this service more attractive to smaller players.
2.43 In England and Wales, NGC segregate reserve services into the
following different categorises:
• regulating reserve;
• standing reserve;
• warming and hot standby; and
• fast reserve.
Regulating reserve
2.44 Regulating reserve is a commercial service provided at the discretion
of the generator. Synchronised, part-loaded generators, capable of
changing output according to TSO requirements, provide regulating
reserve services. TSO instructions are usually issued in accordance
with the bid / offer ladders visible in the BM.
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Standing reserve
2.48 The key difference between regulating and standing reserve is that
the latter is sourced from non-synchronised generators capable of
starting, synchronising and providing the TSO’s instructed level of
output within 20 minutes.
2.49 In order to provide standing reserve services, the TSO requires the
reliable delivery of at least 3 MW of generation (or corresponding
load reduction) through a single point of contact. This requirement
does not preclude the aggregation of generation (or demand) by an
agent or directly by a customer.
2.50 Other technical requirements for standing reserve providers are that
the instructed level of service must be provided for at least 20
minutes, the recovery period must not be more than 20 hours and the
participant should be capable of providing the service at least 3 time
per week.
2.51 The requirement for standing reserve varies according to the time of
year, the day of the week and time of day. NGC divides the year into
five seasons, for both working and non-working days, and specifies
the periods within each day that standing reserve is required. These
periods are referred to as availability windows3.
3
www.nationalgrid.com/uk/indinfo/balancing/pdfs/Standing_Reserve_Introduction.pdf
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2.56 For the 2004/2005 financial year, NGC has entered contracts to secure
nearly 2500 MW of standing reserve from both BM & non-BM
participants. Non-BM providers represent 764 MW of this total with
550 MW being provided on a flexible basis. A non-linear relationship
exists between site numbers and the amount of standing reserve
procured as over 40% of the contracted capability is sourced from
only 10% of the sites.
2.58 Whilst the larger BM generators (>50 MW) provide the majority of
standing reserve at present, their corresponding site numbers are low
when compared with the smaller participants. It is estimated that over
80% of standing reserve energy is provided by less than less than
15% of the market participants.
2.59 This disparity between site numbers and service utilisation is perhaps
understandable in the context of an electricity system characterised
by large-scale generation. NGC’s requirements for standing reserve
will largely be driven by generation shortfalls caused by equipment
failures and these will often be measured in multiples of 100 MW.
Consequently, scheduling replacement generation from the larger
standing reserve providers appears pragmatic from a network co-
ordination perspective, assuming the prices of standing reserve to be
comparable between BM and non-BM participants.
2.60 In terms of market value, again the standing reserve market is heavily
biased towards the BM segment as illustrated in Table 4.
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24 14 4 1.4
2.61 As can be seen, the value of the standing reserve market equated to
approximately £43 million in 2003/2004.
2.63 Scatter plots of prices tendered for standing reserve services for
2004/2005 showed wide variations for both availability and utilisation.
Availability prices ranged between £1.50 - £12.75/MW/h, with an
average price of approximately £3.50/MW/h. Similarly, wide ranges of
utilisation prices were also witnessed of between £20 - £370/MWh
with the largest grouping in the £70 - £150/MWh band.
4
National Grid Transco Procurement Guidelines Report, May 2004
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2.69 The value of the Warming and Hot Standby services are significant at
approximately £21 million per annum. Whilst Warming & Hot
Standby contracts position thermal generators to participate in the
Standing Reserve market, it should be noted that any BM bid
acceptances, requiring generator output to deviate from zero, cancel
any associated warming and hot standby payments. In such
situations, generators must recover their costs through the BM.
2.70 Due to the technology types employed and the typical operating
regimes of most forms of distributed generation, it is unlikely that
Warming and Hot Standby activities will be relevant or applicable to
distributed generators.
Fast reserve
2.71 Fast reserve is a fast acting, flexible service from providers capable of
increasing energy output or reducing energy consumption, following
receipt of electronic instructions from NGC.
2.72 The technical parameters for fast reserve are onerous in that power
delivery must start within 2 minutes of instruction at a ramp rate of at
least 25MW/minute, and the reserve energy should be sustainable for
a minimum of 15 minutes. In addition, fast reserve providers must be
able to supply at least 50 MW of reserve power.
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2.74 NGC procure fast reserve through a tender process and bilateral
contracts. In total, during the 2003/2004 financial year, NGC spent
approximately £21 million on fast reserve services.
Reactive power
2.76 NGC is required to manage the voltage on the transmission system
within technical limits to ensure quality of supply. Due to the
impedance characteristics of the transmission system, the ability to
decouple and vary reactive power independently of active power,
provides a useful means of voltage regulation for the TSO.
2.79 Obligatory reactive power services are also procured through the
market-based tender process, which enable generators to influence
the attractiveness of their reactive power capabilities. Within the
tender process, there is also scope for generators to offer enhanced
reactive power services, which go beyond the minimum
requirements of the Grid Code although generators seldom exercise
this option. Indeed during the last 5 tender rounds, there have been
no offers from generators to provide enhanced reactive services.
2.81 In recent years, the value of the transmission level obligatory reactive
power markets has been evenly split between the market-based
approach and the default arrangements. In 2003/2004 NGC spent
£16.9 million on the market based procurement of reactive power and
£16.4 million on the default arrangements.
2.82 One issue influencing the size and value of the transmission-level
reactive power market is the use of NGC’s Static Voltage
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Fast start
2.85 Fast start is the special service provided by OCGT plant to start
rapidly from a no-load condition and to deliver full rated power
automatically within 5-7 minutes of a TSO instruction. Fast Start
services are usually initiated by fully remote control infrastructure.
2.86 In recent years the requirements for fast start services have been
consistent and NGC is not currently seeking any additional fast start
capacity.
2.88 The low materiality and the limited market potential for additional
fast start services is unlikely to be attractive to distributed generators.
Black start
2.89 In the event that all or part of the transmission system becomes de-
energised, NGC must have the capability to re-energise the
transmission network to restore supplies. The process of restoring
the power system is known as black start.
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2.90 The providers of black start services tend to be the operators of OCGT
plant located at large conventional thermal generation sites. In a
black start scenario, the onsite OCGT plant is utilised in an islanded
mode to re-power main generator essential services, which then re-
energise the transmission system, i.e. the OCGT plant does not re-
energise the transmission system directly.
2.92 The low materiality of TSO black start services and the distant nature
of much distributed generation to the transmission system (coupled
with relatively low electrical ratings) mean that the TSO unlikely to
seek black start services from distributed generation.
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3.6 In the event that network usage deviates from the initial planning
assumptions, passive networks can prove inflexible to new operating
regimes, often requiring significant redesigns and upgrades.
3.7 As much of the envisaged renewable and CHP generation will require
connection to distribution systems, there is a concern that the costs
of reconfiguration and reinforcement of passive networks could
present a barrier to the deployment of distributed generation,
especially in situations where power flows are reversed.
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3.11 ER P2/5 contains two important tables. Table 1 of ER P2/5 states the
minimum demand that must be met after certain specified circuit
outages. This level is dependent on the Group Demand or Class of
Supply. The amount of demand that can be supplied depends upon
the available circuit capacities and critically, the contributions from
local distributed generators. Table 2 in ER P2/5 specifies the
contribution that can be attributed to generation connected to a
particular load group.
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3.14 Although situations may arise in which the required level of network
security is insufficient, this does not automatically imply that the
design standard has been violated. Security shortfalls may occur in
situations where insufficient generation is available during a
particular network outage, e.g. generator output was less than
assumed during the design phase. Similarly, security shortfalls could
also be attributed to insufficient network capacity being available due
to unforeseen circuit outages. It therefore follows that whilst a design
standard can minimise operational standard violations, it cannot
eliminate them.
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3.20 Overall Standards (OS) address other aspects of service quality where
it is not appropriate to give individual guarantees, but where
customers have a right to expect predetermined minimum levels of
service from DNOs. No penalty payments are made if these levels are
not achieved and it has been proposed that OS should be removed or
replaced.
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3.25 The magnitude of voltage variations can also depend upon localised
network characteristics. For example, voltage variations on highly
interconnected, cable based urban networks are typically small
whereas the corresponding variations on rural, radial Overhead Line
(OHL) circuits can be much more significant.
