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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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    Cited by:

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    2. David P. Brown & Andrew Eckert & Douglas Silveira, 2023. "Strategic interaction between wholesale and ancillary service markets," Competition and Regulation in Network Industries, , vol. 24(4), pages 174-198, December.
    3. Pollitt, Michael G. & von der Fehr, Nils-Henrik M. & Willems, Bert & Banet, Catherine & Le Coq, Chloé & Chyong, Chi Kong, 2024. "Recommendations for a future-proof electricity market design in Europe in light of the 2021-23 energy crisis," Energy Policy, Elsevier, vol. 188(C).
    4. Simshauser, Paul, 2021. "Renewable Energy Zones in Australia's National Electricity Market," Energy Economics, Elsevier, vol. 101(C).
    5. Luigi Viola & Saeed Nordin & Daniel Dotta & Mohammad Reza Hesamzadeh & Ross Baldick & Damian Flynn, 2023. "Ancillary Services in Power System Transition Toward a 100% Non-Fossil Future: Market Design Challenges in the United States and Europe," Papers 2311.02090, arXiv.org.
    6. Tangerås, Thomas, 2020. "Competition for Flexible Distribution Resources in a ’Smart’ Electricity Distribution Network," Working Paper Series 1351, Research Institute of Industrial Economics.
    7. Joseph Nyangon & Ruth Akintunde, 2024. "Principal component analysis of day‐ahead electricity price forecasting in CAISO and its implications for highly integrated renewable energy markets," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 13(1), January.
    8. Liu, Tingting & Chen, Zhe & Xu, Jiuping, 2022. "Empirical evidence based effectiveness assessment of policy regimes for wind power development in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 164(C).
    9. Milstein, I. & Tishler, A. & Woo, C.K., 2024. "The effect of PV generation's hourly variations on Israel's solar investment," Energy Economics, Elsevier, vol. 136(C).
    10. Prakash, Abhijith & Bruce, Anna & MacGill, Iain, 2022. "Insights on designing effective and efficient frequency control arrangements from the Australian National Electricity Market," Renewable and Sustainable Energy Reviews, Elsevier, vol. 161(C).
    11. Tim Schittekatte & Valerie Reif & Leonardo Meeus, 2021. "Welcoming New Entrants into European Electricity Markets," Energies, MDPI, vol. 14(13), pages 1-20, July.
    12. Prakash, Abhijith & Ashby, Rohan & Bruce, Anna & MacGill, Iain, 2023. "Quantifying reserve capabilities for designing flexible electricity markets: An Australian case study with increasing penetrations of renewables," Energy Policy, Elsevier, vol. 177(C).

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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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