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Water Heaters to teh Rescue: Demand Bidding in Electric Reserve Markets

With just a few changes in reliability rules, regulators could call on consumer loads to boost power reserves for outages and contingencies.
Fortnightly Magazine - September 1 2003
  1. Revisions to Operable Capability Market Rules, Docket No. ER99-4002-000, Washington, D.C., Sept. 30, 1999.
  2. B. Kranz, R. Pike, and E. Hirst, "Integrated Electricity Markets in New York: Day-Ahead and Real-Time Markets for Energy, Ancillary Services, and Transmission," New York Independent System Operator, Schenectady, N.Y., November 2002.
  3. PJM Interconnection, "Spinning Reserve Market," Docket No. ER02-2519-000, submitted to the Federal Energy Regulatory Commission, Norristown, Pa., Aug. 29, 2002.
  4. It is baffling that a competitive market would be designed to pay resources providing the identical service different amounts, and in different ways, based solely on the cost to the resource of providing the service.
  5. U.S. Federal Energy Regulatory Commission, Order Accepting Spinning Reserve Market, Docket No. ER02-2519-000, Washington, D.C., Oct. 31, 2002.
  6. New England has averaged 14 DCS events a year during the past five years. This is about the same rate experienced in New York and PJM.
  7. We assume that retail loads will be paid for reserves just as generators are. They will receive an hourly reservation payment based on the price set in the day-ahead market and, when called upon to reduce load, they will enjoy the benefit of a lower energy payment during this time of higher energy prices. That is, loads would not receive an additional energy payment for interrupting during a DCS event.
  8. E. Hirst, "Price-Responsive Demand as Reliability Resources,", April 2002.

Definitions of Real-Power Ancillary Services

Ancillary services are those functions performed by the equipment and people that generate, control, and transmit electricity in support of the basic services of generating capacity, energy supply, and power delivery. These services are required to respond to the two unique characteristics of bulk-power systems: the need to maintain a balance between generation and load in near real-time and the need to redispatch generation (or load) to manage power flows through individual transmission facilities. This table lists the key real-power ancillary services, the ones that ISOs (independent system operators) generally buy in competitive markets.

Market Description
Regulation Generators on line, on automatic generation control, that can respond rapidly to system-operator requests for up and down movements; used to track the minute-to-minute fluctuations in system load and to correct for unintended fluctuations in generator output to comply with NERC's CPS.
Spinning reserve Generators on line, synchronized to the grid, that can increase output immediately in response to a major generator or transmission outage and can reach full output within 10 minutes to comply with NERC's DCS.
Supplemental reserve Same as spinning reserve, but need not respond immediately; therefore units can be off line but still must be capable of reaching full output within the required 10 minutes.
Replacement reserve Same as supplemental reserve, but with a 30-minute response time, used to restore spinning and supplemental reserves to their pre-contingency status.

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