5
The Electricity Safety, Quality and Continuity Regulations 2002
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3.29 The network areas where DNOs will have the greatest exposure to
fluctuating supply voltages caused by distributed generation is on
rural 11 kV circuits. This can be attributed to lower fault levels, long
OHL circuits and limited voltage regulation infrastructure.
3.32 Where generation based solutions can be adopted for voltage control
or overload avoidance, the benefits to DNOs could be measured in
terms of avoided network reinforcement costs. Similarly, such
techniques could also benefit generators in terms of reduced costs of
connection.
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3.41 The sizes and types of generators providing services to the TSO differ
considerably from those predicted for distributed generation.
Typically, transmission connected generation is rated in hundreds of
megawatts, based upon well-proven Rankin, combined cycle or
hydro-electric technology and is connected to either 275 or 400 kV
networks (132 kV in Scotland). The TSO arrangements are further
simplified by the widespread usage of synchronous electrical
generators. In terms of operational interfaces, the TSO needs only to
communicate with a maximum of approximately 400 generators, the
vast majority of which have a 24 hour manned presence.
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4.1 This section explores the features of the most significant ancillary
services, which may be provided by the different forms of distributed
generation.
4.2 The services for which potential arrangements have been explored
are:
• TSO Frequency Response;
• TSO Regulating and Standing Reserve;
• TSO Reactive Power;
• DNO Security of Supply contributions;
• DNO Quality of Supply Services; and
• DNO Voltage and Power Flow Management Services.
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6
The requirement for occasional response services could also expand if intermittent
generators are derogated from compliance with Grid Code requirements regarding fault-
ride-through capabilities.
7
ILEX/UMIST, System Costs of Additional Renewables, a report to the DTI, October
2002
8
Estimates derived as part of this project
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additional wear and tear. Thermal units operate less efficiently when
part-loaded, with an average efficiency loss of about 20%.
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Market-extrapolation 0 3 12 24 39
based estimates
(£M/annum)
4.19 The need for additional occasional response will be driven by the
degree of robustness of wind generation to withstand disturbances,
their exact location on the system, demand and wind conditions and
the ability of the control systems of wind generators to make their
inertia available to the system. Should the new Grid Code proposals
regarding fault-ride-through be adopted, it is unlikely that there will
9
Estimates derived as part of this project.
10
It is a Grid Code requirement that generation will operate in a stable manner during and
after faults on the transmission network (fault-ride-through capability).
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Opportunities for DG
4.21 As discussed above, frequency regulation services are currently
provided by large generators equipped with appropriate governing
systems and customers capable of rapid demand reductions
triggered by low frequency relays. The system operator instructs
individual generators to operate in frequency sensitive mode. If a
generator, operating at full load, is instructed to run in frequency
sensitive mode, the system operator would also need to position the
unit for the delivery of the response service by accepting
corresponding bids in BM in order to de-load the generator.
4.23 From our analysis we conclude it is unlikely that these services would
be supplied regularly by renewable generation, as the opportunity
cost of operating part-loaded would be relatively high due to the
requirement to recover lost ROC revenue.
4.24 It is conceivable that in low load situations, wind farm outputs could
be required and compensated (via the BM), to de-load for system
stability purposes. In such situations, wind farms could then provide
low frequency regulating services.
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inertia effects which would reduce the rate of frequency fall following
losses of generation. Although there are benefits from providing
inertia, the mechanisms for rewarding generators are not yet
established.
4.29 The infrastructure required by the TSO for generators to provide low
frequency response services are mandated for ‘large’ generators by
the Grid Code. Historically, distributed generation has not been fitted
with such infrastructure although retrofit might be possible in some
cases. The rationale to retrofit such infrastructure to distributed
generation would depend on the cost of the equipment and the
likelihood of the service being attractive to the TSO.
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4.34 The monitoring and control requirements for the provision of reserve
services are less onerous than those required for frequency response
owing to the longer timescales for service delivery. The delivery of
reserve is initiated by TSO instruction rather than through continuous
dynamic control loops.
39
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
4.41 When assessing the future role of distributed generation with respect
to the provision of reserve services, it is important to consider how
TSO requirements for such services will change in the future.
4.42 A critical factor influencing the size of the reserve markets in future
will be the level and penetration of intermittent generation. The
magnitude of output fluctuations from intermittent sources will
depend, not only on the level of penetration, but also upon the time
horizon considered. Statistical analysis of wind output fluctuations
over various time horizons can be performed to characterise the
uncertainty of wind output.
4.43 When analysing the need for additional reserve (considering all forms
of reserve together), a time horizon of up to 3 - 4 hours is typically
considered. This is driven by the assumption that time horizons of
more than 3 - 4 hours will involve the start-up of additional units,
which should be within the dynamic capabilities of conventional gas
fired technologies.
11
SCAR, ILEX/UMIST, October 2002
40
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
Installed wind 0 5 10 15 20
capacity (GW)
4.46 The penetration of wind power will increase overall imbalances in the
market as the forecast errors increase. Given one hour Gate Closure,
the volume of additional BM offers for various penetrations of wind
generation are given in Table 8.
Installed wind 0 5 10 15 20
capacity (GW)
12
Estimates derived as part of this project
13
Estimates derived as part of this project
14
Procurement Guidelines Report for 1 May 2002 to 30 April 2003, National Grid, 30 May
2003.
41
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
Installed wind 0 5 10 15 20
capacity (GW)
4.48 Furthermore, it is expected that flexible plant will benefit from the
increased value in the BM or short-term power exchanges, caused by
the fluctuations in wind output creating the imbalance volumes
illustrated in Table .
Opportunities for DG
4.49 DG could in principle contribute to reserve services. A number of DG
technologies could provide synchronised reserve including part-
loaded CCGTs, biomass and wind generation, while standing reserve
could be provided by diesel engines, OCGTs, and in some
circumstances CHP including micro schemes (provided that suitable
communication and control infrastructure were available). Indeed, if
CHP schemes were to provide standing reserve, ‘heat-dump’ facilities
may also be required. The capabilities of each technology are further
discussed in section 5.
42
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
15
It should be noted however that the generation backgrounds take no account of future
plant closures, over and above the Nuclear Magnox sites
43
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
44
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
16
L. Mogridge, ‘Economics of provision of a reactive power/voltage control service by
Generating plant’, paper no. 500-01, CIRGE Symposium on Open Access, Tours, France,
8-12 June 1997.
IEE Colloquium on ‘Economic provision of reactive power for system voltage control’,
London, October, 1996
45
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
4.66 In order to illustrate how DNO demand for reactive power varies with
different levels of DG penetration (over a range of DG power factors),
a simple generic model of the UK distribution was created. The
schematic diagram of the system is shown in Figure 2. The
distribution of load across the network and the assumed peak load
power factors are provided in Table 10.
132/ 33 kV Sub
33 kV c ircuit DG - 33 kV
11 kV c ircuit
DG - 11 kV
Load - 33 kV
11/0.4 kV Sub
Load - 0.4 kV
46
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
11 kV 30% 0.98
33 kV 5% 0.98
Table 11 − The total DNO reactive import [MVAr] from the transmission
network in MVAr at peak for different level penetration of DG and
various power factors (p.f.)
4.69 From the above table we observe that the output from distributed
generation would tend to reduce the amount of reactive power that
will be imported from the transmission network during system peak.
Furthermore, given the assumptions regarding the distribution of
generation across DNO voltage levels, the amount of reactive power
imported will reduce with increased amounts of distributed
17
This exercise is carried out for illustrative purposes rather than for quantifying changes in
DNOs reactive power demand, and hence simplistic assumptions are considered to be
appropriate.
47
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
4.71 The reduction in the import of reactive power from the transmission
network would lead to a corresponding reduction in reactive power
that needs to be produced by conventional generation, and hence this
would reduce TSO expenditure on reactive power. This corresponds
to a benefit provided to the TSO from distributed generation. In order
to examine the materiality of the potential savings in transmission
system operating costs, it is appropriate to consider the unity power
factor scenario.
18
In this high level analysis we ignore potential problems associated with voltage rise
effect.
