EBF 483
Introduction to Electricity Markets

9.1 Ancillary Services Markets


Since electricity cannot be stored in large volumes at reasonable cost, part of the job of the power grid operator is to make sure that supply and demand balance at every moment. This means that the power grid is making adjustments every single second as demand changes (actually, much more quickly than one second). Many of these adjustments are automated responses. Go ahead and turn the light on and off in the room you're sitting in. Believe it or not, there is a huge network of sensors on the power grid that can tell that electricity usage is going up and down by some small amount, and making automatic adjustments to power plant outputs in response.

If grid operators can tell that electricity demand is about to increase in, say, five minutes or 30 minutes, then they can manually issue instructions to power plants. The video (4:30) below provides a cute example of this:

Ensuring that the power grid is stable and that supply matches demand on a continuous basis requires that decisions be made over a staggering array of time scales, as shown in the figure below. The day ahead market is used to allow power grid operators to have enough supply to meet anticipated demand 24 hours in advance. The real time market does the same thing on an hour-ahead time frame. But what happens between the hour-ahead market clearing and actual real-time dispatch?

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Figure 9.1: Operational and planning decisions for electric power systems
Source: Alexandria von Meier

As the figure shows, there is a lot going on between one hour ahead of real-time and fractions of a second ahead of real time. If the grid operator feels that more power is needed one day or one hour before real time, it can increase the amount cleared through the day ahead or real time markets. But what if the grid operator needs additional supply in fifteen minutes? In five minutes? In five seconds?

The first part of this lesson is focused on "ancillary services" - those tools that grid operators have to handle fluctuations in supply and demand in between those discrete moments when the real-time market clears.

There are four primary types of ancillary services that we'll discuss in this lesson:

  • Reactive Power
  • Frequency regulation
  • Spinning and Non-Spinning Reserves
  • Black Start

You can read more technical details about each of these in the ancillary services primer posted on Canvas.