The power and gas markets look very different today from what we were anticipating three to four years ago. Gas has gone from seeming shortage to seeming abundance with recent spot prices falling...
Leaning on Line Pack
Green energy mandates might overburden gas pipelines.
shouldn’t be taken for granted. ISOs are cognizant of this dynamic and are working to plan around these unfolding events. But as the resource mix is transformed in the decade ahead, will the inventory of ancillary services be sufficient and affordable to accommodate the stepped up integration of wind resources?
Existing ISO Procedures
ISOs have implemented various operational strategies to integrate wind generation and may be introducing additional reforms based on FERC’s recent NOPR. Applicable mandatory North American Electric Reliability Corporation (NERC) standards have been developed to ensure reliable operation of the system. In their balancing role, ISOs have well-formed planning and operating procedures to ensure that frequency and voltage deviations under normal and emergency operating conditions don’t undermine reliability objectives. Thus, NERC standard BAL-001 sets requirements and measures for frequency control under steady-state operating conditions through its control performance standards, while NERC standard BAL-002 addresses balancing requirements under disturbance.
To be in compliance with the reliability standards, ISOs have to maintain adequate operating reserves and AGC capability. In the seconds-to-minutes time frame, bulk power system reliability is almost entirely maintained by automatic equipment and control systems such as AGC. AGC is ideally derived from pumped storage plants, but many thermal plants also furnish AGC. Moreover, the cohort group of CC plants is ideally positioned to produce AGC. In the minutes-to-hours time frame, system operators rely on CC units and peakers providing load following to maintain system reliability. 10 NERC standard VAR-001 governs voltage and reactive control. Generating and non-generating resources capable of controlling voltage are used to ensure compliance with the NERC standard.
Overall, ISOs procure or provide five types of ancillary services to ensure system reliability: dispatch and scheduling; energy balancing; regulation; voltage control; and black-start capability. Daily and hourly commitments of the resources providing ancillary services and other products are determined through security constrained economic dispatch. Balancing requirements are derived from fossil fuels and pumped storage facilities. To the extent natural gas is used, both economic and environmental goals are well served. A second-best solution to the vexsome problem of providing sufficient ancillary services relates to use of premium fossil fuel—in particular, ultra low sulfur diesel (ULSD)—to enable quick-start peakers to start up in the real-time market. However, permit restrictions, environmental effects, and the high cost of ULSD relative to natural gas disfavors this solution.
Resources that provide ancillary services are compensated under FERC approved tariffs. Some ancillary services are compensated at a regulated rate, while other services are compensated at market prices. ISOs provide dispatch, system control, and scheduling under FERC approved tariffs, the cost of which is borne by transmission customers. Voltage control and reactive power support are provided as needed either at the dispatch order or automatically within the resource’s voltage control range. The resources providing these services are compensated for their reactive capabilities on a monthly basis based on a rate set by the tariff. Resources equipped with AGC provide regulation and frequency response service. Charges for this service are determined based on the offers submitted by AGC resources in accordance with market rules that