19
Note for example that a reduction in reactive import of 2,310MVAr can be achieved for
5GW of capacity of distribution generation, giving a saving of 462MVAr/GW.
20
This assumes a price for reactive energy at 1.2£/MVArh.
21
For example, reduction of reactive import would tend to be more valuable in South of the
country, given the magnitude of North to South flows.
48
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
49
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
4.77 All three options are permitted under ER P2/5. For circuit-based
solutions, additional security requirements can easily be determined
through simple power flow studies. In the case of generation-based
solutions, security contributions can be determined by reference to
Table 2 in ER P2/5 although the types of generation contained with
this table are limited. To date, the limited numbers of continuously
operated distributed generators has restricted the provision of such
security contributions and DNOs have largely been reliant upon
network infrastructure based solutions.
50
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
4.81 The simple example set out in Figure 3 illustrates how a DNO would
currently comply with ER P2/5 planning guidance in a 33/11 kV
demand group. As can be seen, the group demand of 100 MW can be
supplied through either distribution circuit such that if one circuit
were to fail, the group demand could be accommodated through the
remaining circuit. In this example, it is not necessary to include any
security contribution from the generator. Indeed, unless the generator
type was specifically recognised in ER P2/5, no security contribution
could be allocated.
P2/5 Example
100MW 100MW G 50 MW
22 In developing Table 2 of P2/5 and its update P2/6, the generation credit to be given was
estimated by comparing the reliability of generation, using expected energy not supplied
(EENS) as a criterion, with the reliability of an equivalent network. This was considered
to be an acceptable approach when P2/5 was developed in the 1970s.
51
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
23
Ron Allan, Goran Strbac, Predrag Djapic and Keith Jarrett, FES Project
DG/CG/0023/00/00, “Developing the P2/6 Methodology”, April 2004.
52
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
53
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
24
R Allen, G Strbac, P Djapic, K Jarret, Developing P2/6 Methodologies, April 2004
54
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
25
It should be noted that there will be other revenue opportunities available to generators,
e.g. energy sales
55
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
4.102 Clearly, the performance of medium and low voltage networks has a
dominant effect on the overall quality of service. The vast majority of
CIs (85%) and CMLs (93%), have their cause in LV and MV networks.
In GB, the average number of CIs is approximately 85 for every 100
customer each year. For CMLs, the average figure is approximately 85
56
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
minutes per annum. These statistics are primarily driven by the radial
design of these networks.
26
T Bopp, G Strbac, R Allen, Economic evaluation, of islanded operation, Power Engineer,
2004.
57
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
(a) (b)
50 MW
27 50 50 50 50
R Billinton and R Allan, ‘Reliability evaluation of Power Systems’, Plenum 1984.
G
58
4.109 The system shown in Figure (b) has the same circuits or
transformers together with a generator (G) having an output capacity
of 50MW, an availability of 40% that is significantly lower than the
availability of the circuits.
4.111 Assuming now that the generator in system (b) can operate in an
island mode, there will be 40% chance that the generator will be
available in the situation when both of these transformers are out of
service. Hence, CML in system (b) will be 0.6x52 = 31 min/year,
achieving a savings of 21min/year, for 25,000 customers. This is
clearly a massive reduction in CMLs experienced by these customers.
It is important to note that a generator with relatively poor availability
can make such a significant contribution to CMLs.
4.112 Assuming further that the DNO has 2,500,000 customers, the overall
reduction of CMLs at the company level will be 0.21 min/year.
Assuming a value £150,000 for each CML saved, the value of this
reduction in CMLs will be in the order of £31,500. For a generator of
50MW, this would amount to £0.63/kW/annum. However, this would
be relatively small part of the required income necessary to cover
investment cost. If we assume that the plant would need to earn
£45/kW/year (typical for OCGT) to cover its capital cost, for a 50MW
generator this would amount to £2.25m per year. If the generator
were renewable, operating at 40% load factor, ROC income (at
£50/MWh) would amount to approximately £9m.
59
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
28
K K Kariuki, R N Allan, “Assessment of customer outage costs due to electric service
interruptions: residential sector”, IEE Proceedings on Generation, Transmission and
Distribution, Vol. 143, No. 2, March 1996.
29
Consumer Expectations of DNOs and Willingness to Pay for Improvements in Service,
Ofgem, June 2004.
30
This also indicates the value of the services that could be available to DG.
31
T Bopp, G Strbac, R Allan, “Economic evaluation of islanding operation”, Power
Engineer, 2004.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
4.118 The most attractive target areas for extracting benefits of islanded
operation would include those networks delivering relatively poor
service quality to high value loads and/or large numbers of
customers. Generally, however, the number of such areas will be
limited, as under IIP, DNOs are investing in their local networks. It
should be noted that the current regulatory framework incentivises
DNOs to invest in network areas providing relatively poor
performance to large numbers of customers.
4.119 Clearly, urban networks represent areas with relatively high load
densities with large numbers of customers although it should be
recognised that these tend to be supplied from interconnected
underground networks rather than OHLs. As cable networks
experience fewer faults than OHL networks, the scope for network
support services is diminished in urban areas. Conversely, rural
32
These figures also indicate the value of the services that could be available to DG for
providing the service (ignoring cost associated with making islanding possible).
33
It should be noted that a recent survey carried out by Ofgem indicated that customers
value service quality more than expected.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
4.120 The recent survey conducted for Ofgem34 indicates that all customers
value the speed of reconnection of power supply after major storms.
Domestic consumers appear to have high expectations regarding
quality of service. Although most consumers believe it is reasonable
for a power cut to occur in major storm, two thirds believe that
distributors should be doing more to reduce the impact of severe
weather on their networks. Consumers expect power to be restored
quickly; only 12% of customers expect restoration times to exceed 24
hours and nearly half expect power to be restored within 3 hours.
This is an area in which DG could potentially offer services in the
longer term. More work would be required to examine and quantify
the potential benefits in this area.
4.121 This suggests that, in the short to medium term, the demand for
islanding services from DG will be limited. Of course, there will be
specific cases in which islanding operation may be a technically and
commercially viable option. Also, it should be recognised that the
demand for higher quality of supply is only likely to increase in the
longer term. This issue is being explored elsewhere under the
Technical Steering Group Workstream 5 programme.
34
Accent Marketing & Research, Consumer Expectations of DNOs and Willingness to Pay
for Improvements in Service, June 2004, 145f/04 (Report to Ofgem).
62
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
Existing experience
4.127 There are a number of examples of autonomous power systems.
There is a significant amount of standby generation installed on a
variety of industrial and commercial sites. As already discussed, this
generation is installed to increase reliability of supply to high value
loads where the public electricity supply system was not seen to be
sufficiently reliable. Generally, in the case of failure in the main
supply system, standby generation is configured to run in various
modes when disconnected from the system, e.g. to supply only
essential services or entire site demands. This demonstrates that the
technical solutions adopted, and the levels of redundancy and
automation specified, will vary according to the value of load that is
being secured.
4.128 Also, there are a number of solutions adopted for small islands but
these are not likely to be directly transferable to a large-scale
implementation in existing distribution networks. A direct example of
islanded power systems supplying very high value loads are found
on ships although such approaches are likely to be cost prohibitive
for a large scale implementation within distribution networks.
63
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
64
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
Figure 8 − Use of DG for voltage support at the end of the feeder due to load
growth
11 kV
Primary
substation
11 kV feeder with
Tee offs
B C
A
D1 D2 D3 D4 D5 D6
Loads
Distributed
generator
4.134 DNOs prefer to use solutions with availability that is close to 100%
primarily because the statutory limits on voltage are deterministic. It
is conceivable that opportunities for DG to provide voltage support in
distribution networks could be enhanced considerably if the
European Voltage Standard (EN-50160)35, describing voltage limits in
statistical terms, were used to assess DNO compliance with statutory
obligations on voltage limits. Because EN-50160 specifies how often
and by how much voltage levels may be exceeded, it would not be
65
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
11 kV
Primary
substation 11 kV feeder with
Tee offs
B
C
A
Voltage
D1 D2 D3 D4 regulator D5 D6
Loads
11 kV
Primary
substation
11 kV feeder with
Tee offs
B C
A
D1 D2 D3 D4 D5 D6
Loads Capacitive
compensation
66
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
Load (MW)
t1 t2 t3 t4 Ti me (hr)
4.138 If DG could be used to support voltage, the cost of the service must
be compared with cost of providing the same service from a voltage
regulator. As the typical cost of an 11kV voltage regulator is in the
region of £20,000/MVAr, the annual cost of such a device is roughly
£1500 assuming a 40-year life and a discount rate of 7.5%. Therefore
the annual cost of voltage support service provided by DG would
have to be equal to or below £1500 per annum36.
