The Central Electricity Regulatory Commission (CERC) has issued the draft CERC (Ancillary Services) Regulations, 2021 to enhance the security and reliability of the electricity grid, especially in view of the increasing penetration of renewable energy sources. The objective of these ancillary service regulations is to provide mechanisms for procurement (through administered as well as market-based mechanisms), deployment and payment of ancillary services for maintaining grid frequency close to 50 Hz. The regulations aim to maintain grid frequency within the allowable band as specified in the “Grid Code” and relieve congestion in the transmission network to ensure smooth operation of the power system, and safety and security of the grid.
The existing framework of ancillary services utilises thermal power stations, which have ramping limitations. Besides, the current administered mechanism of reserves regulation ancillary services cannot accommodate energy storage solutions and demand-side response, among other things. The new draft Ancillary Services Regulations, 2021 will be applicable to regional entities, including those with energy storage resources, and demand side resources and other entities as provided in the regulations. The draft regulations mandate estimation of the secondary reserves ancillary services (SRAS) and the tertiary reserves ancillary services (TRAS) requirement by the nodal agency, in coordination with regional load despatch centres (RLDCs) and state load despatch centres (SLDCs), for such period and based on such methodology as specified in the Grid Code. While the estimation of reserves would be done on a longer-time horizon, the nodal agency shall reassess the quantum of requirement of SRAS and TRAS on day-ahead basis and also on real-time basis.
Secondary reserves ancillary service
- Eligibility for SRAS provider: A generating station or an entity having energy storage resource or demand-side resource, connected to the interstate transmission system or intra-state transmission system, shall be eligible to provide SRAS, subject to certain eligibility conditions. The SRAS resource should be automatic generation control-enabled and should have a bidirectional communication system with the nodal agency (the NLDC or RLDC), along with SCADA telemetry for monitoring and measurement of energy delivered under SRAS. Further, SRAS providers should be capable of responding to a SRAS signal within 30 seconds and providing the entire SRAS capacity obligation within 15 minutes and sustaining it for at least the next 30 minutes. The SRAS provider should also be capable of providing at least 1 MW of secondary response.
- Activation and deployment of SRAS: SRAS shall be activated and deployed by the nodal agency to maintain or restore grid frequency and replenish primary reserves in case the area control error (ACE) of the region deviates from zero and goes beyond the minimum threshold limit of ±10 MW or any other such events as specified in the Grid Code.
- Procurement of SRAS: SRAS shall be procured on a regional basis by the nodal agency. A SRAS provider shall provide standing consent to the nodal agency for participation, which shall remain valid till it is modified or withdrawn. The consent cannot be modified or withdrawn without giving a notice of 48 hours to the nodal agency. SRAS providers will be required to declare the technical parameters/requirements (such as installed capacity, technical minimum, ramp-up and ramp-down capability) and declare upfront the variable charge or compensation charges on a monthly basis.
- Selection of SRAS providers and despatch of SRAS: The SRAS provider shall be selected on a regional basis by the nodal agency for providing SRAS-Up/Down, based on the “custom participation factor” (CPF), subject to the ramp limited resources available with SRAS providers. The CPF for each SRAS provider shall be determined based on the “rate participation factor” (RPF) – ramping capability in MW per minute and the cost factor – variable charge or compensation charge, as the case may be. While the CPF for SRAS-Up shall be directly proportional to the normalised RPF and inversely proportional to the normalised cost factor, for SRAS-Down it shall be directly proportional to the product of the normalised RPF and normalised cost factor. SRAS shall be despatched on a regional basis through SRAS-Up and SRAS-Down secondary control signals. These signals shall be sent to the control centre of the SRAS provider every four seconds by the nodal agency. The SRAS provider shall allow its control centre to follow the secondary control signal for SRAS-Up or SRAS-Down automatically, without manual intervention.
- Payment for SRAS: SRAS providers shall be paid from the Deviation and Ancillary Service Pool Account, at the rate of their variable charge or compensation charge, as declared by them, for the SRAS-Up MW quantum despatched for every 15-minute time block. Meanwhile, SRAS providers shall pay back to the Deviation and Ancillary Service Pool Account, at the rate of their variable charge or compensation charge, as the case may be, for the SRAS-Down MW quantum despatched for every 15-minute time block.
