The top-level design of the power auxiliary service market is more perfect

China Energy Storage Network News: The new policy follows the principle of "whoever benefits, whoever bears the cost", further improves the auxiliary service assessment and compensation mechanism, clarifies the responsibilities and obligations, participation methods and compensation sharing principles of cross-provincial and cross-regional power generation units participating in auxiliary services, and establishes a user-participated sharing mechanism.

On December 24, 2021, the National Energy Administration issued the newly revised "Regulations on the Management of Power Grid Operation" and "Measures for the Management of Power Auxiliary Services" (hereinafter referred to as the "two documents"). After a lapse of fifteen years, the two documents were revised, which will open up a new framework for the top-level design of my country's power auxiliary services market.

The industry believes that the two newly revised documents have made substantial adjustments to the dispatching and operating mechanisms of grid-connected entities, adapted to the actual needs of large-scale development of new energy and power market reform, and played a positive role in consolidating the safety and stability responsibilities of grid-connected entities and encouraging them to exert their regulatory potential. It is particularly noteworthy that the auxiliary service sharing mechanism established in the new version of the "Electricity Auxiliary Service Management Measures" is of great significance for resolving the current contradictions between new energy and traditional energy, and between new energy and the power grid.

The old version of the document is not suitable for the new market environment

Data shows that in 2021, the national system peak-shaving capacity will increase by 90 million kilowatts, equivalent to 90 million-kilowatt pumped-storage power stations, which will increase the power generation space for clean energy by nearly 80 billion kilowatt-hours and reduce carbon dioxide emissions by nearly 100 million tons.

Wu Junhong, deputy director of the Power Distribution Research Center of the China Energy Research Association, believes that in recent years, my country's energy transformation has entered an accelerated period, and the installed capacity of new energy has continued to expand. At the same time, the volatility of new energy has put forward higher requirements for power auxiliary services, and the construction of the auxiliary service market faces new challenges. Against this background, the revision of the above two documents is timely.

"At present, the demand for a large number of renewable energy sources connected to the system can no longer be met by only the power generation side bearing the entire system ancillary service costs unilaterally. Under the principle and logic of 'whoever benefits, whoever bears', the rights, responsibilities and interests of the stakeholders of ancillary services must be further improved." Wu Junhong said, "New energy storage, electric vehicle V2G, demand response, virtual market and other emerging business forms that meet the development direction and needs of energy transformation must also have corresponding rules to support their development. The old version of the document is no longer suitable for the new market environment, and revision is inevitable."

A person from the National Development and Reform Commission said that the purpose of revising the two documents is to expand the scale of ancillary service market players, improve the regulation capacity of the power system, and enhance the absorption capacity of new energy. "The most important thing is to give new energy development momentum and allow new energy companies to obtain larger installed capacity by actively configuring and purchasing ancillary service capabilities."

Explore the establishment of an auxiliary service sharing mechanism with user participation

The newly revised "Electricity Auxiliary Services Management Measures" further improves the auxiliary service assessment and compensation mechanism in accordance with the principle of "whoever benefits, whoever bears the responsibility", clarifies the responsibilities and obligations, participation methods and compensation sharing principles of cross-provincial and cross-regional power generation units participating in auxiliary services, and establishes a user-participated sharing mechanism.

According to data released by the National Energy Administration, at present, the cost of ancillary services including peak load regulation accounts for about 1.5% of the total electricity bill in the society, and is expected to reach 3% or even higher in the future.

The relevant person in charge of the National Energy Administration pointed out that this proportion will continue to rise with the large-scale access of new energy. In the future, the compensation and sharing of power auxiliary services will be in two ways: fixed compensation and market-based. The dispatched agencies will determine the specific types of auxiliary services and price standards based on the actual situation of each region and report to the National Energy Administration for implementation.

Shao Junsong, co-founder of Jiangxing Intelligence, believes that the ancillary service market in the past did not reflect the scarcity of ancillary services. "After the two documents were revised, a market-based compensation formation mechanism and an ancillary service sharing mechanism involving power users were established. In the future, contracts will clearly state the responsibilities and costs of power ancillary services, thereby realizing the transfer of ancillary service costs to users through market-based means."

Wu Junhong told reporters that "whoever benefits, bears the responsibility" is the basic principle of auxiliary services. Only by assuming responsibilities and cost constraints can relevant entities be motivated to do relevant work well, improve electricity efficiency, and enhance the efficiency of electricity consumption and new energy power generation in the whole society.

"In the past, rewards and penalties for ancillary services were concentrated on the power supply side. Although this measure can encourage relevant power sources to improve flexibility to adapt to the ancillary service assessment rules, it cannot encourage the user side to adapt to the fluctuations of renewable energy through self-regulation. Only when the user side also assumes relevant rights, responsibilities and interests can users be truly incentivized to respond to changes in the active output of the power system." said Wu Junhong.

It is understood that according to the newly revised document, the user-interruptible load that could only be adjusted downward in the past will be expanded to the user-adjustable load that can be "up and down". Users can bear the necessary ancillary service costs or obtain corresponding economic compensation according to their contributions based on their own load characteristics, thereby improving the demand-side regulation capabilities through market mechanisms.

Enriching the variety of auxiliary services to stimulate market vitality

Shao Junsong told reporters that the process of energy transformation will inevitably face various challenges. With the implementation of emission reduction targets and the rapid increase in the proportion of new energy, the pressure faced by the power system in the short term is undoubtedly huge. "The power generation end, transmission end, and power consumption end will definitely become the focus of power system innovation and investment in the next few years. The revision of the two documents will play a positive role in promoting the operation of my country's power market."

Wu Junhong said that the revision of the two documents will promote the power market in two aspects: on the one hand, the user-side electricity price formation mechanism has changed, which is more in line with the development needs of the new power system with new energy as the main body in the future. The user's electricity usage habits must be improved on the basis of considering the cost of auxiliary services, which expands the expression form and business model of the power market on the user side; on the other hand, the variety of auxiliary services has been enriched, and new types of auxiliary services such as rotational inertia, climbing, stable machine cutting service, and stable load shedding service have been introduced. This is both a challenge and a general trend for the construction of the power market.

"The increase in new varieties will also stimulate market vitality and allow more emerging entities and new technologies to participate in the future ancillary service market, thereby comprehensively improving the quality of power market construction and its supporting role for new power systems." Wu Junhong said.