4.139 It is important to point out that in this application DG would not itself
require an AVR (automatic voltage regulator) to support voltage, as
the injection of active power along or at the end of a feeder would
cause the voltage to rise. In other words use of DG in this mode takes
advantage of the classic voltage rise effect caused by the output from
the distributed generator.
36
(£1.50/kW assuming a 1 MVA generator).
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
4.141 Under all circumstances it would be expected that the DNO would
remain accountable for voltage performance and retain liability for
any breaches of statutory obligations.
11 kV Primary 11 kV Primary
substation - 1 substation - 2
Voltage
A drop
Loads
Normally
open point
B
Alte
Voltage r
regulator solu native
tion
s
Distributed
generator
68
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
Overloaded
Section B
New 11 kV
11 kV in feed
Primary Normally
A open point
substation
C
D1 D2 D3 D4 D5 D6
Loads
Distributed
generator
4.145 Use of DG for this type of application raises the same issues of
availability as discussed under voltage control services. Therefore
only non-intermittent DG could provide this service. The service
would be required mostly at peak times. The value of the flow control
provided by DG would be determined by assessing alternative
network solutions as stated above. Infrastructure requirements would
consist mainly of half-hourly metering for the generator output and a
means of instructing the generator to start running. The latter could
be achieved through a telephone call or the machines could be
started remotely. Remote control would require appropriate
communication. Existing SCADA based communication would
suffice, thus avoiding any further infrastructure investment
requirements.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
4.147 Suppose the two feeders are rated at 4 MW each and each circuit
carries a load of 3 MW at peak. When the Normally Open Point (NOP)
is closed after taking out the first section of the feeder from
substation 1, the loading on the feeder from substation 2 increases to
6MW, exceeding its rated capacity at peak times. This is also a
security of supply issue that would have to be assessed in the context
of ER P2/5 (or P2/6). In this case, the overload could not be resolved
by load shedding 1 MW, as required for a class B group demand,
since the remaining load of 5MW would still exceed the rating of the
cable (4MW). The options open to the DNO to resolve this problem
would include network reinforcement or contracting a security service
from the DG.
70
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
11 kV Primary 11 kV Primary
substation - 1 substation - 2
3-4 MW 3-4 MW
A
Loads
Normally
open point
B
Distributed
generator
4.152 Because of the drive to reduce CMLs and CIs, DNOs have made
considerable investments in 11kV and 0.4kV networks. A direct result
of this investment is that distribution networks in GB are generally
“over compliant” with planning and security standards. In general, it
will be some time before the investment in MV and LV networks is
outstripped by load growth resulting in non-compliance with security
standards. For the foreseeable future, the scope for DG to provide
security related ancillary services in such situations could be limited,
71
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
4.154 Supplying loads with poor power factors can make the situation
more severe. In order to illustrate this we consider an 11 kV OHL and
an Underground Cable (UC), with the following per-kilometre
characteristics:
4.155 Assuming a load of 4MW (lumped at the end of the circuit or evenly
distributed along the circuit) and allowable voltage drop of 5%, the
maximum transport distance is calculated for various distributions of
the load along the circuit and various power factors. This is presented
in Table 12.
72
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
73
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
4.159 This may be also presented by the increase in demand for capacity of
the plant supplying load with various power factors, as shown in
Table 14.
4.160 From this simple analysis we observe that the power that can be
transported (as % of the MVA capacity of the circuit) is directly
proportional to the power factor of the load supplied and that the
need to transport reactive power considerably increases the capacity
requirements of network infrastructure.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
Central
Generation
Transmission
5.3 For example, large off shore wind farms connected at high voltage
distribution networks (or directly connected to transmission
networks) will have different impacts on system operation, than will
micro generation or biomass. The connection of intermittent and
unpredictable wind generation will increase the demand for
75
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
5.4 This section outlines the capabilities of existing and near commercial
distributed generation technologies to provide different ancillary
services described in section 3. The technologies evaluated include:
• Wind Power (including the latest doubly fed induction generators);
• Biomass, Land Fill Gas and small hydro-electric schemes;
• Large conventional CCGT power stations, > 100 MW;
• Large CHP installations, >30 MW;
• Micro CHP installations, typically rated between 1 – 3 kW; and
• Standby Generation, typically rated between 200 kW & 50 MW.
5.7 As the operating regimes for the different listed types of distributed
generation vary considerably, the list of technologies has been
segregated into renewable and non-renewable sources. It is assumed
that the incentives for renewable generators will remain consistent
over the coming years, i.e. to maximise outputs in the pursuit of ROC
revenues unless more attractive revenue opportunities can be
identified.
5.8 This section focuses on the new services which could be provided by
each technology type. The capabilities and opportunities for both
renewable and non-renewable distributed technologies are
summarised in Table 16 and Table 17 at the end of this Section.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
Wind Power
TSO Frequency Response
5.9 Wind generation technology has historically been based on simple
fixed speed induction generators with very little control over the
dynamic performance of the generator (passive stall turbines). Over
recent years, significant progress has been made regarding the
development of active stall and pitch regulated variable speed wind
turbines. This development is important, both in terms of increased
turbine efficiency but also control capabilities.
37
C Chen, G Strbac, X P Zhang, "Evaluating the impact of plant mix on frequency
regulation requirements”, UPEC 2000, Belfast, Sept 2000.
77
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
38
Grid Code consultation document, June 2004
(http://www.nationalgridinfo.co.uk/grid_code).
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
5.21 For the duration of a fault on the transmission network, the voltages
on the faulted phases are assumed to be zero at the point of fault.
Considering the relatively low transmission circuit impedances, such
fault conditions can cause a large transient voltage depression across
wide network areas. Conventional synchronous generators are
expected to trip only if a permanent fault occurs on the circuit they
are directly connected to. However, other electrically nearby
generators that are connected to healthy circuits will remain
connected and stable after the faulted circuits are disconnected. At
present the transmission system is operated to withstand a maximum
instantaneous in-feed loss of 1320 MW (Sizewell B).
5.23 A study has recently been carried out recently to estimate the
additional system cost that would need to be incurred in order to
accommodate wind generation with various degrees of robustness to
withstand faults on the UK transmission network39. The findings
suggest that the system cost of holding additional response could
increase considerably for wind penetrations above 10GW.
Furthermore, given the indicative cost of providing fault ride through,
it would be cost efficient to invest in equipment and solutions
necessary to enable wind generators to ride-through faults.
39
T Bopp, G Strbac, Value of fault ride through capability of wind farms in the UK, a report
to the DTI, August 2004.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
5.27 This situation would typically occur in instances where the group
demand increased above 12MW. Instead of automating, manual
switching could be retained and intermittent DG relied on for the time
period between 15 min and up to 3 hr. Therefore, the worst-case
scenario is to adopt a value of 3 hours for Tm.
40
These times were recommended by Work Stream 3 of the Technical Steering Group of
DGCG.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
Biomass
5.33 Biomass is an example of a base-load, predictable, renewable
generation technologies, of medium size. Compared to intermittent
wind, integration of biomass plant is likely to reduce system
operation and development cost. Even with high penetrations,
biomass would be widely distributed around the country and hence it
is likely to reduce flows in high voltage distribution and transmission
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
5.34 Biomass can comprise a wide range of technologies and fuel sources.
One of the most likely forms of biomass generation would be based
on energy crop incineration. From an electricity system perspective,
these are all expected to exhibit similar characteristics.
5.36 Size of biomass plant will be limited by the ability to transport and
store large volumes of low energy-density feedstock. It is not
expected that the biomass plant will exceed 30MW-50MW sizes.
Hence, smaller schemes are likely to be connected to 11kV while
larger to 33kV.
