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Jay Morrison is an Energy Bar Association Primer Dean and Vice President of Regulatory Issues at the National Rural Electric Cooperative Association. This screed solely reflects the views of the author and does not necessarily reflect the views of NRECA or any of its members.
At the U.S. Energy Information Agency conference this Spring, one of the speakers asserted that energy and ancillary services are the only products for sale in wholesale markets. "I don't believe," I recall him saying, "in fuel diversity." I've heard similar views from some others who seek to run or operate in markets for a fungible commodity - kilowatt-hours.
That does not, however, appear to be the view of most industry stakeholders. Most stakeholders appear to view the products and services provided by different power resources to be differentiable based on operational characteristics, fuel, location, environmental characteristics, impact on local economies, and more.
In addition to their marginal costs, system operators must focus on the performance parameters of specific resources. Some of these are reflected in ancillary services, such as the ability of a resource to provide operating reserves or reactive power.
Others, such as ramping capability, haven't traditionally been ancillary services but may soon be. Other operational concerns don't look like ancillary services at all. For example, operators seek to limit their exposure to single contingencies by evaluating how many generators feed into the same transmission line or receive their fuel supply from the same rail line or pipeline.