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How can wind power participate in balancing markets?

Question asked by Elias De Keyser Partner on 22-Feb-2017

Hey CommUnity!

I am currently investigating how renewables (more particularly wind power) can participate in balancing markets and how much they could potentially benefit from this in terms of revenue increase. I took the Spanish case as an example, where since recent regulation reforms renewables can participate in provision of secondary reserve, tertiary reserve and deviation management. I have some questions on the mechanisms of those markets, and this is more or less the same as in other countries:

 

In general

Do you guys know good papers/reports on the issue of wind participation in balancing markets

 

Secondary reserve

I had some doubts while estimating potential revenues. Is it correct that power that was allocated for secondary downward reserve and is activated by the TSO, only receives the activation compensation and allocation compensation (hence the revenue that was normally going to be gained by delivering the scheduled energy at day-ahead price is lost)? Hence it is only going to be more profitable if allocation compensation (+ activation compensation if reserve was activated) are higher than day-ahead market price. Does that make sense?

 

Tertiary reserve
For tertiary reserve, all generation units that can provide reserve are obliged to do so (for renewables this is only the case if the capacity factor is bigger than 50%). Tertiary reserve is defined as the maximum variation of power generation that a programming unit related to a generating or pump storage unit can experience within a maximum of 15 minutes dynamic time, and which can be maintained for at least 2 consecutive hours.

- Now, does this take into account that there might be allocation of secondary reserve? Should the bid for tertiary reserve exclude the part that was allocated as secondary reserve?
- Also, tertiary reserve downward revenue is only gained by compensation for usage, hence revenues for what was normally going to be sold at day-ahead market are lost. I found that for 2016, tertiary reserve downward prices were just too low to be profitable for renewables: a wind plant would loose money if it was activated for downward tertiary control. Does that make sense to you guys?
- Finally, do you think it is reasonable to provide upward tertiary reserve (which can be done if by default the unit curtails part of the wind, which also is done to be able to provide secondary reserve power), knowing that you have to guarantee it for up to two hours (due to variability and uncertainty of wind this seems tricky to me, on the other hand, tertiary reserve bids can be adapted up to 25 min before the hour for which the reserve is meant).

 

thanks a lot for your insights and help!

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