TSO services
5.38 In principle, large biomass schemes will be able to contribute to
system frequency regulation, similarly to conventional large steam
sets. However, in order for the plant to provide low frequency
response the generator would need to run part-loaded. Given that the
opportunity cost of operating part-loaded in frequency sensitive
mode would be relatively high, due to the losses of ROC revenue (in
addition to reduced energy sales and losses in efficiency of
operation), this is unlikely to be attractive to either plant or the
system operator42. It is even less likely that this plant would provide
synchronous reserve due to smaller value of this service.
41
SCAR, ILEX/UMIST, October 2002.
42
In order to position the plant in frequency sensitive mode, the system operator will need
to de-load it and compensate the plant operator opportunity cost.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
5.39 On the other hand, there is scope for the provision of high frequency
response. As indicated earlier however, the value of this service is not
very significant43.
DNO services
5.41 Existing biomass plant has a relatively high technical availability and
hence the capability to contribute to provision of security related
services would be significant, provided that there are no restrictions
in fuel availability. However, the need for such services is likely to be
location specific and depend on the strength of local network. The
evaluation of security services is discussed in Section 6.
Landfill gas
5.43 Landfill gas generation would use synchronous generation
technology. The plant is likely to operate as a base load generator
running at full output, provided that there are not limits of gas
availability.
5.44 Typically, the size of the majority of landfill gas sites in the range 0.5 –
1.5MW. Some larger sites could be above 1.5MW, but usually these
comprise multiple sets. Landfill gas would primarily be connected to
11kV.
TSO services
5.45 Landfill gas units are too small for provision of TSO frequency
regulation services while provision of standing reserve is not feasible
43
With large penetration of wind however, the need for downwards regulation is likely to
increase and this increase in volume of the service may also lead to increase in value of
the service. However, it is unlikely that the provision of this service would lead to
significant financial benefits.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
DNO services
5.46 Availability of landfill gas generation is relatively high, although the
performance of individual sites may vary and will be primarily driven
by gas availability. Landfill gas plant will generally be able to
contribute significantly to provision of network security service. The
importance of this contribution will be driven by the strength of the
local network.
Hydro generation
5.48 Small and medium sized hydro schemes without significant storage
capacity are likely to be characterised by considerable variations in
available water flow and hence output, particularly if the catchment
area is on rocky or shallow soil. Therefore, uneven rainfall will lead to
a variable resource. This generation would be normally classified as
intermittent, similar to wind.
5.49 On the other hand, larger schemes would normally have some
storage capabilities.
TSO Services
5.51 Although in principle, medium size hydro scheme based on
synchronous generation would be able to provide low frequency
response, this is unlikely to be sufficiently attractive to schemes
without storage, due to relatively high opportunity cost associated
with spilling water and cost of lost ROC revenue. In addition to having
installed governor control equipment, remote real time monitoring
system will be required, which would contribute to increase of service
provision cost.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
DNO services
5.54 Similar to wind generation, intermittent hydro generation could
contribute to security provided that the output can remain at or above
a certain required level for some minimum period of time. For
schemes examined44 the persistence of small hydro plant was found
to be more significant than that of wind and hence there is more
scope for hydro to contribute to contribution to network security. This
implies that hydro generation should be able to contribute to security
not only during the period in which network transfer capacity is being
switched in following a circuit outage, but also during repair and
maintenance activities, as the contribution of hydro plant is likely to
last for days.
5.55 Larger hydro with storage could make a contribution not only to
network security, but also to service quality, as much of this plant is
equipped with AVR and governor facilities necessary for islanding
operation, including re-synchronisation equipment45. Such services
would be generally of high value to DNOs, particularly in cases if
interruptions to large number of customers may be avoided.
44
P2/6 Data Collection, Power Planning Associates, April 2004.
45
This is particularly the case with medium size hydro schemes developed prior to privatisation.
86
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
5.60 The ability to control reactive power and the proximity to the
transmission network is likely to be useful to the TSO for
transmission voltage control purposes. CCGT aleady participate in
this market.
5.62 Given that CCGT utilise synchronous generators and will be equipped
with automatic voltage regulators, such plant could contribute to
voltage control in the local network.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
Stack
Combustion
Chambers
Compressor Turbine
S
T
Air in
Heat Recovery
Gas
Supply
Steam Generator
S
Turbi ne
Process
Steam
5.65 Often CHP plants are specified such that the gas turbine runs at full
load and thus provides a base load of heat input into the HRSG and
supplemental burners are used to meet peak process steam
requirements. Such arrangements optimise the efficiency of the CHP
scheme and simplify the control arrangements as many installations
are controlled with reference to HRSG inlet temperatures.
5.67 During the 1990s there was a trend towards ‘over-sizing’ the
electricity generating infrastructure on some large CHP schemes in
response to advantageous trading arrangements in wholesale
electricity markets. Such initiatives sacrifice overall thermal efficiency
in return for an increased ability to export power.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
5.69 Another feature of some large CHP schemes is the ability to continue
providing heat to the industrial process in situation where the gas
turbine has been taken out of service. Again, supplementary burners
must be utilised to meet the process heat requirement in such
circumstances whilst electrical loads can be supplied from the local
distribution network.
5.74 Whether CHP operators choose to provide such services will depend
upon commercial priorities. Some operators with high value heat and
electrical loads may be unwilling to provide network support services
during times of system stress (e.g. post fault), preferring to operate in
an islanded mode until any network constraints have been removed
from the system, thereby limiting their risk exposure.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
5.79 The largest CHP schemes, i.e. those over 100 MW, will be required to
comply with Grid Code requirements so should already be capable of
providing frequency response services to the TSO.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
5.84 The largest CHP schemes are likely to have direct interfaces with the
BM via dedicated BMUs so the submission of bids and offers should
be straightforward. For smaller schemes, registered in settlement
through a supplier, there would be a requirement for the supplier to
submit bids and offers on behalf of the CHP operator, inevitably
complicating service delivery. In order that smaller operators could
participate in the BM, it may be necessary for suppliers to aggregate
the capabilities of many CHP operators to offer meaningful reserve
volumes to the TSO.
5.85 Overall, large CHP does not appear a natural candidate to provide
reserve services. The complexity of service delivery from such highly
specialised plant, coupled with settlement complications mean that
regulating reserve will continue to be provided by large flexible
power station units with dedicated BM interfaces. Any opportunities
which arise are likely to be linked to the largest and most flexible CHP
schemes.
5.87 Given that large CHP may be equipped with AVRs, such plant could
contribute to voltage control on the local network. The ability to
control reactive power may enable scheme developers to connect the
plant to weak distribution networks and avoid network reinforcement
costs. Furthermore, CHP could potentially supply some local reactive
requirements, thus increasing the transport capabilities of the
existing circuits.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
5.88 The availability of this CHP support would need to be relatively high
for DNO to consider contributions. As has already been discussed,
the CHP operators own concerns regarding site security of supply
may take prudence to the extent the generation will be disconnected
from distribution networks during network disturbances.
Micro-CHP capabilities
5.89 This section discusses the potential for micro CHP to provide ancillary
services and outlines the infrastructure that might also be required.
High-level estimates are provided regarding the costs of the
infrastructure.
5.91 Taken individually, micro CHP cannot meaningfully provide any of the
ancillary services evaluated as part of this work. However when
aggregated together, micro CHP could theoretically provide some
service capabilities. Therefore, a condition precedent for micro CHP to
provide services to either the TSO or DNOs, is that the outputs from
units would need to be aggregated together.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
Standing Reserve
5.97 Assuming generation from many micro CHP installations could be
initiated simultaneously, it should be possible for micro CHP to also
contribute towards standing reserve. The infrastructure required to
control large numbers of micro CHP installations would be very
similar to that required for aggregating outputs for DNO security
contributions.
5.98 Assuming both the DNO and TSO required aggregate services from
micro CHP installations, any infrastructure costs could be shared. As
the DNO is likely to require more locational control than the TSO, it
would make sense for the DNO to act as aggregator (however this
would have other implications as explored in Section 6).
Communication
5.100 The objective of remote aggregation is to enable a group of micro
CHP units to be controlled centrally making communication the
46
Contribution of aggregated (controlled) micro-CHP is not considered in the proposed ER
P2/6
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
5.103 The simplest form would be via the telephone using the PSTN or
mobile services.
