Notice on Promoting the Participation of Electric Energy Storage in the Pilot Project of the Electricity Ancillary Service Compensation (Market) Mechanism in the “Three Norths” Region

National Energy Supervision [2016] No. 164

North China, Northeast China, Northwest China Energy Regulatory Bureau, Shanxi, Shandong, Gansu, Xinjiang Energy Regulatory Office, Beijing, Tianjin, Hebei, Shanxi, Shandong, Inner Mongolia, Liaoning, Jilin, Heilongjiang, Shaanxi, Gansu, Ningxia, Xinjiang, Qinghai Province (autonomous region, municipality directly under the central government) Development and Reform Commission (Energy Bureau), State Grid Corporation, Huaneng, Datang, Huadian, Guodian, State Power Investment Corporation, Three Gorges, Shenhua Group Corporation, State Development and Investment Corporation, Inner Mongolia Electric Power (Group) Co., Ltd., relevant power companies:

As an emerging energy storage technology and product (excluding pumped storage) that stores electrical energy through chemical or physical methods and releases it in the form of electrical energy when needed, electric energy storage has been gradually applied in my country in recent years in the fields of renewable energy consumption, distributed power generation, microgrids, and power auxiliary services, and has formed a preliminary commercial development model. In order to further explore the role of electric energy storage technology in peak and frequency regulation of the power system and promote the establishment of a new mechanism for sharing and balancing auxiliary services, in accordance with the spirit of the "Several Opinions of the CPC Central Committee and the State Council on Further Deepening the Reform of the Power System" (Zhongfa [2015] No. 9) and its supporting documents, the "Guiding Opinions on Promoting the Development of "Internet +" Smart Energy" (Fa Gai Neng Yuan Le [2016] No. 392), and the "Notice on Doing a Good Job in the Consumption of Renewable Energy in the "Three Norths" Region" (Guo Neng Jian Jiao [2016] No. 39), it is decided to carry out a pilot project of electric energy storage participating in the power auxiliary service compensation (market) mechanism in the "Three Norths" region, tap the potential of the power system in the "Three Norths" region to accept renewable energy, and at the same time meet the heating needs of the people. After consulting the Price Department of the National Development and Reform Commission, the relevant matters are hereby notified as follows:

I. Scope and Objectives of the Pilot Program

In principle, each province (region, city) in the "Three Norths" region can select no more than five electric energy storage facilities to participate in the pilot of the power peak-shaving and frequency-regulating auxiliary service compensation (market) mechanism. Regions with existing work experience can appropriately increase the number of pilots. On the premise of ensuring the safe operation of the power system, make full use of existing policies, give play to the advantages of electric energy storage technology, explore the role of electric energy storage in peak-shaving and frequency-regulating in the operation of the power system and its commercial application, and promote the establishment of a long-term mechanism to promote the consumption of renewable energy.

2. Pilot Program Content

(I) Reasonably configure electric energy storage facilities. Encourage power generation companies, power sales companies, power users, electric energy storage companies, etc. to invest in and build electric energy storage facilities. Encourage local governments to configure electric energy storage facilities of appropriate scale when planning centralized new energy power generation bases, so as to achieve coordinated and optimized operation of electric energy storage facilities, new energy and power grids. Encourage the construction of distributed electric energy storage facilities on the user side of residential areas, buildings, industrial and commercial enterprises, etc.

(II) Promote the participation of electric energy storage facilities on the power generation side in peak load and frequency regulation auxiliary services. Electric energy storage facilities built on the power generation side can participate in peak load and frequency regulation together with the units, or participate in auxiliary service market transactions as independent entities. Among them, the charging power of electric energy storage facilities participating in peak load regulation as independent entities should be 10 megawatts or more, and the continuous charging time should be 4 hours or more. The amount of electricity discharged by the electric energy storage is equivalent to the amount of electricity generated by the power plant, and is settled according to the relevant contract electricity price of the power plant.

(III) Promote the participation of user-side energy storage facilities in peak load and frequency regulation auxiliary services. For energy storage facilities built on the user side, the charging power can be subject to the catalogue electricity price, or participate in direct power trading to purchase off-peak power by itself. The discharged power can be used for self-use or regarded as distributed power generation and sold to nearby power users.

Electric energy storage facilities of a certain scale built on the user side can act as independent market entities or jointly participate in auxiliary services such as frequency regulation, deep peak regulation, and start-stop peak regulation with power generation companies.

III. Pilot Work Requirements

(I) Grid companies should proactively provide services for the access of electric energy storage facilities to the grid, actively assist in solving problems in the pilot process, and settle auxiliary service fees in a timely manner in accordance with regulations. Among them, user-side electric energy storage facilities shall be implemented in accordance with the relevant policies on distributed power sources.

(II) The power dispatching agency is responsible for monitoring and recording the real-time charging and discharging status of electric energy storage. For electric energy storage facilities with a charging power of 10 megawatts or more that participate in market transactions as independent market entities, the charging and discharging status should be subject to the unified dispatching command of the power dispatching agency.

(III) All energy storage facility operators should strengthen the operation and maintenance of energy storage equipment and improve the safety and reliability of energy storage facilities. Real-time charging and discharging information of energy storage facilities should be connected to the power dispatching agency.

(IV) The dispatched agencies of the National Energy Administration and the energy management departments of provinces (autonomous regions and municipalities) should organize and coordinate the pilot projects and supervise their implementation, and support the investment and construction of electric energy storage projects. The regional regulatory bureaus of the National Energy Administration should adjust the peak-shaving and frequency-regulating auxiliary service metering formula as soon as possible according to the "compensation principle based on effect", increase the compensation for auxiliary services, and maintain the continuity and stability of the auxiliary service compensation policy. The relevant dispatched agencies should actively track and analyze the deficiencies in the pilot work of the auxiliary service compensation (market) mechanism for electric energy storage participating in power peak-shaving and frequency-regulating, summarize the experience in a timely manner, and turn the participation of electric energy storage in auxiliary services into normal operation in due course.

(V) If other regions in the country need to carry out a pilot program for the compensation (market) mechanism for auxiliary services of electric energy storage to participate in power frequency and peak regulation, the relevant dispatched agencies shall report to the National Energy Administration for filing and refer to this notice for implementation.

(VI) The departments of land, water resources, environmental protection, urban and rural planning, etc. are requested to provide necessary support for the pilot projects and give priority to carrying out related work.

If you have any problems at work, please report them to the National Energy Administration in a timely manner.

National Energy Administration

June 7, 2016