Ancillary Services

1. Ancillary Services
Accounting & Settlement
Mechanisms
1
H K Chawla
DGM, NRLDC

2. Regulatory Provisions


•Maiden definition in Indian context in the CERC (Indian Electricity Grid Code),
Regulations, 2010
“Ancillary services in power system (or grid) operation means services necessary
to support the power system (or grid) operation in maintaining power quality,
reliability and security of the grid, e.g active power support for load following,
reactive power support, black start etc”
Clause 11(1) (b) of the amended CERC UI Regulations, 2009
(Application of Fund Collected through UI)
“Providing ancillary services including but not limited to ‘load generation
balancing’ during low grid frequency as identified by the Regional Load
Despatch Centre, in accordance with the procedure prepared by it, to ensure
grid security and safety:”
•NLDC prepared the approach paper & submitted it to CERC


2

3. Present Scenario

•STOA Limitations
Fragmented capacity
Match Making

•Unscheduled Interchange (UI): Balancing Mechanism
for inadvertent interchange
Limits on UI Volume
Price Uncertainty
Frequent Start-Stop operation

4. •Impact
- Frequent Unplanned Load shedding
- Value of load lost.
•Need for
–Flexibility and customization
–Harnessing all available generation resources before load
shedding

5. Power Supply Position (Feb’ 2013)
Source: CEA Monthly Report
Region Energy
Requirement
(MU)
Deficit % Peak
Demand
(MW)
Deficit %
Northern
19,967 -8.0 36,923 -9.3
Western
21,456 -1.9 37,343 -2.6
Southern
22,544 -16.5 35,901 -13.1
Eastern
8,133 -4.6 14,338 -5.3
North
Eastern
877 -6.7 1,934 -4.6
All India
72,977 -8.4 126,439 -7.9

6. 48.7
48.9
49.1
49.3
49.5
49.7
49.9
50.1
50.3
50.5
50.7
0 10 20 30 40 50 60 70 80 90 100
% of Time
FREQ(In Hz)
FREQUENCY DURATION CURVE APR'12 TO JULY'12
Scroll
Zoom
For Dated 1-4-2012 to 31-7-2012
FREQUENCY DURATION CURVE APR'12 TO JULY'12
Frequency Below 49.7 Hz for 39% of Time.

7. Why Ancillary Services for India ?

•Reliability , Security, stability and Power quality
•Restructured Power Systems
•Lack of adequate Primary, Secondary and Tertiary
Response
Lack of Adequate Reserves
•Loose Power Pools
•Absence of Tight Frequency Control
7

8. Primary, Secondary and Tertiary
Responses
Tertiary Secondary Primary

9. Targets
•Harness Fragmented Generation at Optimum Cost
•Availability of more peaking capacity
•Opportunity for Generators
–Help the grid
–Monetary Incentive
–Mitigate load shedding
–Value of Lost Load
•Relieve of congestion
–(utilization of Kayamkulam despite congestion)
•Renewable Generation
- Handling Variation thereby facilitating integration
Confidence to Pumped storage plants




9

10. NLDC 10
Flowgate Limiting
SR Import
Flowgate Limiting
S1-S2 exchange
Kayamkulam
Generation
Kayamkulam
injection
would relieve
congestion
towards SR
import

11. Classifications of Ancillary Services

•Frequency Support Ancillary Services (FSAS)

•Voltage Control Ancillary Service

•Black Start Ancillary Service

12. Section 27 (2) of the Electricity Act 2003
“Provided further that no Regional Load
Despatch Centre shall engage in the
business of generation of electricity or
trading in electricity.”
Role
?????? Despatch Decision
?????? Involvement in trading in electricity is
avoided as Facilitation through power exchanges

13. Section 28 (3) of the Electricity Act 2003
‘The Regional Load Despatch Centre shall

a) be responsible for optimum scheduling
and despatch of electricity within the
region in accordance with the contracts
entered into with the licensees or the
generating companies operating in the
region.

b) keep accounts of quantity of electricity
transmitted through the regional grid.’

14. Section 32 (2) of the Electricity Act 2003
‘The State Load Despatch Centre shall

a) be responsible for optimum scheduling
and despatch of electricity within a
State in accordance with the contracts
entered into with the licensees or the
generating companies operating in that
State.
b) ..

c) keep accounts of quantity of electricity
transmitted through the State grid.’