TSO
Single instruction
to aggregator
multiple
instructions to Aggregator
micro CHP units
5.104 The communication from the aggregator to the micro CHP units is
more challenging. For this application two-way communication is
essential for:
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
5.106 The RTS system in the UK uses BBC 198kHz transmitters (Radio 4
long wave) to regulate the charging of storage heaters. Because RTS
is unidirectional and tends to have a very low bandwidth it is not
suitable for control and monitoring of micro CHP.
5.109 Ripple control is the best-known form of mains signalling and it has
been deployed for many years to control water heaters as part of
demand side management. The high cost associated with these
schemes prevents their use on a large scale. However, transmission
across the mains wiring within the home works well as a Local Area
Network (LAN) technology and various proprietary techniques are in
use.
5.110 The current mobile phone technology, General System for Mobile
(GSM) and its successor Universal Mobile Telecommunications
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
5.111 The particular features of GSM that are well suited to this application
are the Short Message Services (SMS). A detailed description of
these services has been discussed by Boait 200247. In summary SMS
services comprise SMS Point to Point (SMS-PP), text messaging
service, and Cell Broadcast (SMS-CB). Message rates of 2,500 per
second can be processed by current high performance SMS systems.
This would readily support, for example, a daily status report from
millions of generators to the central database.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
5.121 The heating operates on a duty cycle determined by the heat loss rate
of the house, which in turn depends on the difference between the
thermostat setting and the external air temperature.
5.122 Dual heat supply functions (space and water heating) enhance the
capability and duration of the micro CHP unit. Remember that for
standing reserve the TSO’s instructed level of output should be
provided within 20 minutes and last for at least 20 minutes with the
recovery period being no more than 20 hours.
Cost estimates
5.123 It is reported by Boait, that depending on the extent to which cell
broadcast is taken up by PTOs for other applications, it should be
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
Technical
5.125 It is envisaged that the collective output of a group of micro CHP
units requested to generate power (for reserve or security services)
from cold will start high (but less 100%) and decay as shown in Figure
18.
% MW
Response
100%
95% Average
response
over time
Time (minutes)
T1 T2 T3
5.126 The initial power output will in general fall below 100% as some units
may fail to start or may already be running. In general units will run
for periods ranging 30 to 60 minutes and switch off depending on
maximum temperature settings for water heaters and space heating.
After a period of cooling off, the units would restart until the
temperature constraints again force them to switch off. In order to
ensure that a certain level of response is sustained the DNO, acting as
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
aggregator, would have to organise the micro CHP units into groups
with staggered starting times T1, T2 and T3 as shown in Figure 18.
5.127 The response of micro CHP units will vary seasonally and with time
of day. In winter for example it would be expected that most units
would already be running during the day to keep homes warm
whereas at 3:00 AM in the morning most units would be expected to
be off as people will be asleep. In summer, all space heating may be
switched off leaving only water heating. The duration the unit is likely
to be able to run will be significantly shorter on a hot summer
afternoon than on cold winter morning. In addition, customers will
retain overall control of the heating equipment within the home and
may override DNO instructions, thus reducing the availability of the
service.
5.128 The data needed to derive typical micro CHP group response curves
shown in Figure 18 would be gathered over time.
Commercial
5.129 On the commercial side, suppliers have contracts with final
customers and with DNOs. DNOs also have contracts with TSOs. In
operation of the system the DNO who has no direct contracts with the
final customers will effectively issue instructions to operate their CHP
units. As there are commercial implications each time a DNO (or TSO
via the DNO) calls upon a customer to provide either standing reserve
or security related services, the DNO would have to notify suppliers
as well. Therefore suppliers would also have to be equipped with SIM
cards to enable them to receive notification via SMS each time their
customers are called upon to supply a service.
5.130 The cost implications to the customer and hence the compensation
they would expect to receive for service delivery would vary
seasonally and with time of day. The cost to the customer of
providing the service is composed of the fuel cost (gas) incurred less
the income earned from energy sales for the duration of service
delivery. The economic justification for micro CHP is based upon
customers’ requirements for heat and electricity is a by-product of the
heating process. Therefore if the customer has no use for the heat
generated during the time the service is being delivered they would
seek full cost recovery (assuming the micro CHP unit could somehow
dump heat). Conversely, if the heat could actually be used within the
house, then the cost would be lower. It may not be straightforward to
determine whether or not the heat was needed at the time the service
was called upon. It might be simpler to simply compensate the
customer assuming the heat was surplus to their requirements.
Clearly this is a subject for further debate.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
5.131 The other interesting issue relates to performance when called upon
to provide the service. It is to be expected that the performance of
different customers when called upon to provide a service will vary
for a whole host of reasons. For example a customer may not
respond because their micro CHP unit may already be running or
there could be failure in communication.
Standby Generation
5.132 Diesel generators are frequently used to provide standby generation
for industrial and commercial operations. They vary in size but tend
to be less than 5MVA and are normally connected at 11kV or 33kV.
Range of services
5.133 Most diesel sets use synchronous generators fitted with a droop
governor and an AVR as they are required to operate as stand alone
units. In theory therefore diesel generator sets could provide
frequency response and reactive power services. However because
the machines are normally on standby, they cannot provide
frequency response services as these services can only be provided
by part-loaded machines that are already running and synchronised
to the grid.
5.134 Standby diesel is more likely to provide standing reserve to TSOs and
security (and perhaps niche service quality related services to DNOs).
Depending on size, some aggregation may be required to realise
these services. The infrastructure requirements to facilitate
participation of standby diesels in standing reserve, security and
service quality markets are discussed below.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
5.137 The costs of the existing arrangements are high and not necessarily
scaleable. The economics of such service provision is justified by the
size of standby generators utilised. To see a step change in the extent
of aggregation undertaken, lower cost control infrastructure would
need to be developed.
Synchronising facilities
5.139 Synchronising two separate alternating current systems is a well-
established practice. Three conditions must be fulfilled before the two
systems can be connected; 1) the phase angle, 2) frequency and 3)
voltage magnitude differences between the two systems must be
within acceptable tolerances. This is to reduce the amount of current
flow when the two systems are connected, hence avoiding any
damage to transformers and other equipment such as distributed
generation.
5.140 There are several existing devices that are used to check
synchronism before two ac systems are connected to together. Some
of the common ones are synchroscope, phase angle voltmeter,
synchronising check relay and synchronising relay that checks the
difference in phase angle, frequency and voltage between two
systems before closing the circuit breaker to connect the two
systems.
5.141 The synchroscope and phase angle voltmeter are used in the
situations where circuit breaker is closed manually. The
synchronising check relay is used to provide an electrical interlock in
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
Protection
5.144 When a standby diesel unit is to be operated in parallel with the grid
it is important to ensure the machine is equipped with appropriate
protection to protect it from the grid, which is a very large source of
fault current. Therefore basic generator protection including in
particular reverse power, negative phase sequence, over-current and
earth fault would have to be installed. Again these protection devices
are standard and can be installed at relatively low cost.
Ancillary
Ancillary Wind
Wind Wind
Wind Land
LandFill
Fill
Biomass
Biomass Solar
SolarPV
PV Hydro
Hydro
Service
Service non-DFIG
non-DFIG DFIG*
DFIG* Gas
Gas
Size
Size <<50
50MW
MW >50
>50MW
MW 1–100MW
1–100MW 11––10MW
10MW <100
<100kW
kW >>1MW
1MW
Frequency
Frequency HF
HFonly
only HF
HFonly
only HF
HFonly
only
Reserve
Reserve Possible
Possible Possible
Possible Possible
Possible Possible
Possible Possible
Possible Possible
Possible
Reactive
Reactive
Network
Network Limited
Limited
Support
Support
Future
Future Future
Future Future
Future
Black
BlackStart
Start islanding?
islanding? islanding?
islanding? islanding?
islanding?
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
Service recipients
6.2 The primary recipients for the selected ancillary services will be either
the TSO or individual DNOs.
6.3 For the purpose of this work, TSO frequency response and TSO
reserve have been regarded as non-locational national services. By
contrast, TSO reactive power and all the DNO-centric services have
been treated as being highly locational, i.e. the position of the service
provider on the recipients network has been regarded as critical.
