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Simulating the Operation of Markets for Bulk-Power Ancillary Services

Author

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  • Eric Hirst
  • Brendan Kirby

Abstract

The U.S. Federal Energy Regulatory Commission (FERC) requires electric utilities to offer six ancillary services. Most of the tariffs filed with FERC price these services on the basis of traditional cost-of-service (embedded) costs, Because most of these services are provided by generating units, however, it should be possible to create competitive markets for them. This paper describes, the structure of, and results from, a spreadsheet model that simulates markets for seven services: losses, regulation, spinning reserve, supplemental reserve, load following, energy imbalance, and voltage support. The model also analyzes, system control, although this service will continue to be provided solely by the system operator under cost-based prices. Developing this computer model demonstrated the likely complexity of markets for energy and ancillary services. This complexity arises because these markets are highly interdependent. For example, the cost of regulation (the frequent change in generator outputs to track the minute-to-minute fluctuations in system load) depends strongly on which units, are already being dispatched to provide energy and losses, their variable costs, and their operating levels relative to their maximum and minimum loading points.

Suggested Citation

  • Eric Hirst & Brendan Kirby, 1998. "Simulating the Operation of Markets for Bulk-Power Ancillary Services," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 49-68.
  • Handle: RePEc:aen:journl:1998v19-03-a03
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    Cited by:

    1. Raineri, Ricardo & Arce, Raúl & Ri­os, Sebastián & Salamanca, Carlos, 2008. "From a bundled energy-capacity pricing model to an energy-capacity-ancillary services pricing model," Energy Policy, Elsevier, vol. 36(8), pages 2868-2876, August.

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    JEL classification:

    • F0 - International Economics - - General

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