15. Existing Mechanism for Energy Accounting
15
•Energy accounting on 15-minute time block basis.
•Three part tariff for both beneficiaries as well as generators
•Three parts are :
Generators Beneficiary (State)
Capacity Charge Declared Capacity Capacity Share
Energy Charge Scheduled Energy Schedule Drawal
UI Charge Difference between
Scheduled energy and
Actual Generation
Difference between
Schedule drawal and
actual drawal

16. UI Mechanism
16
•For deviation from scheduled generation/ Drawal
•Monday to Sunday is the weekly accounting period
•Inputs – DC, Scheduled Injection/ Drawal, Bilateral/
collective exchanges, Metered Energy, Frequency
•Issued Weekly by RPCs
•Physical account maintained by RLDCs
•Interest on late payment of UI charges
•Responsibility of the State/SLDC- Further
apportioning/recovery of UI charges from the various
Discoms and embedded customers in the State

17. Unscheduled Interchange Curve
4/15/2013
POSOCO
17
0.00
200.00
400.00
600.00
800.00
1000.00
1200.00
1400.00
1600.00
1800.00
2000.00
49.00 49.04 49.08 49.12 49.16 49.20 49.24 49.28 49.32 49.36 49.40 49.44 49.48 49.52 49.56 49.60 49.64 49.68 49.72 49.76 49.80 49.84 49.88 49.92 49.96 50.00 50.04 50.08 50.12 50.16 50.20 50.24 50.28
FREQ Normal Range(50.20 - 49.50 HZ)
UI Rate VS Frequency (w.e.f 17.09.2012)
(Payment Side)
Frequency (HZ)

28.12
28.50 Paisa/0.02
HZ
16.50
Paisa/0.02
HZ
1800
Paisa/KWH
49.50
49.70 HZ
49.80
50.00 HZ
900

18. UI Charges ( payment side)
4/15/2013
POSOCO
18
0
200
400
600
800
1000
1200
1400
1600
1800
2000
49.00 49.04 49.08 49.12 49.16 49.20 49.24 49.28 49.32 49.36 49.40 49.44 49.48 49.52 49.56 49.60 49.64 49.68 49.72 49.76 49.80 49.84 49.88 49.92 49.96 50.00 50.04 50.08 50.12 50.16 50.20 50.24 50.28
FREQ Normal Range(50.20 - 49.50 HZ)
ADDL UI for OD (in the range < 49.70 HZ & < 49.50 HZ & < 49.20 HZ)
ADDL UI for APM (in the range < 49.70 HZ & < 49.50 HZ)
ADDL UI for UI (in the range < 49.70 HZ & < 49.50 HZ & < 49.20 HZ)
UI Rate VS Frequency (w.e.f 17.09.2012)
(Payment Side)
Frequency (HZ)

28.12
28.50 Paisa/0.02
HZ
16.50
Paisa/0.02 HZ
1260
Paisa/KWH
1800
Paisa/KWH
Addl UI for O/D
49.50 HZ
49.20
49.70 HZ
49.80
50.00 HZ
463.65
505.80
900
49.50
421.50 paise/kwh
590.10paise/kwh
1080.00
Paisa/KWH
590.63 Paisa/KWH
100 %
40 %
20 %
20 %
10 %

19. UI Charge receipt side
4/15/2013
POSOCO
19
0
100
200
300
400
500
600
700
800
900
1000
1100
1200
49.00 49.04 49.08 49.12 49.16 49.20 49.24 49.28 49.32 49.36 49.40 49.44 49.48 49.52 49.56 49.60 49.64 49.68 49.72 49.76 49.80 49.84 49.88 49.92 49.96 50.00 50.04 50.08 50.12 50.16 50.20 50.24 50.28
FREQ Normal Range
Buyer/Bef UD>10 % of sch or 250 MW whichever is less &
Seller/Gen >20 % of sch subject to 105 % of inst Cap in a
block or 101 % of Inst cap over a day
APM for OG > 105% DC in a block or 101 % over Avg DC
UI Rate VS Frequency (w.e.f 17.09.2012)
Frequency (HZ)

28.12 Paisa/0.02
28.50 Paisa/0.02
HZ
16.50 Paisa/0.02
HZ
900 Paisa/KWH (Infirm Liquid Fuel)
450 Paisa/KWH
49.80 HZ
49.80 HZ
50.00 HZ 165 paisa/KWH (Infirm Coal /Lignite/hydro)
49.82 HZ
421.50 Paisa/KWH
49. 48 HZ
330 Paisa/KWHn (Infirm Imported Coal/RLNG)
260 Paisa/KWH ( Infirm APM Gas as fuel)

20. Year-wise Status of UI Amount Billed

21. RLDCs and SLDCs have a key role in the
metering and settlement system

• RLDCs at the regional level
• SLDCs at the State level
Objective of the settlement system is to determine

Who bills whom for how much quantum of power
and how much money?
Existing Settlement System