Service providers
6.4 Consistent with the scope of this work, the parties evaluated as
potential providers of the above services have been the various forms
of distributed generation rather than demand side participation
(which have been specifically excluded from this study). As
distributed generation is a broad term encompassing many
generating types, the work has focused on existing and near
commercial DG technologies.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
6.9 The primary driver for indirect arrangements relates to generator size.
In many instances, individual small generators will be unable to
provide sufficient output to satisfy recipient requirements. In such
cases, it may be possible for small generators to contribute
collectively by aggregating their individual outputs to create a useful
of level service for a recipient. Aggregation activities may be suited to
the following range of different market participants:
• suppliers;
• DNOs;
• customers (owning a number of distributed generators); and
• 3rd party operators.
6.10 In the case of services being provided to the TSO, especially response
and reserve, aggregation could remove TSO operational constraints
regarding the initiation of a service from multiple generators. From a
system operation perspective, it is unlikely that the TSO will want to
maintain potentially thousands of interfaces with small individual
generators, especially in cases where service delivery cannot be
guaranteed.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
6.15 In the absence of exemptions, all large and grid connected generators
(as outlined in paragraph 2.5) are required to comply with the Grid
Code, the Connection and Use of System Code (CUSC) and the
Balancing and Settlement Code (BSC). Operationally, such generators
are required to trade and settle their outputs through a dedicated
generation BMU account under NETA.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
6.21 Whilst such indirect trading mechanisms, via supplier BMUs, are
perhaps not ideal for ancillary service provision, these arrangements
do not preclude the development of such services in the future. Also
it should be recognised that these arrangements do provide
generators with a cost effective means of trading their main energy
outputs.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
6.24 The net effect of this mechanism is to enhance the value of renewable
generation to a current value of approximately £52/MWh. The high
value of renewable electricity exports has a significant impact on the
revenues of renewable generators. These cash flows are evaluated in
Section 7.
48
This situation may be somewhat ameliorated by the move to ‘shallowish’ DG connection
charging regime as proposed from 1 April 2005.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
Use of system
6.31 Distribution Use of System Agreements (UoSAs) are bilateral
contracts predominantly between DNOs and suppliers (the primary
users distribution systems). These agreements are important to DNOs
as the bulk of their regulatory income is derived through Distribution
Use of System (DUoS) charges.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
Market Opportunities
6.37 A pre-requisite for markets or market mechanisms to develop, is the
requirement for multiple providers to be capable of providing each
service or multiple buyers requiring particular services.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
6.48 Difficulties can arise with bilateral arrangements where one party,
either the buyer or the seller, has disproportionate power in
111
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
6.53 Reasons for the unpopularity of such approaches include the burden
upon administrators, the requirement for third party intervention in
market operations (which can influence impartiality), a lack of
flexibility in terms of service provision and the inability to capture and
reward enhanced services. Consequently, such approaches are often
only adopted as a last resort.
Contractual options
6.54 For each potential distribution level ancillary service, there will be a
variety of possible contracting options. As has already been outlined
in the review of TSO ancillary services, a range of contractual
structures already exist. These include:
• mandatory and commercial arrangements for frequency response;
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
6.56 For services to DNOs, similar contractual forms could also be adopted
although it appears likely that for network support related services,
DNOs will be keen to ensure service delivery which would thus favour
firm and committed approaches.
Payment arrangements
6.60 There are a variety of different remuneration arrangements, which
could be utilised to reward generators for the provision of services to
DNOs and TSOs. These include:
• Flat fees: These represent a simple arrangement whereby the
generator would receive payments irrespective of season, time of
day, running status, delivery requirement and quantities delivered.
• Time based charges: These are effectively a variant of the flat fee
approach but time capped according to windows within which the
recipient requires the service.
• Capacity based charges: Capacity based arrangements can be
used to secure a proportion of a generator’s output where the
provider does not necessarily require the full generation
capability.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
6.61 It should be noted that such approaches are not mutually exclusive,
i.e. combinations of the above approaches could be implemented.
The advantages and disadvantages of each approach are outlined in
greater detail in Section 7.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
6.76 Whilst the latter option is currently a minor feature of the ancillary
services market for standing reserve, and suppliers tolerate the
related imbalance implications for their demand accounts, it is not
clear that this arrangement is robust to large-scale expansion.
6.77 The contractual options for aggregation are illustrated in Figure 19.
As can be seen, a variety of aggregation contractual arrangements
are possible depending upon which parties undertake the
aggregation activity. The right hand arrangement could be utilised in
situations where the DNO was procuring other services from the
same portfolio of distributed generators, e.g. security from micro-
CHP. Also similar arrangements could evolve if the DNO (or any other
party) had invested in a communication infrastructure between a
central point and customer premises, e.g. smart metering initiatives.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
TSO
Supplier
Generator
Contract
6.81 As such network services are all highly locational in nature, it is likely
that bilateral contractual arrangements will evolve before there is
sufficient DG penetration to enable more market-based approaches.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
6.93 In the event that, under normal operating conditions, the generator
would not be able to provide sufficient contribution, the DNO may
wish to explore whether the generator’s contribution could be
enhanced to meet the desired requirement.
6.94 In both instances, the DNO and the generator would enter into a
commercial contract regarding the provision of a security
contribution. It should be noted that the existing regulatory treatment
for procuring network security does not accommodate such
arrangements.
6.97 The valuation methodology would also need to address the following
critical questions:
• How much security contribution would the DNO procure?
• For what duration will the DNO require the contribution?
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
6.106 Taken one step further, DNOs will, no doubt, want to evaluate the
implications of non-delivery, which could lead to the prospect of
penalty clauses within generator contracts.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
49
For wind generation, the probability of delivery of the allocated contribution is about
40%
122
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
6.111 The penalty for non-delivery should not be linked to DNO exposures
associated with increased CMLs and CIs caused by generator
unavailability. This is because there is no direct link between the
contribution that the generator makes to network security in the
context of ER P2/5 and actual network performance as measured by
CMLs and CIs50. Clearly the contribution to network security and the
contribution to network performance are two different matters51.
6.114 Taken to the extreme, a DNO with a network security shortfall may be
aware of a generator on their network with an operating regime that
would resolve the problem. In such a circumstance, the DNO might
avoid declaring their security requirement whilst utilising the
generator’s contribution for compliance purposes, and the generator
would remain unaware.
50
It should be remembered that ER P2/5 does not deal with the question of outage
frequency but is only concerned with the maximum restoration times.
51
The recent update to ER P2/5 was developed to allow a simple and straightforward
extension to the existing ER P2/5 Table 2, such that contributions from modern
generation technologies could be recognised in the short term. The approach adopted was
consistent with the original ER P2/5 methodology and hence unrelated to CIs & CMLs.
123
ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
6.121 Ancillary services to the TSO from distributed resources will most
easily be accommodated from passive networks. This is because,
irrespective of operating status, the distributed generator should be
able to respond to TSO instructions if it is within the generators’
capability. However, on active networks there is an increased
likelihood that due to distribution network constraints, certain modes
of operation may not be permitted by the DNO. Consequently there
could be increased delivery uncertainty regarding TSO ancillary
services originating from distributed generators on active networks.
6.122 Conversely, there will be most scope for ancillary services to DNOs
from distributed generators connected to active networks. This
relates to the reliance on fewer primary assets. In the case of a
passive network, it is unlikely that the DNO will require as many
services from distributed generators, as will be the case in an actively
managed scenario. Also the availability of more sophisticated
secondary infrastructure on active networks will facilitate more
generator participation.
Hierarchy of services
6.124 In instances where a distributed generator is providing multiple
services to both the TSO and DNO, it is useful to determine which
service takes precedence in the event of conflicting instructions.
Examples of such services could be:
• Local Voltage Support;
• DNO Network Security; and
• frequency response and reserve services.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
6.127 Such hierarchies will influence the types of contract that the
distributed generator selects to enter. In the above example, the
generator would be unlikely to enter a firm frequency response or
reserve contract.
6.131 On an actively managed network, the DNO would require details of the
generators full operating range and the nature of any services to be
provided. The DNO would then design the network to prevent unsafe
situations arising. This would merit careful DNO consideration during
the design phase. In the event of a TSO instruction to change generator
output, the active management control arrangements would
automatically react to prevent undesirable outcomes (e.g. voltage rise)
so again the DNO would not need to be informed of each TSO
instruction. The DNO’s initial information requirements may become
more detailed in such situations.
