Policy instruments for ancillary services and capacity adequacy

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Journal Title
Journal ISSN
Volume Title
Master's thesis
Date
2011
Major/Subject
Energiatalous ja voimalaitostekniikka
Mcode
Ene-59
Degree programme
Language
en
Pages
108
Series
Abstract
This thesis examines the needs of power systems, the different instruments used to meet those needs, and builds a framework for classifying both. The thesis starts with a look at the drawbacks of the vertically integrated power market that lead to the creation of the liberalized energy-only market, at what needs this energy-only market fulfils, and what its challenges are. The third chapter explains why the energy-only market alone is not enough for second-to-second power system operation. The needs it cannot meet are presented and determined to arise from three different levels: physical operation, network, and policy level. The fourth chapter examines the instruments used to meet these needs, often called ancillary services, and develops a framework for classifying them. This framework has four categories: frequency control, capacity, coordination and operation, as well as system backup and restoration. The fifth chapter presents a case study of the frequency control and capacity instruments in the Danish system, and the sixth chapter has case studies of the Polish and Pennsylvania-Jersey-Maryland (PJM) systems. The case studies demonstrate how the developed framework for ancillary services works in the context of real countries as well as in identifying the dimensions on which the instruments differ between the case areas, the dimensions that define the service in question and that players wishing to enter the market in question need to know. This chapter also includes some general points on what leads to the opening of ancillary and capacity markets, and examples of ways to organize the capacity market. Next, the findings chapter summarises the main facts found out during the research, including some points on what to take into consideration when designing market instruments to a system. The conclusions chapter draws it all together, and the discussion chapter evaluates what went well, what could have been done better, and points out directions for further research.
Description
Supervisor
Syri, Sanna
Thesis advisor
Paatero, Jukka
Keywords
ancillary services, capacity adequacy, frequency control, Denmark, PJM, Poland
Other note
Citation