- Performance of SRAS provider and incentive: A SRAS provider shall be eligible for incentives, based on its performance, which would be measured by the nodal agency by comparing the actual response measured against the secondary control signals for SRAS-Up and SRAS-Down sent to the control centre of the SRAS provider. Each SRAS provider would be eligible for an incentive rate corresponding to its performance measurement. For instance, if the performance of a SRAS provider is above 95 per cent in a day, it would be eligible for an incentive rate of 40 paise per unit. On the other hand, performance below 20 per cent for two consecutive days by a SRAS provider shall make the provider liable for disqualification from participation in SRAS for a week.
Tertiary reserves ancillary services
- Eligibility for a TRAS provider: A generating station or energy storage resource or demand-side resource connected to interstate transmission system or intra-state transmission system shall be eligible for participation as a TRAS provider, if it is capable of varying its active power output or drawl or consumption on receipt of despatch instructions from the nodal agency and of providing TRAS within 15 minutes and sustaining the service for at least the next 60 minutes.
- Activation and deployment of TRAS: TRAS shall be activated and deployed by the nodal agency in case the secondary reserve has been deployed continuously in one direction for 15 minutes for more than 100 MW, in order to replenish the secondary reserve or in the case of any other such events as specified in the Grid Code.
- Procurement of TRAS: The nodal agency shall communicate to the power exchanges the quantum of TRAS-Up and TRAS-Down requirement on a day-ahead basis before the commencement of the day-ahead market (DAM); as well as the incremental requirement, on a real-time basis, before the commencement of the real-time market (RTM). On the other hand, TRAS providers shall submit bids for TRAS-Up and TRAS-Down for each time block or for a minimum of two consecutive time blocks in the DAM or in the RTM. The energy-up/down bid in Rs per MWh shall be submitted for the offer volume in MW. The power exchanges shall collect bids for TRAS-Up and TRAS-Down and share the same with the nodal agency for price discovery.
- Price discovery of TRAS: The price discovery for TRAS-Up shall be based on the principle of uniform market clearing price. The highest energy-up bid corresponding to the requirement for TRAS-Up shall be the market clearing price for energy-up in the DAM (MCP-Energy-Up-DAM) or in the RTM (MCP-Energy-Up-RTM). Meanwhile, for price discovery for TRAS-Down shall be based on the principle of pay-as-you-bid. The energy-down bids shall be stacked in descending order and the nodal agency shall select the TRAS-Down providers to meet the estimated TRAS requirement, in that order. The commission may, if considered necessary, provide for a price cap for TRAS.
- Scheduling and despatch of TRAS: In case the actual requirement for TRAS-Up/Down is equal to the total TRAS-Up/Down cleared in the market, the nodal agency shall issue despatch instructions to all TRAS-Up/Down providers. However, in case the actual requirement for TRAS-Up is less than the total TRAS-Up cleared in the market and MCP-Energy-Up-DAM is equal to the MCP-Energy-Up-RTM, TRAS-Up shall be despatched on a pro-rata basis. However, if MCP-Energy-Up-DAM and MCP-Energy-Up-RTM are not equal, TRAS-Up with lower MCP-Energy-Up shall be despatched first, followed by the TRAS-Up with higher MCP-Energy-Up. In case the actual requirement for the deployment of TRAS-Down is less than the total TRAS-Down cleared in the market, the nodal agency shall issue despatch instructions to the TRAS-Down providers in descending order of their Energy-Down bids.
- Payment for TRAS – TRAS: Up provider shall receive MCP-Energy-Up, as discovered in the DAM or the RTM, as the case may be, for the quantum of energy instructed to be despatched by the nodal agency. On the other hand, TRAS-Up provider shall receive commitment charges at the rate of 10 per cent of the MCP-Energy-Up-DAM or the MCP-Energy-Up-RTM, as the case may be, subject to the ceiling of 20 paise per kWh for the quantum of TRAS-Up cleared in the DAM or the RTM as the case may be, but not instructed to be despatched by the nodal agency. Meanwhile, the TRAS-Down provider shall pay back to the Deviation and Ancillary Service Pool Account at the rate of its energy-down bid in the DAM or RTM, as the case may be, for the capacity instructed to be despatched by the nodal agency.
To conclude, the draft Ancillary Service Market Regulations 2021, by making provisions for including entities such as energy storage resources and demand-side resources to provide ancillary services, address some of the key limitations in the existing regulatory framework for ancillary services. In view of the emerging power market scenario characterised by growing renewable energy penetration and increasing decentralised generation, the proposed ancillary services regulations, once finalised, are expected to go a long way in maintaining a stable grid.