6.132 A complication for the generator in such situations is that the active
network could intervene and prevent service delivery to the TSO. Such
instances would need to be addressed within contracts. Inevitably, any
delivery uncertainty would undermine service value.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
6.134 Critical to the impact on supplier imbalance are the timescales within
which service delivery is required following initiation (the key timing
consideration being NETA Gate Closure). In the event that a supplier
could be provided with sufficient notification of an ancillary service
delivery instruction, the supplier could accommodate the proposed
change in output before Gate Closure. Should ancillary service
instructions be issued within an hour of Gate Closure, the supplier will
inevitably have an increased imbalance exposure.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
7. IMPACT ASSESSMENT
7.1 This section considers the impacts upon different market participants
involved in the supply and delivery of ancillary service from
distributed generators.
Frequency response
7.5 As the only new distributed technology with a consistent capability to
provide low frequency response services is wind power utilising
Doubly Fed Induction Generator (DFIG) technology, it is most
appropriate to consider the impact of frequency response in this
context.
7.6 As has already been discussed, the requirement for wind power, or
indeed any renewable source, to provide frequency response will be
comparatively rare due to the part loading requirements and the
costs associated with losses of ROC revenue.
7.7 The only time that such generators are likely to enter frequency
responsive mode is during periods of low national demand (summer
nights) when renewable output may need to be curtailed.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
Standing reserve
7.12 In the standing reserve market at present, the most flexible plant can
earn approximately £23/kW52 per annum from standing reserve
services. It should be recognised that the costs of entry for the lowest
cost OCGT plant are in excess of £45/kW53 per annum. Consequently,
the standing reserve market is not attracting new entry at present.
7.13 However, this does not imply that the value of standing reserve will
remain these levels in the future. With the increased deployment of
intermittent generation, the value of standing reserve could increase
significantly over the next decade although would not exceed the cost
of new entry but this does not imply that the provision of such
services would be unattractive to existing standby generation.
52
Market participant figure.
53
ILEX data.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
device. The fact that not all such devices would be able to respond to
TSO instructions (some would be switched off, already generating or
heat limited) would result in a considerably lower value for the
service. Should the most effective provider currently be able to earn
£23/kW per annum, the uncertainties associated with the delivery and
the duration of service from micro-CHP could reduce this figure
potentially below £7/kW. This figure is gross of any fee paid to the
aggregator.
7.16 At such levels, the service would not cover the costs of the
infrastructure unless the communication infrastructure could be used
to facilitate other services such as smart metering. Even if the value
of the service were to triple, it is difficult to envisage an income of an
extra £20 per annum (before infrastructure costs) influencing a
customer’s selection of heating system.
Option A
X
20 20 G
Option C
Option B
X X X
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
7.18 The range of annualised cost estimates54 for each option is included
in Table 19 below. As can been seen, all of the network solutions are
of lower cost than the generation solution. Whilst the least cost
option is to invest in 5 MW of transfer capacity (assuming the circuit
to be OHL), the simple substation reinforcement delivers 20 MW of
security contribution for less than twice the cost of the transfer
capacity option. The annualised cost of the generation solution is
more than 20 times that of the cheapest network solution. It can also
be seen that the most complicated network reinforcement (involving
a new 33 kV cable) approaches the cost of a generator solution
although it delivers 20 MW rather than the 5MW from the generator.
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7.19 Assuming the DNO would pay the generator its avoided costs of
network reinforcement, such payments would range between £10k
and £120k (£1/kW - £12/kW) per annum depending upon the
complexity of the network solution. It is anticipated that most
reinforcements would be at the lower end of this range.
7.21 This analysis also suggests that in rare instances, where the costs of
network solutions are high the value of generation contributions
could increase significantly.
56
ILEX projections.
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7.27 In the longer term (post 2015), with sufficient distributed generators
connected within individual load groups, there may be increased
opportunities for DG to provide voltage and flow management
services, owing to increase in aggregate availability of generators.
Further work could be undertaken to evaluate such opportunities.
Impact on DNOs
7.28 In the short to medium term, the ability of DNOs to source network
security services from distributed generators will not fundamentally
change the way in which DNOs operate their networks.
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Impact on Suppliers
7.39 As the output from distributed generation is largely purchased by
suppliers and settled through supplier demand accounts within
NETA, suppliers must ensure they understand generator operating
regimes and whether generator operation is likely to be affected by
instructions to provide ancillary services. It should be noted that both
NETA and the Supplier-Hub arrangements can accommodate TSO
and DNO ancillary service provision from DG.
7.42 Obviously, a simple way for such exposures to be managed would for
the supplier to act as the aggregator between the TSO (or DNO) and
the generator. Alternatively, suppliers would need to ensure that they
were notified in the event of ancillary service instructions being
issued to generators with whom they had contracts. It will be
interesting to observe whether large suppliers, owned by vertically
integrated parents, choose to offer such aggregation services.
7.43 One other impact upon suppliers relates to the supplier’s renewable
obligation targets. It is conceivable that a conflict could arise between
a distributed generator willing to provide ancillary services through
part load operation and a supplier incentivised to maximise
renewable purchases. Any such conflicts would need to be managed
by the affected parties.
Impact on Aggregators
7.44 New aggregation opportunities could emerge with increased
numbers of distributed generators. In addition to the existing
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
7.45 At the TSO level, whilst the current infrastructure arrangements may
not facilitate the participation of small individual distributed
generators, new infrastructure may become available, thus extending
participation. It might be beneficial for the TSO and aggregators to
explore how such arrangements could be structured.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
8.2 Although all of these services were explored in detail, only TSO
frequency response, TSO regulating and standing reserve and DNO
security of supply contributions represent realistic opportunities for
distributed generators in the short or medium term.
8.3 CCGT and DFIG wind generators were the most promising
technologies for the provision of TSO frequency response services
whereas CCGTs, diesel standby generators and perhaps micro CHP
were best placed to provide reserve services.
8.4 It was found that, to varying degrees, DNO security of supply services
could be provided by most existing distributed generation
technologies.
8.5 As the majority of existing DG has been installed for electricity supply
purposes, very few generators are equipped with the infrastructure
necessary to provide ancillary services. Such infrastructure includes
governors, automatic voltage regulators, resynchronisation facilities
and appropriate protection, monitoring and communication facilities.
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
8.9 The analysis undertaken suggests that value of the most feasible
ancillary services will be relatively low. Consequently, such services
will represent incremental revenue opportunities for DG. In general, it
would not be possible to develop business cases for investing in DG
solely on the basis of ancillary service income.
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Recommendations
8.20 The extent of opportunities on DNO networks will largely relate to
load growth and asset replacement profiles. Whilst it has not been
possible to quantify the relative magnitudes of these opportunities
within this project, such information will be critical to evaluating the
market potential for network security services under alternative future
development scenarios and should be explored further.
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Within 3 hours
(Group Demand minus 1
Over 1 MW to 12 MW)
B NIL
MW
In repair time (Group
Demand)
Within 15 minutes
(Smaller of Group
Demand minus 12 MW
Over 12 MW to
C and 2/3 Group Demand) NIL
60 MW
Within 3 hours (Group
Demand)
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
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The authors would like to thank the following individuals for their
input to this study:
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ILEX
Director
Stephen Andrews
Date 20 September
2004
Project Manager
David Porter
Date 20 September
2004
Author
David Porter
Date 20 September
2004
Quality Control
Beverly King
Date 20 September
2004
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ANCILLARY SERVICE PROVISION FROM DISTRIBUTED GENERATION
149
ILEX Energy Consulting Tel: +44 (0)1865 722660
King Charles House Fax: +44 (0)1865 722988
Park End Street E-mail: energy.consult@ilexenergy.com
Oxford, OX1 1JD www.ilexenergy.com
UK www.ewe.ch
ILEX Energy Consulting Ltd, King Charles House, Park End Street, Oxford OX1 1JD. Registered in England No. 2573801
ILEX is a member of Electrowatt-Ekono, part of the Jaakko Pöyry Group