22. TRADER
GRID
10 MW
10 MW
8 MW
A B
@ Rs. 2.00/ u @ Rs. 2.20/ u
AGREEMENTS
ACTUAL FLOW
12 MW
A B

23. TRADER
UI POOL A/C
UI for 2
MW
A B
Rs. 2.00/ u for
10 MW
Rs. 2.20/ u for
10 MW
PAYMENTS
UI for 2
MW

24. Interchange: Possible Combinations
NLDC 24
SI
SI
SI
UI
UI
UI
Scheduled-Scheduled
Scheduled-Unscheduled
Unscheduled-Unscheduled
Existing
Possible
Combinations
Interchange
under FSAS

25. FSAS
•Focus
–Stabilize the frequency by utilizing the left over fragmented
generation capacity.
•Umbrella (un-despatched generation)
–Liquid fuel based
–Diesel based
–Merchant/ IPPs/ CPPs
•Liquid fuel and diesel based capacity
–The load serving utilities partially harnessing intra-state and
inter-state sources.
–Un-despatched capacity and need of load serving entities
fragmented.
–Such Generations commercially feasible, if UI rates are
higher than their costs. 25

26. Framework of FSAS
•Facilitation of FSAS through Power Exchanges
•New product for introducing FSAS
•Separate category of user group
–Seller registration for FSAS
•Users to be Part of the existing settlement
mechanism including deviations
•Proper visibility with data, communication,
telemetry
•Standing clearance from concerned SLDC/RLDC
26

27. Procedure
•Competitive Bidding Process
•Window to open after closure of Day Ahead Market
–Sellers to bid in either of the exchanges
–Declaration of supplier, bid area, quantum, duration, price
•Adherence to the ‘anonymity philosophy
•Sellers in DAM with un-cleared bids and other sellers
with surplus/idle power can be the Prospective
participants.

27

28. Possible Opportunity for FSAS Ancillary
Volume in MWH

Lost Sell Volume (Sell Bid-Unconstrained MCV) (Apr-12 to Mar-13)

29. •Compilation and Stacking of bids
–For every time block of the next day
–Stacking based on bid price
•Overall optimization by stacking and despatch
of bids on National basis

30. Despatch under FSAS
•Despatch in real time
–System Conditions
–Deficit anticipation by the system operator .
•Lower limit in the IEGC frequency band ie 49.70
Hz as the threshold frequency.
•System operator will trigger FSAS below
threshold frequency.
–Merit Order of bids
•Despatch certainty of at least 12 time blocks (i.e 3
hours) to prevent frequent start-stop operation.
30

31. •Backing down,subject to system conditions, during
the said 12 time blocks, compensation to the extent
of their fixed cost.
•Despatch in case of Congestion
–Pan India merit order may be discounted
–TTC/ATC across Inter & Intra Regional to be
honoured
•Consent from seller to ascertain its readiness
–Participants option to schedule in STOA continue.

32. Scheduling & Accounting for FSAS
•Scheduling to be routed through Power Exchanges
similar to that of Day Ahead Market
•PXs to reveal the injection point/ identity of the
identified bidders.
•Despatched bids: incorporated in schedule of Sellers
•Unmatched one to one schedule

32

33. •Despatched bid quantum attributed towards
drawal of the POOL; a fictitious notional entity.
•Drawees/ users of despatched power quantum to
pay back for the service in the form of UI charges

•Scheduling as per present practice on regional basis
–By SLDCs for embedded players

34. Integration of Settlement Mechanism with UI
Mechanism
34
Seller 1 Buyer 1 Buyer 2
Day ahead schedule (MW) 100 75 25
Schedule under FSAS (MW) 15 0 0
UI (MW) 5 12 8
Total (MW) 120 87 33
UI POOL
(Regional)
Buyer 1
Buyer 2
12 MW @ UI rate
8 MW @ UI rate Seller 1
15 MW @
FSAS clearing
rate
5 MW @
UI rate

35. Settlement under FSAS
• Settlement
Uniform pricing
–As paid to the costliest generator who was called in
last for that respective time block
•Energy based settlement
•Upper limit of CERC UI vector : ceiling price





35

36. •Payment to sellers through power exchanges
–Transfer of Funds from respective regional UI pool to
exchanges next day .
–Exchange to pay to the supplier of services same day
•Scheduling , Transmission charges(PoC) and losses as
applicable for STOA transactions

37. Voltage Control Ancillary Service
•VCAS to support & maintain voltage within the permissible
limit.
• Provision for Voltage control ancillary service
embedded in IEGC.
• Priced for regional entities except generating stations for
Reactive Energy Exchange when voltages beyond 103% or
97%.
•Cost of supplying reactive power
–The capital cost of the equipment .
• Generators
–Reluctant to operate synchronous condenser mode
Friction and windage losses.
–Sometimes reduction in real-power production capability.
•Participation in Voltage Control by Generators may be
compensated through Ancillary Service.

