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Competition in Markets for Ancillary Services? The implications of rising distributed generation

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  • Michael Pollitt

    (EPRG, CJBS, University of Cambridge)

Abstract

Ancillary services are electricity products which include balancing energy, frequency regulation, voltage support, constraint management and reserves. Traditionally they have been procured by system operators from large conventional power plants, as by-products of the production of energy. This paper discusses the use of markets to procure ancillary services in the face of potentially higher demand for them, caused by rising amounts of intermittent renewable generation. We discuss: the nature of markets for ancillary services; what we really mean by ancillary services; how they are impacted by the rise of distributed generation; how they are currently procured; how they relate to the rest of the electricity system; the current state of evidence on ancillary services markets; whether these markets ever be as competitive as conventional wholesale energy markets, and offer some conclusions.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Michael Pollitt, 2019. "Competition in Markets for Ancillary Services? The implications of rising distributed generation," Working Papers EPRG1928, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    • Handle: RePEc:enp:wpaper:eprg1928
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    References listed on IDEAS

    as
    1. Greve, Thomas & Teng, Fei & Pollitt, Michael G. & Strbac, Goran, 2018. "A system operator’s utility function for the frequency response market," Applied Energy, Elsevier, vol. 231(C), pages 562-569.
    2. Banshwar, Anuj & Sharma, Naveen Kumar & Sood, Yog Raj & Shrivastava, Rajnish, 2018. "An international experience of technical and economic aspects of ancillary services in deregulated power industry: Lessons for emerging BRIC electricity markets," Renewable and Sustainable Energy Reviews, Elsevier, vol. 90(C), pages 774-801.
    3. Michael G. Pollitt, 2019. "The European Single Market in Electricity: An Economic Assessment," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 55(1), pages 63-87, August.
    4. Anna Creti & Fulvio Fontini, 2019. "Economics of Electricity. Markets, Competition and Rules," Post-Print hal-02304345, HAL.
    5. Sinan Küfeoglu & Gaomin Liu & Karim Amaya & Michael G. Pollitt, 2019. "Digitalisation and New Business Models in Energy Sector," Working Papers EPRG1920, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    6. Hogan, William W, 1992. "Contract Networks for Electric Power Transmission," Journal of Regulatory Economics, Springer, vol. 4(3), pages 211-242, September.
    7. Cretì,Anna & Fontini,Fulvio, 2019. "Economics of Electricity," Cambridge Books, Cambridge University Press, number 9781316636626, April.
    8. Chyong, C. & Pollitt, M. & Cruise, R., 2019. "Can wholesale electricity prices support “subsidy-free” generation investment in Europe?," Cambridge Working Papers in Economics 1955, Faculty of Economics, University of Cambridge.
    9. R. G. Lipsey & Kelvin Lancaster, 1956. "The General Theory of Second Best," Review of Economic Studies, Oxford University Press, vol. 24(1), pages 11-32.
    10. Sinan Küfeoglu & Michael Pollitt & Karim Anaya, 2018. "Electric Power Distribution in the World: Today and Tomorrow," Working Papers EPRG 1826, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Tangerås, Thomas, 2020. "Competition for Flexible Distribution Resources in a ’Smart’ Electricity Distribution Network," Working Paper Series 1351, Research Institute of Industrial Economics.
    2. Simshauser, P., 2021. "Renewable Energy Zones in Australia’s National Electricity Market," Cambridge Working Papers in Economics 2119, Faculty of Economics, University of Cambridge.
    3. Tim Schittekatte & Valerie Reif & Leonardo Meeus, 2021. "Welcoming New Entrants into European Electricity Markets," Energies, MDPI, vol. 14(13), pages 1-20, July.

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    More about this item

    Keywords

    ancillary services; balancing energy; frequency regulation; reactive power; constraint management; reserves;
    All these keywords.

    JEL classification:

    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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