38. Black Start Ancillary Service
•Black start
–Process to recover or reenergize a system from total or partial
failure
•Generating units with black start facility
–Certain identified units
–Required for black start of an electrical power system
–Should be able to start without external support
•CEA (Technical Standards for Connectivity to the Grid)
Regulations, 2007
–Clause 6(4) (c)
“Participate in contingency operation such as load shedding,
increasing or reducing generation, islanding, black start,
providing start up power and restoration as per the procedure
decided by appropriate Load Despatch Centre;”.
•Mandatory service as of now

39. •Startup supply requirement
–0.5% for hydro stations
–2% of the installed capacity for gas turbines
•Expenditure associated with Black Start
–capital cost of the equipment used to start the unit
–cost of the operators
–routine maintenance and testing cost
–cost of fuel
•Equipment cost recovered as fixed charges in generation tariff.
•Units not reimbursed for the operating cost .
•Need for Black Start as an Ancillary Service for voluntarily
procurement from generating units.

42. ALL INDIA WIND ENERGY
GENERATION 0
25
50
75
100
125
150
175
200
225
250
01-Apr 01-May 31-May 30-Jun 30-Jul 29-Aug 28-Sep 28-Oct 27-Nov 27-Dec 26-Jan 25-Feb 26-Mar
MONTH
MU/DAY
2011-12 2012-13
2011-12: MAX-168 MU; MIN-7 MU; AVG-57 MU
2012-13: MAX-224 MU; MIN-9MU; AVG-81 MU

43. 0
150
300
450
600
750
900
1050
1200
123456789101112131415161718192021222324
MW

TIME
Wind Generation in Rajasthan from April'12 to Jan'13
Apr-12
May-12
Jun-12
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Jun'12
Jul'12
May'12
Aug'12
Apr'12
Dec'12
Sep'12
Oct'12
Nov12
Jan'13

44. Integration of Renewable Generation
•Renewables 26.36 GW installed capacity targeted for 45 GW by
2015 (RPO target level of 10% Nationally).
•Challenges for grid operators
–Reliability top priority
–Variability and uncertainty in aggregate electric demand .
–Unit Commitment
–Integration of intermittency nature of Renewable Generation
–Frequency Control
–Reactive Power Management
–Physical constraints (i.e., available transmission)
–Institutional constraints ( market structure)
•FSAS to complement the diurnal changes in renewable
generation.
•FSAS to facilitate renewable integration by reducing the impact of
their variation.

45. Summary
•Ancillary services separate from basic system services as such
to be remunerated appropriately
•Discovery of Information
–Undespatched generation: Quantum & price
–Spinning Reserves: quantum & price
•Home Grown Solution
•Competitive Bidding
•Cost to customers
–Imbalance price based on the prevailing UI vector
•Merit Order Despatch
–Overall Countrywide Optimization



45

46. •Operational Flexibility for drawees
•Generators
-Respond to price signals
-Incentive for response and helping the grid
•UI and Ancillary
–Two of the four pillars of market, Should co-exist
•Reliance on FSAS as a routine practice to be avoided
•Frequency Curve will get further smoothen with the
availability of FSAS
•Powerful signal for investment to Generators

47. Pillars of Market Design
47
Sally Hunt – ‘ Making Competition Work in Electricity’

48. Way Forward


•Staff paper by CERC
•National Diagolue
•Capacity Building at SLDC
•Procedure by Nodal Agency/NLDC
•Implementation
•Monitoring of actual delivery
•Demand Response
•NLDC/Nodal Agency indemnification.

50. IEGC
Feb.’2000
ABT
2002-03
Open Access
2004
PX
2008
Transmission
Pricing (PoC)2011
Evolution of Power Market in India
Ancillary
Market

51. A Typical Dispatch

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
36
34
32
30
28
26
24
22
FIRM SHARES IN ISGS

ADVANCE SHORT TERM BILATERAL CONTRACTS
Day Ahead,
PX
Sell
Buy Buy
Sell
Forecast
UI
Contingency Real-time
Surpluses/Deficits - Balance supply and demand
Hours
00 MW

52. Pumped Storage Plants…….
facilitation through FSAS
•Nearly Rs. 2/kWh differential in peak and off peak prices of
power

•Increased standard of living……load curve with pronounced
humps.

•Higher level of pithead based coal generation……..lower off
peak prices

•Narrowing of frequency band would further increase the
differential between peak and off peak prices in the market.

•Absorbing large quantities of intermittent generation…..a major
challenge……….pumped storage a beautiful complement